Slovenian Law states that an authorised person needs a “special authorisation” for the conclusion of an arbitration agreement. Similar provisions are found in other laws in the Middle East and other ex-Yugoslavian States.
According to Article 76 of the Slovenian Obligations Code, a general authorisation, valid for “legal transactions classed among ordinary business” does not suffice:
“…
(2) An authorised person that holds a general authorisation shall only be allowed to conduct those legal transactions classed among ordinary business.
(3) Without a special authorisation for each individual case authorised persons may not assume an obligation under a bill of exchange, conclude a contract of surety, a contract on settlement, or a contract on the alienation or encumbrance of real estate, become involved in a dispute, conclude an arbitration agreement, or waive any right without recompense.”
Conclusion of an arbitration agreement is not considered as a matter of “ordinary business” under Slovenian Law and does, as such, require a special authorisation. The requirement for a special authorisation for the forum choice also appears in Serbian[1] and Bosnian[2] legislation.
Accordingly, it is crucial to ensure that the authorisation, given to a representative in accordance with the Slovenian Law, is specific enough to cover the conclusion of an arbitration agreement, should the parties wish to conclude one and to include this in their agreement.[3]
A problem could arise when, e.g., in a commercial transaction regarding a loan facility, the parties include an arbitration clause in a subsequent securities agreement that is to be signed by an authorised representative. Should the authorised representative not be duly authorised to conclude an arbitration agreement, such arbitration agreement is without effect.
A party giving the authorisation can subsequently approve the conclusion of the arbitration agreement and thereby cure the lack of special authorisation. The party suffering from the lack the authorisation may also request that such subsequent authorisation be made.
However, in case that the Respondent’s representative, who signed the arbitration agreement was not duly authorised, the Respondent will have much more to gain if it pleads the absence of the special authorisation and a consequent lack of the effect of the arbitration agreement.
Therefore, under Slovenian Law, authorised persons must always ensure that they are specially authorised for the conclusion of an arbitration agreement.
[1] Article 87 of the Serbian Civil Code.
[2] Article 91 of the Bosnian Civil Code.
[3] Also, regarding the question of form, the Slovenian legislation does not require any specific form for an authorisation. However, the parties should note that the form prescribed by law for a specific agreement shall also apply to the authorisation for such agreement. Some agreements such as construction agreements or loan facility agreements must be in a written form, therefore the authorisation should also be given in writing.
