ROMANIA

1. ARBITRATION

Arbitration in Romania is governed by the Fourth Book - Domestic Arbitration (Articles 541 – 621) and by the Seventh Book – International Civil Trials – International Arbitration (Articles 1111-1133) of the New Civil Procedural Code ("NCPC"). An arbitral dispute taking place in Romania is qualified as international if it is based upon a legal relationship having a foreign element.

The most used institution in Romania is the International Court of Commercial Arbitration attached to the Chamber of Commerce and Industry of Romania (“CCIR”). CCIR has its own Rules of Arbitration.

Nevertheless, under the provisions of the NCPC the parties to an arbitration clause or separate arbitration agreement are free to choose any arbitral institution or arbitration rules they want to be applicable to their dispute. Under Romanian law, the parties may agree that disputes arising from their contractual relationships shall be settled by arbitration, indicating, under the sanction of nullity, the method of appointment of arbitrators. In case of institutionalized arbitration, reference to the arbitration body or its rules of arbitration shall suffice.

The arbitral agreement shall be concluded either in the form of an arbitration clause, stipulated in the main contract (such clause is always previous to any arisen dispute), or in the form of a separate agreement (“compromise”), which is concluded at the moment the dispute occurs. Both the arbitration clause and the compromise must be in writing and signed by the parties.

Generally all disputes involving a patrimonial interest can be submitted to arbitration. Disputes concerning personal status, collective labour conflicts, certain shareholder disputes, the annulment of intellectual property rights and bankruptcy proceedings cannot be subject to arbitration.

In the arbitration agreement or by subsequent agreement, the parties are free to establish the procedure to be observed by the arbitral tribunal, the number of arbitrators, and the method used to appoint the arbitrators, including whether the dispute shall be settled by a sole arbitrator or several arbitrators (this is generally applicable to ad hoc arbitration as in case of institutionalized arbitration, the rules of the institution shall apply). As a general rule, according to the NCPC, if the parties have not specified the number of arbitrators, the dispute shall be settled by three arbitrators, one appointed by each party and the third arbitrator, the chairman, shall be appointed by the other two arbitrators. The parties are also free to decide on the seat and language of arbitration.

If the parties fail to reach an agreement, the arbitral tribunal has the authority to decide upon the procedural rules that will apply to the arbitration; however, if the parties are unable to reach an agreement and the tribunal is unable to decide, the general provisions stipulated in the NCPC shall apply.

Before or during the arbitral proceedings, any party may request the courts of law to grant precautionary and provisional measures with regard to the dispute or to ascertain certain factual circumstances (Article 585 of the NCPC).

A copy of the request for arbitration and the arbitration clause shall be attached to the application for precautionary or provisional measures. In case the court grants such measures, the party who applied for such measures shall communicate a copy of the decision to the arbitral tribunal.

During the arbitral proceedings, precautionary and provisional measures or measures required for the ascertaining of factual circumstances related to the dispute can also be approved by the arbitral tribunal. In case of resistance, the execution of these measures shall be ordered by the court.

Generally, arbitral awards rendered by tribunals with seat in Romania are enforceable by the courts through judicial bailiffs, in the same manner as other legally binding court judgments. The arbitral award shall be final and binding, and shall have the same effect as any final decision rendered by a court of law.

Arbitral awards are considered "national" awards when the seat of arbitration was in Romania. If the seat of arbitration was not located in Romania, the arbitral award shall be considered a foreign award and shall be enforced only after it is recognized by the Romanian courts under a specific procedure.

Arbitral awards may be challenged in ordinary courts. An arbitral award may only be set aside following a petition for annulment based upon one of the following reasons:

-the dispute could not be settled by arbitration;

-the arbitral tribunal settled the disputes in the absence of an arbitration agreement or pursuant to an agreement that is void or inoperative;

-the arbitral tribunal had not been constituted in accordance with the arbitration agreement;

-a party was absent on the date of the hearing and the summoning procedure has not been legally fulfilled;

-the arbitral award has been rendered after the time for rendering the award has lapsed;

-the arbitral tribunal has decided matters which have not been submitted to arbitration, or has failed to decide upon a specific claim;

-the arbitral award failed to include the grounds of the award, the date and place where the award was issued, or the award was not signed by the arbitrators;

-the arbitral award violates public order, morals or provisions of the law; or

-if, after the issuance of the arbitral award, the Constitutional Court ruled on a law applied in the dispute to which the arbitral award refers, declaring that the law, the ordinance or a provision of the law or ordinance is unconstitutional.

Generally the term for filing a set aside petition is thirty (30) days from the communication of the arbitral award.

2. ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

Arbitral awards which are not deemed to be qualified as a national award in Romania, but have been rendered in a domestic or international arbitration in a foreign state, are considered foreign arbitral awards.

Foreign arbitral awards can be acknowledged and enforced in Romania by applying the provisions stipulated in the NCPC.

Foreign arbitral awards which are not willingly performed by those who are obligated to do so may be acknowledged and enforced in Romania if the subject matter of the arbitration may be settled through arbitration and if the award does not contain provisions contrary to private international law public order.

Romania is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("NY Convention"), with the reservations that the Convention will only be applied to awards resulting from disputes having a commercial nature according to Romanian legislation; and to the recognition and enforcement of awards made on the territory of another contracting state. With regard to awards made in the territory of non-contracting states, the Convention will only be applied to the extent to which those states grant reciprocal treatment.

Romania is also a party to the 1961 European Convention on International Commercial Arbitration and the 1965 Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States, both containing provisions with regard to the recognition and the enforcement of arbitral awards in specific fields.

The enforcement of judicial awards is mainly regulated by the provisions of the NCPC. This legal framework is only supplemented by the international conventions on arbitration. The NCPC chapter on the enforcement of foreign arbitral awards has incorporated the provisions of the NY Convention.

The application for the acknowledgement and enforcement of an arbitral award must be lodged with the tribunal in which the domicile or the registered office of the opposing party is located. In case the competent court cannot be identified, the Bucharest Tribunal always has jurisdiction. The application for enforcement must be accompanied by the arbitral award and by the arbitration agreement, translated into Romanian.

The recognition or the enforcement of the foreign arbitral award shall be denied by the tribunal, if the opposing party proves the existence of the following circumstances:

-the parties did not have the capacity to conclude the arbitration agreement, under their respective applicable laws;

-the arbitration agreement was not valid under the law chosen by the parties or, if not applicable, the law of the state where the award was issued;

-the opposing party was not properly informed with regard to the election of the arbitrator(s), the arbitral proceeding or was unable to defend itself in the arbitration;

-the composition of the arbitral tribunal or the arbitral procedure was not carried out according to the agreement of the parties or, in the lack of such agreement, in accordance to the lex loci;

-the award concerns a dispute excluded from the arbitration agreement or contains provisions that exceed the scope of the arbitration agreement. However, matters from the award that may be subject to arbitration can be separated from the others and enforced; or

-the award has not become binding on the parties yet, was annulled or suspended by a competent authority from the state of its issuance or in accordance with the law of the state of its issuance.

The decision on the application for recognition and enforcement of a foreign arbitral award may be challenged only through an appeal. The foreign arbitral award is recognised in Romania with regard to all factual circumstances in its content.

The NCPC prohibits the examination on the merits of an arbitral award by the court of recognition.

TYPE OF PROCEEDINGS

PRACTICE TIPS

PROCEDURE AND ASSUMPTIONS

-The costs of arbitration depend to a great extent on the amount in dispute, the amount of documents, the number of witnesses and whether expert opinions are required.

-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.

Document Production

The usual duration of arbitration proceedings is between 6 months and 1 year.

Arbitration Proceedings

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 following two estimates are based on the procedural costs of the Court of International Commercial Arbitration attached to the Chamber of Commerce and Industry.

Assumption: Sole arbitrator appointed and an amount in dispute of EUR 1,000,000; Total costs: registration fee: EUR 150, administrative fees of EUR 13,300 and fees for a sole arbitrator of EUR 12,900.

Assumption: Sole arbitrator and an amount in dispute of EUR 10,000,000: Registration fee: EUR 150; administrative fees of EUR 42,300 and fees for a sole arbitrator of EUR 41,900.

These fees are applicable only for disputes between foreign companies, or between foreign companies and Romanian companies and not to arbitration between Romanian companies claiming amounts in EUR. For this last situation, the amounts in EUR must be converted to RON and the fees will be calculated based upon the amount in RON. However, the fees in RON and EUR are rather similar.

Assumption 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; preparation and review of one post hearing brief.  Total approximate cost: from EUR 40,000 to

EUR 60,000.

Assumption based on an amount in dispute of EUR 10,000,000: Review of 1,000 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: from EUR 60,000 to

EUR 100,000.

Approximate Duration

Limited.

Approximate Costs

PROCEDURAL COSTS

Simple case

Complex case

ATTORNEYS’ FEES (NET)

Simple case

Complex case

Approximate Duration

Approximate Costs

COURT FEES

ATTORNEYS’ FEES (NET)

Enforcement of Foreign Arbitral Awards

-A translation of the award is always required.

-For 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.

For a declaration of enforceability, court fees are insignificant (EUR 10 – EUR 20).

For the enforcement of the award by a bailiff, there are specific costs.

Application for recognition/enforcement:

Simple case: EUR 1,000 to EUR 1,500

Complex case: EUR 2,000 to EUR 5,000

1 to 3 months until a decision on recognition (if applicable) and enforcement is rendered in first instance; 3 to 5 months if the decision is appealed.

The duration of execution proceedings depends mainly on whether the debtor has executable assets and whether execution measures or even enforceability of the foreign judgment issued in an EU Member State are opposed by the debtor.

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 Romania, please contact

CONTACT

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+40 21 308 8100

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www.wolftheiss.com/offices/romania

ALEXANDRU ROMAN

Associate

Wolf Theiss, Romania

+40 21 308 8100

alexandru.roman@wolftheiss.com