At the stage of Moldova's transition to the market economy, the need to move to a new qualitative stage in terms of ensuring the rights and legal interests of the subjects of entrepreneurship in foreign trade relations became obvious.
International commercial arbitration is becoming the main mechanism of resolving disputes in the field of international economic relations. This was also confirmed in December 1976 by the UN General Assembly. The resolution 31/98 adopted by the General Assembly on 15th December 1976 on Arbitration Rules of the United Nations Commission on International Trade Law recognized the value of arbitration as a method of settling disputes arising in the context of international commercial relations. At the same time the resolution recommended the use of the Arbitration Rules of the United Nations Commission on International Trade Law in the settlement of disputes arising in the context of international commercial relations, particularly by reference to the Arbitration Rules in commercial contracts. Thus, its unanimously accepted resolution noted the importance of arbitration as a method of resolving disputes arising from international trade relations.
Along with going to state courts, international commercial arbitration is one of the most popular means of resolving disputes between parties to an international contract. Arbitration is a system of adjudication conducted as a result of an agreement between the parties on the resolution of disputes arising or may arise between the parties, by means of independent arbitrators who derive their powers from this agreement, instead of solving their disputes with state jurisdiction. In arbitration both sides to a dispute agree to let a designated third party, the arbitrator or the arbitral tribunal decide the outcome of that legal dispute.
In the Republic of Moldova, the law for all types of arbitration disputes was adopted on May 31, 1994. At the moment, this activity is regulated by three normative acts: The Law on Arbitration of February 22, 2008 No. 23-XVI; The Law on International Commercial Arbitration of February 22, 2008 No. 24-XVI and the Civil Procedure Code of the Republic of Moldova. The Institute of Commercial Arbitration was established by the UN General Assembly, which in 1985 approved a model law for such institutions. And this model law constitutes a general framework for local arbitration regulations in Moldova and in different countries around the world.
The oldest commercial arbitration court in the Republic of Moldova, operating since 1993, is the International Commercial Arbitration Court at the Chamber of Commerce and Industry of Moldova (ICAC CCI RM).
Advantages of Arbitration
Compared to courts, dispute resolution through arbitration has certain advantages.
The advantages of arbitration in the Republic of Moldova lie in some fundamental factors:
- The maximum time for a final decision by the arbitration tribunal in the Republic of Moldova is 6 months. And in the state courts of Moldova, the case can be considered from the first instance to the Supreme Court of Justice, then back, etc. for five years or longer.
- Party autonomy is prioritized. Parties have the right to determine the fundamental aspects of the arbitration. Also, the parties themselves choose the arbitrators who will resolve the disputes. They are appointed one by the plaintiff and one by the defendant. The presiding arbitrator (the third arbitrator) is chosen by these two arbitrator, if they cannot agree, the third arbitrator is chosen according to the rules.
- Arbitration is cheaper than going to state courts.
- Confidentiality of the procedure. Publicity and public filings can damage reputation of the companies and sometimes help competitors. Court filings are public records. On the other hand, arbitral hearings are confidential and the awards are not published unless agreed by the parties.
Enforceability of the Award
The decision of the arbitration court, as well as the state one, are binding. The award rendered by the tribunal has the same effect as a court decision.
According to art. 8 of the Constitution, the Republic of Moldova undertakes to comply with the treaties to which it is a party. In art. II of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, concluded in New York on June 10, 1958, ratified by the decision of the Parliament of the Republic of Moldova no. 87 of 10 July 1998, in force for the Republic of Moldova since 17 December 1998, states: "Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration". From the cited provisions, results the positive obligation of the parties to submit to the arbitrators the settlement of the disputes covered by the arbitration agreement. This obligation derives from the application of the principle of binding force of conventions, known as pacta sunt servanda, which is one of the fundamental principles of international trade law, but also of common law.
Also, the grounds on which an award by an arbitral tribunal can be set aside has been limited under regulations. Courts are precluded from reviewing the substance of the award rendered by an arbitral tribunal. This prohibition comes as a natural consequence of arbitrations' legal characteristics.
In the Republic of Moldova about 90% of participants in arbitration courts agree with their decisions.
Local entrepreneurs often do not consider the possibility of going to arbitration when concluding transactions and have not yet fully understood the benefits of arbitration.
Drafting an Arbitration Clause
An arbitration agreement will only deliver results if the clause or agreement to arbitrate is valid; in other words, if there is to be a valid arbitration there must first be a valid agreement to arbitrate. The arbitration agreement that reflects the existence of the intention to apply to arbitration mutually will enable the arbitrators to make a decision on the dispute and consequently to enforce this decision.
In order to talk about a valid arbitration agreement, it is not enough that the intentions of the parties in the agreement are mutually exclusive; at the same time, these intentions should be clearly understood. Some arbitration clauses contain defective elements as, (i) they may be drafted by persons with little or no experience in arbitration, (ii) they may be drafted in haste when all the commercial points of the contract are almost complete (iii) drafter may be clumsy or (iv) they may be just negligent cut-and-paste jobs; and any of these defects may give rise to uncertainty.
When drawing up domestic and international commercial contracts or clauses, the clause on the possible consideration of disputes in the ICAC at the Chamber of Commerce and Industry of the Republic of Moldova should be indicated clearly. Any inconsistency or defective element may invalidate an arbitration clause.
Additional Information About Arbitration in Moldova
- The Council of the Chamber of Commerce and Industry of the Republic of Moldova approved the Rules of the ICAC on the consideration of corporate disputes, allowing business entities to consider their corporate disputes in the ICAC at the Chamber of Commerce and Industry of the Republic of Moldova.
- At the moment, there are more than 90 multilateral international instruments, which the Republic of Moldova has joined and which contain provisions on arbitration. At the same time, it should be mentioned that there are more than 80 bilateral agreements that contain rules of arbitration.
- In the Republic of Moldova, the legal norms regarding the role of courts in the arbitration process comply with international standards, UNCITRAL principles. The legal framework on arbitration in the Republic of Moldova contains 18 different laws, which include the Civil Code, the Civil Procedure Code, 2 special laws on national and international arbitration, as well as other legislative acts that relate to the settlement of disputes through arbitration.
- With the assistance of the Chamber of Commerce and Industry of the Republic of Moldova, in 2008 the Parliament adopted two laws: "On (internal) arbitration" and "On international commercial arbitration". The Law on International Commercial Arbitration, is exactly in line with the UN Recommended Model Law. Based on these laws, the Chamber of Commerce approved two relevant Regulations on Domestic and International Arbitration, as well as a Regulation on Mediation in accordance with the Law on Mediation, passed by Parliament on June 14, 2007.
The International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Republic of Moldova
The International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Republic of Moldova is a permanent arbitration institution, non-governmental and independent, established in 1993, which operates in accordance with the legislation of the Republic of Moldova.
The purpose of the arbitration court is to ensure in the Republic of Moldova domestic and international commercial arbitration, as well as conciliation procedures and other alternative ways of resolving commercial disputes. At the same time, the main authority of the arbitral tribunal is to resolve domestic and international commercial disputes.
Initially, the International Commercial Arbitration Court at the Chamber of Commerce and Industry resolve only international commercial disputes. It should be mentioned that the initiative to include the arbitration agreement in the contract came from an economic agent from abroad. Analysis of the arbitration materials of that period shows that the disputes arose due to non-compliance with the contractual conditions by the Moldovan side, which did not take the arbitration clause seriously.
In accordance with its Statute, the Arbitral Tribunal currently has the following powers:
- Arbitration for the resolution of international and domestic commercial disputes, the competence of which is established on the basis of an agreement agreed by traders in contracts or additional documents;
- Model arbitration agreements designed to be included in a contract or in the form of an independent agreement;
- Procedural advice provided by the Secretariat of the Arbitration Court at the headquarters of the Court by telephone or by correspondence;
- International cooperation with similar arbitration institutions and organizations from other countries in order to establish or develop cooperation relations. Participation, organization of international conferences, meetings, forums and seminars;
- Study and research of the law of international arbitration and the law applicable to disputes;
- Evidence of arbitration practice, documentation in the field of domestic and international commercial arbitration.
It should be mentioned that, since 2003, the Arbitration Court at the Chamber of Commerce and Industry of the Republic of Moldova is a part of the European Arbitration Group, created by the International Court of Arbitration at the International Chamber of Commerce in Paris, and has the ability to resolve domestic and international trade disputes of any complexity.
On average, the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Republic of Moldova considers 120-130 cases per year. During 2020, 128 cases were considered, which emphasizes that even in difficult conditions associated with the epidemiological situation, the Arbitration court has demonstrated flexibility, adapted procedures and provided entrepreneurs with the opportunity to resolve disputes through arbitration.
As known, the speed of dispute resolution is one of the advantages of an arbitration procedure. Last year, in 55% of cases, the final decision was made within a maximum of 3 months, and in another 20% of cases - within 4-6 months.
Of the total number of disputes considered, 45% ended with the signing of a conciliatory agreement. The Arbitration Court at the Chamber of Commerce and Industry of the Republic of Moldova facilitates the conclusion of such agreements between the parties to the dispute and supports the peaceful settlement of disputes. Signing a conciliation agreement guarantees the parties a quick settlement of the dispute, reduced costs and time, and the restoration of partnership between the parties.
The qualifications of arbitrators of a commercial arbitration court are usually the highest. For example, the recommended list of arbitrators of the ICAC CCI RM includes 36 local and 37 foreign arbitrators, most of whom are doctors of law and have the title of professor.
When choosing arbitration court, it should be held in mind that the rules of arbitration in the Republic of Moldova have been developed taking into account the provisions of the relevant international conventions and the national legal framework, as well as the best international practices contained in the UNCITRAL Arbitration Rules, the Stockholm Arbitration Court, the Vienna International Arbitration Court and the Paris Arbitration Court. The arbitration rules of the ICAC at the Chamber of Commerce and Industry of the Republic of Moldova contain provisions for expedited arbitration proceedings, which will allow the participants in the process to consider disputes as soon as possible.
This provides local and foreign entrepreneurs with a safe and efficient system for resolving domestic and international disputes. The ICAC at the Chamber of Commerce and Industry of the Republic of Moldova provides an opportunity for the resolution of domestic and international disputes, both commercial and other types, through institutionalized arbitration or ad hoc arbitration, in accordance with the conditions stipulated by the current regulatory and legislative acts, international and treaties, one of the parties to which is the Republic of Moldova. As for arbitration costs, they are the lowest in the region. These factors should unconditionally motivate the parties to choose a place for resolving disputes in the Republic of Moldova.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
