International commercial arbitration

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General considerations for arbitration

Arbitration (proceedings) is an out-of-court method of dispute resolution by independent and impartial arbitrators, which is often used as an alternative to the trial for resolving property disputes. In the Czech Republic, arbitration is regulated by Act No. 216/1994 Sb., on arbitration proceedings and the enforcement of arbitration awards (“Arbitration Act”).

Arbitration is a non-public procedure, which, together with its expedition and often lower costs compared to ordinary court proceedings, is considered one of its greatest advantages.

The result of arbitration is an arbitration award, which constitutes an execution title. The arbitration award must be in writing (in paper form or with a state-recognised electronic signature) and must contain a statement of reasons unless both parties to the dispute have expressly agreed not to require a statement of reasons, otherwise it is invalid.

The arbitration award cannot be appealed, but the arbitration agreement may provide for review by other arbitrators. However, either party may bring an action before the court to annul the arbitration award within three months of its delivery. In proceedings for annulling an arbitration award, the court does not review the substance of the arbitration award according to its content, but only reviews the fulfilment of the conditions for arbitration proceedings and certain issues related to the course of the arbitration proceedings.

 International commercial arbitration

Arbitration is often used to resolve disputes in international trade. Given the independence from the courts of the relevant state, arbitration is usually considered a preferable alternative.

The advantages of dispute resolution in international arbitration include the fact that the dispute is resolved on neutral ground in a final and binding manner, usually without the formalities of the procedural rules of the parties’ legal systems, as well as the expedition of the proceedings and the possibility of choosing an arbitrator qualified in the relevant field of law or commerce. The efficiency associated with arbitration then makes arbitration a cheaper alternative to dispute resolution.

Arbitration proceedings may be conducted in any language agreed by the parties, i.e. usually in English.

In the international context, the enforcement of arbitration awards is guaranteed by international agreements, in particular, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), which was concluded on 10 June 1958 in New York and came into force on 7 June 1959. For Czechoslovakia, it came into force on 10 October 1959. 

The New York Convention establishes conditions under which a foreign arbitration award, i.e. an arbitration award rendered in the territory of another state, may be recognised and enforced in the territory of its contracting states. According to the Convention, such awards are to be treated in the same manner as domestic arbitration awards. Enforcement of foreign arbitration awards is governed by the law of the state of enforcement. The New York Convention provides its contracting states with an exhaustive list of grounds for which the recognition and enforcement of a foreign arbitration award may be refused. The New York Convention has currently 156 contracting states.

Most arbitration institutions set rules governing the procedure for resolving disputes in arbitration. The best known and most widely used arbitration rules include the rules of the International Chamber of Commerce (“ICC”) and the London Court of International Arbitration (“LCIA”).

The standard arbitration clause (in English) recommended by the ICC reads as follows:

“All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.”

But arbitration clauses usually also include the designation of three arbitrators (in order to balance the decision-making process), the place of arbitration (usually a neutral location such as Vienna, London, Paris or Geneva) and the language of the dispute resolution (English).

What situations do we typically handle for our clients in the context of international commercial arbitrations?

  • Protection of international investments
  • Resolution of serious international commercial disputes
  • Investment arbitration
  • Legal advice to private, state and public entities in international disputes
  • Representation before the arbitration court
  • Conclusion of an investment protection agreement
  • Representation of clients before:
    • The International Court of Arbitration with the International Chamber of Commerce in Paris (ICC)
    • The International Arbitral Centre of the Austrian Federal Economic Chamber in Vienna (VIAC)
  • Quantification of costs of international arbitration
  • Legal analysis of international arbitration cases

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