The Romanian legal system is based on codified principles of civil law. Judicial precedents are non-binding but are taken into consideration by courts and the parties in dispute.
The Romanian judicial system was modified and updated by the entry into force of the New CivilProcedure Code ("NCPC") on 15 February 2013. The aim was to create a new framework for combatingdelays in solving civil litigations and for enforcing the decisions of the courts in a more efficient manner.The provisions of the NCPC are applicable to cases and enforcement proceedings which started afterthe entry into force of the NCPC.
One of the most relevant changes in the NCPC was the reduction of the duration of trials by introducinga new administrative procedural stage prior to the actual trial.
Therefore prior to the first hearing before the judge, if there are any irregularities concerning the claim, theclaimant may be ordered by the court to correct these under the sanction of having the claim declared null.Generally the term is a maximum of 10 (ten) days from the receipt of the resolution of the court.
After such irregularities are solved, the court shall communicate the claim and its supporting documentsto the respondent who shall usually file a statement of defence within 25 (twenty-five) days from thereceipt of the claim. This term may be shortened if the case is tried as a matter of urgency (i.e. as achallenge against a forced enforcement). The claimant shall file its response to the statement of defencewithin 10 (ten) days from the receipt of the statement of defence. Within 3 (three) days from the receiptof the response to the statement of defence, the judge shall issue a resolution with the date of the firsthearing which shall not be later than 60 (sixty) days from the date of the resolution.
The Romanian court system is composed of Local District Courts (judecatorii), County Courts (tribunale),Courts of Appeal (curti de apel) and the High Court for Cassation and Justice (HCCJ; Inalta Curte deCasatie si Justitie).
In comparison to the former Civil Procedure Code of 1865, under the NCPC Local Courts are no longerconsidered to be the main ordinary courts as their subject matter jurisdiction was severely reduced; theprevious initial threshold of RON 500,000 (approximately EUR 110,000) was reduced to RON 200,000(approximately EUR 44,000). Cases which are tried in the first instance by the Local Courts may beappealed before the County Courts. A case which is initially heard by the County Courts may beappealed before the Courts of Appeal and the final appeal (recurs) may be filed with the HCCJ (if a finalappeal is regulated for the said case). The final appeal must be grounded on at least one of the eightgrounds for appeal, which are stipulated in the NCPC.
The organization of the High Court of Cassation and Justice, the Courts of Appeal, tribunals, specializedcourts and courts of first instance is provided for by Law No. 304/2004 regarding the organization of thejudicial system, which has been republished with several subsequent amendments and additions.
The Courts of Appeal contain specialized sections. Depending on the case, there are panels for hearingcivil, criminal or commercial cases, matters involving minors and family disputes, administrative or taxdisputes, labour disputes and social insurance matters. Additionally and depending on the nature andnumber of cases, the Courts of Appeal may sometimes hear matters concerning maritime or domesticwaterways disputes.
Romania also has tribunals which are courts organized at the level of each county and the city ofBucharest. The jurisdiction of each tribunal includes all first instance courts in the county or in the city ofBucharest. Tribunals have specialized sections. Depending on the case, there are panels for civil andcriminal cases, commercial cases, cases involving minors and family disputes, administrative and fiscaldisputes, cases regarding labour disputes and social insurance, as well as maritime and inlandwaterways matters. Depending on the nature and number of cases, specialized sections or panels maybe set up in the courts of first instance.
The Romanian legal system distinguishes between lower and higher civil courts, determining jurisdictionby a dual mechanism that takes into account the value of the claim and the particular type of caseregardless of the value of the claim(s).
Article 94 of the NCPC stipulates that courts of first instance shall hear all monetary claims up to thevalue of RON 200,000 (approximately EUR 44,000), as well as cases concerning the evacuation frompremises held or occupied without legal grounds, etc. First instance courts may also hear claims againstdecisions made by public administrative authorities acting in matters of jurisdiction and otheradministrative bodies with similar fields of activity, allowed by law and any other matters assigned by law(such as the Land Book registration of real estate assets).
As pointed out above, the competence to hear commercial (litigation between professionals) and civilcases depends upon the value of the amount in dispute. In civil and commercial cases, the tribunal mayhear the matter as a first instance court if the amount in dispute is over RON 200,000 (approximatelyEUR 44,000).
There is also a set of rules that establish subject matter jurisdiction on the basis of criteria other thanvalue. For instance, jurisdiction is assigned to the tribunal in matters involving, inter alia, private claims,such as labour and social insurance claims, intellectual and industrial property rights, administrativedisputes, acknowledgment and the approval of enforcement of foreign court rulings, insolvency matters,and public procurement litigations.
In addition to the initial and final appeal, the Romanian Civil Procedure Code enables the use ofextraordinary legal remedies, which are applications that allow the annulment of a decision (groundedmostly on alleged errors of law), and the application for the revision of a decision (grounded onprocedural aspects such as new facts or evidence).
Litigation costs are mainly composed of court and attorneys' fees and expenses for expert opinions andthe production of evidence. Generally, the costs are paid by the unsuccessful party.
The final decisions of the courts of justice may be voluntarily executed or enforced by means of privatejudicial officers. However, enforcement may be challenged and/or suspended, at the request of the partyopposing enforcement, based on grounds of judicially recognized irregularities.
In Romania, it is considered that the business crime phenomenon has been on a downward trend overthe past few years. However, although the number of companies that have reported such problems hasdecreased since 2005, the amount of money involved in frauds has doubled.
Studies have shown that over 36% of Romanian companies were victims of business crimes in the pasttwo years. On average, every Romanian company participating in the study was a victim of over seveneconomic crimes in the past two years. Average losses incurred by the companies have doubled duringthis timeframe. The total reported loss due to business crimes amounts to USD 13.7 million, meaningapproximately USD 450,000 per affected company; twice the average amount registered in 2005.
Companies most affected by this phenomenon are large ones, with over 5,000 employees (62%), whilecompanies with less than 200 employees were less affected (36%). The statistics show that insurance andretail are the most affected industries, with 57% of companies in these industries affected, followed by 44%of companies in the automobile industry, and up to 27% in the pharmaceutical industry being affected.
The most frequently used fraud methods reported by Romanian companies are: asset misappropriation(23%), copyright infringements (15%), accounting frauds and corruption (10%). With over USD 5.5million spent on dealing with business crimes in the past two years, this segment is treated veryseriously by the Romanian public authorities.
Business crimes are regulated in the Romanian Criminal Code ("RCC") as well as in other special lawssuch as Law No. 241/2005 for the prevention and fight against tax evasion.
The RCC and other relevant laws regulate crimes such as: profiteering, measurement fraud, qualityfraud, disclosure of economic secrets, trademark counterfeiting, circulating counterfeited products, unfaircompetition, non-compliance with regulations regarding import and export, embezzlement, non-compliance with regulations regarding import and export.
In Romania, in accordance with the Romanian Criminal Procedure Code ("RCPC") a criminal case iscomprised of four major phases: the criminal investigation, the preliminary room proceedings, the trialand the enforcement of the final decision. In order to initiate a criminal investigation, the judicialauthorities can be notified either by a criminal complaint or by denouncement, by the notification of otherauthorities or they can start the investigation ex officio.
The criminal investigation can be started in rem, when the perpetrator is unknown, or in personam, whenthe identity is known to the police. If the police consider that it has enough evidentiary support, it willcharge the perpetrator with the crime. When the criminal investigation is finalized, the prosecutor mayorder the following solutions: (a) send the case to court for trial; (b) return the file to the police for furtherinvestigation; (c) reach and conclude a plea bargain with the defendant; or (d) not bring the case to trial.
Following the completion of the criminal investigation, if the prosecutor decides to send the case beforethe court, the preliminary room proceedings are initiated. These proceedings consist of verifying thecompetence of the court and its legal referral, as well as verifying if the evidence was legallyadministrated and if the criminal investigation was conducted according to the law. The duration of theseproceedings shall not exceed 60 (sixty) days.
Once the preliminary room proceedings are finalized the preliminary chamber judge can either (a) sendthe case before the court; or (b) send the case back to the prosecutor in order to complete theinvestigation, if the judge considers this necessary. In the event the case is sent to trial and the court,subpoenas are sent to the parties and the prosecutor. The first instance case is comprised of: (a) priormeasures (the appointment of the judges, ensuring the defence, drafting and displaying the hearing list);and (b) the hearing, the deliberation and the delivery of the judgment.
First instance decisions may be challenged with an appeal which is the only ordinary remedy providedby the RCPC.
The Courts of Appeal judge the appeals filed against the decisions issued in first instance by the LocalCourts and Tribunals. These decisions, except the ones referring to the retrial of the cause can bechallenged with cassation appeals (recurs in casatie). The cassation appeal is judged by the High Courtof Cassation and Justice which verifies if the decisions were issued in compliance with the applicablerules of law. The grounds on which the cassation appeal can be admitted are limited (e.g. in case thedefendant was convicted for a deed that is not provided for by the criminal law, the punishments wasgiven in other limits than those permitted by the law, etc.).
The RCPC provides for two other extraordinary remedies that serve the purpose of repairing errorscontained in final criminal court decisions. These extraordinary remedies are: the challenge forannulment (contestatie in anulare) and the extraordinary appeal (revizuire).
Another legal remedy is the challenge (contestatia) which can be filed in cases expressly mentioned inthe code (i.e., the decision issued by the judge during the criminal investigation by which a person isordered to be taken into custody). A decision issued once the challenge is heard cannot be subject toany remedy.
The Romanian prosecution body competent to solve business crimes consists of prosecutors organizedin the Public Ministry, whilst the police and other investigating bodies have the competence of carryingout investigation activities, but only under the strict supervision of a prosecutor.
Specific corruption crimes such as bribery or exertion of influence are, in strictly regulated situations,prosecuted by a special body organized within the Public Ministry – the National Anticorruption Division.Other economic and financial crimes such as IT criminality, organized crime and racketeering, moneylaundering, terrorism and others are prosecuted by the Directorate for Investigating Organized Crimeand Terrorism.
According to the RCPC, the injured person is the person who suffered a physical, material or moralinjury by the offense. The injured person is not a party in the criminal trial however he/she has the rightto become a civil party until the indictment document is read aloud in court).
The injured party has the following rights:
-the right to an attorney;
-the right to be informed regarding its rights;
-the right to file applications, raise preliminary issues and submit final pleadings;
-the right to examine the criminal file and to be informed about the status of the case;
-the right to request certain evidence to be taken;
-the right to be heard; and
-the right to examine the defendant, experts and witnesses.
If the injured person chooses to become a civil person, its financial losses may be recovered directlythrough the criminal case. If the victim does not want to recover damages this way and files a separateclaim in front of civil courts, then the decision in the criminal case shall have res judicata authority in thecivil case with respect to the existence of the felony, the defendant and the establishment of guilt.
With respect to interim injunctions, the RCPC provides for two categories of measures. The first categoryincludes actions that apply strictly to cases when the defendant has medical problems and represents adanger to society: mandatory medical treatment and forced medical hospitalization. The second type ofinterim measures may be taken when there is the need to prevent concealment, destruction, disposal orremoval of the assets engaged in the trial, such as seizure of assets and accounts.
The duration of criminal cases in Romania can vary from 2 (two) years up to 5 (five) or even 7 (seven)years, depending on the number of remedies used. The long duration of criminal cases is a seriousissue in Romania, especially in the criminal investigation phase.
It is extremely difficult to assess what the overall costs for a criminal case will be. In Romania, criminalcases are exempted from stamp duty. The most significant costs are incurred by procedures related togathering evidence, such as wiretapping, DNA testing and experts, in case the court orders surveys andalso by the administering of other types of evidence such as witnesses or other material evidence.
Judicial expenses arising from the criminal case are forwarded either by the state or by the parties. Incase of conviction, the defendant has to pay the judicial expenses forwarded by the state/other partywith the exception of interpreters and legal aid, these costs being always borne by the state. If there ismore than one defendant, the court will decide the allocation of costs, depending on their share inincurring the expenses.
The judicial expenses are born as follows:
-In case of acquittal
-by the injured person , if the costs were caused by this person;
-by the civil party, if the claim for damages was rejected completely, proportional with the expensescaused by this party;
-by the defendant, if though acquitted, it was ordered by the court to pay damages;
-In case of termination of the criminal case
-by the defendant, if measures were taken to replace criminal liability or a cause for impunity exists;
-by both parties, in case of reconciliation of the parties;
-by the injured party, in case of a waiver or if the complaint was submitted too late;
-by the party who signed the mediation agreement, if criminal mediation intervened.
In case of appeal/cassation, the judicial expenses are to be borne by the losing party. If the case doesnot go to trial, the legal expenses shall be borne by the party who made the complaint.
Criminal Liability of the Legal Entity
Legal entities (with the exception of the state and public authorities which conduct an activity which is notsubject to a private domain) are liable for criminal offences committed in achieving the object of theiractivity or in the interest or in the name/behalf of the legal entity if the criminal offence was deliberatelycommitted.
The liability of the legal entity does not exclude the liability of the natural person who contributed in anymanner to the commitment and perpetration of the criminal offence.
According to Article 137 of the RCC (in force from 1 February 2014), a legal entity committing a criminaloffence is subject to a fine which may vary between RON 3,000 and RON 3,000,000 (approximatelybetween EUR 7.500 and EUR 700,000).
Additional sanctions provided by the RCC may be the following: dissolution of the legal entity, thesuspension of the activity of the legal entity, publishing of the conviction decision, closing of businessunits, prohibition to participate to public tenders or placing under judicial supervision.
On 25 June 2014, Law no. 85/2014 (the "Insolvency Code") was published by the Romanian Parliament withthe goal of enacting a complex legislative act meant to cover the entire insolvency-related legal framework.The Insolvency Code entered into force on 28 June 2014.
According to the provisions of the Insolvency Code, it shall apply only to proceedings initiated after thelaw entered into force. Since this date the provisions of all the other separate legal regimes for banksand other institutions, insurance undertakings, investment undertakings, including collective investmentundertakings or entities of the capital market were repealed (Government Ordinance no. 10/2004regarding the bankruptcy of credit institutions). The Insolvency Code also repeals the provisions of Law85/2006 regarding insolvency proceedings and Law No. 381/2009 regarding the introduction of the ad-hoc mandate and the preventive concordat.
Insolvency is the status of a debtor's estate characterized by the lack of available financial resources forthe payment of outstanding debts and which may occur in the following forms: (a) "presumed insolvency"occurs when the debtor is not able to pay an outstanding debt towards one/several creditors within 60(sixty) days of the maturity of such debt; and (b) "imminent insolvency" occurs when it is proven that thedebtor shall not be able to pay at maturity its debts with the funds available at the moment of such maturity.
Either a legal entity or a natural person, specifically a tradesman, acting individually (with the exceptionof liberal professions or entities with a special insolvency regime), may be subject to insolvencyproceedings as per the provisions of the Insolvency Code.
The Insolvency Code introduces the possibility for the Financial Surveillance Authority to file anapplication for the initiation of insolvency proceedings with regard to the legal entities that fall under itsscope (i.e., banks and other credit institutions, insurance undertakings, investment undertakings,including collective investment undertakings, or entities of the capital market). Moreover, autonomousstate-owned entities may be subject to insolvency proceedings.
The Insolvency Law classifies insolvency proceedings as one of the following: (a) general proceedings(procedura generala); or (b) simplified proceedings (procedura simplificata).
The general proceeding is applicable exclusively to legal persons in a state of insolvency or imminentinsolvency and means that the debtor will have the option to first use the reorganization procedure andthen the bankruptcy procedure, if reorganisation is not possible or fails.
Simplified proceedings are limited to the bankruptcy procedure and represent a rapid, simple andefficient means of liquidation. In cases of simplified proceedings, the debtor is directly subject tobankruptcy proceedings., either at the same time as the commencement of the insolvency proceedings,or after a supervision period of maximum 20 (twenty) days.
A petition for the initiation of insolvency proceedings can be presented in court by the debtor or creditor,including the Ministry of Public Finances which is required to file for the opening of insolvencyproceedings regarding the fiscal debts of corporate debtors. The Insolvency Code implements theconcept of the "private creditor test", meaning that a comparative analysis is conducted with respect tothe fulfilment of a budgetary claim in a preventive insolvency procedure or in a judicial reorganisationprocedure, as opposed to a bankruptcy procedure. This concept is derived from the EU Court of Justicecase law and it basically states that if a budgetary creditor votes in favour of a plan (reorganisation orcomposition) that ensures a higher recovery rate of a claim that it would in a bankruptcy procedure, thisis not deemed as state aid.
The insolvency may be ascertained by the bankruptcy tribunal at the request of a creditor which maydemonstrate that the debtor has an unpaid debt of more than RON 40,000 (approximately EUR 9,000)which has been overdue for at least 60 (sixty) days. The debtor in a state of insolvency is obliged tobring an application to court within 30 (thirty) days of the occurrence of the state of insolvency. The useof the bankruptcy procedure may be directly requested by the debtor in its application to the court.
After the insolvency proceedings are initiated each creditor of the debtor is required to file a formal claim,referred to as a statement of debt (declaratie de creanta), within the time period set out in the judgmentdelivered by the bankruptcy tribunal. All creditors, as listed in documentation submitted by the debtor tothe judicial receiver, will be informed of the time limits for filing the statements of debts, appeals,preparing the claims charts and any other items related to the proceedings in a notice published in theInsolvency Gazette, in a circulated newspaper and in a communication to each creditor as per the NCPC(usually by post). This is also applicable to foreign creditors. In case the foreign creditors have anundertaking in Romania, the notice shall be communicated to such undertaking.
The statement of debt must be submitted to the bankruptcy tribunal and to the bankruptcy trusteetogether with supporting documentation and proof of payment of the judiciary stamp tax.
The bankruptcy trustee or representative reviews the claim and either grants and registers the claim in apreliminary claims chart, or rejects the claim. Creditors have the right to appeal (contestatie) if theirclaimed statements of debts are rejected, in whole or in part, and/or if the claims are not properlyregistered in the preliminary claims chart. This appeal must be filed in court within 7 (seven) days fromthe publication in the Insolvency Gazette of the preliminary claims chart. Unless appealed by the debtor,bankruptcy trustee or representative, or the creditors, a claim is presumed valid and correct. The finalclaims chart is registered in the court registry and posted at the tribunal. In practice, the final claims chartis filed in the tribunal's archive for reference purposes. Until the closure of the proceedings, furtherobjections may be filed only upon the discovery of manifest errors, fraud, counterfeits or previouslyunknown claims to property title.
Simplified insolvency proceedings apply to debtors that: (a) fall under one of the categories provided bylaw; and (b) have become insolvent and are unable to satisfy their financial obligations. Debtors may besubject to simplified proceedings provided that:
-no assets can be identified;
-the by-laws or the company books cannot be found;
-the directors are unreachable;
-the registered office no longer exists or does not correspond to the address registered with the traderegister;
-the required documentation has not been presented in court;
-the relevant company has been dissolved prior to the petition;
-the relevant company has declared its intention to enter into bankruptcy or is not entitled to benefitfrom the reorganization procedure; or
-the entity was not legally authorised to conduct its services.
The costs and expenses of insolvency proceedings are incurred by the insolvent estate in the order ofpriority assigned to the claims of the secured and unsecured creditors. In the absence of sufficient funds,the costs of the insolvency proceedings are satisfied by the liquidation fund or may be advanced by thecreditors in specific cases.
Should the debtor be subject to a reorganisation plan, the Insolvency Code sets out specific majorityrequirements for the voting of such a reorganisation plan. Those creditors entitled to vote upon thereorganisation plan within the Creditors' Meeting are in general divided into five different classesestablished for the purposes of such a vote, as follows: (i) the creditors that have a preference right (i.e.,secured); (ii) the budgetary creditors; (iii) the employees; (iv) the unsecured essential supplier creditors(i.e., those suppliers in the absence of which the activity of the company cannot continue); and (v) theremaining unsecured creditors.
The Insolvency Code introduces the "double-voting" rule, establishing an additional prerequisite for theapproval of a reorganisation plan which requires that creditors holding at least 30% of all the registeredclaims must approve the respective plan. Besides the above-mentioned rule, in order for the Creditor'sMeeting to vote in favour of the reorganisation plan the majority of votes - computed by value of claimswithin each class - is required.
In order to protect entities in financial difficulties, the Insolvency Code also regulates specific proceduresfor the avoidance of insolvency, these being the ad-hoc mandate and the preventive concordat.
The ad-hoc mandate
The ad-hoc mandate is a confidential procedure initiated by the debtor in which an ad-hoc attorneynegotiates with the creditors to reach an agreement with one or more of them, which will resolve thedebtor's financial difficulties.
The aim is to reach an agreement between the debtor and one or more of its creditors within a 90(ninety) days deadline, by partial or total release of debt, debt rescheduling, personnel dismissals etc.
The mandate can be terminated as follows: (i) once an agreement is reached; (ii) if no agreement isreached within the deadline; or (iii) unilaterally, by the debtor or the ad-hoc attorney.
The preventive concordat
The preventive concordat is an agreement concluded between the debtor and creditors by which thecreditors and the debtor agree on a plan to restructure the debtor's business and re-pay its debts.
This procedure is available only for legal persons who intend to continue activity, with the followingexceptions: (a) debtors against which a definitive court decision for economic crime has been issued; (b)
debtors which in the last 3 (three) years before the offer of the preventive concordat have benefited fromanother similar procedure; and (c) the representatives of the debtor have been liable according to theInsolvency Law or a special legal provision.
The debtor must ask the court for the initiation of the preventive concordat proceedings and for theappointment of an insolvency practitioner. The debtor and the insolvency practitioner must prepare a listof creditors and the concordat offer.
Among other things, the concordat must include: (a) steps which will be taken to change the way thedebtor conducts its business; (b) the means by which the debtor intends to solve its difficulties; (c) thepercentage by which the receivables of the creditors will be covered; and (d) the term within which thedebts must be paid (not more than 36 (thirty-six) months from the date the concordat is signed).
For fiscal debts, the approval of the tax authorities must be obtained and state aid rules must becomplied with as per the private creditors' test procedure provided by the Insolvency Code.
The debtor may ask the court to temporarily suspend any enforcement proceedings while the concordatoffer is being analysed by the creditors. After the recognition of the concordat, all enforcement measuresagainst the debtor will be suspended by the court.
The concordat may be recognised if the value of disputed and litigated receivables does not exceed 25%of the total amount of the receivables, and if the concordat has been approved by creditors holding atleast 75% of the total value of the receivables.
The creditors which voted against the concordat may request its cancelation within 15 (fifteen) days fromthe date the preventive concordat was recognised by the judge.
Arbitration in Romania is governed by the Fourth Book - Domestic Arbitration (Articles 541 – 621) and bythe Seventh Book – International Civil Trials – International Arbitration (Articles 1111-1133) of the NewCivil Procedural Code ("NCPC"). An arbitral dispute taking place in Romania is qualified as internationalif it is based upon a legal relationship having a foreign element.
The most used institution in Romania is the International Court of Commercial Arbitration attached to theChamber of Commerce and Industry of Romania (“CCIR”). CCIR has its own Rules of Arbitration.
Nevertheless, under the provisions of the NCPC the parties to an arbitration clause or separatearbitration agreement are free to choose any arbitral institution or arbitration rules they want to beapplicable to their dispute. Under Romanian law, the parties may agree that disputes arising from theircontractual relationships shall be settled by arbitration, indicating, under the sanction of nullity, themethod of appointment of arbitrators. In case of institutionalized arbitration, reference to the arbitrationbody or its rules of arbitration shall suffice.
The arbitral agreement shall be concluded either in the form of an arbitration clause, stipulated in themain contract (such clause is always previous to any arisen dispute), or in the form of a separateagreement (“compromise”), which is concluded at the moment the dispute occurs. Both the arbitrationclause and the compromise must be in writing and signed by the parties.
Generally all disputes involving a patrimonial interest can be submitted to arbitration. Disputesconcerning personal status, collective labour conflicts, certain shareholder disputes, the annulment ofintellectual property rights and bankruptcy proceedings cannot be subject to arbitration.
In the arbitration agreement or by subsequent agreement, the parties are free to establish the procedureto be observed by the arbitral tribunal, the number of arbitrators, and the method used to appoint thearbitrators, including whether the dispute shall be settled by a sole arbitrator or several arbitrators (this isgenerally applicable to ad hoc arbitration as in case of institutionalized arbitration, the rules of theinstitution shall apply). As a general rule, according to the NCPC, if the parties have not specified thenumber of arbitrators, the dispute shall be settled by three arbitrators, one appointed by each party andthe third arbitrator, the chairman, shall be appointed by the other two arbitrators. The parties are alsofree to decide on the seat and language of arbitration.
If the parties fail to reach an agreement, the arbitral tribunal has the authority to decide upon the proceduralrules that will apply to the arbitration; however, if the parties are unable to reach an agreement and thetribunal is unable to decide, the general provisions stipulated in the NCPC shall apply.
Before or during the arbitral proceedings, any party may request the courts of law to grant precautionaryand provisional measures with regard to the dispute or to ascertain certain factual circumstances (Article585 of the NCPC).
A copy of the request for arbitration and the arbitration clause shall be attached to the application forprecautionary or provisional measures. In case the court grants such measures, the party who appliedfor such measures shall communicate a copy of the decision to the arbitral tribunal.
During the arbitral proceedings, precautionary and provisional measures or measures required for theascertaining of factual circumstances related to the dispute can also be approved by the arbitral tribunal.In case of resistance, the execution of these measures shall be ordered by the court.
Generally, arbitral awards rendered by tribunals with seat in Romania are enforceable by the courtsthrough judicial bailiffs, in the same manner as other legally binding court judgments. The arbitral awardshall be final and binding, and shall have the same effect as any final decision rendered by a court of law.
Arbitral awards are considered "national" awards when the seat of arbitration was in Romania. If the seatof arbitration was not located in Romania, the arbitral award shall be considered a foreign award andshall be enforced only after it is recognized by the Romanian courts under a specific procedure.
Arbitral awards may be challenged in ordinary courts. An arbitral award may only be set aside followinga petition for annulment based upon one of the following reasons:
-the dispute could not be settled by arbitration;
-the arbitral tribunal settled the disputes in the absence of an arbitration agreement or pursuant to anagreement that is void or inoperative;
-the arbitral tribunal had not been constituted in accordance with the arbitration agreement;
-a party was absent on the date of the hearing and the summoning procedure has not been legallyfulfilled;
-the arbitral award has been rendered after the time for rendering the award has lapsed;
-the arbitral tribunal has decided matters which have not been submitted to arbitration, or has failed todecide upon a specific claim;
-the arbitral award failed to include the grounds of the award, the date and place where the award wasissued, or the award was not signed by the arbitrators;
-the arbitral award violates public order, morals or provisions of the law; or
-if, after the issuance of the arbitral award, the Constitutional Court ruled on a law applied in thedispute to which the arbitral award refers, declaring that the law, the ordinance or a provision of thelaw or ordinance is unconstitutional.
Generally the term for filing a set aside petition is thirty (30) days from the communication of the arbitralaward.
Recognition and enforcement of foreign arbitral awards
Arbitral awards which are not deemed to be qualified as a national award in Romania, but have beenrendered in a domestic or international arbitration in a foreign state, are considered foreign arbitral awards.
Foreign arbitral awards can be acknowledged and enforced in Romania by applying the provisionsstipulated in the NCPC.
Foreign arbitral awards which are not willingly performed by those who are obligated to do so may beacknowledged and enforced in Romania if the subject matter of the arbitration may be settled througharbitration and if the award does not contain provisions contrary to private international law public order.
Romania is a party to the 1958 New York Convention on the Recognition and Enforcement of ForeignArbitral Awards ("NY Convention"), with the reservations that the Convention will only be applied toawards resulting from disputes having a commercial nature according to Romanian legislation; and tothe recognition and enforcement of awards made on the territory of another contracting state. Withregard to awards made in the territory of non-contracting states, the Convention will only be applied tothe extent to which those states grant reciprocal treatment.
Romania is also a party to the 1961 European Convention on International Commercial Arbitration andthe 1965 Washington Convention on the Settlement of Investment Disputes between States andNationals of Other States, both containing provisions with regard to the recognition and the enforcementof arbitral awards in specific fields.
The enforcement of judicial awards is mainly regulated by the provisions of the NCPC. This legalframework is only supplemented by the international conventions on arbitration. The NCPC chapter onthe enforcement of foreign arbitral awards has incorporated the provisions of the NY Convention.
The application for the acknowledgement and enforcement of an arbitral award must be lodged with thetribunal in which the domicile or the registered office of the opposing party is located. In case thecompetent court cannot be identified, the Bucharest Tribunal always has jurisdiction. The application forenforcement must be accompanied by the arbitral award and by the arbitration agreement, translatedinto Romanian.
The recognition or the enforcement of the foreign arbitral award shall be denied by the tribunal, if theopposing party proves the existence of the following circumstances:
-the parties did not have the capacity to conclude the arbitration agreement, under their respectiveapplicable laws;
-the arbitration agreement was not valid under the law chosen by the parties or, if not applicable, thelaw of the state where the award was issued;
-the opposing party was not properly informed with regard to the election of the arbitrator(s), thearbitral proceeding or was unable to defend itself in the arbitration;
-the composition of the arbitral tribunal or the arbitral procedure was not carried out according to theagreement of the parties or, in the lack of such agreement, in accordance to the lex loci;
-the award concerns a dispute excluded from the arbitration agreement or contains provisions thatexceed the scope of the arbitration agreement. However, matters from the award that may be subjectto arbitration can be separated from the others and enforced; or
-the award has not become binding on the parties yet, was annulled or suspended by a competentauthority from the state of its issuance or in accordance with the law of the state of its issuance.
The decision on the application for recognition and enforcement of a foreign arbitral award may bechallenged only through an appeal. The foreign arbitral award is recognised in Romania with regard toall factual circumstances in its content.
The NCPC prohibits the examination on the merits of an arbitral award by the court of recognition.
Recognition and enforcement of foreign judgments issued in an EU Member State
The enforcement of foreign judgments (i.e. judgments that are not issued by national courts) is regulateddifferently depending on the state of issuance. If the foreign judgment is issued in an EU Member Statethen the provisions of the applicable European regulations shall be mandatory and shall supersede anyother provisions in the Romanian laws. For the enforcement of judgments issued in a non-MemberState, the provisions of the NCPC shall apply.
As Romania is a Member State of the European Union since 2007, all EU regulations are directlyapplicable in Romania. The most relevant regulations are Regulation No. 1215/2012 of the EuropeanParliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civiland commercial matters (“Regulation 1215”); Regulation No. 805/2004 of the European Parliament andof the Council of 21 April 2004 creating a European Enforcement Order for uncontested claims("Regulation 805") and Regulation No. 1896/2006 of the European Parliament and of the Council of 12December 2006 creating a European order for payment procedure ("Regulation 1896").
According to Regulation 1215, a judgment given in another Member State can be used/enforced inRomania if the party presents a copy of the judgment which satisfies the conditions necessary toestablish its authenticity (along with a translation in the Romanian language); and the certificate issuedpursuant to Article 53 of Regulation 1215.
In all cases, enforcement procedures are governed by Romanian law if the enforcement is conducted onRomanian territory.
Recognition and enforcement of foreign judgments issued in a non EU Member State
The recognition and enforcement of foreign judgments issued in a non-EU Member State is regulated bythe provisions of Article 1.093-1.101 and 1.102-1.109 of the NCPC.
Article 1094 of the NCPC provides that foreign judgments are fully recognized, de jure, in Romania if:
-the foreign judgment refers to the civil status of the citizens of the state where such judgments wereissued;
-the foreign judgment, issued in a third party state, has been firstly recognized by the foreign stateswhere the parties are citizens; or
-lacking such recognition, the foreign judgments issued under the applicable international privateRomanian law, are not contrary to the Romanian public order of international private law and the rightto a defence was observed.
Judgments other than those referred to in Article 1.094 of NCPC may be recognized in Romania andenjoy the benefits of res judicata, if the judgment satisfies the following cumulative criteria:
-the judgment is final according to the law of the state where it is issued;
-the foreign court issuing the judgment had competence to judge the matter in accordance with the lawof the state of issuance, without this competence being established exclusively because of thedefendant or the defendant's assets, without having any direct relation to the litigation proceedings inthe state of issuance; and
-there is reciprocity between Romania and the foreign state that rendered the judgment.
The application for the recognition of a foreign judgment must be accompanied by the followingdocuments: (a) a copy of the foreign judgment; (b) proof that it is final and binding; (c) proof that theopposing party was correctly summoned in the main case (if the party did not attend the hearings); and(d) any other document that can prove that the judgment complies with the provisions of the NCPC. Theabove-mentioned documentation must be accompanied by authorized translations if submitted in alanguage other than Romanian.
After the recognition of the foreign judgment is approved by the court, the party can request theenforcement of the foreign judgment. Also, the foreign judgment must be considered enforceableaccording to the law of the state of issuance. The party must file an application for enforcement with thetribunal where the opposing party refusing to acknowledge the foreign judgment is located.
The court that accepts the application for enforcement also issues an enforcement order based on whichthe enforcement is carried out.
-Litigation costs include court fees, attorneys'fees, and expenses for experts appointed bythe court and witnesses.
-Court fees have to be paid upon filing the claim.
-Court fees in the second and third instances areto be paid by the party filing the appeal. The feesare 50% of the due court fees based upon theamount claimed in first instance or the amountchallenged in the appeal (if this is different thanthe amount claimed in first instance).
-Litigation costs are awarded against the losingparty who must reimburse the winning party.Courts tend to decrease the initial amount butthis can only be done with the attorneys' feesand not with other costs.
-In order to claim the attorneys' fees the partymust submit proof of payment otherwise theapplication is rejected.
-If a claimant has been partially successful, thecosts of both sides are divided on a pro-ratabasis. However, attorneys' fees may bedecreased by the court depending on thecomplexity of the case.
-There are certain provisions related to attorneys'fees in the law regarding the organization andpractice of the profession of attorney-at-Iaw.
-The actual attorneys' fees of a party(depending on the fee agreement betweenattorney and client) may be substantiallyhigher, but are of no relevance to the opposingparty.
-Agreements on Quota litis fees are prohibited forRomanian lawyers in all types of proceedings.
Court fees are based on the EmergencyOrdinance no. 80/2013 on judicial stamp taxesand depend on the amount in dispute.
-Amount in dispute EUR 500,000:
Court fees: EUR 6,000 in first instance;
-Amount in dispute EUR 1,000,000:
Court fees: EUR 11,000 in first instance;
-Amount in dispute EUR 5,000,000:
Court fees: EUR 51,000 in first instance.
Assumptions based on an amount in disputeof EUR 1,000,000:First instance: preparation oftwo briefs, four hearings with a duration of 2 to 6hours respectively, preparation of hearings/meet-ings with the client, witnesses, technical surveys,cross-examination correspondence with client:
In total EUR 15,000 to EUR 30,000; secondinstance: one brief, no hearing: EUR 8,000 toEUR 15,000; third instance: one brief, no hearing:EUR 6,000 to EUR 15,000.
Assumptions based on an amount in disputeof EUR 10,000,000:first instance: preparation of4 comprehensive briefs, six hearings with aduration of 2h, 4h, and 4 x 8h; preparation ofhearings/meetings with client, witnesses,technical surveys, correspondence with client: Intotal EUR 50,000 to EUR 150,000; secondinstance: one brief, no hearing: EUR 15,000 toEUR 20,000; third instance: one brief, no hearing:EUR 15,000 to EUR 25,000.
There are no civil jury trials in Romania.
Simple cases: first instance: 1– 5 months; second instance: 1- 4 months; third instance: 1-2 months(calculated after setting the first hearing).
Complex cases: first instance: 1 to 3 years; second instance: 1 to 2 years; third instance: 1 to 1½ years(calculated after setting the first hearing).
Legal entities may be represented only by counsellors or attorneys. The appeal grounds and therepresentation before the appeal court may be done only by attorneys or counsellors under the
sanction of nullity.
Pro Bono System
-Documents are subject to disclosure if theparty itself referred to the document in thecourse of the proceedings.
-If the opposite party has in its possession acertain document relevant for the case, thecourt may order that party to present it.
Yes. There is a special legislation which provides legal aid for people who cannot afford the cost of
-The Romanian Civil Procedure Code does notprovide for a special proceeding for collectiveredress. Traditional tools of multiparty practicesuch as joinder and consolidation ofproceedings are applied.
-There are cases where several co-claimants(over 50 parties) have filed actions against banks.
The perpetrator is entitled to assistance by a counsel during the criminal investigations and the trial.
It is mandatory if the perpetrator faces the risk of life sentence or a sentence of 5 or more years inprison, or if he/she has mental problems, is underage, is held in custody, or is otherwise unable torepresent him or herself.
Criminal cases are exempt from stamp duties according to Romanian law.
Complex cases/criminal investigations: 6 months to 1 year; preliminary room proceedings: 60 days;first instance: 6 months to 1 year; second instance: 6 months.
Various, such as testimonies of the defendant, of the injured person, of the civil party or of the party whomay be held liable for the monetary side of the case, witnesses' testimony, written documents, audio andvideo recordings, photographs, material means of evidence (object of the crime), technical and medicalreports and other surveys.
Pro Bono System
-The court may order the applicant to pay asecurity deposit.
-In general, litigation costs will be borne bythe unsuccessful party.
-In some cases, costs incurred by asuccessful applicant in preliminary injunctionmatters can only be sought in the mainproceedings
-There are 3 conditions provided by theRomanian Civil Procedure Code in order for aninjunction to be allowed by the court:
-urgency of the matter;
-the measures taken by filing the injunction,must have a temporary effect;
-the court may not try the substance of thematter during such a procedure.
As a general rule, due to the urgent character ofsuch proceedings, only written notes are admittedas evidence (occasionally cross-examination). Alldocuments should be presented in Romanian.
The cost may consist of
-a fixed amount for non-monetary claims, orvariable amounts depending on the actualvalue of the monetary claim.
-An appeal is 50% of the initial amount.
Example: in case of a preliminary injunction(ordonanta presedintiala), if the object is not of amonetary nature, the stamp duty is RON 20(approx. EUR 4).
If it is of a monetary nature, the stamp duty
is RON 200 (approx. EUR 44) for a valueexceeding RON 2,000 (EUR 440).
Assumptions: only the request for apreliminary injunction is filed, the courtrenders its decision without hearing theopponent: EUR 4,000 to EUR 6,000 in firstinstance; second instance: one brief, 1-3hearings: EUR 4,000 to EUR 7,000 (the appealgenerally implies the presence of the parties).
Assumptions: Apart from filing the request fora preliminary injunction, two comprehensivecounter statements are filed in reply to twostatements of opponent: Total costs (includingmeetings with client/witnesses) of first instance:EUR 10,000 to EUR 20,000; second instance:one brief, 2-3 hearings: EUR 10,000 to EUR25,000 (the appeal generally implies thepresence of the parties).
Generally, a decision on a request for apreliminary injunction is rendered between 1 dayand 3 months depending on the preliminaryissues raised by the opposing party.
Appellate proceedings: if a preliminary injunctionis subject to an appeal, it may take between 1 to2 months.
Preliminary Injunction Proceedings
The usual duration of arbitration proceedings is between 6 months and 1 year.
-The costs of arbitration depend to a greatextent on the amount in dispute, the amountof documents, the number of witnesses andwhether expert opinions are required.
-The arbitrators usually have large discretionregarding the award of costs. However, inpractice the award on costs often dependson the outcome of the case. The award oflegal fees is usually not determined byreference to a statutory tariff.
The procedural costs depend on whether a sole-arbitrator or an arbitral tribunal of three membersis appointed, the complexity of the case and theadministrative charges.
The following two estimates are based on theprocedural costs of the Court of InternationalCommercial Arbitration attached to the Chamberof Commerce and Industry.
Assumption: Sole arbitrator appointed and anamount in dispute of EUR 1,000,000; Totalcosts: registration fee: EUR 150, administrativefees of EUR 13,300 and fees for a sole arbitratorof EUR 12,900.
Assumption: Sole arbitrator and an amount indispute of EUR 10,000,000: Registration fee:EUR 150; administrative fees of EUR 42,300 andfees for a sole arbitrator of EUR 41,900.
These fees are applicable only for disputesbetween foreign companies, or between foreigncompanies and Romanian companies and not toarbitration between Romanian companiesclaiming amounts in EUR. For this last situation,the amounts in EUR must be converted to RONand the fees will be calculated based upon theamount in RON. However, the fees in RON andEUR are rather similar.
Assumption based on an amount in dispute ofEUR 1,000,000: Review of 100 pages ofdocuments; no challenge to the jurisdiction of thearbitral tribunal; two exchanges of submissions;review of correspondence with arbitral tribunal;assistance with the preparation of 4 witnesses;review of 4 written witness statements; no experts;preparation of oral hearing and participation;preparation and review of one post hearing brief.Total approximate cost: from EUR 40,000 to EUR60,000.
Assumption based on an amount in dispute ofEUR 10,000,000: Review of 1,000 pages ofdocuments; no challenge to the jurisdiction of thearbitral tribunal; two exchanges of submissions;review of correspondence with arbitral tribunal;assistance with the preparation of 8 witnesses;review of 8 written witness statements; documentproduction up to 500 pages; preparation andreview of expert opinions; preparation of oralhearing and participation in an oral hearing;preparation and review of one post hearing brief.Total approximate cost: from EUR 60,000 to
Enforcement of Foreign Judgments and Arbitral Awards
For a declaration of enforceability, court fees areinsignificant (EUR 10 – EUR 20). For theenforcement of the award by a bailiff, there arespecific costs.
Application for recognition/enforcement:
Simple case: EUR 1,000 to EUR 1,500
Complex case: EUR 2,000 to EUR 5,000
1 to 3 months until a decision on recognition (ifapplicable) and enforcement is rendered in firstinstance; 3 to 5 months if the decision isappealed.
The duration of execution proceedings dependsmainly on whether the debtor has executableassets and whether execution measures or evenenforceability of the foreign judgment issued in anEU Member State are opposed by the debtor.
-A translation of the judgment/award isalways required
-Judgments that fall outside the scope ofapplication of the EC Regulation/LuganoConvention must be submitted in the original orin a copy issued by the court that rendered thejudgment.
-A certified translation of the judgment must besubmitted.
-For enforcement of awards under the NewYork Convention, the creditor must provide thecourt with the authenticated original award or aduly certified copy thereof and the original ofthe arbitration agreement or a duly certifiedcopy thereof.