This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in Romania.
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 in your country? Are there any mandatory laws?
The relevant legal provisions governing arbitration are set out in the Civil Procedural Code (the “CPC”). To this end, Book IV of the CPC enshrines the general set of rules applicable to arbitration, covering inter alia the arbitral convention, the arbitral tribunal, arbitration proceedings, the arbitral award and annulment thereof, enforcement of the arbitral award.
In addition, the CPC comprises in Book VII, Title IV – “International arbitration and effects of foreign arbitral awards” a separate set of rules applicable to international arbitration and the effects of foreign arbitral awards.
The arbitration rules set out in the CPC are in general suppletive, parties being free to amend or derogate from them. Notwithstanding, party autonomy is subject to several limitations, parties being required to observe several public policy and mandatory provisions, such as the written form of the arbitral award, the grounds of incompatibility of arbitrators, or the rules regarding arbitrability of disputes.
Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
Romania ratified the New York Convention on recognition and enforcement of foreign arbitral awards by way of Decree no. 186/1961, in force as of 24 July 1961.
As per the Decree no. 186/1961, Romania adhered to the New York Convention under the following reservations: (i) the Convention shall apply only to disputes arising out of contractual or non-contractual legal relationships, that are deemed commercial under the national law; and (ii) the Convention shall apply for the recognition and enforcement of awards rendered on the territory of another contracting state. If the awards are rendered in the territory of a non-contracting state, the Convention shall apply only if reciprocity exists.
What other arbitration-related treaties and conventions is your country a party to?
Romania is a party to several arbitration-related conventions, including inter alia: (i) the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927; (ii) the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958; (iii) the European Convention on International Commercial Arbitration of 1961; (iv) the Convention on the Settlement of Investment Disputes between States and Nationals of other States of 1965; (v) the Energy Charter Treaty of 1994.
Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?
Romanian arbitration law does not strictly follow the UNCITRAL Model Law on International Commercial Arbitration, but it is consistent with the general principles of such law and with the general international arbitration standards.
Are there any impending plans to reform the arbitration laws in your country?
The arbitration rules embodied in the CPC have been relatively recently enacted in 2013 and no significant changes are foreseen in the near future.
What arbitral institutions (if any) exist in your country? Have there been any amendments to their rules or are there any being considered?
Various arbitral institutions exist in Romania under the auspices of the local chambers of commerce and industry.
The main arbitral body in Romania is the Court of International Commercial Arbitration attached to the Romanian Chamber of Commerce and Industry (“CICA”). Aiming to modernize and align itself to the main international institutional arbitration rules, at the beginning of 2018 CICA completely overhauled its provisions and introduced a new set of arbitration rules reflecting current trends.
What are the validity requirements for an arbitration agreement under the laws of your country?
The arbitration clause must be concluded in writing and must provide the manner of appointment of arbitrators. In the case of institutional arbitration, it is sufficient to provide reference to the institution or the rules of the institution administering the arbitration.
The compromise must mention the subject-matter of the dispute, the names of the arbitrators, or the manner of appointment thereof in the case of ad-hoc arbitration. In case the arbitration agreement refers to a litigation related to the transfer of ownership rights and/or the constitution of another real right over an immovable asset, the agreement must be concluded in authentic notarized form. Failure to comply with these requirements renders the arbitration clause void of any effects.
Are arbitration clauses considered separable from the main contract?
Under Romanian law, arbitration clauses are deemed separable from the underlying contract i.e. if the agreement is invalid or otherwise unenforceable, the arbitration clause does not automatically become void or unenforceable. The parties may also enter into an arbitration clause subsequent to emergence of the dispute, by means of a separate agreement referred to as a compromise.
Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?
While not expressly enshrined under the CPC, multi-party or multi-contract arbitration are not excluded under Romanian law and, in practice, disputes deriving from distinct contracts may be heard in the same proceedings.
How is the law applicable to the substance determined? Is there a specific set of choice of law rules in your country?
Pursuant to the Romanian legal framework, the arbitral tribunal shall apply the law chosen by the parties (lex voluntatis), and, to the extent that the parties failed to choose such, the arbitral tribunal shall apply the law it deems appropriate, by taking into consideration, in all cases, the applicable trade usages and professional rules.
The arbitral tribunal may also render an award following the ex aequo et bono principle, provided that the parties expressly convened such a manner of resolving the dispute.
Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?
As per Romanian law, the following categories of disputes are deemed non-arbitrable in case of domestic arbitration:
(i) disputes concerning the civil status and capacity of individuals, inheritance, family relationships and rights upon which the parties cannot decide;
(ii) disputes concerning assets that are not freely transferable or disposable;
(iii) disputes falling under the exclusive jurisdiction of the courts of law (e.g., those concerning judicial liquidation, certain disputes in the intellectual property field, etc.).
In your country, are there any restrictions in the appointment of arbitrators?
Under the provisions of the Romanian CPC, any individual with full capacity to exercise his/her rights may act as an arbitrator. To this end, the law does not provide for any additional conditions to be met.
When arbitration is organized by a permanent arbitral body, then the arbitral institution decides upon all matters related to the appointment, removal or disqualification of the arbitrators.
Are there any default requirements as to the selection of a tribunal?
According to the Romanian CPC, the parties may appoint as an arbitrator any individual who has full legal capacity. The arbitration clause establishes whether there will be only one arbitrator or more arbitrators.
If there is no specific provision in the arbitration clause on the number of arbitrators and the parties do not agree otherwise, there will be three arbitrators, one appointed by each party, and the chair appointed by the two chosen arbitrators. Any provision in the arbitration clause allowing one party to appoint more arbitrators than the other party, is void of any effects.
When the parties fail to agree on the appointment of the sole arbitrator, or the two arbitrators cannot agree on the presiding arbitrator, the party seeking to commence arbitration proceedings may request the assistance of the domestic courts as regards the appointment of the sole arbitrator or chairman. An arbitrator must expressly accept the appointment.
Can the local courts intervene in the selection of arbitrators? If so, how?
The Romanian CPC stipulates that the local courts may intervene in the selection of arbitrators if: (i) the parties cannot reach an agreement as to the appointment of the sole arbitrator; (ii) one of the parties does not appoint its arbitrator; or (iii) the two party-appointed arbitrators cannot reach a decision regarding the person of the presiding arbitrator.
Can the appointment of an arbitrator be challenged? What are the grounds for such challenge? What is the procedure for such challenge? Has there been an increase in number of challenges in your jurisdiction?
An arbitrator may be disqualified for the same reasons calling for the disqualification of a judge, such as direct commercial relations with one of the parties, or when they have provided assistance to one of the parties, assisted and represented one of the parties, or testified in an earlier procedural stage of the case and other situations alike.
When a party is knowledgeable of any reason for disqualification, the party may challenge the appointment before the competent court within 10 days as of the appointment of the arbitrator, or as of the date when the party became aware of grounds for a challenge. The decision of the court on the grounds or disqualification is final.
Similarly, the CICA Rules stipulate a set of grounds triggering the incompatibility of the arbitrators, including, inter alia:
- The arbitrator does not meet the qualifications or other requirements regarding arbitrators provided in the arbitration agreement;
- A legal person whose shareholder the arbitrator is or in whose governing bodies the arbitrator is bears an interest in the case;
- The arbitrator has employment connections or direct trade links with one of the parties, with a company controlled by one party or that is placed under common control with the latter;
- The arbitrator has provided consultancy to one of the parties, assisted or represented one of the parties or testified in one of the earlier stages of the case.
The challenge shall be made within 10 days since the date the party has acknowledged the appointment of the arbitrator or, as the case may be, since the reason for challenge occurred.
What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
Pursuant to the CPC, in such cases where an arbitrator cannot fulfill his/her obligations, another arbitrator must be appointed following the procedure provided by the law. Moreover, the CICA Rules provide that in such cases the number of arbitrators should be restored as the truncated tribunal cannot continue the proceedings.
Are arbitrators immune from liability?
Considering that the arbitrators perform a similar activity to that of national judges, their liability is also to some extent similar to that of national judges.
Under the Romanian CPC, the arbitrators are held liable for the damages incurred as a result of the following:
- The arbitrator abandons his duty as arbitrator in the case with no justified reason;
- The arbitrator fails to participate in the adjudication of the case with no justified reason;
- The arbitrator does not render the award within the established time limit with no justified reason;
- The arbitrator does not respect his duty of confidentiality;
- The arbitrator is subject to breach of his other duties, intentionally or by reckless negligence.
Is the principle of competence-competence recognised in your country?
The principle of competence-competence is recognized under Romanian law.
What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?
Under Romanian law, a domestic court will assess the existence of a breach of an arbitration agreement solely if the interested party raises a plea of lack of jurisdiction, as a result of the underlying arbitral clause. In this context, the Romanian courts of law shall render a decision on jurisdiction, after proper analysis of the clause and its validity.
On a general perspective, to the extent that the arbitral clause comprises all the legal conditions related to its validity, as per the applicable law, the courts of law will refer the dispute to arbitration.
How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?
Arbitral proceedings are carried out in accordance with the rules agreed to by the parties, the rules of the arbitral body chosen by the parties, the rules established by the arbitral tribunal, or the rules detailed in the CPC. In any case, the arbitral proceedings must comply with such fundamental norms of fairness and substantial justice as the right to be heard, equality between the parties and the adversarial nature of the trial.
The arbitral tribunal is vested by the claimant by way of a written arbitration request, comprising, inter alia, the following relevant details: name and address of the claimant, applicable identification data, identification information regarding the respondent, the object and value of the claim, the full reasoning of the claim etc.
Where the arbitration is held in front of an arbitral institution, the parties shall follow the procedural rules of that institution.
In terms of applicable provisions enacting limitation periods or time bars which may affect the dispute, the parties should be aware that, pursuant to the Romanian legislation, claims having a pecuniary object are subject to the statute of limitations. The time limits triggering the limitation period are different and dependent on the nature of the dispute. However, the general limitation period is of three years, as of the date when the holder of the right to claim knew or was supposed to know, under the circumstances, the effectiveness of its right.
What happens when a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate?
As per the CPC, failure of a party to participate in the arbitration does not impede the adjudication of the dispute, provided that the party was duly summoned to appear in front of the arbitral tribunal.
To the extent that the party did not receive an official communication regarding the arbitral proceedings, it is entitled to request, no later than 3 days prior to the arbitration hearing, a postponement of the proceedings.
Consequently, the parties to an arbitration may not be compelled to appear in front of the arbitral tribunal, and the procedure will continue in their absence.
In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?
Under the Romanian legislation, the possibility of a state or state entity to invoke immunity is not regulated. As far as the state has entered into an arbitration agreement, being duly authorized to do so, it is bound to respect the provisions thereof.
In what instances can third parties or non-signatories be bound by an arbitration agreement or award? Can local courts order third parties to participate in arbitration proceedings in your country?
The CPC stipulates the right of third parties or non-signatories to participate in the arbitral proceedings, under the general conditions concerning third party participation in front of the national courts.
The paramount condition to be complied with relates to the consent of the third parties, as well as that of the other parties to the arbitration. Nonetheless, an accessory joinder claim (i.e., the third party voluntarily adheres to the procedure, with the scope of supporting one of the parties’ positions) is admissible even in the absence of the consent of all the other parties.
What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
As per the Romanian legislation, prior to or during the arbitral proceedings, the interested party may register a request for the issuance of an interim measure (such as seizure of goods or conservatory measures regarding evidence), either to the arbitral tribunal, or the national court, both having jurisdiction in this respect.
The request for interim measures may raise certain issued in case of an ad-hoc arbitration, where the claimant may be required by the national court to provide additional information regarding the territorial competence of the court.
Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?
Evidence is usually heard before all arbitrators during the arbitral hearings. Witnesses and experts need not testify under oath.
The arbitral tribunal is not vested with the right to apply any financial sanctions (as are the national courts of law) in case the witnesses or the experts do not appear in front of the tribunal. In order to enforce such measures, the parties have to file a claim before the local tribunal whose jurisdiction covers the seat of the arbitration.
The arbitral tribunal is also entitled to order the production of certain evidence or request written information from public authorities.
In case of refusal of the public authorities to grant such information, the party will have to lodge a court claim in order to obtain such an order.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?
Counsel in Romania is generally bound by the ethical rules provided in the legislation governing the lawyer’s profession, such as the Statute of legal profession.
Arbitrators, albeit not being expressly bound by a code of ethics, hold the obligation, under the CPC, to maintain confidentiality, impartiality and good standards whilst performing their duties.
How are the costs of arbitration proceedings estimated and allocated?
As per the provisions of the CPC, the final costs for the arbitral procedure and the arbitrators’ fees will be payed according to the agreement of the parties and when the parties did not agree upon the costs, the party who lost the case must cover them. The allocation of the costs is made proportionally to the admission or rejection of the claim or defence.
Can pre- and post-award interest be included on the principal claim and costs incurred?
The parties are entitled to recover pre- and post-award interest, subject to their express request. Interest to the costs incurred is not admissible.
What legal requirements are there in your country for the recognition of an award?
The enforcement of foreign arbitral awards is generally based on the conditions of the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, as well as on the provisions of Romanian internal law, mainly the Private International Law.
The party seeking to enforce a foreign award in Romania must file a complaint requesting the recognition and enforcement of the award. The complaint must be accompanied by the original foreign award and by the arbitration clause agreed by the parties. A certified (official) translation must be produced together with these documents.
The grounds for allowing the Romanian court to refuse the enforcement of a foreign arbitral awards are the grounds mentioned in Article V of the New York Convention.
In addition to these grounds, Romanian law requests that the statutes of limitation of the right to request the enforcement should not have expired (Romanian law provides for a general statutes of limitation of 3 years from the day when the judgment remained final and binding).
What is the estimated timeframe for the recognition and enforcement of an award? May a party bring a motion for the recognition and enforcement of an award on an ex parte basis?
As a general matter, it is difficult to provide an accurate estimated timeframe for the recognition and enforcement of an award, considering that the overall duration of the proceedings and the hearing on the merits of the request for recognition and enforcement may vary significantly depending on the workload of the national courts. However, in practice, recognition and enforcement proceedings are not expected to exceed a timeframe of 6 months to 1 year.
The proceedings for the recognition and enforcement of foreign awards are adversarial. The request for recognition of a foreign arbitral award is decided by the court following the summoning of the parties. In exceptional cases, the application can be reviewed ex parte if it clearly results from the award that the defendant agreed to the claimant’s claims.
Does the arbitration law of your country provide a different standard of review for recognition and enforcement of a foreign award compared with a domestic award?
A domestic arbitral award is not subject to a separate recognition and enforcement procedure, being enforced under the same rules of a court decision. On the other hand, the foreign arbitral award is subject to a recognition and enforcement procedure in front of the national courts.
The complaint must be accompanied by the original foreign award and by the arbitration clause agreed by the parties. A certified (official) translation must be produced together with these documents.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?
In general, Romanian legislation does not provide any limits on the available remedies.
The limits are fixed by the parties’ claims as the arbitral tribunal can grant only what has been requested, irrespective of the nature of the claim, provided that the relief sought by the parties is not incompatible with public policy, ethics and mandatory legal provisions.
Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?
An arbitral award may be challenged only by an action for annulment, based on one of the following grounds: (i) the dispute was not capable of being settled by arbitration; (ii) the arbitral tribunal rendered the decision in the absence of an arbitration clause or agreement to arbitrate, or pursuant to an arbitration clause or agreement to arbitrate that was void or ineffective; (iii) the arbitral tribunal was not constituted in accordance with the arbitral agreement; (iv) the party who was absent at the time of the closing pleadings had not been properly summoned for the day when such pleadings took place; (v) the award was passed after the expiry of the term set by law, or the agreement of the parties for the conclusion of the arbitration proceedings; (vi) the arbitral tribunal exceeded its authority; (vii) the arbitral award does not contain the grounds, the order of the tribunal, does not mention the date and place where it was made, or is not signed by the arbitrators; (viii) the arbitral award is against public policy; or (ix) after the Arbitral Award was rendered, the Constitutional Court decided upon a plea of non-constitutionality which was raised during the arbitral proceedings, and declared unconstitutional the law, Government Ordinance or legal provision of a law or of a Government Ordinance subject to the plea of non-constitutionality.
The action for annulment can be brought before the court of appeal in the circumscription of which the arbitration took place. The decision of the court may be appealed to a higher court (usually, the High Court of Cassation and Justice).
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)?
Pursuant to the CPC, any agreement waiving the right of appeal or challenge of an award before the dispute arises is null and void. Only after the award is rendered, the parties may waive the right to appeal.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
As a general rule, a state or state entity may not raise a defence of state immunity at the enforcement stage, the latter being bound by the obligation to carry out the arbitral award.
To what extent might a third party challenge the recognition of an award?
As a general rule, a third party cannot challenge the recognition of an award, as it was not part of the proceedings.
Have there been any significant developments with regard to third party funding in your jurisdiction recently?
Albeit not strictly regulated or forbidden under the Romanian law, third party funding is not widespread in Romania.
Is emergency arbitrator relief available in your country? Is this frequently used?
The recent CICA Rules entered into force at the beginning of 2018 introduced the institution of the emergency arbitrator. Fairly recent in Romanian jurisdictions, emergency arbitrator relief is not frequently used by the parties.
Are there arbitral laws or arbitration institutional rules in your country providing for simplified or expedited procedures for claims under a certain value? Are they often used?
The CICA Rules provide for a simplified procedure for claims with a value not exceeding RON 50.000 (approximately EUR 11,000). The simplified procedure may also become applicable where the parties agree on its performance.
Have there been any mass (arbitration) claims in your jurisdiction?
Based on the publicly available information, no mass arbitration claims have been heard in Romania.
Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?
Recent years saw increased focus on transparency in domestic arbitration.
Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted in your country? If so, how?
The issue of diversity in the choice of arbitrators is a growing concern of the arbitral institutions, that strive to enlist as arbitrators individuals of diverse ages or origins. To this end, various institutions have adhered to the Equal Representation in Arbitration Pledge.
Have there been any developments regarding mediation in your jurisdiction?
There have been no recent developments regarding mediation in Romania. In addition, mediation is not frequently used in our jurisdiction.
Have there been any recent court decisions in your country considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?
As per the publicly available information, there have not been any recent court decisions in Romania considering the setting aside of an award that has been enforced in another jurisdiction or vice versa.
Is corruption an issue that is regularly raised in your jurisdiction? What standard do local courts apply for proving of corruption?
Corruption is not an issue regularly raised in arbitration proceedings in Romania, such issues generally falling under the jurisdiction of the national courts.