Arbitration in the Republic of Macedonia is governed by the following laws: Law on litigation procedure(Закон за парничната постапка) stipulating the legal proceeding before selected courts, InternationalPrivate Act (Закон за меѓународно приватно право) regulating the applicable law and the recognition offoreign arbitral awards, Law on international commercial arbitration of the Republic of Macedonia (Законза меѓународна трговска арбитража на Република Македонија) ("Law on international arbitration")regulating international commercial arbitration when the place of arbitration is located in the territory of theRepublic of Macedonia and Law on enforcement (Закон за извршување) regulating the enforcement offoreign arbitral awards.
In addition, the Rulebook of the Permanent Court of Arbitration within the Economic Chamber of the Republicof Macedonia ("Rulebook") regulates the organization of the Permanent Court of Arbitration with its seat inSkopje, capital of Macedonia, which has jurisdiction for disputes with or without an international element.
The Arbitration Rules of the Macedonian Stock Exchange Joint Stock Company Skopje ("MacedonianStock Exchange") and Central Depositary of Securities Joint Stock Company Skopje ("Central Depositaryof Securities") regulate the settlement of disputes between members of the Macedonian Stock Exchangeor between members and their clients, and between the members of the Central Depositary of securitiesor between the members and their clients in a justified, efficient and honest manner. It is mandatory toresolve disputes between members of the Macedonian Stock Exchange and members of the CentralDepositary of Securities by arbitration. Disputes between members of the Macedonian Stock Exchangeand members of the Central Depositary of securities with their clients are to be resolved by arbitration atthe request of the clients. The Macedonian Stock Exchange and the Central Depositary form an ArbitrationCommission for resolving disputes. The arbitral awards of this Arbitration Commission are final andbinding among the parties without any right to appeal. The party commencing the arbitration procedurecovers the deposit for the procedure. Nevertheless, the final fees are covered by the party which wassuccessful in the dispute.
According to Macedonian law, an arbitration agreement may be concluded for a certain dispute and forfuture claims that may arise out of or in connection with a defined legal relationship.
Parties may agree on arbitration for the resolution of disputes if the rights are in the free disposal of theparties and the disputes do not fall under the exclusive jurisdiction of the Macedonian courts pursuant tothe law, such as disputes related to but not limited to:
-establishment, termination and statutory changes of legal entities;
-registration in public registries;
-registration and legality of intellectual property rights;
-recognition of enforcement;
-marital and family matters;
-penal law matters;
-insolvency matters; and
Both disputes with and without an international element may be resolved in front of an arbitral tribunal,whereby the dispute is considered to have an international element if:
-at least one of the parties at the time when the arbitration agreement was concluded is a naturalperson with permanent residence or domicile outside the territory of the Republic of Macedonia,or a legal entity whose seat is not within the territory of the Republic of Macedonia; or
-the place where a substantial part of the obligations of the commercial regulations should beperformed or the place to which the subject matter of the dispute is most closely connected isnot on the territory of the Republic of Macedonia.
Parties are not entitled to designate the applicable law if the legal dispute has no international element.
Under Macedonian law, parties may agree on the seat of arbitration which may be outside of the territoryof the Republic of Macedonia only if at least one of the parties was, at the time of conclusion of thearbitration agreement, a natural person with permanent residence or domicile outside the territory of theRepublic of Macedonia, or a legal entity whose seat is outside the territory of the Republic of Macedonia.
The arbitration agreement must be in writing and may be concluded in the form of an arbitration clause inthe main contract or as a separate agreement.
The composition of an arbitral tribunal and the procedure before arbitral tribunals is strictly regulated. As ageneral rule, if the dispute is to be resolved by a sole arbitrator, he/she has to be appointed by bothparties. If they do not reach an agreement on the sole arbitrator, he/she will be appointed by the presidentof the arbitration court. Where the dispute is to be resolved by an arbitral tribunal, the claimant and therespondent each appoints one arbitrator. The chair of the tribunal is then to be appointed by the presidentof the arbitration court; either directly or after the parties’ attempt to jointly appoint a chair has failed. Insome cases, the chair of the arbitral tribunal may be elected by the president of the competentMacedonian court. The arbitrators are appointed from a list of registered arbitrators. Foreign persons arequalified to act as arbitrators.
The arbitral tribunal may conduct the procedure in a way that it considers most appropriate, provided thatthe parties are treated equally and, at every stage of the procedure, each party is given an opportunity topresent its facts, legal findings, requirements and views. Unless the parties have agreed otherwise, thearbitral tribunal may appoint experts for resolving issues in a particular field of expertise.
Unless the parties have agreed otherwise, the arbitral tribunal may, at the request of one of the parties,issue an interim measure and order any party to take a certain action which the arbitral tribunal considersnecessary in compliance with the subject of the dispute. The arbitral tribunal may request any party toprovide an appropriate security regarding that measure. If the party against whom the interim measure isdirected does not carry out the interim measure on a voluntary basis, the party that requested the interimmeasure may apply for the enforcement before the competent court.
Arbitral tribunal may require the legal support of the competent court of the Republic of Macedonia forperforming of evidences when the arbitral tribunal cannot perform them itself.
An arbitral award should be rendered in writing including a proper reasoning except where the parties havereached an amicable settlement. An arbitral award may be published only upon approval by both parties.
The arbitral tribunal is obliged to deliver the draft of the arbitral award to the arbitration court prior to itssigning, for an eventual opinion on amending the arbitral award. The review and the approval of the draftarbitral award are to be performed by the President of the arbitration court or by another member of thePresidency as appointed by the Presidency of the arbitration court. The arbitral award may not be signedand delivered to the parties before completion of this process of review and approval.
An arbitral award is final and binding upon the parties who are obliged to comply with it without any delay.An arbitral award has the effect of a final and binding judgement against the parties, unless the agreementprovides for a possibility of appeal to an arbitration court of a higher instance. Based on the Law oninternational arbitration, there is no (ordinary) legal recourse against the arbitral award before a higherarbitration court.
The arbitral tribunal may only issue an arbitral award ex aequo et bono if explicitly authorized by theparties to do so.
A claim for annulment of the arbitral award may be filed as follows, but not limited to:
-lack of arbitration agreement or invalid arbitration agreement;
-non-arbitrability of the subject matter;
-improper composition of the arbitral tribunal;
-lack of due process;
-violation of the Macedonian procedural ordre public;
-violation of the Macedonian substantive ordre public; and
-violation of the Macedonian Constitution.
A challenge must be filed within three months from the notification of the award or acknowledgement of thereasons for annulment. The challenge may not be filed after the expiry of 1 (one) year as of the date oflegal validity of the arbitral award.
Macedonian companies do not use arbitration frequently in their domestic business relations. In relationshipswith a foreign element, Macedonian companies often use the services of the International Chamber ofCommerce (ICC) or the Vienna International Arbitral Centre of the Federal Economic Chamber (VIAC).
2. ENFORCEMENT OF FOREIGNARBITRAL AWARDS
An arbitral award is considered foreign if it was rendered outside the territory of the Republic of Macedonia.
The recognition and enforcement of foreign arbitral awards shall be resolved according to the provisions ofthe 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards to whichthe Republic of Macedonia acceded subject to the following reservations: (i) the Republic of Macedoniawill apply the Convention only to differences arising out of legal relationships, whether contractual or not,that are considered commercial under the national law; and (ii) the Republic of Macedonia declared areservation with regard to retroactive application of the Convention.
Macedonian courts recognize foreign arbitral awards when they fulfil the legal conditions and they receivethe same legal status as judgements of the Macedonian courts.
PROCEDURE AND ASSUMPTIONS
TYPE OF PROCEEDINGS
The procedural costs of the arbitration aresubject to the advance on costs regulatedunder the Rules and include the following:registration fee, arbitration administrativefee, arbitrator’s fee, representation fees,expenditures. These costs are to be coveredby the party undertaking the legal action.Where the advance on fees exceeds EUR25,000 the party is entitled to present anunconditional and irrevocable bankguarantee, from a Macedonian bank or afirst class foreign bank, payable at first-demand of the President of the PermanentCourt of Arbitration, The final costs shall bedetermined in the final arbitral award whichwill also stipulate which party should coverthese.
The attorney and the client may agree onhourly fees or a fixed fee, however notbelow the minimum prices determined in theAttorney’s Tariff according to the value of thedispute.
ATTORNEYS’ FEES (NET)
Simple and Complex cases
The amount of the arbitration costsbasically depends on the value of thedispute and further on the number ofparties, the number of arbitrators, the,involvement of third parties, etc.
The time period includes the procedurefor recognition before the basic court andeventually the court of appeal in bothsimple and complex cases.
In addition, the period also includes thepossibility of extension of the enforcementdepending on the disposed debtor’sassets.
Enforcement of Foreign Arbitral Awards
Court fees shall be calculated according tothe Court Fees Act and depend on the valueof the dispute.
These costs are to be covered by the partyundertaking the legal action.
Final costs shall be determined in the finalcourt decision which will also stipulate whichparty shall cover these.
The attorney and the client may agree onhourly fees or a fixed fee, however notbelow the minimum prices determined inthe Attorney’s Tariff according to the valueof the case.
ATTORNEYS’ FEES (NET)
Simple and Complex cases
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 the Republic of Macedonia, please contact