This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in Serbia.
This Q&A is part of the global guide to Arbitration.
For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/arbitration/
What legislation applies to arbitration? Are there any mandatory laws?
In Serbia, the main law governing arbitration is the Law on Arbitration, which has been enacted in 2006. This law governs all arbitrations seated in Serbia, and contains a number of mandatory provisions which the parties cannot derogate from, if the seat of arbitration is in Serbia. It also contains rules on recognition of foreign arbitral awards.
In addition to the Law on Arbitration, several of other laws contain provisions which are of relevance for arbitration proceedings. These include, among other, the Law on Private International Law (which contains rules on exclusive competence of courts which are of importance for determining arbitrability of disputes). In addition, provisions which govern court proceedings are also of relevance for arbitration proceedings, since they govern the conduct of courts in proceedings which are closely related to arbitration (such as setting aside of arbitral awards, recognition of arbitral awards, interim measures, enforcement of arbitral awards, etc).
Is the country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
The New York Convention entered into force in former Yugoslavia in October 1981. After the dissolution of former Yugoslavia, Serbia remained a party to New York Convention by virtue of succession.
As for the reservations to the New York Convention which apply to Serbia, there are three such reservations currently in force: (1) The Convention is applied only to those arbitral awards which were adopted after the coming of the Convention into effect (i.e. no retroactive effect); (2) Convention is applied on a reciprocal basis only to those arbitral awards which were adopted on the territory of the other State Party to the Convention and (3) Convention is applied with respect to the disputes arising from the legal relations, contractual and non-contractual, which, according to Serbian national legislation are considered as economic (i.e. commercial).
What other arbitration-related treaties and conventions is the country a party to?
Serbia is a party to the ICSID Convention, as well as to the European Convention on International Commercial Arbitration. In addition to these multilateral conventions, Serbia concluded a number of bilateral agreements with different states on mutual legal assistance in civil matters, which concern, inter alia, recognition and enforcement of arbitral awards.
Is the law governing international arbitration based on the UNCITRAL Model Law? Are there significant differences between the two?
Serbian Arbitration Act is based on UNCITRAL Model Law of 1985, and UNCITRAL lists Serbia as one of countries whose legislation is based on UNCITRAL model law.
As for the differences between the Serbian Arbitration Act and UNCITRAL Model Law, there are a few provisions differing from Model Law. First, number of arbitrators must be odd. Also when a single arbitrator is to be appointed, parties have a 30-day deadline to agree on the single arbitrator. Failing that, the single arbitrator will be appointed by the appointing authority, or by the court. Furthermore, Serbian law provides that an award may be set aside if it is based on a false testimony by a witness or expert, on falsified documents, or if it is the result of a criminal offense committed by the arbitrator or the party (provided that these facts are determined by a final and binding judgement of a criminal court).
Are there any impending plans to reform the arbitration laws?
At this point, there are no impending plans to reform the arbitration laws in Serbia.
What arbitral institutions (if any) exist? Have there been any amendments to their rules or are there any being considered?
There are two arbitral institutions currently active in Serbia – Permanent Arbitration at the Serbian Chamber of Commerce and Industry of Serbia (SCC) and Belgrade Arbitration Center. The arbitration at the Serbian Chamber of Commerce and Industry has celebrated its 70th anniversary this year. In 2016, this arbitral institution has seen a major revamp – until then, there was a duality of institutions at the SCC, Foreign Trade Arbitration which had competence over international disputes, and Permanent Elected Court which had competence over disputes between domestic subjects. In 2016, these two institutions were merged into Permanent Arbitration, and new rules on procedure were adopted.
In addition to the long-standing arbitration institution at SCC, in 2013, a new arbitral institution, Belgrade Arbitration Center, was founded in Belgrade, with the aim of promoting and popularizing arbitration in domestic market. The rules of BAC introduced some novel solutions in Serbia compared to the rules of arbitration at SCC. These include the rule that each party will pay its share of the advance of costs of arbitration (unlike arbitration rules of SCC which provide that claimant must pay the entire advance). BAC rules regulate for the first time in Serbia the issue of confidentiality of arbitration proceedings, providing that the proceedings and award shall be confidential. Also, BAC rules introduce rules on appointment of arbitrators in case of multi-party arbitration, and provide that in case when there are several persons on one side, they are to jointly appoint their arbitrator.
What are the validity requirements for an arbitration agreement?
Serbian law provides that an arbitration agreement shall be invalid in the following cases:
(i) If it relates to a matter which is not arbitrable under Serbian law;
(ii) If it has not been concluded in the form provided by the law (i.e. written form);
(iii) The parties did not have the legal capacity to enter into an arbitration agreement.
(iv) Arbitration agreement has been concluded under threat, duress, due to fraud or in error.
(v) If the arbitration agreement provides for an even number of arbitrators.
(vi) If the arbitration agreement is unspecified, i.e. the arbitration agreement has to concern disputes arising out of a certain specified legal relation – it cannot concern all future relations between the parties.
Are arbitration clauses considered separable from the main contract?
Yes, the principle of severability of the arbitration clause is accepted in Serbian law, and as such, it is explicitly expressed within the Law on Arbitration.
Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?
There are no specific provisions or legal practice in Serbia which concern multi-party or multi-contract arbitration. The only rule concerning multi-party arbitration is contained in BAC rules and concerns appointment of arbitrators in multi-party arbitration. As for multi-contract arbitration, it is allowed in principle, and both the Rules of Permanent Arbitration at SCC and BAC Rules contain a provision that in case of multiple claims between same parties from the same or distinct legal relations, the secretariat of the institution will seek to join these proceedings and have them resolved by a single tribunal.
How is the law applicable to the substance determined?
As a matter of principle, substantive law in arbitration is the law selected by the parties. In case that a provision governing substantive law points to an application of a particular substantive law, it shall be considered that the law in question shall be applied without regard to the conflict-of-law provisions (unless the parties explicitly predicted differently). If the parties did not determine which substantive law is to be applied, the sole arbitrator/tribunal shall determine the applicable law based on conflict of laws provision they deem most appropriate. Finally, the arbitration may decide ex aequo at bono if the parties explicitly agreed to this.
Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?
Serbian Arbitration Law provides that a dispute is arbitrable under following conditions: (i) it concerns a property right with which the parties may freely dispose, and (ii) it does not concern a matter which is within exclusive competence of courts. In practice, the second precondition (exclusive competence of courts) has caused certain dilemmas.
First of all, Serbian Law on Private International Law provides that a number of disputes are within the exclusive competence of courts and as such, they are non-arbitrable (e.g. disputes which govern ownership rights over real estate in Serbia, family law disputes, probate disputes). No major controversies exist in this regard. However, in addition to the Serbian Law on Private International Law, a number of other laws contain provisions which govern the competence of courts for certain types of disputes. What creates problems in practice is that at times the laws are unclear as to whether these provisions provide for an exclusive court competence, or they merely regulate which particular court should have competence in certain matter. For example, there is controversy in practice concerning the arbitrability of disputes which relate to insolvency proceedings, and in general, the impact of insolvency of a party to an arbitration to the arbitration proceedings. Furthermore, the law remains unclear with regard to exclusive competence of courts in corporate disputes – the dominant court practice is that these disputes are not arbitrable.
Are there any restrictions in the appointment of arbitrators?
Under Serbian law, there are few restrictions in the appointment of arbitrators. Arbitrators have to have to be legally competent natural persons, they have to be independent and impartial with regard to the parties and the subject matter of the dispute, and they need to fulfil the characteristics prescribed by parties themselves in the arbitration agreement. Finally, a person who has been convicted to a prison sentence cannot be appointed as arbitrator as long as the legal consequences of the conviction are in force.
Are there any default requirements as to the selection of a tribunal?
If the parties did not agree on the procedure for selection of a tribunal, Law on Arbitration provides the following procedure.
If a single arbitrator is to be appointed, the parties are supposed to jointly appoint the arbitrator within 30 days from the time one party invites the other party to jointly appoint the arbitrator. If the parties cannot agree on an arbitrator, the arbitrator shall be appointed by the appointing authority, and if there is no appointing authority, or it fails to appoint the arbitrator, the arbitrator shall be appointed by the court.
If the dispute is to be resolved by three arbitrators, each party is to appoint its arbitrator within 30 days from the day the other party has invited it to do so. If the party fails to appoint the arbitrator, arbitrator shall be appointed by the appointing authority (and, if there is no appointing authority or it fails to do appoint, by the court). The presiding arbitrator is appointed by the party-appointed arbitrators, within 30 days from their appointment. If the party-appointed arbitrators do not appoint the presiding arbitrator, the presiding arbitrator will be appointed by the appointing authority (and, if there is no appointing authority or it fails to do appoint, by the court).
Can the local courts intervene in the selection of arbitrators? If so, how?
Under Serbian law, local courts have a role in the process of selection of arbitrators. First, the court can appoint arbitrators if they are not appointed by the parties or by the appointing authority (provided it exists). Second, local courts can be called upon to decide upon the challenge of arbitrators. Finally, courts can decide upon the request for revocation of an arbitrator (i.e. in scenarios where an arbitrator is no longer capable of fulfilling his duty).
Can the appointment of an arbitrator be challenged? What is the procedure for such challenge? Has there been an increase in number of challenges in your jurisdiction?
Arbitrators may be subjected to a challenge procedure, however, this possibility has not been often exploited by the parties nor there is a trend of an increase in number of challenges in Serbia.
A party may challenge the arbitrator within 15 days from the day that it became aware of the appointment of the arbitrator, or within 15 days from the time it became aware of the facts giving rise to challenge. The party which took part in the appointment of a particular arbitrator can only challenge that arbitrator if the facts giving rise to challenge occurred after the appointment, or if the party became aware of those facts after the appointment.
If the parties did not agree differently, the court decides on the challenge of the arbitrator. If the parties have initiated arbitration in accordance with the rules of procedure of a particular arbitral institution, the challenge of arbitrators shall be resolved in accordance with the rules of that institution.
The procedure of challenge of arbitrator does not prevent the arbitration from continuing arbitration proceedings and rendering an award.
What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
Serbian law does not provide for a possibility that a truncated tribunal may continue with the proceedings. Consequently, the legal thory is on the stand point that in case of a truncated tribunal, it would be necessary to replace the missing arbitrator before the proceedings can continue.
Are arbitrators immune from liability?
Serbian law does not contain rules on immunity of arbitrators from liability. Without an explicit provision regulating such immunity, arbitrators would be subject to a general regime of liability prescribed under Serbian Law on Obligations. In that regard, arbitrators could be found liable to compensate damages they incurred to a party provided that this damage could be ascribed to their willful intent or negligence. In reality, an arbitrator faced with such a request would likely argue that it acted with due care and that it therefore cannot be liable. Thus, in practice it would be difficult to establish such liability. The only exception would be in extreme situations, such as in case of criminal conviction of an arbitrator for an offense made in relation to arbitration proceedings.
Is the principle of competence-competence recognised? What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?
Yes, the principle of competence-competence is explicitly recognized under Law on Arbitration. As for the position of courts, if a party initiates arbitration in apparent breach of an arbitration agreement and the other side invokes the existence of the arbitration agreement, the law provides that the court will refer parties to arbitration unless the arbitration agreement is manifestly null and void or incapable of being performed. Thus, Serbian law mimics position of the French law on this matter.
As for jurisdictional objections before the tribunal, they may be decided on either as a preliminary issue, or in the final award. If the tribunal decides on jurisdiction as a preliminary issue, each party may address the local court within 30 days from receipt of the decision on jurisdiction and request that the court decides on jurisdiction. Alternatively, if the tribunal decides on its jurisdiction in the final award, the party which disputes the jurisdiction may request that the award is set aside on grounds of lack of jurisdiction.
How are arbitral proceedings commenced? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?
Arbitration proceedings are commenced by filing the request for arbitration or a statement of claim. The arbitration proceedings are deemed to have commenced on the day that that the institution receives the request for arbitration or statement of claim (in case of institutional arbitration) or on the day when the respondent receives the request for arbitration or statement of claim notice on appointment of arbitrator (in case of ad hoc arbitration).
As for limitation periods/time bars, they are not provided under arbitration laws; however, rules of statute of limitation contained within substantive laws apply and are of relevance when deciding on the timing of filing of the request for arbitration. If the request for arbitration or statement of claim is filed prior to statute of limitations, the statute of limitation is suspended.
What happens when a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate? Can they order third parties to participate in arbitration proceedings?
Law on Arbitration provides a number of provisions aimed at compelling the respondent to participate in the arbitration. These include provisions on appointment of arbitrators in case a party refuses to participate in the appointment process, as well as the rule that, if a party fails to deliver the statement of defense or participate at the hearing, this does not prevent the proceedings to continue. However, local courts do not have the authority to compel a party to arbitrate. Finally, they cannot compel third parties to participate in an arbitration (the only exception being the rules on judicial assistance in furnishing of evidence, where the court may fine witnesses who fail to appear before the court to provide their testimony which is to be used in arbitration proceedings).
In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?
There are no specific provisions governing state immunity. However, after the state consented to arbitration (by concluding the arbitration agreement or by virtue of an international treaty) there should be no legal ground for the state to invoke state immunity in connection with the commencement of arbitration proceedings.
In what instances can third parties or non-signatories be bound by an arbitration agreement or award?
It is established as a general principle that no one can be bound by an arbitration agreement without consent. Up until now, Serbian courts and arbitrations have not addressed doctrines allowing extension of the arbitration agreement to non-signatories (such as group of companies doctrine, piercing of the corporate veil, etc).
What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
Both courts and arbitral tribunals are entitled to grant interim measures to support arbitration proceedings. There is, however, a great controversy with respect to enforcement of interim measures rendered by the arbitral tribunal, because the law does not provide a mechanism on enforcement of such interim measures by the court. This severely limits the effectiveness of interim measures rendered by the arbitral tribunal.
As for the types of interim measures which can be granted, provisions governing enforcement and security provide a wide variety of such measures (these include, among other, freezing of assets, ban of disposal over particular property of the debtor, seizure of debtor’s cash or securities and their sequestration before the court, instructing banks to sequestrate the monetary means of the debtor before the court, instructing the central securities depository and clearing house to inscribe a ban on disposal over shares owned by the debtor, banning the debtor’s debtor to settle its debts towards the debtor, etc).
Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?
With regard to evidentiary matters, Law on Arbitration contains general rules on examination of witnesses and experts. In this regard, the law provides that witnesses may be examined at the hearing, or, if the parties agree so, they may also be examined outside of the hearing. As for experts, the law provides that the arbitral tribunal may appoint an expert to provide its opinion on the issues determined by the tribunal. The tribunal may order the parties to provide all necessary information and documents to the expert.
As for the role of local courts in the evidentiary process, the arbitral tribunal may address the court and request the assistance of the court in furnishing of evidence (for example, in order to obtain a witness statement from a particular witness).
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings?
Serbian attorneys are bound by the ethical standards of the Serbian bar Association in all the proceedings where they participate, including also arbitration proceedings. However, parties may agree on application of certain ethical codes and standards of conduct, such as IBA Guidelines on Parties’ Representation in International Arbitration.
How are the costs of arbitration proceedings estimated and allocated?
Serbian Law on Arbitration does not provide any particular rules governing allocation of costs, so arbitral tribunals have a wide discretion when it comes to deciding on allocation of costs. In practice, specific circumstances of the case and in particular, conduct of the parties, are considered when making the decision on costs.
Can pre- and post-award interest be included on the principal claim and costs incurred?
The issue of interest on a principal of a claim is a matter of applicable substantive law. Under Serbian law, interest may be requested from the time a claim becomes due. Therefore, it is possible to claim both pre and post award interest.
When it comes to costs of proceedings, Serbian law does not contain any specific provisions on interest on costs, but as a general principle (which is widely applied in court proceedings), it is deemed that the claim on costs becomes due at the time the award becomes enforceable. Therefore, in the court proceedings any interest on costs could only be requested during the enforcement of the award. On the other hand, in case the arbitral tribunal order the payment of pre-award interest on costs this kind of award could be recognized and enforced in Serbia.
What legal requirements are there for the recognition of an award?
Domestic arbitral awards are enforceable titles. However, foreign arbitral awards need to be recognized before they can be enforced. Serbia applies the recognition regime provided in the New York Convention, being its signatory.
The procedure for recognition is initiated by filing a request for recognition of the award before the court. Alternatively, instead of initiating a separate procedure on recognition, it is also possible to directly initiate enforcement based on the arbitral award and request that the enforcement court decides on the recognition of the award as a preliminary issue.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?
Other than the mandatory provisions of Serbian law (such as public policy limitations), there are no specific limitations of the remedies that the arbitral tribunal may award, and such remedies are enforceable by local courts.
Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?
It is not possible to challenge the award on merits by an appeal to the court. The only way in which a party may challenge an award before the court is by requesting that the court set aside a domestic award. Foreign awards may be challenged in the course of procedure for their recognition.
Under Serbian law, the award may be set aside for following reasons:
(i) if the arbitration agreement is invalid under the law applicable to its validity;
(ii) if the party against whom the award was rendered was not properly informed on the arbitration proceedings, appointment of arbitrator, or was prevented from making its arguments for other reasons;
(iii) if the arbitral tribunal decided on matters beyond the scope of the arbitration agreement;
(iv) if the composition of the arbitral tribunal or the conduct of arbitration proceedings were in contradiction to the arbitration agreement or the applicable arbitration rules of a particular arbitration institution;
(v) if the arbitral award is based on a false statement of a witness or expert, on a falsified document or if the award was made due to a criminal offense of a party or on arbitrator (provided that these reasons are proven by a final judgement of a criminal court);
(vi) if under Serbian law, the subject matter of the award is not arbitrable;
(vii) if the decision is contrary to the public policy of Serbia.
Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?
Under Serbian law, a waiver of right to challenge an award before the dispute arises would be considered as null and void. Even if the parties included such a waiver in their agreement, it would have no legal effect and it would be possible to challenge the award before the court.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
Under Serbian enforcement law (which also applies to enforcement of arbitration awards), enforcement over property of a foreign state may only be performed with the written consent of a ministry competent for foreign affairs, or if the foreign state consents to enforcement over its property. In all other cases, foreign states enjoy immunity from enforcement.
As for enforcement over the property of the Republic of Serbia, such enforcement may be conducted, however, it is not possible to enforce claims over particular types of property – these include property such as real estate used by state authorities, property used for defense purposes, protected natural goods, cultural goods, etc.
To what extent might a third party challenge the recognition of an award?
A third party is not entitled to challenge the recognition of an award. What would be possible is for a third party which has a legal interest to oppose the recognition of an award to intervene in the recognition proceedings. In this scenario, the third party would have the position of an intervenor, and would be able to put forward legal arguments, furnish evidence, file legal remedies etc.
Have there been any significant developments with regard to third party funding recently?
Serbian law does not contain rules of third party funding (other than a rule on nullity of agreements by which at attorney purchases a disputed claim from the client who entrusted the attorney with regard to enforcing such claim, and agreements by which an attorney is entitled to receive a share of the disputed claim). In practice, third party funding is not developed in Serbia.
Is emergency arbitrator relief available? Is this frequently used?
Neither Serbian Law on Arbitration, nor the rules of arbitral institutions in Serbia adopted emergency arbitrator relief.
Are there arbitral laws or arbitration institutional rules providing for simplified or expedited procedures for claims under a certain value? Are they often used?
Rules of the Permanent Arbitration at the Serbian Chamber of Commerce and Industry of Serbia provide for expedited procedure. These rules apply in cases where the amount of dispute does not exceed EUR 50,000, as well as in cases where the amount in dispute is above EUR 50,000, if the parties agreed on application of expedited procedure.
Have measures been taken by arbitral institutions to promote transparency in arbitration?
With regard to transparency of arbitration proceedings, the Law on Arbitration and Permanent Rules on Arbitration at SCC contain no provisions regulating this manner, so in practice, the issue of transparency and confidentiality remain a matter of agreement of the parties in particular proceedings. On the other hand, BAC Rules provide for confidentiality of arbitration proceedings and the award, however, in the interest of transparency, BAC Rules allow the institution to publish arbitral awards or excerpts thereto, after they have been anonymized, unless the party to the proceedings request in writing that the award is not published.
Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted? If so, how?
Diversity in the choice of arbitrators and counsel is not promoted at an institutional level, however, in reality the pool of arbitration practitioners in Serbia includes a number of young experts, as well as many prominent female practitioners, both as counsel and as arbitrators.
Have there been any developments regarding mediation?
There is a legal frame governing mediation and a number of institutions in Serbia which aim to promote mediation (Serbian National Association of Mediators, Partners Serbia, etc.). However, mediation has not taken hold in Serbia and the number of disputes that are resolved through mediation is negligible.
Have there been any recent court decisions considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?
To our best knowledge, there haven’t been such court decisions in Serbia.