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1. ARBITRATION

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, International Private Act (Закон за меѓународно приватно право) regulating the applicable law and the recognition of foreign arbitral awards, Law on international commercial arbitration of the Republic of Macedonia (Закон за 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 the Republic of Macedonia and Law on enforcement (Закон за извршување) regulating the enforcement of foreign arbitral awards.

In addition, the Rulebook of the Permanent Court of Arbitration within the Economic Chamber of the Republic of Macedonia ("Rulebook") regulates the organization of the Permanent Court of Arbitration with its seat in Skopje, 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 ("Macedonian Stock Exchange") and Central Depositary of Securities Joint Stock Company Skopje ("Central Depositary of Securities") regulate the settlement of disputes between members of the Macedonian Stock Exchange or between members and their clients, and between the members of the Central Depositary of securities or between the members and their clients in a justified, efficient and honest manner. It is mandatory to resolve disputes between members of the Macedonian Stock Exchange and members of the Central Depositary of Securities by arbitration. Disputes between members of the Macedonian Stock Exchange and members of the Central Depositary of securities with their clients are to be resolved by arbitration at the request of the clients. The Macedonian Stock Exchange and the Central Depositary form an Arbitration Commission for resolving disputes. The arbitral awards of this Arbitration Commission are final and binding among the parties without any right to appeal. The party commencing the arbitration procedure covers the deposit for the procedure. Nevertheless, the final fees are covered by the party which was successful in the dispute.

According to Macedonian law, an arbitration agreement may be concluded for a certain dispute and for future 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 the parties and the disputes do not fall under the exclusive jurisdiction of the Macedonian courts pursuant to the 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;

-property matters;

-labour relations;

-marital and family matters;

-penal law matters;

-insolvency matters; and

-consumer matters.

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 natural person 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 be performed or the place to which the subject matter of the dispute is most closely connected is not 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 territory of the Republic of Macedonia only if at least one of the parties was, at the time of conclusion of the arbitration agreement, a natural person with permanent residence or domicile outside the territory of the Republic 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 in the main contract or as a separate agreement.

The composition of an arbitral tribunal and the procedure before arbitral tribunals is strictly regulated. As a general rule, if the dispute is to be resolved by a sole arbitrator, he/she has to be appointed by both parties. If they do not reach an agreement on the sole arbitrator, he/she will be appointed by the president of the arbitration court. Where the dispute is to be resolved by an arbitral tribunal, the claimant and the respondent each appoints one arbitrator. The chair of the tribunal is then to be appointed by the president of the arbitration court; either directly or after the parties’ attempt to jointly appoint a chair has failed. In some cases, the chair of the arbitral tribunal may be elected by the president of the competent Macedonian court. The arbitrators are appointed from a list of registered arbitrators. Foreign persons are qualified to act as arbitrators.

The arbitral tribunal may conduct the procedure in a way that it considers most appropriate, provided that the parties are treated equally and, at every stage of the procedure, each party is given an opportunity to present its facts, legal findings, requirements and views. Unless the parties have agreed otherwise, the arbitral 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 considers necessary in compliance with the subject of the dispute. The arbitral tribunal may request any party to provide an appropriate security regarding that measure. If the party against whom the interim measure is directed does not carry out the interim measure on a voluntary basis, the party that requested the interim measure 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 for performing 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 have reached 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 its signing, for an eventual opinion on amending the arbitral award. The review and the approval of the draft arbitral award are to be performed by the President of the arbitration court or by another member of the Presidency as appointed by the Presidency of the arbitration court. The arbitral award may not be signed and 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 agreement provides for a possibility of appeal to an arbitration court of a higher instance. Based on the Law on international arbitration, there is no (ordinary) legal recourse against the arbitral award before a higher arbitration court.

The arbitral tribunal may only issue an arbitral award ex aequo et bono if explicitly authorized by the parties 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;

-ultra petita;

-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 the reasons for annulment. The challenge may not be filed after the expiry of 1 (one) year as of the date of legal validity of the arbitral award.

Macedonian companies do not use arbitration frequently in their domestic business relations. In relationships with a foreign element, Macedonian companies often use the services of the International Chamber of Commerce (ICC) or the Vienna International Arbitral Centre of the Federal Economic Chamber (VIAC).

2. ENFORCEMENT OF FOREIGN ARBITRAL 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 of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards to which the Republic of Macedonia acceded subject to the following reservations: (i) the Republic of Macedonia will 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 a reservation with regard to retroactive application of the Convention.

Macedonian courts recognize foreign arbitral awards when they fulfil the legal conditions and they receive the same legal status as judgements of the Macedonian courts.

PROCEDURE AND ASSUMPTIONS

PRACTICE TIPS

TYPE OF PROCEEDINGS

Arbitration Proceedings

The procedural costs of the arbitration are subject to the advance on costs regulated under the Rules and include the following: registration fee, arbitration administrative fee, arbitrator’s fee, representation fees, expenditures. These costs are to be covered by the party undertaking the legal action. Where the advance on fees exceeds EUR 25,000 the party is entitled to present an unconditional and irrevocable bank guarantee, from a Macedonian bank or a first class foreign bank, payable at first- demand of the President of the Permanent Court of Arbitration, The final costs shall be determined in the final arbitral award which will also stipulate which party should cover these.

The attorney and the client may agree on hourly fees or a fixed fee, however not below the minimum prices determined in the Attorney’s Tariff according to the value of the dispute.

Document Production

Approximate Costs

PROCEDURAL COSTS

ATTORNEYS’ FEES (NET)

Simple and Complex cases

Approximate Duration

Limited.

3-7 months

The amount of the arbitration costs basically depends on the value of the dispute and further on the number of parties, the number of arbitrators, the, involvement of third parties, etc.

1-2 years

Approximate Duration

The time period includes the procedure for recognition before the basic court and eventually the court of appeal in both simple and complex cases.

In addition, the period also includes the possibility of extension of the enforcement depending on the disposed debtor’s assets.

Enforcement of Foreign Arbitral Awards

Court fees shall be calculated according to the Court Fees Act and depend on the value of the dispute.

These costs are to be covered by the party undertaking the legal action.

Final costs shall be determined in the final court decision which will also stipulate which party shall cover these.

The attorney and the client may agree on hourly fees or a fixed fee, however not below the minimum prices determined in the Attorney’s Tariff according to the value of the case.

Approximate Costs

COURT FEES

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