Selected Case Law Of Czech Courts Related To Arbitration

I. Appointment of Arbitral Tribunal and Public Policy ("ordre public") Proviso (2012-2022)

ArbAct: Section 3 [Form, Terms and Execution of Arbitration Agreement]:

1. The arbitration agreement must be executed (entered into) in writing; otherwise, it is invalid. The arbitration agreement is also considered executed in writing if it is negotiated by telegraph, fax or any electronic means which provide a record of the terms of the agreement and the identification of the individuals or entities who entered into the arbitration agreement.
2. However, if the arbitration clause is incorporated in the terms and conditions governing the main contract to which the arbitration clause applies, the arbitration clause is also considered validly negotiated if a written offer of the main contract with the arbitration clause was accepted by the other party in any manner clearly indicating the latter party's consent with the terms of the arbitration agreement.

Article IX of Act No. 258/2016 Coll., Amending Selected Legislation in Connection with the Consumer Credit Act:

1. The validity of an arbitration agreement shall be governed by Act No. 216/1994 Coll., as applicable at the moment at which the arbitration agreement is entered into.
2. Arbitration commenced on the basis of arbitration agreements entered into before the effective date of this Act shall be conducted and resolved pursuant to the former laws and regulations.
3. Arbitrators entered on the list of arbitrators as of the day preceding the effective date of this Act shall be subject to the wording of Sections 40a to 40d of Act No. 216/1994 Coll. applicable before the effective date of this Act.

Section 3 ArbAct in Effect on 1 April 2012 (until 1 December 2016):

1. The arbitration agreement must be executed (entered into) in writing; otherwise, it is invalid. The arbitration agreement is also considered executed in writing if it is negotiated by telegraph, fax or any electronic means that provides a record of the terms of the agreement and the identification of the individuals or entities who concluded the arbitration agreement.
2. However, if the arbitration clause is incorporated in the terms and conditions governing the main contract to which the arbitration clause applies, the arbitration clause is also considered validly negotiated if a written offer of the main contract with the arbitration clause was accepted by the other party in any manner clearly indicating the latter party's consent with the terms of the arbitration agreement.
3. An arbitration agreement for the resolution of disputes arising from consumer contracts must be negotiated separately, not integrated in the terms and conditions governing the main contract; otherwise, the arbitration agreement is invalid.
4. The professional shall provide the consumer with a proper explanation reasonably preceding the execution of the arbitration clause, so that the consumer can assess the potential consequences of entering into the arbitration clause for the consumer. Proper explanation shall be interpreted as meaning the explication of all consequences of the arbitration clause.
5. The arbitration clause concluded pursuant to Subsection (3) must also contain truthful, accurate and complete information on:
   
   1. the arbitrator or the fact that the arbitral award will be rendered by a permanent arbitral institution,
   2. the manner in which the arbitration is to be commenced and conducted,
   3. the fee paid to the arbitrator and the anticipated types of costs that the consumer may incur in the arbitration, and the rules for successfully claiming compensation for such costs,
   4. the place of arbitration,
   5. the method of service of the arbitral award on the consumer, and
   6. the fact that a final arbitral award is enforceable.
6. If the arbitration clause vests the jurisdiction to resolve the dispute in a permanent arbitral institution, the requirement under Subsection (5) is also fulfilled by reference to the statutes and rules of permanent arbitral institutions issued under Section 13.

Article II of the ArbAct Amendment (Act No. 19/2012 Coll.) [Transitional Provisions]:

2. The validity of an arbitration agreement shall be governed by Act No. 216/1994 Coll., as applicable at the moment at which the arbitration agreement is entered into.

Legislative developments since 1 April 2012:

Section 3 ArbAct, as amended by Act No. 245/2006 Coll., Act No. 296/2007 Coll., Act No. 7/2009 Coll., Act No. 466/2011 Coll., Act No. 19/2012 Coll. and Act No. 91/2012 Coll., was newly reformulated by Act No. 258/2016 Coll., Amending Selected Legislation in Connection with the Consumer Credit Act – see Part Seven, Article VIII of the said Act, which took effect on 1 December 2016. In view of the fact that no arbitration clauses can be entered into in consumer contracts since 1 December 2016, Subsections (3) to (6) of Section 3 ArbAct were also repealed with effect as of the said date. However, arbitration agreements entered into force before 1 December 2016 shall be subject to the version of the ArbAct in effect as of the day on which the arbitration agreement was entered into. Hence, arbitration agreements entered into force from 1 April 2012 to 30 November 2016 shall be subject to Section 3 ArbAct in effect during the said period.

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Originally published by Czech (& Central European) Yearbook of Arbitration.

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