History of arbitration in Montenegro
The origins of arbitration in Montenegro date back to the Middle Ages when the trade cities (Republics) in the Mediterranean such as: Kotor, Dubrovnik, Venice, Genoa and Marseille settled their trade disputes in the manner similar to the contemporary arbitration. The seeds of arbitration germinated from the General Property Code in 1888. In the area of conflict of jurisdictions, the Code deals with the recognition and enforcement of foreign court decisions. The effects of foreign court decisions were equated to the effects of local decisions and the conditions for the recognition of foreign arbitral awards were established back then while most of these rules are still in effect today.1
The Foreign Trade Arbitration was founded by the Yugoslav Chamber of Commerce in 1947 in Belgrade. The former Yugoslavia was the only European socialist country that managed to develop some kind of arbitration practice for national disputes.2 Even though the Law on the Civil Code from 1956, reserved arbitration only for the ‘disputes with foreigners’, in the Soviet manner, it opened the possibility for the arbitration in the relations between domestic companies which led to the formation of the arbitration institutions within the commercial chambers of republics and provinces of the former Yugoslavia. This possibility is primarily envisaged by the Constitution of Yugoslavia in 1963, and then sanctioned by the Basic Law on Enterprises from 1965. The very same provisions featured the Law on Civil Procedure from 1976. However, at the beginning of the 1990s significant changes emerged. As for the legal regulation of arbitration, amendment CFR 1990 modified the provisions on arbitrarity, enabling arbitration for the first time in a wider range of relations. Namely, until 1990, arbitration in disputes without a foreign element was permitted only between (some) legal persons, ie, only in terms of trade relations’ disputes. After 1990, arbitration is allowed in the relations between all domestic legal entities (legal and natural persons) and not only for resolving the commercial disputes but for resolving all disputes on rights that all parties are free to dispose of, if the law did not prescribe that certain types of disputes should be settled exclusively by other courts.3 The first institution for arbitration was established in Montenegro in 2003 (within the Chamber of Economy of Montenegro). The Foreign Trade arbitration and the Permanent elected court were founded within the Commercial Chamber of Montenegro, too. The arbitration proceedings have already been regulated pursuant to the Code of the Civil Procedure in the Official Gazette of Montenegro in No. 22/2004 and No. 76/2006. Standards in Montenegro governing arbitration standards are contained in Article 472, up to the Article 508 of the Civil Procedure.4 The Arbitration Rule Draft is completed, too. Foreign Commercial Arbitration will be the only arbitration institution (so far, it was a permanent court of arbitration and the court for resolving disputes with an international element).
Montenegrin Law on Arbitration
The Montenegrin Law on arbitration was adopted on 31 July 2015, and it entered into force in August 2015.5 Montenegro adopted this law in accordance with the UNCITRAL Model Law,6 with over 90 countries worldwide also modeling their arbitration laws on the UNCITRAL Model Law.
The Law on arbitration governs the internal and international arbitration, recognition and enforcement of arbitral awards, as well as the jurisdiction and the court procedure in relation to the arbitration. Internal arbitration will take place in case the disputed parties are natural persons with the residence or habitual abode in Montenegro, ie, legal entities established under the laws of Montenegro. International arbitration involves a dispute in which one of the parties is a natural person with the residence or habitual abode in another country, or a legal entity that is established under the foreign law and whose headquarters are in another country.
The application of this Law shall not affect the application of other laws if they provide specific rules on settlement of disputes through arbitration. Also, this method of dispute resolution is disabled if another law stipulates that the disputes cannot be settled by arbitration.
In order to separate the arbitration as much as possible as a non-judicial dispute resolution mechanism from the intervention of the court, the law stipulates that the courts concerning arbitration can take only those actions that are according to this law in the jurisdiction of the court. Thus, under certain conditions, the Commercial Court of Montenegro shall be competent for the issues of appointing the arbitrators, as well as objecting to the jurisdiction of the arbitral tribunal, submission of the award, making decision on the claim lodged for the annulment of the arbitral award, as well as the request for the recognition of the foreign arbitral award and the provisional measures. The court that is competent for the legal assistance in presenting evidence and the submission of a foreign arbitral award shall be the court that is actually competent to provide the requested legal aid, and the territorial jurisdiction belongs to the court in whose territory the specific action is to be taken.7
The Law contains provisions regulating the following:
- agreement on arbitration;
- composition and jurisdiction of the Arbitration Tribunal;
- interim measures;
- conduct of the arbitration proceedings;
- bringing the arbitration award and finalisation of the proceedings; and
- cancellation, recognition and enforcement of the arbitration award.
The law aims at providing the additional assurance to the parties that the rules which have already been proved in a great number of countries will be applied to their dispute.8
By the adoption of the Law on arbitration the distinction between domestic disputes and disputes with a foreign element was eliminated. Soon after, the enforcement of the Law on arbitration drafting of the New arbitration rules commenced.9 Prior to the adoption of Arbitration Rules before the Chamber of Commerce of Montenegro, the Assembly of the Chamber of Commerce of Montenegro (CCM) brought the decision on the constitution of the Arbitration Court before the CCM, which means that the previous two arbitration courts were abolished: the Permanent Elected Court and the Foreign Trade Arbitration Court. The permanent list of arbitrators was abolished according to the new regulation that contains only a list of arbitrators having the informative character.
While drafting the Montenegrin arbitration rules,10 the working group carried out examinations regarding comparative resolutions and concluded that in the last few years drafting and adoption of new arbitration rules occurred in the following arbitration institutions: UNCITRAL11 Rules from (2010), ICC12 (2012), Rules of Lewiatan court of arbitration (Poland)13 (2012), VIAC14 (2013), ADCCCA15 (2013), BAC Rules (2013),16 LCIA17 (2014) and new arbitration rules of Ljubljana18 (2014).
Striving to adjust the arbitration rules to the current events and aiming to be in line with other arbitration institutions features the Arbitration Rules of Zagreb, that were adopted by the end of 2015,19 as well as the Arbitration Rules of the Permanent Elected Court before the Chamber of Commerce of Serbia, that were adopted in June 2016.20 In addition, there is a good example of SIAC that originally adopted Arbitration Rules in 2013 which were updated after three years. Having updated these Rules, SIAC showed significant awareness of the great importance to accomplish more efficient and thorough dispute resolution through continuous adjustments to current trends. New Rules of SIAC that were adopted in 2016 (the Rulebook from 2016) provide resolution of proceedings in the early stage. These modifications of SIAC Rules have contributed to more expedient and more efficient proceedings of the SIAC arbitration.21
On the occasion of drafting new Arbitration Rules of Montenegro, New Arbitration Rules of Ljubljana, the Rules of Austrian VIAC, the New ICC Rules and UNICTRAL Rules have been compared.
Since the adoption of modifications and amendments to the UNICTRAL Model Law on arbitration, new provisions have been established such as: interim measures, emergency arbitration, emergency arbitrator and multi-party arbitration. First, there was a caution whether to accept the amendments to national law or to enact new laws on arbitration on the basis of the adopted amendments to the UNICTRAL Model Law.22
All written submissions and notifications are sent electronically. Written submissions are principally submitted in no longer than 15 days, and the deadline is always determined by the arbitration tribunal.
Unless the parties in the proceeding have agreed that the dispute shall be decided upon the written submissions filed, arbitration tribunal can conduct an oral hearing. After the oral hearing, parties in the proceeding cannot submit written submissions any further.
Arbitration tribunal in its written arbitration award states the summary of the reasons upon which the award is based, unless the parties have agreed not to state these reasons.
Montenegrin Arbitration Rules contain provisions regulating the following:
- Introductory Provisions;
- Commencement of the Arbitral Proceedings;
- Constitution of the Arbitral Tribunal;
- Proceedings before the Arbitral Tribunal;
- Arbitral Award;
- Costs of the Arbitral Proceedings;
- Expedited Arbitral Proceedings;
- General Rules;
- Appendix I – Organization of the ACCEMN (Arbitration Court at the Chamber of Economy of Montenegro);
- Appendix II – Schedule of costs;
- Appendix III – Emergency arbitrator proceedings; and
- Appendix IV – Rules on the procedures of the ACCEMN as appointing authority in ad hoc arbitrations organised pursuant to the UNCITRAL arbitration rules.
In this article, we will pay special attention to expedited arbitral poceedings in Montenegro in comparison to expedited proceedings of other arbitration institutions worldwide.
Expedited Arbitral Proceedings
Recently, arbitration rules have increasingly been changed by many arbitration institutions. The main reason for applying all these changes lies in the prevailing globalisation process. The updated arbitration rules lead to improving the arbitration proceedings by accelerating the dispute resolution process, which obtains continuation of the undisputed business arrangements of the interested parties.
Expedited Arbitral Proceedings are applied to the arbitral rules in Montenegro, ensuring a more efficient and simplified arbitration route. The Montenegrin Expedited Procedure Rules align with mutual agreement of all parties involved in the dispute while respecting their rights.
We will comment on the Montenegrin Expedited Procedure Rules and compare them to the Expedited Procedure Rules of other arbitral institutions.
Article 46, par. (1) of the Arbitration Rules of Montenegro provides:
The Rules for Expedited Arbitral Proceedings (expedited proceedings) shall apply where the parties expressly agree on expedited proceedings either in the arbitration agreement or at a later stage. Parties may agree on expedited proceedings no later than by the submission of the statement of defense.
Under the ICC Rules, the ICC Court is entitled to decide at any stage of the proceedings, either on its own motion or upon the request of a party and after consultation with the tribunal and the parties, that the Expedited Procedure Rules will no longer apply to that case.23
Montenegrin Rules for Expedited Arbitral Proceedings do not prescribe any specific amount of the arbitral proceedings. ICC rules that were enforced on 1 March 2017 envisage that expedited procedure will automatically be applied to all arbitrations with amounts below US$2 million and to cases that include higher amounts on an opt-in basis.24 In accordance with the LCIA, SCC and VIAC rules expedited procedure arbitration commences regardless of the amount in dispute.25
The SIAC and HIAC also provide that a party may apply for proceedings to be conducted in accordance with their expedited procedures ‘in cases of exceptional urgency’, even in cases that exceed the defined amount in dispute for expedited cases.26 Pursuant to Expedited Procedure Rules of Zagreb of the Permanent Arbitration Court before the Croatian Chamber of Commerce, the arbitration proceeding does not exceed the amount of €100,000.27 Under the Swiss Arbitration Rules the claims should be up to 1 million Swiss francs.28
In most arbitration institutions expedited arbitration rules are enclosed within the general arbitration rules. However, SIAC and the Finland Chamber of Commerce have adopted specific rules that refer to the expedited procedure.
Article 46, par. (2) of the Arbitration Rules of Montenegro reads:
Where the parties have agreed on expedited proceedings, these Rules with amendments laid down in this Article shall apply.
As with the ICDR, SIAC, HIAC, CIETAC and SCAI rules, the Expedited Procedure Rules of Montenegro allow a multiple-member tribunal to be appointed in an expedited case either by party agreement or by the decision of the institution.29
Article 46, par. (3) of the Arbitration Rules of Montenegro states:
Unless otherwise agreed by the parties, dispute in expedited proceedings shall be resolved by a sole arbitrator unless the Presidency determines, with respect to the complexity and other circumstances of the case, that the dispute shall be resolved by an arbitral tribunal consisting of three arbitrators.
Pursuant to Rules for Expedited Arbitrations, Arbitration Institute of the Stockholm Chamber of Commerce30, as well as the Arbitration Rules of Zagreb31 and the ICC Rules,32 the arbitration shall be decided by a sole Arbitrator, too.
Article 46, par. (4) of the Arbitration Rules of Montenegro envisages:
Where the arbitral tribunal is to consist of a sole arbitrator, the parties shall nominate the arbitrator by mutual agreement within 15 days of being invited to do so by the Secretariat. If the sole arbitrator has not been nominated within this time period, the appointment shall be made by the Presidency.
ICC Rules prescribe that where an arbitration proceeds pursuant to the Expedited Procedure Rules, it will be heard by a sole arbitrator notwithstanding any contrary provision of the arbitration agreement. The sole arbitrator will be nominated by the parties within a time limit fixed by the ICC Court’s Secretariat or, failing such nomination, appointed as soon as possible by the ICC Court itself.33
Article 46, par. (5) of the Arbitration Rules of Montenegro prescribes:
Where the arbitral tribunal is to consist of more than one arbitrator, the claimant shall nominate an arbitrator in the request for arbitration, while the respondent shall nominate an arbitrator within 15 days of being invited to do so by the Secretariat. The appointed arbitrators shall, within 15 days of being invited to do so by the Secretariat, nominate the arbitrator who is to act as the chairperson of the arbitral tribunal. Where an arbitrator is not nominated within the set time period, the appointment shall be made by the Presidency.34
According to Swiss Arbitration Rules, the sole arbitrator shall be appointed by the Court within 30 days from the notice of arbitration.35
A number of institutions, including the ICC (as well as SCC, ICDR and SIAC) require that a case management conference be held for expedited cases. In contrast, institutions that do not generally require a case management conference (such HKIAC, SCAI, CIETAC and VIAC) also do not do so for expedited cases.36
Pursuant to Rules for Expedited Arbitration of the Finland Chamber of Commerce, the arbitrator shall outline the sequence and schedule of the arbitration in the procedural timetable as comprehensively as possible, at such an early stage of the proceedings.37
Regarding provisions that envisage deadlines for rendering the final award, the latest period for submitting the final award is, mainly, six months from constituting the tribunal or six months from submitting the case file to the tribunal.
Article 46, par. (6) of the Arbitration Rules of Montenegro reads:
The final arbitral award shall be made by the arbitral tribunal no later than six months from the transmission of the file to the arbitral tribunal pursuant to Article 20 of these Rules. For justified reasons, the Presidency may extend this time limit upon a reasoned proposal from the arbitral tribunal or of its own motion. In doing so, it may require from the arbitral tribunal a report as to the status of the case and the reasons for its inability to render the arbitral award within the time limit.
In accordance with Rules for Expedited Arbitration of the Finland Chamber of Commerce, the arbitrator shall inform the parties and the Institute of the date by which he or she expects to issue the final award. The advance notice shall be given as soon as possible after the last hearing date, or the date on which the arbitrator received the parties’ last authorised written submissions.38 The arbitrator shall render the final award no later than three months from the date on which he or she received the case file from the Institute. The arbitrator may, however, ask for an extension of the time limit by submitting a reasoned request to the Institute well in advance of the expiry of the original time limit.39
The SCC Rules provide also that the final award shall be made no later than three months from the date the case was referred to the arbitrator.40
On the other hand, the SIAC rules envisage that complete arbitration shall take place in a time period of six months from the appointment of arbitration tribunal.41 The ICC Expedited Procedure Rules require an award to be rendered within six months of the case management conference, unless extended by the ICC Court.42 Arbitration Rules of Zagreb from 2015 provide that the final arbitral award shall be rendered within 15 days from the date of concluding the final hearing.43
Article 46, par. (7) of the Arbitration Rules of Montenegro states:
The arbitral tribunal shall conduct the expedited proceedings in such manner as to be able to render the final arbitral award within the time period set out in paragraph 6 of this Article. Unless the arbitral tribunal determines otherwise, the following provisions shall apply:
i. after the submission of the statement of defense, the parties shall, as a rule, be entitled to submit one further written submission; any counterclaim or claim for the purpose of a set-off shall already be raised in the statement of defense;
In order to keep the arbitral proceedings as efficient as possible, the document production is limited according to most Expedited Procedure Rules or in some institutions the Tribunal itself is entitled to this right. Pursuant to ICC Rules the sole arbitrator may limit the parties’ document production, witness evidence, and written submissions.44
ii. all written communications and notices shall be sent by electronic means;
iii. the time limits set by the arbitral tribunal for submitting written submissions shall, as a rule, not be longer than 15 days;
iv. unless the parties have agreed that the dispute is to be decided on the basis of written submissions only, the arbitral tribunal may hold an oral hearing;45
The sole arbitrator may conduct what the ICC refers to as a ‘distance’ hearing (eg, by video conference), or dispense with a hearing entirely and decide on the basis of documents only.46
v. after the oral hearing has been held, no further written submissions shall be made; and
vi. the arbitral tribunal shall state the summary of the reasons upon which the arbitral award is based, unless the parties have agreed that no reasons are to be given.47
In most expedited rules, an award is allowed to be in summary form unless the parties have specifically agreed otherwise. However, the ICC Expedited Procedure Rules and CIETAC require that an award must be reasoned.48
By adopting new arbitration rules such as interim measure and interim arbitrator, not only the efficiency of arbitral proceedings shall be increased but trust and confidence of the parties involved in the alternative dispute resolution (ADR), through conduction of the expedited arbitration proceedings.
- Kostić-Mandić, M. Recognition and enforcement of foreign court decisions in the new private international law of Montenegro, Collected papers, Association of Montenegro Lawyers, Nos. 1-2/2015, Podgorica.
- Triva, S., Uzelac, A. (2007) Croatian arbitration law, Narodne novine Zagreb.
- Code of the Civil Procedure, Official Gazette of Montenegro in No. 22/2004 and No.76/2006.
- Montenegrin Law on arbitration, Official Gazette of Montenegro in No. 47/2015 from 18/8/15.
- UNCITRAL Model Law on Electronic Commerce (1996) with additional article 5 as adopted in 1998 and UNCITRAL Model Law on International Commercial Arbitration 1985 with amendments as adopted in 2006.
- Explanation submitted to the Parliament of Montenegro with the Draft of Law on Arbitration.
- Božović V.: GAR, The European Arbitration Review 2017, Montenegro, p. 84
- Arbitration rules of the Arbitration court before the Chamber of commerce of Monenegro, 2015.
- Working group avails of the opportunity to express special gratitude to the Embassy of the Kingdom of Norway, GIZ and especially to prof. A. Galič who was the main bearer of all activities related to drafting the New arbitration rules.
- United Nations International Commission on International Trade Law.
- ICC International Court of Arbitration.
- Rules of the Court of Arbitration at the Polish Confederation of Private Employers Lewiatan.
- The International Arbitral Centre of the Austrian Federal Economic Chamber in Vienna (Vienna International Arbitral Centre).
- Abu Dhabi Centre for Arbitration and Mediation.
- Rules of the Belgrade Arbitration Centre.
- London Court of International Arbitration Centre.
- Ljubljana Arbitration Rules.
- The Rulebook on arbitration before the Permanent arbitration court of the Croatian Chamber of Economy (The Rules of Zagreb), 2015.
- The Rulebook on permanent arbitraton before the Chamber of Commerce of Serbia (‘Official Gazette of the RS’, No. 58/2016).
- http://www.bakermckenzie.com/-/media/fie/insight/publications/2016/07/new-siac-rules-2016/al_singapore_newsiacrules_ (15.07.2016).
- Božović V.: Slovenska arbitražna praksa; Letnik V, Številka 3 (November 2016); The Scope of key issues in the arbitration of Montenegro compared to the benchmark arbitral institutions in the world, p. 23-24.
- ICC Rules, Appendix VI: Expedited Procedure Rules, Article 1(4).
- ICC Rules, Article 30(3)(b).
- The SIAC Expedited Procedure Rules, Article 5.
- ICC Rules, Appendix VI: Expedited Procedure Rules, Article 1(2).
- Arbitration Rules of Zagreb from 2015, Article 62(1)(1).
- Swiss Arbitration Rules, Article 42(2).
- International Arbitration Alert, Steven P. Finzio, Wen-Chuan Dai, Daria Sakhno, and Michael Lee
- Rules for Expedited Arbitrations, Arbitration Institute of the Stockholm Chamber of Commerce, Article 17.
- Arbitration Rules of Zagreb from 2015, Article 63.
- ICC Rules, Appendix VI: Expedited Procedure Rules, Article 2(1).
- ICC Rules, Appendix VI: Expedited Procedure Rules, Article 2.
- Arbitration rules of the Arbitration court before the Chamber of Commerce of Montenegro, Ar.46, par.5.
- Swiss Arbitration Rules, Article 8.
- ICC Rules, Appendix VI: Expedited Procedure Rules, Article 3(3).
- Rules for Expedited Arbitration of the Finland Chamber of Commerce, Article 40.
- Rules for Expedited Arbitration of the Finland Chamber of Commerce, Article 38.
- Rules for Expedited Arbitration of the Finland Chamber of Commerce, Article 40.
- Rules for Expedited Arbitrations, Arbitration institute of the Stockholm Chamber of Commerce, Article 43.
- The SIAC Expedited Procedure Rules, Article 5.
- ICC Rules, Appendix VI: Expedited Procedure Rules, Article 4(1).
- Arbitration Rules of Zagreb from 2015, Article 70.
- ICC Rules, Appendix VI, Article 3(4).
- Arbitration rules of the Arbitration court before the Chamber of Commerce of Montenegro, Ar.46, par.7.
- ICC Rules, Appendix VI, Article 3(5).
- Arbitration rules of the Arbitration court before the Chamber of Commerce of Montenegro, Ar.46, par.7.
- ICC Rules, Article32(2).
Cherishing the tradition of being pioneers in dealing with new legal issues in our country makes us unique. We were first in the privatisation business, intellectual property and arbitration while cooperating with offices from London, Paris, Nicosia, Belgrade, Zagreb and other cities. We emphasise that this firm has specialised in the field of franchise agreement, and in this capacity, we attended the International Franchise Fair in New York. Innovation is one of the our advantages as well as recognising the primary interest of our clients, and, through mutual trust and our extensive experience and expertise, we achieve the most effective results. VMB Law Firm cooperates with renowned law firms in the region and throughout the world. We are especially pleased that in the recent years we have taken on leadership role in the development of ADR (Alternative Dispute Resolution), with particular focus on cooperation with the arbitration centers from the region such as the German Institute of Arbitration (DIS) and UNCITRAL in Vienna. Our firm had a leading role in drafting the Law on Arbitration of Montenegro, based on Model Law UNCITRAL Rules. We were also the initiators and active participants in making the rules that are applied to the arbitration before MAC (Montenegro Arbitration Court). We have cooperation with all arbitration institutions in the region; Serbia, Bosnia, Macedonia, Slovenia, Albania, Kosovo, especially with the most important international arbitration institutions such as the LCIA. We follow the changes that take place in the arbitral proceedings through symposiums, conferences and joint meetings with related firms.
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