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1. ARBITRATION

The rules regulating arbitration are contained in the entity laws on civil proceedings i.e. Articles 434 - 453 of the FBiH Code of Civil Procedure and in Articles 434 – 453 of the RS Code of Civil Procedure.  Both acts are valid for both domestic and international arbitration proceedings; however, for arbitration proceedings to be classed as international, a foreign element must exist. However, in practice this method of dispute settlement is rarely used in BiH.

Arbitration may be initiated only on the basis of a written agreement signed by both parties. Any written proof, such as fax, email or postal correspondence is considered sufficient. Furthermore, an arbitration agreement is considered valid if the respondent does not contest the existence of such an agreement. An arbitration agreement may be part of a contract or contained in a separate document, i.e., in general terms and conditions which apply to the legal relationship between the parties. There are no specific content requirements for an arbitration agreement. However, the agreement should state the parties to the agreement and the subject-matter of the agreement, plus indicate clearly that a single dispute or all disputes that may arise from a certain contractual legal relationship will be subject to arbitration.

Generally disputes concerning all commercial transactions may be submitted to arbitration. Claims involving family law and claims under administrative proceedings that cannot be brought before the courts but are decided by state agencies are not arbitrable. The parties are free to decide on the language of arbitration and on the applicable procedural rules that will govern the proceedings and may also decide on the number and method for selecting the arbitrators. There may only be an odd number of arbitrators. Provided that a foreign element exists, the parties are free to agree on any substantive law.

The applicable legislation does not provide for any specific rules on interim measures in relation to arbitration proceedings.

An arbitral award has the same legal validity and force as a court judgment and is therefore binding and enforceable. It can be challenged only in certain situations prescribed by law. These include:

-the invalidity or ineffectiveness of the arbitration agreement or no arbitration agreement existed;

-the conduct of the proceedings or the rendering of the award were not in accordance with the parties’ agreement;

-the award does not contain reasoning or was not signed;

-the award was made in a dispute not falling within the terms of the statement of claim or contains decisions beyond the statement of claim;

-the reasoning in the award is inadequate or contradicts the findings of the arbitral tribunal; or

-an infringement of BiH public order.

In addition, the Arbitration Court with the BiH Foreign Trade Chamber is established as of 2003 and administers both domestic commercial disputes, i.e., disputes which involve parties only residing in BiH, and commercial disputes between a party residing in BiH and a party with a foreign residence.

2. ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

A foreign arbitral award must also be recognized by the competent BiH courts before it can be enforced in BiH. The following preconditions must be met for recognition:

-the subject matter of the foreign arbitral award is not exempt from arbitration according to BiH law;

-the subject matter of the foreign arbitral award is not under the exclusive jurisdiction of the BiH courts or other authorities;

-the foreign arbitral award does not contradict principles set forth in the BiH Constitution, the FBiH Constitution or RS Constitution and/or public order;

-reciprocity of recognition exists between BiH and the country of origin of the foreign arbitral award;

-the relevant parties have concluded a written arbitration agreement and such agreement is valid and binding;

-the party against which the arbitral award has been rendered was duly informed of the appointment of the arbitral tribunal and of the arbitration proceedings and there were no obstacles for such party to participate in the arbitration proceedings;

-the composition of the arbitral tribunal and the arbitration proceedings were in accordance with the provisions of the arbitration agreement and the arbitration rules;

-the arbitral tribunal has not exceeded its authority determined by the arbitration agreement;

-the foreign arbitral award is final and enforceable; and

-the foreign arbitral award is not ambiguous or contradictory.

BiH is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, with the reservations that the Convention will only be applied to the recognition and enforcement of awards made in the territory of another contracting state, will only be applied to differences arising out of legal relationships, whether contractual or not, that are considered commercial under the national law and will only be applied to those arbitral awards which were adopted after the entry into effect of the Convention. In addition, BiH is a party to the 1961 European Convention on International Commercial Arbitration.

TYPE OF PROCEEDINGS

PROCEDURE AND ASSUMPTIONS

PRACTICE TIPS

Approximate Duration

Arbitration proceedings are seldom used in BiH and the practice is very limited. Therefore, it is very difficult to give any estimates as to the duration, costs and other matters relevant for arbitration proceedings.

-Institutional arbitration is regulated by the Arbitration Rules of the Arbitration Court attached to the Foreign Trade Chamber of BiH (adopted in 2003).

-Until now, only a very limited number of arbitration proceedings have been initiated and realized before the Arbitration Court.

Arbitration Proceedings

Yes. According to the Arbitration Rules of the Arbitration Court attached to the Foreign Trade Chamber of BiH, the plaintiff and the defendant are required to, in their claims and in response to claims, state and provide all documents supporting their statements.

Approximate Costs

PROCEDURAL COSTS

Simple case

Complex case

ATTORNEYS’ FEES (NET)

The procedural costs depend on whether a sole arbitrator or an arbitral tribunal is appointed. The following estimates are based on the procedural costs of the Arbitration Rules of the Foreign Trade Chamber of BiH.

Assumption: sole arbitrator appointed and an amount in dispute of EUR 1,000,000: Administrative costs:  EUR 3,060; fee for a sole arbitrator: EUR 10,200. In total: EUR 13,260.

Assumption: sole arbitrator appointed and an amount in dispute of EUR 10,000,000: Administrative costs:  EUR 9,480; Fee for a sole arbitrator: EUR 31,600. In total: EUR 41,080.

In case of an arbitral tribunal, the arbitrators’ costs will be multiplied by the number of arbitrators, minus 20%.

According to the FBiH Attorney's Tariff, attorneys' fees for all actions in arbitration proceedings are the same as the fees in standard civil proceedings. When representing a client in international arbitration proceedings, the attorney is entitled to double the amount of fees applicable in standard civil proceedings.

According to the RS Attorney's Tariff, drafting submissions and representation at the hearing: BAM 500 (approx. EUR 250).

Document Production

Canton Sarajevo: BAM 100 (approx. EUR 50) for the motion for recognition; BAM 200 (approx. EUR 100) for appeal; fees for the court’s decision depend on the amount in dispute and are calculated in the same way as in civil proceedings.

RS: BAM 200 (approx. EUR 100) for the motion for recognition, while the court fees for an appeal are BAM 300 (approx. EUR 150).

Under the FBiH Attorneys' Fees application for the recognition of foreign arbitral awards: 50% of the fees that would be charged by the attorney for actions in standard civil proceedings. Attorneys’ fees for all actions in enforcement proceedings are the same as the fees in standard civil proceedings.

Under the RS Attorneys' Fees application for the recognition of foreign arbitral awards and representation at the oral hearing (if applicable): BAM 375 (approx. EUR 180). Attorneys' fees for all actions in enforcement proceedings are the same as the fees in the standard civil proceedings.

Approximate Costs

Court Fees

ATTORNEYS’ FEES (NET)

Enforcement of Foreign Arbitral Awards

Approximate Duration

According to the BiH Law on Conflict of Law Rules, the following must be submitted along with the motion for recognition/execution of a foreign arbitral award:

-original or certified copy of the foreign arbitral award for which recognition is sought, including certification from the competent authority that the award became legally valid and binding under the law of the country where the award was rendered;

-official translation of the foreign arbitral award; and

-proof that the court fee has been paid.

The same documents must be submitted with a motion for recognition and enforcement of a foreign arbitral award under the New York Convention for Recognition and Enforcement of Foreign Arbitral Awards.

Up to one year, if appealed even longer.

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 Bosnia & Herzegovina, please contact

CONTACT

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www.wolftheiss.com/offices/bosnia-herzegovina

Naida ČustoviĆ

Partner

Law Office Custovic - Independent Attorney at Law in Cooperation with Wolf Theiss

+ 387 33 953 444

naida.custovic@lawoffice-custovic.com

Ilma KasumagiĆ

Associate

Law Office Custovic

+ 387 33 953 444

ilma.kasumagic@lawoffice-custovic.com