Arbitration in Croatia is governed by the Croatian Arbitration Act of 2001. The purpose of the act was tocreate a modern law based on the UNCITRAL Model Law and to incorporate features of the 1958 NewYork Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Croatian law distinguishes between domestic arbitration and international arbitration, depending upon theseat of arbitration. For a dispute to be classified as international, at least one of the parties must be anindividual with his or her domicile or habitual residence outside of Croatia, or be a legal entity establishedunder foreign law. The parties may choose international arbitration, i.e., arbitration proceedings having itsseat outside Croatia, only in a dispute which is classified as an international dispute.
There is only one major arbitration institution in Croatia, the Permanent Arbitration Court of the CroatianChamber of Commerce (PAC-CCC), which was established in 1853. The Permanent Arbitration Court ofthe Croatian Chamber of Commerce has established Rules of International Arbitration (Zagreb Rules),which adhere largely to the provisions of the UNCITRAL Arbitration Rules.
The parties may generally submit to arbitration all disputes involving rights which the party may freelydispose of. This excludes certain family law disputes, criminal law matters, administrative law matters, andcertain competition law issues. In addition, in arbitration proceedings having its seat outside Croatia, apartfrom the disposability of rights requirement above, the parties may not submit disputes that fall within theexclusive competence of Croatian courts, such as disputes involving real estate located within theterritorial limits of Croatia.
Under Croatian law, an arbitration agreement may be contained in a separate document or in the form ofan arbitration clause included in the underlying contract between the parties, but in both cases it must bein written form. The written form requirement may be satisfied by exchanging letters, faxes, telegrams orother means of communication providing for a written record of the agreement. Most importantly, there isno requirement that the writing contains the parties’ signatures. In addition, the law provides that thewritten form requirement of the arbitration agreement is satisfied if an offer to enter into an arbitrationagreement is made in writing or a written confirmation of an orally made arbitration agreement is sent tothe other party and is not objected to. This would apply only if the offer or written confirmation wouldotherwise be deemed accepted under the usual trade customs. Furthermore, the written form requirementwould be satisfied if there is a reference in a bill of lading to a shipping contract that contains an arbitrationclause. Finally, if the respondent in arbitration proceedings does not challenge the jurisdiction of thearbitral tribunal at least in its reply to the statement of claim, the arbitration agreement will be deemedvalidly executed.
The parties may freely designate the law applicable to the subject-matter of their dispute(s) and otherprocedural rules such as the language of arbitration, the number of arbitrators and the method of selectingthese. In international arbitration proceedings the parties are also free to designate the seat of arbitration.However, in domestic arbitration, i.e. in which only Croatian parties are involved, the seat of arbitrationmust be in Croatia.
Unless otherwise agreed by the parties, an arbitral tribunal may, upon a request by a party, order suchinterim or protective measures (against the other party(ies) to the arbitration agreement) as the arbitraltribunal may consider necessary in respect of the subject matter of the proceedings. The party that hasrequested such measures may also apply to the competent national court for the enforcement of suchmeasures. It is not incompatible with an arbitration agreement for a party to apply to the state courts beforeor during arbitration proceedings for an interim measure of protection or for a court to grant such a request.
Croatian arbitral awards have the same legal effect as final judgments, unless the parties have expresslyagreed that the award may be contested before an arbitral tribunal of a higher instance.
There are only limited grounds for challenging an award:
-no arbitration agreement has been concluded, or the agreement is invalid;
-the parties to the arbitration agreement were under some incapacity, or were not adequatelyrepresented;
-a party was not given proper notice of the commencement of the arbitration proceedings, or wasunable to present its case due to reasons beyond its control;
-the award concerns a dispute not contemplated by, or not falling within the terms of thearbitration agreement, or contains issues beyond the scope of the arbitration agreement;
-the composition of the arbitral tribunal or the arbitral procedure was not in accordance with thelaw, or the agreement of the parties;
-the award does not adequately or appropriately state the reasoning (unless this has beenwaived by the parties), or the award is not signed;
-the subject-matter of the dispute is not arbitrable under the laws of the Republic of Croatia; or,
-the award violates the public order of the Republic of Croatia.
2. ENFORCEMENT OF FOREIGNARBITRAL AWARDS
Croatia is a party to the New York Convention of 1958 on the Recognition and Enforcement of ForeignArbitral Awards (by succession of ex-Yugoslavia, as of 8 October 1991), with the reservations that theConvention will only apply to the recognition and enforcement of awards made in the territory of anothercontracting state, differences arising out of legal relationships, whether contractual or not, that areconsidered commercial under the national law, and to those arbitral awards which were rendered after theeffective date of the Convention. In addition, Croatia is a party to the 1961 European Convention onInternational Commercial Arbitration (by succession of ex-Yugoslavia, as of 8 October 1991), and theWashington Convention of 1966 on the Settlement of Investment Disputes between States and Nationalsof other States (in force as of 22 October 1998).
Currently, there is one bilateral agreement regulating and simplifying the recognition and enforcement offoreign arbitral awards with Austria.
TYPE OF PROCEEDINGS
PROCEDURE AND ASSUMPTIONS
The following two estimates are based onthe procedural costs of the Rules ofArbitration of the Permanent Court ofArbitration of the Croatian Chamber ofCommerce (Zagreb Rules).
Assumption: sole arbitrator appointedand an amount in dispute of EUR1,000,000: Registration fee of EUR 200,administrative fees of EUR 2,140 and feesfor a sole arbitrator of EUR 10,700.
Assumption: sole arbitrator and anamount in dispute of EUR 10,000,000:Registration fee of EUR 200; administrativefees of EUR 6,340 and fees for a solearbitrator of EUR 31,700.
In case there is an arbitral tribunal with threearbitrators, it may be that the fees for thearbitrators triple.
Assumptions based on an amount indispute of EUR 1,000,000: Review of 100pages of documents; no challenge to thejurisdiction of the arbitral tribunal; twoexchanges of submissions; review ofcorrespondence with arbitral tribunal;assistance with the preparation of 4witnesses; review of 4 written witnessstatements; no experts; preparation of oralhearing and participation in an oral hearing;preparation and review of one post hearingbrief. Total approximate cost: EUR 35,000 toEUR 70,000.
Assumptions based on an amount indispute of EUR 10,000,000: Review of1000 pages of documents; no challenge tothe jurisdiction of the arbitral tribunal; twoexchanges of submissions; review ofcorrespondence with arbitral tribunal;assistance with the preparation of 8witnesses; review of 8 written witnessstatements; document production up to 500pages; preparation and review of expertopinions; preparation of oral hearing andparticipation in an oral hearing; preparationand review of one post hearing brief. Totalapproximate cost: EUR 130,000 to EUR200,000.
ATTORNEYS’ FEES (NET)
Limited. Usually the International Bar Association Rules on the Taking of Evidence areapplied which provide for a narrow document production.
-The procedural costs depend onwhether a sole arbitrator or an arbitraltribunal of three members is appointed,the complexity of the case and theadministrative charges.
-The costs of arbitration to a large extentdepend on the arbitration agreementand the amount in dispute, the amountof documents, number of witnesses andwhether expert opinions are required.The costs of arbitration also include thearbitrators' fees and the administrativecharges.
-The arbitrators usually have largediscretion regarding the award of costs.However, in practice the award on costsoften depends on the outcome of thecase. The award of legal fees is usuallynot determined by reference to astatutory tariff.
The usual duration of arbitration proceedings is between 1 to 3 years.
1 to 6 months until a decision on recognitionand enforcement is rendered in the firstinstance; 4 months to 1 year if the decision isappealed.
The duration of execution proceedingsdepends mainly on whether the debtor hasexecutable assets and whether executionmeasures are opposed by the debtor.
-For the enforcement of awards underthe New York Convention, the creditormust provide the court with theauthenticated original award or a dulycertified copy thereof and the original ofthe arbitration agreement or a dulycertified copy thereof.
A court fee of HRK 250 (approx. EUR 35) is payable for the recognition of a foreign courtjudgment. For enforcement actions, court fees are determined by the Court Fees Act anddepend on the amount of a claim.
Application for recognition/enforcement:
Simple case: EUR 400 to EUR 600.
Complex case: EUR 2,000 to EUR 5,000.
Enforcement of Foreign Arbitral Awards
ATTORNEYS’ FEES (NET)
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 Croatia, please contact