Act on Arbitration

Act No. 244/2002 Coll. on Arbitration

This new Act on Arbitration (the ``Act'') repeals and fully replaces the Act No. 218/1996 Coll. on Arbitration, as amended.

The Act eliminates the issues leading to rare exploitation of arbitration, in particular:

• the scope of matters that may be subject to arbitration is substantially extended, now including also civil disputes (with expressly stated exemptions);
• institute of arbitration is liberalised to be more frequently used by domestic and foreign persons;
• clear mechanism of enforcement of arbitration agreements and judgements is specified.

The arbitration proceedings takes place only in case the contracting parties have concluded an arbitration agreement as an agreement that all or any of the disputes which arise or shall arise from their particular relations, contractual or other, will be settled in arbitration. The arbitration agreement is also binding for legal successors of the contracting parties unless excluded in the agreement by the parties.

The arbitration agreement may be concluded either in the form of a separate agreement or as an arbitral clause to the agreement. It shall be executed in writing, otherwise it is null and void.

Only the disputes that the parties to the proceedings may terminate by reconciliation can be settled by arbitration.

The disputes relating to the following matters are excluded from arbitration:

• creation, change or extinction of ownership title or other rights to real property,
• personal legal status,
• compulsory enforcement of decisions,
• bankruptcy or composition proceedings.

If a dispute that may be subject to arbitration is already subject to proceedings in a court of law, its parties may agree on settlement of the dispute in arbitration. They may conclude such agreement before the court into the minutes or also outside the court. Such agreement delivered to the court has effects of withdrawal of a petition as well as of the consent of the defendant with such withdrawal.

Furthermore, the Act stipulates prerequisites of the execution of arbitrator's office. Only an adult natural person, fully capable of legal actions, experienced in the execution of office of an arbitrator and immaculate may become an arbitrator.

The contracting parties may directly in the arbitration agreement identify a particular arbitrator or arbitrators, or they may agree that arbitrator(s) shall be determined by a selected person or by the court according to requirements agreed on by the parties in such arbitration agreement.

The arbitration court consists of one or more arbitrators pursuant to the agreement of the parties, while the number of arbitrators shall be always odd. If the parties fail to agree on the number of arbitrators, there will be three arbitrators. The Act also stipulates the manner in which an arbitrator is to be determined if the parties neither agree on the particular person, nor on the manner of his/her additional appointment.

The appointed arbitrator must acknowledge acceptance of the arbitrator's office in writing.

The arbitrator is obliged, even after termination of his/her office, to observe confidentiality relating to all facts he/she learned during execution of his/her office; he/she is also obliged to inform both parties in case of his/her prejudice in the matter.

Under the Act, each legal entity may establish and maintain a permanent arbitration court at its own costs. At the same time, it is allowed that a special legal regulation introduces an obligation for certain entities to establish a permanent arbitration court. The founder of such permanent arbitration court is obliged to issue the statute and standing order of the court and publish information expressly stipulated by the Act, in the Commercial Bulletin. The founders of permanent arbitration courts that have been established before the effectiveness of this Act are obliged to harmonise their statutes and standing orders with the new legal regulation by 31 October 2002. If they fail to do so, the arbitration court will not be allowed to perform actions in arbitration proceedings, or to render arbitral judgements.

The contracting parties are given a possibility of submitting their dispute to a certain permanent arbitration court, and thus they conform to the statute and standing order of such arbitration court.

Furthermore, the Act regulates the procedure of arbitration proceedings, stipulates principle of equality of the parties to the proceedings, states prerequisites of a petition and legal effects of filing such petition, filing of a statement of defence and cross-action, as well as the procedure of presenting evidences in the proceedings and delivery of any mail.

Under the new Act, the arbitration court does not render decisions in the form of an arbitral award but it issues an arbitral judgement (change in terminology) in case it settles the matter itself or on the basis of reconciliation between the parties to the arbitration proceedings. In case of other matters it renders resolutions.

The parties to the arbitration proceedings may agree in the arbitration agreement that an arbitral judgement may be reviewed by any other arbitrator (arbitrators) at the request of any of the parties. If they fail to agree, review of the arbitral judgement by another arbitrator is not possible.

A domestic arbitral judgement may be reviewed by the court upon a petition of the party to the proceedings for reasons expressly stipulated by this Act. These provisions relating to cancellation of an arbitral judgement by the court may not be excluded from the arbitration agreement by the parties to the arbitration proceedings, with the exception of reasons for which it is possible to ask for retrial pursuant to the Civil Procedure Code.

The Act further regulates recognition and enforcement of domestic and foreign arbitral awards. The court does not issue a special decision on recognition of a foreign arbitral award, but such arbitral award is recognised by the way that the relevant court for enforcement of decision or execution considers it as if it is a domestic arbitral judgement, and orders enforcement of this judgement.

In case the contracting parties do not additionally regulate certain issues in the arbitration agreement and these issues are also not regulated by this Act on Arbitration, provisions of the Civil Procedure Code shall reasonably apply to arbitration.

This Act came into force on 1 July 2002.

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