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1. ARBITRATION

Arbitration in Croatia is governed by the Croatian Arbitration Act of 2001. The purpose of the act was to create a modern law based on the UNCITRAL Model Law and to incorporate features of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Croatian law distinguishes between domestic arbitration and international arbitration, depending upon the seat of arbitration. For a dispute to be classified as international, at least one of the parties must be an individual with his or her domicile or habitual residence outside of Croatia, or be a legal entity established under foreign law. The parties may choose international arbitration, i.e., arbitration proceedings having its seat 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 Croatian Chamber of Commerce (PAC-CCC), which was established in 1853. The Permanent Arbitration Court of the 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 freely dispose of. This excludes certain family law disputes, criminal law matters, administrative law matters, and certain competition law issues. In addition, in arbitration proceedings having its seat outside Croatia, apart from the disposability of rights requirement above, the parties may not submit disputes that fall within the exclusive competence of Croatian courts, such as disputes involving real estate located within the territorial limits of Croatia.

Under Croatian law, an arbitration agreement may be contained in a separate document or in the form of an arbitration clause included in the underlying contract between the parties, but in both cases it must be in written form. The written form requirement may be satisfied by exchanging letters, faxes, telegrams or other means of communication providing for a written record of the agreement. Most importantly, there is no requirement that the writing contains the parties’ signatures. In addition, the law provides that the written form requirement of the arbitration agreement is satisfied if an offer to enter into an arbitration agreement is made in writing or a written confirmation of an orally made arbitration agreement is sent to the other party and is not objected to. This would apply only if the offer or written confirmation would otherwise be deemed accepted under the usual trade customs. Furthermore, the written form requirement would be satisfied if there is a reference in a bill of lading to a shipping contract that contains an arbitration clause. Finally, if the respondent in arbitration proceedings does not challenge the jurisdiction of the arbitral tribunal at least in its reply to the statement of claim, the arbitration agreement will be deemed validly executed.

The parties may freely designate the law applicable to the subject-matter of their dispute(s) and other procedural rules such as the language of arbitration, the number of arbitrators and the method of selecting these. 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 arbitration must be in Croatia.

Unless otherwise agreed by the parties, an arbitral tribunal may, upon a request by a party, order such interim or protective measures (against the other party(ies) to the arbitration agreement) as the arbitral tribunal may consider necessary in respect of the subject matter of the proceedings. The party that has requested such measures may also apply to the competent national court for the enforcement of such measures. It is not incompatible with an arbitration agreement for a party to apply to the state courts before or 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 expressly agreed 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 adequately represented;

-a party was not given proper notice of the commencement of the arbitration proceedings, or was unable 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 the arbitration 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 the law, or the agreement of the parties;

-the award does not adequately or appropriately state the reasoning (unless this has been waived 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 FOREIGN ARBITRAL AWARDS

Croatia is a party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards (by succession of ex-Yugoslavia, as of 8 October 1991), with the reservations that the Convention will only apply to the recognition and enforcement of awards made in the territory of another contracting state, differences arising out of legal relationships, whether contractual or not, that are considered commercial under the national law, and to those arbitral awards which were rendered after the effective date of the Convention. In addition, Croatia is a party to the 1961 European Convention on International Commercial Arbitration (by succession of ex-Yugoslavia, as of 8 October 1991), and the Washington Convention of 1966 on the Settlement of Investment Disputes between States and Nationals of other States (in force as of 22 October 1998).

Currently, there is one bilateral agreement regulating and simplifying the recognition and enforcement of foreign arbitral awards with Austria.

TYPE OF PROCEEDINGS

PRACTICE TIPS

PROCEDURE AND ASSUMPTIONS

The following two estimates are based on the procedural costs of the Rules of Arbitration of the Permanent Court of Arbitration of the Croatian Chamber of Commerce (Zagreb Rules).

Assumption: sole arbitrator appointed and an amount in dispute of EUR 1,000,000: Registration fee of EUR 200, administrative fees of EUR 2,140 and fees for a sole arbitrator of EUR 10,700.

Assumption: sole arbitrator and an amount in dispute of EUR 10,000,000: Registration fee of EUR 200; administrative fees of EUR 6,340 and fees for a sole arbitrator of EUR 31,700.

In case there is an arbitral tribunal with three arbitrators, it may be that the fees for the arbitrators triple.

Assumptions based on an amount in dispute of EUR 1,000,000: Review of 100 pages of documents; no challenge to the jurisdiction of the arbitral 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 in an oral hearing; preparation and review of one post hearing brief. Total approximate cost: EUR 35,000 to EUR 70,000.

Assumptions based on an amount in dispute of EUR 10,000,000: Review of 1000 pages of documents; no challenge to the jurisdiction of the arbitral tribunal; two exchanges of submissions; review of correspondence with arbitral tribunal; assistance with the preparation of 8 witnesses; review of 8 written witness statements; document production up to 500 pages; preparation and review of expert opinions; preparation of oral hearing and participation in an oral hearing; preparation and review of one post hearing brief. Total approximate cost: EUR 130,000 to EUR 200,000.

Approximate Costs

PROCEDURAL COSTS

ATTORNEYS’ FEES (NET)

Simple case

Complex case

Arbitration Proceedings

Document Production

Limited. Usually the International Bar Association Rules on the Taking of Evidence are applied which provide for a narrow document production.

Approximate Duration

-The procedural costs depend on whether a sole arbitrator or an arbitral tribunal of three members is appointed, the complexity of the case and the administrative charges.

-The costs of arbitration to a large extent depend on the arbitration agreement and the amount in dispute, the amount of documents, number of witnesses and whether expert opinions are required. The costs of arbitration also include the arbitrators' fees and the administrative charges.

-The arbitrators usually have large discretion regarding the award of costs. However, in practice the award on costs often depends on the outcome of the case. The award of legal fees is usually not determined by reference to a statutory tariff.

The usual duration of arbitration proceedings is between 1 to 3 years.

1 to 6 months until a decision on recognition and enforcement is rendered in the first instance; 4 months to 1 year if the decision is appealed.

The duration of execution proceedings depends mainly on whether the debtor has executable assets and whether execution measures are opposed by the debtor.

Approximate Duration

-For the enforcement of awards under the New York Convention, the creditor must provide the court with the authenticated original award or a duly certified copy thereof and the original of the arbitration agreement or a duly certified copy thereof.

A court fee of HRK 250 (approx. EUR 35) is payable for the recognition of a foreign court judgment. For enforcement actions, court fees are determined by the Court Fees Act and depend 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

Approximate Costs

COURT FEES

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

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