Arbitration – Romania

Arbitration law in Romania is changing. The new Civil Procedure Code is expected to enter into force early this year which will bring significant changes to institutionalized arbitration and international arbitration. 2012 already saw revisions to the Arbitration Rules of the Court of International Commercial Arbitration Court (CICA Rules), with notable changes including the requirement for arbitral proceeding to be in the Romanian language except where all arbitrators are foreign and a reduced time-frame for the arbitral tribunal to render the award. To find out more about the changes to the system as well as the others issues which surround arbitration law in Romania, Lawyer Monthly speaks to Cristiana Stoica, founding partner of Bucharest-based law firm, Stoica &Asociatii Attorneys at Law.

Q: Please introduce yourself and your firm.

My practice includes a large number of business projects assisted or represented in Romania, and a significant expertise in litigation and arbitration, merely related to international disputes. STOICA &Asociatii is one of the largest law firms in Romania, formed in 1994. With a total staff of 55 people, the firm practice is business law orientated, with a focus on almost all aspects of corporate and commercial law, enjoying a strong reputation in international arbitration and dispute resolution. The law firm is, among others, a member of International Bar Association, of International Union of Lawyers and of World Link for Law.

Q: What are the common causes of dispute between businesses in your country, and across borders?

There are two types of major disputes in Romania in general. First, between private persons (either individuals or entities), involving their contractual conduct or attempts to the property law regime; second, between individual or legal entities, on a side and the state institutions, on the other side, as disputes based either on public law contracts or on administrative law infringements or contests. Disputes may include either domestic or international participants, depending on the circumstances of the case, where some of such disputes may be conducted in front of Romanian courts of law or in arbitration. International disputes or better said disputes containing elements of international law relate merely to the activity or conduct of a foreign entity which effects are related to the Romanian jurisdiction, in particular generated by cross border operations (entrepreneurial law, privatizations, international trade, product liability claims, and intellectual property infringements). In order an arbitration to take place in Romania, either in front of an arbitral institution (e.g., International Court of Arbitration attached to the National Chamber of Commerce) or in the form of an ad-hoc arbitration, the parties have to convene by way of a convention for arbitration, with the observance of the Romanian law, both on formal and substantive conditions supposed to apply in their case.

Q: As you will know, there has recently been an overhaul of the Arbitration Rules of the Court of International Commercial Arbitration (CICA Rules). What are the main changes that have been brought about?

In Romania, the arbitration, international or domestic, is subject to the provisions of the civil procedure code (Book IV), representing the basic principle applying to any arbitration, either institutional or ad-hoc. In addition, the International Court of Arbitration attached to the Chamber of Commerce of Romania, which is the arbitral institution performing most part of arbitration in Romania, is governed by its own rules. The last modifications of these rules occurred in January 2012.  Among them, one could observe the selection by “the authority of nomination” of the arbitrators forming a panel. Also, in international arbitration, it was provided as a rule that the procedure takes place in Romanian language, foreign participants and foreign arbitrators being given the support of a translator, by their own expense; only exceptionally, under specific conditions, foreign languages in arbitration are permitted.

Q: How will these changes affect the arbitration scene in your jurisdiction?

If we consider the arbitration to take place in an institutional form (e.g., in front of the International Court of Arbitration attached to the National Chamber of Commerce), the parties will not enjoy any freedom in choosing their arbitrators, since in ad-hoc arbitration this option will continue to produce effects. Also, the rule of using almost exclusively the Romanian language during the procedure and only exceptionally a foreign language, may limit the interest of the parties in a potential international arbitration to address their dispute to this arbitral institution; however, still they can appeal to ad-hoc arbitration, which recognize them more freedom in solving their dispute as in the case of the institutional arbitration. As a conclusion, the immediate impact of these modifications relate to international disputes, where the parties are used to be recognized their agreed approach to the settlement by arbitration of their potential conflicts, as this happens usually in other international arbitration systems. Instead, under the current Romanian court of arbitration rules, they are not given the same level of importance to their various choices included in an arbitral convention.

Q: What, in your opinion, are the advantages of arbitration as a dispute resolution method as opposed to court action?

The main advantage of arbitration towards court action consists in offering to the disputing parties a much shorter duration of the procedure, a more selective portfolio of evidence to be administrated, a more specialized approach on the subject matter in dispute; to this, a particular advantage is the confidentiality of the case, including the exclusion of the final arbitral award from any publicity.

Q: Do laws and regulations differ for domestic companies as opposed to foreign companies?

In international arbitration disputes, apart from the Rules contained by the civil procedure code (Book IV) and the own rules of the International Court of Arbitration attached to the National Chamber, there are applied few international conventions to which Romania is party – Geneva, 1961 and UNCITRAL. Also, the duration of the procedure for solving an international dispute is double compared to a domestic arbitral dispute (ten months, instead of five months). The members of the panel are appointed by “the authority of nomination” among foreign arbitrators from the list previously approved by the president of the National Chamber and the board (“colegiu”) of the court. Also, the presence of a translator appointed by the arbitral tribunal is compulsory.

Q: How do you assist clients involved in arbitration? Is there any general advice you could offer clients to prevent the situation from escalating?

The best is to prevent any dispute, so that generally clients are advised to choose the right way to solve their potential conflicts when occurred. Where appropriate, arbitration is proposed to them and in this respect attention is paid to the drafting of a convention of arbitration in light with the arbitral institution own rules where the potential dispute is supposed to be addressed.

Q: Do you foresee the need for legislative change in 2013, if so why?

The Romanian civil procedure code is expected to start to apply as soon as possible. This instrument is very useful for conducting the disputes to take place in front of Romanian courts of law in a more appropriate manner, at international standards. Also, this new instrument will support the arbitration proceedings. However, these new rulings will need a particular involvement of the Romanian law institutions, in particular the courts of law, to insure proper implementation. Until this change occurs, there is a good advantage for arbitration to increase its role and gain more place as it has now, as an alternative to ordinary court proceedings.

Cristiana Stoica, Ph.D, Founding Partner

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