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The European, Middle Eastern and African Arbitration Review 2016

Romania

The Romanian New Civil Procedure Code, which entered in force on 15 February 2013, regulates domestic and international arbitration, containing relevant provisions for both the setting aside of the national arbitral awards and the recognition and enforcement in Romania of foreign arbitral awards.

The legislation on annulment of the arbitral awards

Article 608 of the New Civil Procedure Code, regulating the limitative cases in which an arbitral award may be set aside in Romania, is similar to the previous legislation (article 364 of the Romanian old Civil Procedure Code) on the setting aside.

In accordance with the new Civil Procedure Code, an arbitral award may be set aside if:

  • the dispute was not capable of resolution by means of arbitration;
  • the dispute was decided upon by the arbitral tribunal without an arbitration agreement or on the basis of a null and void or inoperable arbitration agreement;
  • the arbitral tribunal was not constituted in accordance with the arbitration agreement;
  • the party was not present at the date when the dispute was heard and the summoning procedure was not legally fulfilled;
  • the arbitral award was rendered after the expiry of the arbitration term even though one of the parties understood to invoke the caducity of the arbitration and the parties did not agree to continue the arbitration;
  • the arbitral award was rendered on matters not requested or awarded more than it was requested;
  • the arbitral award does not contain the dispositive part and the reasoning, does not show the date and place of the rendering or is not signed by the arbitrators; or
  • the arbitral award violates the public order, good moral standings or mandatory provisions of the law.

One additional case in the new regulation, which was not previously provided, is that the arbitral award may be set aside if, after the rendering of the arbitral award, the Constitutional Court renders its decision on the objection raised in that arbitral case, declaring the legal provision that was the object of the unconstitutional objection, which cannot be separated from the provisions mentioned in the notice.

Another interesting difference between the two regulations is that now an arbitral award can no longer be set aside if the reasons for asking such could have been remedied by means of requesting the arbitral tribunal to clarify, to supplement or to interpret the arbitral award.

Overlapping of the old and the new Civil Procedure Code

Together with the enactment of the new Romanian Civil Procedure Code, the issue of the applicable procedural law to the request for annulment arose in situations in which the arbitration case was initiated prior to its entering in force, while the arbitral award was rendered and the annulment procedure was initiated after such moment.

The answer was not unanimous.

For instance, the High Court of Cassation and Justice decided that in such a case the new Civil Procedure Code was applicable, considering the request for annulment as a self-standing request governed by the procedural rules in force at the date of its filing. The High Court of Cassation and Justice underlined that the rendering of an arbitral award cannot lead to the conclusion that the trial in front of the courts of law commenced prior to the entry into force of the new Civil Procedure Code only because the arbitral procedure was carried out prior to such moment.1

Nonetheless, in another case, the Bucharest Court of Appeal decided that the applicable procedural law was the old Civil Procedure Code as the arbitral case was initiated during the applicability of this code.2

Jurisprudence on annulment of arbitral awards

Violation of public order, good moral standings or mandatory provisions of law. Limits of the court control3

The Timisoara Court of Appeal dismissed the request for annulment of the arbitral award considering that the claimant failed to place its reasons in one of the cases limitative provided by article 364 of the old Civil Procedural Code for the annulment of an arbitral award.4

The High Court of Cassation and Justice maintained this decision, underlining that in fact the claimant raised arguments that meant to prove that the arbitral award was not grounded, while in the case in which the annulment of the arbitral award is sought on the basis of violation of public order, of good moral standings or of mandatory provisions of the law, article 364 (i) of the old Civil Procedure Code does not allow for the court to examine if the arbitral award was grounded. The reasons for such an approach was that jurisdiction of the arbitral tribunal over the dispute under the arbitration agreement excludes the jurisdiction of the courts of law and that under the request for annulment of the arbitral award the courts of law perform only a legality control over the arbitral award.5

The inadmissibility of the motion for revision of the arbitral award6

By arbitral award No. 2/10 of April 2006, the arbitral tribunal admitted in part the request file by claimant ordering respondent to pay damages. Subsequently, the respondent filed a motion for the revision of this arbitral award based on the provision of the civil procedure code regulating such request (the motion for revision is regulated outside the chapter regarding arbitration) requesting its change in the sense of rejecting the request for arbitration of the claimant. By arbitral award No. 4/26 of July 2007, the arbitral tribunal decided, with a majority, the granting of the motion for revision of respondent, the withdrawal of arbitral award No. 2/10 of April 2006 and, on the merits, it rejected the request for arbitration. Against the arbitral award No. 4/26 of July 2007, the claimant filed a request for annulment.

The Pitesti Court of Appeal admitted the request for annulment of arbitral award No. 4/26 of July 2007 and rejected the motion for revision of arbitral award No. 2/10 of April 2006 as inadmissible. In order to reach this decision, the Pitesti Court of Appeal held that, in accordance with the law, an arbitral award may be set aside only by means of a request for annulment filed in accordance with article 364 of the old Civil Procedure Code, a motion for revision being inadmissible. It further held that the request for annulment of the arbitral award is not a means of appeal similar to those provided by the Civil Procedure Code, but that it represents a self-standing court action.7

The High Court of Cassation and Justice confirmed this decision by rejecting the appeal filed by respondent.8

The obsolescence of the request for annulment: applicable procedural law

The employer (in a construction contract) filed a request for partial annulment against the arbitral award rendered by an arbitral tribunal under the arbitration rules of ICC Paris. The Bucharest Court of Appeal admitted the obsolescence objection.9 In reaching this decision it was held that:

  • the court decided in 22 April 2013 to suspend the case due to the fact that the applicant (the employer) failed to file the contract concluded with the contractor, the documentation and the legal ground that stayed at the basis of the conclusion of the contract;
  • on 4 December 2013 the applicant requested the lifting of the suspension and attached the certified translation of the documents previously requested;
  • the applicable procedural law provides for a six-month obsolescence term; and
  • the request for lifting the suspension exceeded the six-month term.

In connection with the applicable procedural law, the Bucharest Court of Appeal held that, even if at the time of the suspension of the trial of the request for annulment, the obsolescence term was for one year, and that at the date of the filing of the request for arbitration (26 July 2010) the obsolescence term was of six months, this being the applicable term in light of the transitory provisions. The transitory provision states that the trials pending at the date of the entry into force of the Civil Code are settled by the courts legally vested, in accordance with the legal, material and procedural provisions in force at the date when they started. The Bucharest Court of Appeal considered that the relevant date for determining the applicable provisions to the obsolescence objection is the date when the arbitral case was initiated, namely 26 July 2010.

This decision was confirmed by the High Court of Cassation and Justice, which rejected the appeal filed by the applicant. The High Court further held that the request for annulment has a dual nature: the means of appeal for annulment for legal reasons and the first court claim for the case in which the arbitral award is annulled, and while it is true that the request for annulment is a self-standing legal institution, the trial is not commenced together with this annulment request, but together with the request for arbitration. It further concluded that even if the arbitration is a private justice, the applicable law is determined in light of the date of the filing of the request for arbitration, the request for annulment being a continuation of the litigation commenced in front of the arbitral tribunal, and not a request of first instance.10

Substantial amendment of the arbitration rules after the date of conclusion of the arbitration agreement: the will of the parties prevails11

By the arbitral award rendered under the rules of the Court of International Commercial Arbitration attached to the Chamber of Commerce and Industry of Romania Court (CCIR), the request for arbitration was admitted and the respondent was ordered to pay damages. The contract between the parties (June 2010) contained an arbitration agreement that provided for all the disputes arising out of the contract which regards the validity, interpretation, performance and termination of the contract to be settled in accordance with the Rules of arbitration of the CCIR by three arbitrators. Between the date of the conclusion of the arbitration agreement and the date of the filing of the request for arbitration, the CCIR Rules were amended, the parties no longer being allowed to nominate their own arbitrators, but the entire arbitral tribunal was to be appointed by a Nomination Authority defined by the CCIR Rules. In these circumstances, the arbitral tribunal was appointed in accordance with the rules in force at the date of the request for arbitration by the Nomination Authority.

Against this arbitral award, the respondent filed a request for annulment considering the illegal constitution of the arbitral tribunal. The Bucharest Court of Appeal admitted the request considering the constitution of the arbitral tribunal was not constituted in accordance with the arbitration agreement. In order to reach this decision it was held that at the date of the conclusion of the arbitration agreement the CCIR Rules of arbitration granted the parties the freedom in vesting the arbitral tribunal, this being recognized in the doctrine as one of the advantages of arbitration (the possibility of the parties to constitute their arbitral tribunal in accordance with their will, as in arbitration the parties may elect the persons they consider appropriate in consideration of their legal and technical background necessary in a certain field). It was further held that the will of the parties when concluding the arbitration agreement was for them to have the possibility to appoint the arbitrators and thus the findings of the arbitral tribunal that the applicable procedural rules are the ones in force at the date of the request for arbitration (and not the ones in force at the date of the conclusion of the arbitration agreement) are illegal from the perspective of the distinction between the arbitral tribunal constituted through the will of the parties and the permanent court of arbitration and the principle of autonomy of will of the parties that governs arbitration.

This decision was confirmed by the High Court of Cassation and Justice that dismisses the appeal filed against the decision of the Bucharest Court of Appeal. The High Court underlined that the fundamental amendment of the rules on the appointment of the arbitrators (respectively, the loss of the parties of the right to nominate their arbitrators) after the conclusion of the arbitration agreement, as long as it does not reflect the will of the parties, exclude the application of the new rules of procedure because they cannot alter the will of the parties and to distort its content. It further held that the principle of the prevalence of the new procedural norms from their entry into force cannot affect the principle of disposition provided by the Civil Procedure Code, which is also applicable in arbitration proceedings.12

Legislation on the recognition and enforcement of arbitral awards

Romania is a signatory party to the New York Convention for the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) adopted on 10 June 1958, Decree No. 186/1961.

The domestic regulation on the recognition and enforcement of arbitral awards is contained in the new Civil Procedure Code. Article 1124 from the new Civil Procedure Code provides that:

Any arbitral awards of internal or international arbitration made in a foreign state and which are not deemed national awards in Romania are foreign arbitral awards.

The conditions for granting recognition and enforcement of foreign arbitral awards are contained in article 1125 and 1129 of the new Romanian Civil Procedure Code:

  • the dispute representing the subject matter in the foreign arbitration can be settled by way of arbitration in Romania;
  • the award includes no provisions that are contrary to the public order of Romanian private international law;
  • the parties have the capacity to enter into the arbitration agreement according to the law applicable to each of them, established according to the law of the state where the award was made;
  • the arbitration agreement was valid under the law to which the parties subjected it or, in the absence of establishment thereof, according to the law of the state where the arbitral award was made;
  • the party against whom the award is sought to be relied upon was duly informed in regard to the appointment of the arbitrators or in regard to the arbitration procedure and was not in the impossibility to capitalise its own defense in the arbitration trial;
  • the constitution of the arbitration tribunal or the arbitral procedure was compliant with the agreement of the parties or, in the absence of an agreement thereof, with the law of the venue where the arbitration took place;
  • the award concerns a dispute that was provided in the arbitration agreement and is within the limits determined by it, and includes provisions that are within the terms of the arbitration convention; and
  • the arbitral award has become binding on the parties, was not set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

Jurisprudence on recognition and enforcement of the arbitral awards

The arbitral award was rendered in favour of claimant on 17 May 2012 in arbitration proceedings conducted under the ICC Rules in Paris, France.

The respondent filed in front of Paris Court of Appeal a request for annulment, pending at the date of the filing by the claimant of the request for recognition and enforcement of the arbitral award in Romania.

The respondent opposed the recognition and enforcement, arguing that the arbitral award was suspended as it filed a request for annulment.

The recognition and enforcement of the arbitral award was granted by the Bucharest Tribunal and upheld by the Bucharest Court of Appeal.13 In order to reach this decision, the courts considered that the provisions of the New York Convention and of the New Civil Procedure Code were applicable. It further held that, as per the provisions of article VII of the New York Convention, the provisions of the Convention shall not deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon and that the claimant avail itself of the provisions of the New Civil Procedure Code as legislation of the country where the arbitral award is sought to be relied upon. It found that the arbitral award was a foreign arbitral award, rendered in a foreign state, not be deemed national award in Romania. As regards the provisions of article 1129 (f) of the Civil Procedure Code and article V (e) of the New York Convention – the arbitral award has not become binding yet on the parties or it has been set aside or suspended by a competent authority from the country in which, or under the law of which it was made – the courts took into consideration the arbitral award is enforceable and binding as of its communication to the parties and may be challenged only by means of request for annulment and that the party opposing recognition failed to prove that the arbitral award was suspended, regardless of the submission of the annulment request in France.

Notes

  1. Decision No. 1594/2014 of 27 March 2014, rendered by the High Court of Cassation and Justice.
  2. Resolution of 4 March 2015, rendered by the Bucharest Court of Appeal.
  3. These decisions were rendered in light of the provisions of article 364 (i) of the old Romanian Civil Procedure Code, which are nonetheless resumed in article 608 (h) of the new Romanian Civil Procedure Code.
  4. Decision No. 2/PI/18.03.2013, rendered by Timisoara Court of Appeal.
  5. Decision No. 90 of 17 January 2014, rendered by the High Court of Cassation and Justice.
  6. These decisions were rendered in light of the provisions of article 364 of the old Romanian Civil Procedure Code which are nonetheless resumed in article 608 of the new Romanian Civil Procedure Code.
  7. Decision No. 253/F-COM, rendered by Pitesti Court of Appeal.
  8. Decision No. 2592 of 27 June 2013, rendered by the High Court of Cassation and Justice.
  9. Decision No. 15/2014 of 25 February 2014, rendered by the Bucharest Court of Appeal.
  10. Decision No. 3155/2014 of 20 October 2014, rendered by the High Court of Cassation and Justice.
  11. These decisions were rendered in consideration of the old civil procedure code.
  12. Decision No. 1614 of 8 May 2014, rendered by the High Court of Cassation and Justice.
  13. Decision No. 6213 of 21 October 2013, rendered by Bucharest Tribunal; Decision No. 355/2014 of 21 May 2014, rendered by the Bucharest Court of Appeal.