Aceris Law

International Arbitration Law Firm

International Arbitration in the Czech Republic (Czechia)

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Civil and commercial arbitration in the Czech Republic is governed by Act No. 216/1994 Coll. on Arbitral Proceedings and Enforcements of Arbitral Awards (the “Arbitration Act”), which replaced a former 1963 Arbitration Act. Contrary to many national arbitration laws, the Arbitration Act is not based on the UNCITRAL Model Law. For instance, contrary to the UNCITRAL Model Law,[1] the Arbitration Act does not contain any specific provision giving the arbitral tribunal any express power to grant interim measures or preliminary relief.

Arbitration Czech Republic

According to Paragraph 30 of the Arbitration Act, for all matters that are not expressly covered by the Act, relevant provisions of the Czech Code of Civil Procedure shall apply.

Scope of Application of the Arbitration Act

Paragraphs 1 and 2 of the Arbitration Act provide that the Arbitration Act applies to proprietary disputes and governs the enforcement of arbitral awards. In 2016, via an amending Act No. 258/2016 Coll., consumer-related disputes were expressly excluded from the scope of application of the Arbitration Act.

Form of Arbitration Agreement

The Arbitration Act specifies in its Paragraph 2(3) that an arbitration agreement may take two forms: either the form of a submission agreement (or compromis)[2] when a dispute has already arisen, or the form of an arbitration agreement for disputes that may arise in the future between the parties.

Irrespective of its form, Paragraph 3(1) stipulates that the arbitration agreement must be concluded in writing in order to be considered valid and legally binding. The arbitration agreement may also be concluded electronically (via email or telegram for instance) provided that the identity of the parties and the content of the arbitration agreement can be clearly determined.

Composition of Arbitral Tribunal

Pursuant to Paragraph 4 of the Arbitration Act, natural persons of age and full legal capacity without any criminal record may serve as arbitrators.

Under Paragraph 7(1) of the Arbitration Act, the arbitral tribunal shall be composed of an odd number of arbitrators. Unless the arbitration agreement states otherwise, Paragraph 7(2) provides that each party shall appoint an arbitrator and the two party-appointed arbitrators shall then appoint a president of the arbitral tribunal.

Pursuant to Paragraph 8(2), each arbitrator is required to disclose all circumstances that may give rise to serious doubts about his/her impartiality.

Jurisdiction of Arbitral Tribunal

The Arbitration Act fully embraces the principle of competence-competence and, pursuant to Paragraph 15, arbitral tribunals shall decide on their own jurisdiction. This Paragraph further states that, should either party have an objection to the arbitral tribunal’s jurisdiction, it is required to raise it as its first act in the arbitration.

As mentioned above, the Arbitration Act does not give the arbitral tribunal a power to order interim measures. If such measures are required in support of arbitration, parties need to turn to ordinary Czech courts.

Arbitral Awards

According to Paragraph 23(a) of the Arbitration Act, arbitration proceedings are terminated by the issuance of an arbitral award. As per Paragraph 25(1), arbitral awards must be written and rendered and signed by at least a majority of the arbitral tribunal. Paragraph 25(2) states that, unless otherwise agreed by the parties, arbitral awards must state reasons.

Setting Aside of Arbitral Awards Rendered in the Czech Republic

The Arbitration Act provides in Paragraph 31 for the following grounds on which an arbitral award may be set aside:

  • the subject matter of the dispute was not arbitrable under the Arbitration Agreement (e.g., consumer related disputes);
  • the Arbitration Agreement was not valid, terminated or did not cover the dispute at hand;
  • any member of the arbitral tribunal lacked the relevant prerequisites to serve as arbitrator;
  • arbitral award was not rendered by a majority;
  • either party was not given the right to be heard;
  • the arbitral tribunal ordered relief which was not requested by either party or relief that is impossible or illegal under Czech law;
  • there are grounds to reopen the proceedings under the Czech Code of Civil Procedure, such as situations where new evidence that could change the outcome of the dispute has come to light (see Paragraph 228(1) of the Czech Code of Civil Procedure).

Recognition of Foreign Arbitral Awards in the Czech Republic

The Czech Republic is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which regulates the enforcement of foreign arbitral awards in the Czech Republic.

Investment Arbitration in the Czech Republic

The Czech Republic does not have any specific code or act that would govern issues related to the protection of foreign investments made in its territory through arbitration. However, the Czech Republic has signed a number of bilateral or multilateral treaties to this effect.[3] The Czech Republic is also a signatory member of the Washington Convention (the ICSID), as well as the Energy Charter Treaty.

In recent years, the Czech Republic has been involved in a number of investment arbitrations, namely in arbitrations in the renewable (solar) energies sector:

[1] See UNCITRAL Model Law on International Commercial Arbitration, 2006, Chapter IV A (Interim measures and preliminary orders).

[2] On Submission Agreements, see, e.g., Arbitration Proceedings without an Arbitration Clause, Aceris Law LLC, 29 November 2017.

[3] A list of investment treaties entered into by the Czech Republic is available at https://investmentpolicy.unctad.org/international-investment-agreements/countries/55/czechia