MOLDOVA

1. ARBITRATION

Arbitration in the Republic of Moldova continues to increase in popularity as an alternative venue to the conventional court system for solving disputes. The Government of the Republic of Moldova seems determined to promote the alternative dispute resolution (ADR) systems as well as to improve the enforcement procedure of foreign arbitral awards.

The existing legislative framework was reviewed and a series of recommendations were issued in order to align the existing framework to international standards. A practical handbook for arbitration users has been prepared and distributed. A number of impressive trainings on arbitration proceedings and enforcement of foreign arbitral awards, with the participation of foreign trainers, were provided to judges and arbitrators. Also, the set of guidelines on arbitration agreements, adopted several years ago by the Moldovan Supreme Court of Justice is currently revised in order to clarify certain ambiguous provisions and ensure uniformity in this area.

The Republic of Moldova has rather little experience with alternative methods of dispute solving as the first piece of legislation on arbitration dates back to 1994 which is considered to be the year of foundation of arbitration in Moldova. Also in 1994, the first Moldovan ADR institution, the International Commercial Arbitration Court (ICAC) was established under the umbrella of the Chamber of Commerce and Industry of Moldova and it still remains the country’s main permanent arbitration body. Currently, there are 29 local and 32 international arbitrators on the arbitrators’ list of the ICAC.

The number of arbitration institutions has increased tremendously since 1994. Based on a list published by the Supreme Court of Justice of Moldova, at present, there are 30 arbitration courts organized under various NGOs and associations, 4 of which were registered in the last two years. This list includes also several specialized arbitration institutions, such as: the International Arbitration Court of the Liquidators and Administrators Association of Moldova, the Court of Arbitration of the International Association of Auto Transporters of Moldova, the Arbitration Court Specialized in Industrial Property of the State Agency on Intellectual Property, as well as several arbitration courts in the agricultural sector. Each of these are also quite active in their domain. Also, last year the American Chamber of Commerce in Moldova has launched the Chisinau International Court of Commercial Arbitration and seems determined to promote this institution as a venue for solving disputes among its members as well as other business in Moldova.

The number of cases resolved via arbitration has also increased substantially during the past several years. Thus, according to the records of the Arbitration Court of the Chamber of Commerce and Industry of Moldova, which is still the most active arbitration court in Moldova, in 2010 it registered just 16 cases; while in 2017 it was already 127 cases.

Currently the ADR domain in Moldova is regulated by two main national laws:

-The law on arbitration nr.23/2008 - applicable to domestic arbitration; and

-The law on international commercial arbitration nr.24/2008 - applicable to arbitration with a foreign element (e.g. where one of the parties has its residence in a foreign state; or most of the property in dispute are in a foreign state).

Although Moldova has chosen the path of adopting two parallel arbitration laws, one for international and one for domestic arbitration procedures, both of them are in line with the UNCITRAL Model Law on International Commercial Arbitration.

Recognition and enforcement of foreign arbitral awards, the challenge of arbitral awards and the issuance of the enforcement deed of arbitral awards are regulated by the Civil Procedural Code of the Republic of Moldova.

There are also a number of international conventions applicable in Moldova. The most important are as follows:

-The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, 10 June 1958;

-The European Convention on International Commercial Arbitration, Geneva, 21 April 1961; and

-The Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), Washington,18 March 1965.

A wide range of disputes can be referred to arbitration in Moldova. The Law on international commercial arbitration specifies that the term “commercial” refers to relationships which arise from all kinds of commercial relationships, whether contractual or non-contractual. Commercial relations include the following, without limitation: contract of sales and delivery, exchange of goods and services; distribution agreements; commercial agencies and representatives; factoring, leasing, construction of industrial objects; consulting; business engineering; licensing; investments; financing; banking services; insurance; operating or concession agreements; joint ventures as well as other forms of industrial and commercial cooperation; air, maritime, railway and road  transportation of goods and passengers.

There are, however, some exceptions which lie within the exclusive competence of courts of justice which cannot be resolved by arbitration: disputes related to family law, disputes that arise from housing lease agreements, including disputes related to validity, formation, termination and qualification of such agreements and any housing proprietary rights.

Parties are free to appoint arbitrators of any nationality or professional qualifications. Parties in arbitration proceedings having their seat in Moldova may also be represented by foreign counsel.

In order to be able to refer a dispute to arbitration, it is essential that the parties agree to settle the dispute (whether existing or potential) through arbitration. The agreement by which the parties agree to submit the dispute to arbitration is called an arbitration agreement, it must be established in the written form, failing which it will be considered null and void. The arbitration agreement can have either the form of an arbitration clause inserted in the main agreement (compromissory clause) or the form of a separate agreement (compromise). The arbitration agreement can be executed at any time including after the dispute has arisen.

Currently, the state duty for examination of a dispute in courts amounts to 3% of the value of the claim, but does not exceed MDL 50,000 (EUR 2,400) for legal entities. The arbitration fees are regressive and usually vary between 1% and 5% of the value of the claim.

Arbitral tribunals may issue interim measures which, if necessary, are enforced by courts of justice.

According to national rules, the arbitral award must be rendered at the latest within 6 (six) months as of the constitution of the arbitral tribunal unless agreed otherwise by the parties. This is the biggest advantage of arbitration in Moldova, as court proceedings can last for 2-3 (two to three) years. If the parties settle the dispute during the arbitral proceedings, the arbitrator shall terminate the arbitration and confirm the settlement in an award. In this case, according to the Rules of ICAC, 50% of the arbitration fee is reimbursed to the respective parties.

An arbitral award may be challenged in court by any party within 3 (three) months of the date of its receipt. The Code of Civil Procedure expressly provides an exhaustive list of grounds for the annulment of arbitral awards:

-the dispute may not be subject to arbitration proceedings accordingly to the law in force;

-the arbitration agreement is not valid according to the law;

-the arbitral award does not include the operative part and the grounds, place and date of issuance, or is not signed by the arbitrators;

-the operative part of the arbitral award contains provisions that cannot be executed;

-the constitution of the arbitral tribunal or the arbitral procedure does not comply with the arbitration agreement;

-the interested party was not notified, in the manner prescribed by law, about the nomination or appointment of the arbitrators or about the arbitration proceedings, including the place, date and time of the hearing, or due to other valid reasons could not be present before the arbitral tribunal to provide evidence;

-the arbitral award decided a dispute not contemplated by the arbitration agreement or not falling within its terms, or the decision contains provisions on matters beyond the scope of the arbitration agreement; or

-the arbitral award violates fundamental principles of Moldovan law or good morals.

Thus, the legal framework in the Republic of Moldova is in line with international provisions and best practice. Courts encourage business to use arbitration as an alternative means of dispute resolution and, as shown by statistics, business also welcome arbitration proceedings as these provide lots of advantages in comparison with court proceedings.

2. ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

According to Moldovan legislation; a foreign arbitral award can be recognized and enforced in Moldova if (i) it is issued in conformity with an arbitration agreement on the territory of a foreign state that is party to the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards; (ii) if its recognition and enforcement is governed by an international treaty to which Moldova is a party; or (iii) if the recognition and enforcement is allowed on the basis of reciprocity as regards the effects of foreign arbitral awards. The competence to recognize and enforce foreign arbitral awards lies with the Moldovan courts.

Recognition and enforcement of a foreign arbitral award may be refused by the court only at the request of the party against whom it is raised if that party provides evidence to the court that:

-one of the parties to the arbitration agreement has no full capacity to exercise or the arbitration agreement is not valid under the law to which the parties have subordinated it or, failing that, according to the law of the country in which the judgment was delivered;

-the party against whom the decision is issued has not been properly informed of the designation of the arbitrator or the arbitral proceedings or, for other reasons, has been unable to provide his or her defence;

-the judgment has been given on a dispute not provided for in the arbitration agreement or which does not fall under the terms of the arbitration agreement, or the ruling contains provisions on matters that go beyond the limits of the arbitration agreement;

-the formation of the arbitral tribunal or the arbitral proceedings did not comply with the parties' agreement or, in the absence of such an agreement, was not in accordance with the law of the country in which the arbitration took place; or

-the arbitral award has not become binding on the parties or has been discontinued, or its execution has been suspended by the court or competent authority of the country in or under the law of which it was pronounced.

Recognition and approval of forced execution of the foreign arbitration award may also be refused if the court finds that:

-the subject of the dispute cannot be settled by arbitration under the laws of the Republic of Moldova; or

-the recognition or approval of the forced execution of the arbitral award is contrary to the public order of the Republic of Moldova.

PRACTICE TIPS

TYPE OF PROCEEDINGS

PROCEDURE AND ASSUMPTIONS

Arbitration Proceedings

Approximate Duration

The law confers to the arbitral tribunal the right to determine the admissibility, relevance and importance of the evidence.

Approximate Costs

PROCEDURAL COSTS

ATTORNEYS’ FEES (NET)

Simple and Complex cases

Hourly fees or a fixed fee and/or a success fee may be agreed upon between the attorney and the client.

Value of the action

Up to MDL 50,000

From MDL 50,001

to MDL 100,000

From MDL 100,001

to MDL 200,000

From MDL 200,001

to MDL 500,000

From MDL 500,001

to MDL 1,000,000

From MDL 1,000,001

to MDL 2,000,000

Above MDL 2,000,001

Arbitration fee

5% but not less than USD 500

USD 2,500 + 3% from what is higher than USD 50,000

USD 4,000 + 2% from what is higher than USD 100,000

USD 12,000 + 1% from what is higher than USD 500,000

USD 17,000 + 0,5% from what is higher than USD1,000,000

USD 22,000 + 0,3% from what is higher than USD 2,000,000

Attorney's Fees

Document Production

3 to 9 months. Decision to be issued within 6 months of the initiation of arbitration at the latest, unless parties agreed otherwise.

Unless the rules of the arbitration institution provide otherwise or the parties provide for something different in their agreement, the loser bears the costs.

The amount of arbitration fees depends on whether the dispute is international or local. The fees are determined by the courts rules. The fees of the Arbitration Court within Chamber of Commerce and Industry of Moldova are as follows:

International arbitration:

Registration Fee – USD 200

Arbitration Fee – in accordance with the table below:

Domestic arbitration:

Registration Fee – MDL1000

Arbitration Fee – in accordance with the table below

Value of the action

Up to USD 50,000

From USD 50,001

to USD 100,000

From USD 100,001

to USD 500,000

From USD 500,001

to USD 1,000,000

From USD 1,000,001

to USD 2,000,000

Above USD 2,000,001

Arbitration fee

3% but not less than MDL1,000

MDL 1,500 + 2,8% from what is higher than MDL 50,000

MDL 3,000 + 2,6% from what is higher than MDL 100,000

MDL 6,000 + 2,4% from what is higher than MDL 200,000

MDL 15000 + 2,2% from what is higher than MDL 500,000

MDL 30,000 + 2% from what is higher than MDL 1,000,000

MDL 60,000 + 1,5% from what is higher than MDL 2,000,000

Enforcement of Foreign Arbitral Awards

Approximate Duration

Approximate Costs

COURT FEES

ATTORNEYS’ FEES (NET)

Simple and Complex cases

The state fee for the application for recognition and enforcement of foreign arbitral award is MDL 100.

Hourly fees or a fixed fee and/or a success fee may be agreed upon between the

attorney and the client.

Moldovan legislation does not specify any duration. Usually it takes 2-6 months.

The application for recognition and enforcement of a foreign arbitral award in Moldova can be submitted within 3 years from the date the foreign arbitral award has become binding under the law of the place of arbitration.

A foreign arbitral award can be recognized and enforced in Moldova if (i) it is issued in conformity with an arbitration agreement on the territory of a foreign state that is party to the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards; (ii) recognition and enforcement is governed by an international treaty to which Moldova is a party; or (iii) if it may be recognised and enforced on the basis of reciprocity as regards the effects of the foreign arbitral award.

The information in this chapter was correct as of 1 January 2018. If you have any questions about the content of this chapter,

or would like further information about arbitration in Moldova, please contact

CONTACT

In cooperation with

ACI Partners Law Office, Chisinau, Moldova

www.aci.md

Contributing authors: Partner Dr. Cristina Martin and Managing Partner Igor Odobescu

BRYAN W. JARDINE

Partner

Wolf Theiss, Romania

+40 21 3088 102

bryan.jardine@wolftheiss.com