PUBLIC-PRIVATE ARBITRATION IN ROMANIAN LAW.

• Author: Cimpean, Daniela

1. Introduction

   Public-private arbitration is of great importance and great practical relevance in Romania and one of the main reasons behind it lies in the great number of public works contracts concluded in our country, many of which contain an arbitration clause. After the fall of the communist regime and, moreover, after Romania's accession to the European Union, the reconstruction of the country had to be done by means of public works contracts, be they concession contracts, public-private partnerships, or public procurement of works. Most of the time, such contracts took the shape of an internationally used standard contractual model, like the FIDIC model, which includes arbitration as the dispute resolution mechanism. This was a solution often found acceptable by both the financing institutions as well as the foreign investors.

   However, this reality has always stood in great tension with a strong French inspired public-private divide in our administrative law system. In addition, some of the creators of Romania's modern administrative legal system, have outspokenly positioned themselves against arbitration (especially international arbitration) as an effective means to resolve disputes whilst protecting the public interest (Iorgovan, 2004), and this has set the trend for public-private arbitration in our country for many years.

   Nevertheless, there is a wind of change, albeit it is hard to pinpoint the exact factor that led to it. For more than a decade, contracts between a public and a private party could not include arbitration as their dispute resolution system, but this has finally changed in 2013 and stayed as such in the past six years. In this paper we will first make a general presentation of the constitutional and statutory framework for arbitration, whilst discussing the dilemmatic legislative provisions allowing for public entities to become parties in an arbitration dispute. We will tackle this under section 2, which will also include a presentation of the concept of administrative contracts in Romania and a chronological analysis of the evolution of public-private arbitration under administrative contracts. In section 3 we will briefly refer to some of the landmark Romanian public-private arbitrations under international investment treaties and section 4 will tackle arbitration as dispute resolution in our country with a focus on the aspects that have a particularity when it comes to public-private arbitration. Finally, we will look at arbitration as governance and list some conclusive remarks (section 5).

2. Public-private arbitration in Romania

   2.1. The Constitutional and statutory framework for arbitration in Romania

   The historic origins of arbitration in Romania date back to the 19th century, as it was introduced through the provisions of the 1865 Civil Procedure Code. This code was inspired mostly by French and Swiss civil procedure rules. Under the 1865 Civil Procedure Code, arbitration was regulated under Book IV, which was substantially amended in 1993, after the Constitutional reform (Leaua and Baias, 2016). This civil law reform entailed bringing Romania's legal provisions on arbitration more in line with the principles and the structure of the UNCITRAL Model Law of 1985 (Csaki, 2018).

   After the fall of the communist regime in 1989, Romania went through a constitutional reform in 1991 and another one in 2003. The currently in force Constitution recognizes citizens' 'right to access the remedies system', but only refers to judicial courts (art. 21).

   Access to the remedies system in Romania entails bringing claims before specialized tribunals; Romanian courts and tribunals are of different levels (first instance courts, tribunals, courts of appeal, High Court of Cassation and Justice) and have specialized jurisdiction (such as administrative, civil, criminal, insolvency, etc.). For instance, the administrative jurisdiction in Romania is a specialized jurisdiction and claims for annulment of administrative acts and award of damages caused through illegal administrative action should be brought exclusively before specialized administrative courts. This has been applicable also to disputes arising from the performance of administrative/ public contracts, but, currently, this is no longer the case. We will refer to this in detail under sections 3 and 4 below. However, judges ruling on all these cases belong to the same body of magistrates. They do not have specialized training prior to starting their activity as administrative or civil judges but undergo what could be called a de facto specialization. When a judge is promoted from a Tribunal to a Court of Appeal, they tend to keep this de facto specialization although sometimes, in practice, in small cities throughout the country, a judge might go from ruling in the administrative court to hold office in civil courts due to lack of personnel or managerial policies. In practice, these specialized courts/tribunals are in fact specialized units/departments of the Tribunals, Courts of Appeal and of the Supreme Court (in Romania, the High Court of Cassation and Justice) and function in the same premises with other courts. The enforcement of arbitral awards is performed by civil units of the courts.

   As mentioned, the Constitution does not expressis verbis state that justice can be done through arbitral tribunals. However, art. 146, point d) of the current Constitution indirectly recognizes arbitral tribunals as part of the national system of dispute resolution, by allowing them to raise exceptions of unconstitutionality concerning laws and ordinances in front of the Constitutional court. The exception of unconstitutionality is an instrument of constitutional law that allows the parties of a dispute pending before a court of justice or an arbitral tribunal to request the Constitutional Court to review the compatibility with the Constitution of a certain statutory provision that is applicable in the pending dispute. The exception of unconstitutionality is not regulated under the Constitution but under Law no. 47/1992 on the functioning of the Constitutional Court.

   Specifically, art. 146, point d) under the Constitution reads that the Constitutional Court's attributions include: 'ruling on the exception of unconstitutionality of ordinances and laws raised before judicial courts and commercial arbitral tribunals' (authors' translation).

   We should first clarify why the Constitution refers to commercial arbitral tribunals. This is mostly because the previously in force Civil Code in Romania had established a dual system that was very much centered around the dichotomy civil law/commercial law. After the 2013 reform, the New Civil and Civil Procedure Codes have established a monist system in which there is no longer a civil/commercial law dichotomy (Piperea, 2011). As a consequence, it was stated by scholars that the constitutional expression 'commercial arbitral tribunal' is no longer compatible with the monist Romanian private law system and thus should be revised (Puie, 2015). We subscribe to this observation.

   Furthermore, the Constitutional Court has ruled in numerous decisions on the constitutionality of arbitration (in general, not in the specific case of public-private arbitration). For instance, the court held that 'arbitration is an exception to the principle that justice is done through the courts', and that it 'represents a legal mechanism, designed to ensure an impartial, faster, less formal and confidential legal process finalized by an enforceable judgment' (Decision no. 203/2006). When confronted with the question of whether arbitral tribunals are infringing the constitutional prohibition on the establishment of extraordinary courts, the Court stated that arbitral tribunals do not fall under the category of extraordinary courts, since the procedure they follow neither violates nor restricts the procedural rights of the parties, previsioned in the Civil Procedure Code or any other rights or freedoms. Moreover, it ascertained the fact that the Constitution itself in article 146, point d), recognizes the existence of the arbitral tribunals (Decision no. 8/2007).

   In February 2013 a New Code of Civil Procedure (hereinafter referred to as the New Code of Civil Procedure--NCCP) entered into force and the provisions on arbitration previously regulated under Book IV under the Code of Civil Procedure were replaced with the current Book IV, articles 541-621. The rules laid down in the New Code of Civil Procedure are, by and large, a restatement of the previously in force rules (Csaki, 2018).

   The legal nature of arbitration in the Romanian legal system is that of an 'alternative dispute resolution system' that should be conducted in accordance with procedural rules that are derogatory from the lex generalis (i.e., the general civil procedure rules). The NCCP establishes that parties to an arbitral dispute are free to choose the rules applicable to a dispute provided such rules are not contrary to public order and imperative legal provisions (art. 541 NCCP).

   The NCCP's Book IV includes seven titles, dedicated to the general principles of arbitration: the definition of arbitration; the regulation of the conditions in which the subjects of law, including those of public law (art. 542, para. 2 and 3), may agree to solve their disputes by arbitration; the general provisions concerning the arbitral tribunal; the arbitral procedure; the review of the arbitral decision by the regulation of the institution of judicial control; and the enforcement of arbitral decision. Finally, the last title of the book tackles institutionalized arbitration (regulated for the first time in the NCCP, 2010).

   As a general rule, the NCCP establishes that disputes involving matters such as the civil status of persons, collective labor conflicts, certain shareholders' disputes, annulment of intellectual property rights or bankruptcy proceedings cannot be subject...