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Legal Focus
JANUARY 2013
Arbitration Romania
Continuing our focus on the changing landscape of Romanian Arbitration Law, Lawyer Monthly speaks exclusively to Cosmin Vasile, Partner at one of the leading law firms in Romania, Zamfirescu Racoti Predoiu Attorneys at Law. Cosmin acts as special counsel in commercial litigation and commercial disputes and has gained a strong reputation in handling complex international arbitrations, including proceedings governed by the rules of ICC, LCIA, as well as less formal procedures using the UNCITRAL arbitration rules. This makes Cosmin well-placed to comment on the issues surrounding this ever-changing practice area.
What are the common causes of disputes between businesses in your country, and across borders?
The causes of disputes between businesses may vary from one situation to another. However, the common denominator of all the causes, to a different extent, relates to the financial blocking that exists starting with 2009. Such difficulty has affected the opening and the availability of the banks in granting credits, loans and facilities, which cause the same lack of liquidities.
Irrespective of the object of the contract, either that we take into consideration the work contracts under the FIDIC models, or simple lease agreements, one of the parties finds itself in financial difficulty to support the contract until the end. Starting with this, new alleged causes may appear between businesses, with the final purpose, in many cases, of an amicable settlement.
as you will know, there has recently been an overhaul of the arbitration Rules of the court of International commercial arbitration court (cIca Rules). What are the main changes that have been brought about?
The most important change of the Arbitration Rules consists in changing the modality of nominating the arbitrators. Until this recent change, each party had the possibility of appointing its own arbitrator and the supra-arbitrator was appointed by the Nomination Authority. At present, the Nomination Authority solely appoints the arbitrator or the panel of arbitrators. Another change regards the time limit within which the arbitral tribunal must render the award, from six months to five months. Another change refers to the language in which arbitration takes place. If the place of arbitration is Romania, the language will be Romanian or a different foreign international language, as such agreed by the arbitrators which are foreign.
How will these changes affect the arbitration scene in Romania?
Out of the recently changes of the Arbitration Rules, the change regarding the modality of nominating the arbitrators plays the most important role in the future arbitration scene in our jurisdiction. Concretely, the immediate consequence was the reduction of the number of cases in front of the Arbitration Court, in the context in which arbitration was recording an ascending and accelerated ramp. This change had an echo within the arbitration community which generated the decrease of the number of cases addressed to the Arbitration Court as the institutionalized body. The explanation resides in the tradition in which the arbitration community believed that arbitration should ensure the parties the possibility of nominating their own arbitrators. In parallel, there has been an increase of the number of ad-hoc arbitration cases.
do laws and regulations differ for domestic companies as opposed to foreign companies?
The positive Romanian law does not contain different provisions in arbitration, whether the parties are domestic or foreign. There are, however, different provisions with respect to the internal or international arbitration, which apply in equal manner to the parties, be they domestic or foreign.
How do you assist clients involved in arbitration? Is there any general advice you could offer clients to prevent the situation from escalating?
The first advice should regard the pre-contractual period, in the sense that the parties should negotiate and agree upon everything that is predictable to happen during the performance of the contract. Usually, the parties are concerned at the commencement of the contract only about the essential elements, but the reality proves that
the disputes always arise from matters which are not sufficiently regulated within the contract. Regarding the arbitration, the parties should carefully choose the type of arbitration (institutionalized or ad-hoc) and the place of arbitration (which gives the award nationality with effects on recognition and enforcement of the award). Arbitration should not be the only option taken into consideration. We have seen many situations when the negotiations/conciliation procedure led to an amicable settlement, either excluding arbitration or during the arbitration.
do you foresee the need for legislative change in 2013, if so why?
From the information available, 2013 will mark the big bang in Romanian Civil Procedure Code; a new code will enter into force. The arbitration section will contain many welcome changes, whilst other changes will probably be subject to disputes. LM
contact details:
cosmin Vasile, Ph.d. Partner E-mail: cosmin.vasile@zrp.ro
Zamfirescu Racoti Predoiu attorneys at Law
12 Plantelor Street, district 2, Bucharest Ro-023974, Romania tel.: (00 40 21) 311 05 17 (18) Fax.: (00 40 21) 311 05 19 Website: www.zrp.ro