Caveat Claimant! Validity Of Czech Arbitration Clauses Under Siege

The Czech Supreme Court further tightens the rules regarding unilateral selection of a sole arbitrator by one party to arbitration proceedings.

At the end of 2016, the Supreme Court of the Czech Republic rendered an important ruling with far reaching implications for the future of arbitration proceedings in the Czech Republic. Surprisingly, the ruling remains widely unnoticed by market participants and potential claimants.

Facts of the case

The ruling was rendered in a dispute between two entrepreneurs. The parties argued about the validity of an arbitration clause concluded in a framework agreement which stipulated that "any disputes [...] will be decided in an arbitration proceeding by one arbitrator. The claimant shall appoint the arbitrator."