The Legal 500

ARBITRATION

Notion of arbitration

Arbitration is seen as a conventionally originating private justice, in view of the fact that the parties may authorize, within the limits allowed by law, one or several private persons, called arbitrators to settle, in certain circumstances, a legal dispute between the parties, thus avoiding to submit said dispute to courts of competent jurisdiction.

Arbitration involves two components: a contractual one and a jurisdictional one. The contractual nature derives from the fact that the foundation of arbitration lies in the will of the parties. The parties, choosing to settle their dispute by arbitration, appoint the arbitrators and, to a broad extent, the power thereof, the procedural rules to be observed and the manner of substantiating the decision reached by the arbitrators. Since the purpose and the result of this agreement between the parties is the settlement of a virtual or current dispute upon an award likely to have the same effects as a decision that could have been passed by a court of justice, arbitration has a jurisdictional nature as well.

Internal arbitration and international arbitration

Arbitration is considered internal when its purpose is the settlement of disputes related to commercial relationships born and existing only in Romania, and being exclusively subject to the Romanian law.

Arbitration acquires international character where the dispute is connected to several countries legal systems, when it arises from an agreement or from other commercial relationships of international commerce interest.

Consequently, the determinant factor for the parties in addressing one or another arbitration institution is the nature of the dispute; the international nature of the arbitration institution shall not be transferred to the dispute between the parties.

A. Internal Arbitration

Forms of an arbitration agreement

There are two forms of determining the arbitration : by inserting a compromissory clause in the main contract, and by executing a compromissum, which is an independent agreement.

Compromissory clause is one of the clauses of the contract concluded by the parties, by which they agree that, in the event of a dispute arising from that contract, they shall settle it by means of private justice: an arbitral tribunal. Legal exigencies with regard to the compromissory clause impose written agreement thereupon, either by express stipulation in the main contract, or by means of another document such as an accepted invoice or correspondence, yet in any case the agreement between the parties must be clear and certain. Also, a compromissory clause shall mention the name of the arbitrators or the way of appointing them; this shall be the minimal and prior condition of constituting the arbitral tribunal. A compromissory clause is relatively autonomous towards the contract containing it, in the sense that if it is affected by a nullity cause, the latter shall not necessarily entail the nullity of the contract containing said clause, but if a defect of consent affects the contract in its integrity, the compromissory clause shall be affected as well.

By compromissum the parties agree that a dispute arisen between them should be settled by means of arbitration, mentioning at the same time the object of the dispute and the names of the arbitrators or the way of appointing them. A compromissum is a contract, hence it has to meet al the validity conditions of such legal act.

The momentous criterion of distinction between a compromissory clause and a compromissum is, therefore, the dispute itself: a compromissum is about an already arisen and existing dispute, whereas a compromissory clause provides for a future or even possible dispute.

Non-arbitrable disputes

Disputes related to individuals civil status, criminal disputes, disputes whose object is administrative-conventional liability, disputes related to fiscal matters, disputes whose object is legal reorganization and bankruptcy procedure, disputes related to land matters, and disputes related to privatization may not make the object of arbitral agreements. Also, disputes whose object is non patrimonial intellectual property rights, disputes related to competition law (except for the disputes related to unfair competition, which are arbitrable), as well as disputes related to companies, respectively to the goodwill or the nullity of trading companies, may not be subject to arbitral jurisdiction.

One has to allow for the fact that legal entities governed by public law may not be, in principle, parties to an internal arbitral judgment. The only way such legal entity may resort to arbitration is an express provision of a law, which would entitle it to take this step with regard to the private management of the assets it owns.

Effects of an arbitral agreement

The execution of the arbitral agreement excludes, for the dispute to which it refers, the competence of courts of justice. Nevertheless, the court shall withhold the trial for settling in one of the following cases: if the defendant formulated its defense without any reserve based on the arbitral agreement; if the arbitral agreement is void or inapplicable; if the arbitral tribunal may not be set up for reasons clearly imputable to the defendant in arbitration. In all other cases the court referred to for settling the dispute, upon either party

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