The comencement of the arbitral proceedings

Document

Cited in

Author	Professor Ioan Schiau
Position	PhD, Faculty of Law, University 'Transilvania' of Brasov, Romania
Pages	80-88

80 IOAN SCHIAU

PRIVATE LAW

THE COMENCEMENT OF THE ARBITRAL PROCEEDINGS

Professor Ioan SCHIAU, PhD

Faculty of Law

University “Transilvania” of Brasov, Romania

ioan.schiau@unitbv.ro

schiau@schiau-prescure.ro

ABSTRACT

The commencement of the arbitral proceedings is a complex and important phase of any

arbitration, since establishes the main boundaries of the litigation process. The arbitration’s

commencement requirements are extensively addressed by the procedural rules of the arbitration

institution designated by the parties to organize the resolution of their dispute. Whenever the

arbitration is not organized by an arbitration institution but by the parties themselves (Ad-Hoc

Arbitration) and neither the parties, nor the arbitral tribunal have established or opted for other

procedural rules, Articles 571 – 575 of the Romanian Civil Procedure Code offer rules that are

applicable to the commencement of the arbitration procedure; these rules are also applicable whenever

the procedural rules of the designated arbitration institution are silent or do not provide otherwise.1

KEYWORDS: Public Law, Civil Procedure Law, Commencement of Arbitral Proceedings,

Request for Arbitration, Statement of Defense, Counterclaim, Procedural Acts.

1. SETTING UP THE ARBITRAL TRIBUNAL

Whenever the parties are organizing an ad-hoc arbitration, their first step is to

establish an arbitral tribunal, according to their arbitration agreement or to the

applicable provisions of the Civil Procedure Code. The selection and the setting up

of the arbitral tribunal is a time consuming process, involving both parties’

cooperation and sometimes the participation of the state courts.

The parties have to collaborate in establishing the arbitral tribunal; in this

respect the claimant shall notify the defendant, through a Request for Arbitration,

upon his intent to start an arbitration and will appoint an arbitrator (provided that

1 This presentation constitutes a revisited part of the author’s contribution to a collective work

entitled ARBITRATION IN ROMANIA. A PRACTIONER’S GUIDE, edited by C. LEAUA and F. A.

BAIAS, published by Kluwer Law International B. V., The Netherlands, in 2016 and, as such, is

reprinted with permission of Kluwer Law International.

Law Review  vol. VII, issue 2, Jul

-December 2017, pp. 80-88

The commencement of the arbitral proceedings 81

such appointment has not been done through the arbitration clause) and will ask

the defendant to also do so. The appointed arbitrators will, thereafter, nominate

their chairman.

The parties may, nevertheless, invest the arbitral tribunal through a jointly

drafted and signed minute, showing out the facts in dispute and the legal points at

issue. When, due to the deterioration of their cooperation, the parties are not able

to establish an arbitral tribunal, this burden will be deferred to the state court.

Whichever solution will be chosen by parties, according to Article 566 RCCP,

the arbitral tribunal will be legally formed on the date when everyone or all

appointed arbitrators have accepted the designation. This is the moment of the

commencement of the arbitration proceedings, an important moment since the law

attaches to it various legal consequences as it is, for example, the duration of the

arbitral proceedings.

It is worth mentioning that Article 3.2 of the UNCITRAL Arbitration Rules

establishes that “Arbitral proceedings shall be deemed to commence on the date on which

the notice of arbitration is received by the respondent”.2 This solution does not require

the setting up of the arbitral tribunal as a prerequisite for commencing the

procedures, saving the claimant a lot of time and it is, definitely, a better solution

than that endorsed by the Romanian law.

2. THE REQUEST FOR ARBITRATION.

As mentioned before, the arbitral proceedings are triggered by a request for

arbitration filed by the claimant. Article 571 (2) RCCP also provides for an

alternative to the unilateral request for arbitration, allowing the parties to jointly

initiate the arbitral proceedings, through a minute executed in front of the arbitral

tribunal. Of course, when the parties are already in a strong disagreement, such

alternative is highly improbable.

According to Article 571(1) RCCP, the request for arbitration must be

submitted in written form and will include some specific elements, several of

which deserve a proper consideration:

(a) The request must provide identification data of the parties, including full

name, residence, personal numeric or fiscal code, registration number, banking

accounts and so on. If part of the identification data of the defendant is not known

to the claimant, he will have to at least provide the name and residence of the

defendant.

If the claimant is a natural or legal foreign person, then a residence in Romania

should be indicated and all the notices and communications regarding the arbitral

dispute will be addressed to such residence.

2 The UNCITRAL Arbitration Rules have been adopted through Resolution no. 31/98 of 15

December 1976 of the General Assembly of the United Nations and have been revised in 2010.

82 IOAN SCHIAU

The claimant will also indicate the name and the qualifications of the person

that is representing the claimant in the arbitration, providing proof of such quality.

(b) The claimant will have to indicate the arbitral agreement that constitutes

the basis of its decision to submit the claim to arbitration. Such arbitral agreement

may embrace either the form of an arbitration clause inserted into a contract or into

a separate document that makes a reference to the said contract, either the form of

an arbitration compromise that is an independent and separate agreement to

arbitrate an already existing dispute. In both cases, proof of the arbitration

agreement should be attached to the request for arbitration. That arbitral

agreement will constitute the foundation of the arbitral tribunal decision on

jurisdiction; therefore, any irregularities that may be adversely interpreted will

complicate the parties’ choice of venue and the arbitral tribunal’s decision.

claim and will indicate the methods or the calculation used to determine such

value. The expression “the object of the claim” is used by the Romanian lawmaker to

identify the relief or remedy sought by the claimant. For instance, the claimant may

ask the arbitral tribunal to ascertain a legal or contractual right of the claimant or to

order the defendant to do something or to give something to the claimant.

Whenever such object is expressed in money, the value of the claim should be

proved with legal documents and demonstrated through calculation tables (i.e., for

penalties or interest fees).

(d) The claimant will also indicate the facts at issue as well as the legal points

in dispute, mentioning the legal reasons of the claim; likewise, the claimant will

point out the evidence that supports its claim. Actually, the law requires the

claimant to determine a complex of issues, in order to allow the arbitral tribunal to

decide on its claim.

First of all, the claimant has to provide an accurate presentation of the factual

context that triggered the dispute. Secondly, it has to indicate the legal issues risen

by the parties’ dispute and to mention the legal provisions on which it bases its

claim. Third, the claimant will have to indicate and to provide evidence supporting

its claim (documents, fact witnesses’ testimonies, expert and legal expert reports,

etc.).

With regard to the evidence indicated by the claimant, the law does not

actually requires such evidence to be attached to the request; according to Article

587 RCCP the said evidence will be “proposed” in the request for arbitration, but

the taking of evidence will be decided and administered by the arbitral tribunal,

which may set down time limits for the presentation of the evidence accepted by

the tribunal.

In any case, the claimant will usually attach to its request such evidence,

consisting of written documents, as required to prove, at least, the jurisdiction of

the arbitral tribunal and the basic facts and legal points in dispute. Such documents

The commencement of the arbitral proceedings 83

will be delivered to the defendant and to the arbitrators, together with the request

for arbitration.

(e) The law requires the claimant to indicate, within the request for arbitration,

the names and residences of the arbitrators. Such a task may be complied with only

if the parties have already gone through the formalities of setting up an arbitral

tribunal. Usually, the arbitration agreement consist of an arbitration clause

included in the parties’ contract, providing for the right of the claimant to submit

to arbitration all or certain disputes which have arisen or which may arise between

the parties, in respect of a defined contractual relationship.3 Such an arbitration

clause does not mention the names and particulars of the arbitrators, because the

parties are considering disputes that may arise during the performance of their

contractual obligations and are only indicating the means by which the arbitrators

will be appointed.

Therefore, at the time of filing a request, the claimant is able to indicate the

name and particulars of all the arbitrators only if this information is already

included in the arbitration agreement or the arbitral tribunal has been already set

up. But, of course, the claimant will be able to provide the name and the details of

the arbitrator appointed by the claimant, prompting the defendant to also make its

appointment.

(f) The request must be signed by the claimant. As a general rule, a request that

lacks the signature of the claimant is null and void (Article 196 RCCP); this

omission may be covered by signing the request in front of the arbitral tribunal.

That means that such nullity is relative and the irregularity may be covered until or

during the first arbitration hearing.

The claimant has the obligation to deliver to the defendant and to every

arbitrator a copy of the request for arbitration and of the evidence submitted. This

is an important obligation of the claimant, since the receipt of the said copy and

evidence triggers various obligations for the defendant, the main being to file a

statement of defense.

The delivery should be addressed directly to the defendant and the arbitrators;

the arbitral tribunal will not act as reception and distribution point for the

procedural papers and documents issued by the parties. That means that the

claimant will have to prove the delivery of the request, should the defendant deny

receipt of it. Article 577 RCCP deals with these issues.

3. THE STATEMENT OF DEFENSE.

Within 30 days of receiving the request for arbitration, the defendant must

submit its statement of defense. Following the structure of the claimant’s request,

the statement of defense will mention the exceptions raised by the defendant in its

3 See “Article 7 - Definition and form of arbitration agreement” of UNCITRAL Model Law on

International Commercial Arbitration (Model Law).

84 IOAN SCHIAU

defense, its arguments regarding the facts at issue and the disputed legal points as

well as the evidence that he intends to submit to the tribunal. Correspondingly, the

statement of defense will also provide all the mentions required by Article 571

RCCP in regard to the request for arbitration, as the names and particulars of the

parties, of the arbitrators and of the person that is representing the defendant in the

proceedings (including proof of the position or qualifications of the representative)

and signature of the defendant.

In order to promote the celerity of the arbitral proceedings, Article 573(2)

RCCP requires the defendant to disclose its exceptions and other means of defense

within its statement of defense or, if he failed to do so, until the first hearing for

which he was duly summoned. The failure to comply with this requirement

deprives the defendant of the right to further raise or argument those exception

and defenses; this is a civil penalty that, practically, terminates the right of the

defendant to present and take advantage of such exceptions and defenses in front

of the arbitral tribunal.

This consequence concerns all exceptions, irrespective of their nature (absolute

or relative); providing so, Article 573(2) RCCP regulates an important deviation

from the common law rule expressed by Article 247 RCCP that shows that the

absolute exceptions (based upon the infringement of public policy norms) may be

raised by the parties or by the court in any stage of the civil process.

If the defendant fails to submit, in due time, its statement of defense, the

arbitral tribunal may order the defendant to pay the arbitration costs caused by the

postponement of the resolution of the arbitral dispute, if any (Article 573(3) RCCP).

As a rule, Article 595 RCCP establishes that the arbitration costs will be distributed

between the parties, according to their agreement; in absence of such agreement,

the costs will be paid by the party which lost the arbitration dispute. Therefore, the

above mentioned provision of Article 573(3) RCCP is an exception to the rule,

allowing the arbitral tribunal to order the defendant to bear a part of the arbitration

costs, even if the claimant’s request has been dismissed.

A copy of the statement of defense and the attached documents will also be

communicated to the claimant and each arbitrator; that means that the 30 days

period of time mentioned by Article 573(1) RCCP, that starts running from the

moment the defendant receives the request for arbitration has its terminus point at

the moment when the arbitrators have received the statement of defense (or when

the defendant mailed it to the arbitrators).

4. THE COUNTERCLAIM

The defendant that has a claim against the claimant, claim that arises from the

same juridical rapport, may file a counterclaim with the arbitral tribunal (Article

574 RCCP).

The provisions of Article 574 RCCP are restrictive if compared with those of

Article 209 RCCP that regulate the ordinary counterclaim, filed before a state court.

The commencement of the arbitral proceedings 85

Such a common counterclaim may present claims that derive from the same

juridical rapport with the claimant’s claim or which are closely related to such

claim. That means that the defendant’s own claims do not need to be born out of

the same contract, but may originate from the performance of an auxiliary contract,

such as a technical assistance contract that supports a sale contract.

The option expressed by Article 574 RCCP may be determined by the

specificity of the arbitration, as a private alternative jurisdiction, based upon the

agreement of the parties to submit their dispute to an arbitral tribunal and not to

the state jurisdiction. As a result, a counterclaim may originate only from the same

contract or juridical rapport that provided the arbitration agreement. Even if

resulting from a closely related juridical rapport, a claim cannot be heard by an

arbitral tribunal as long as it is not based upon the same arbitration agreement.4

On the other hand, this is not a very powerful argument; identical arbitration

agreements may be included in distinct but related contracts and one cannot see

the reason to deny the parties access to the same arbitral tribunal, in order to

globally solve their disputes based upon a complex contractual relationship.

The Model Law does not apply such restrictions, Article 2(f) of the Model Law

stating only that where a provision of the law refers to a claim, it also applies to a

counterclaim. Likewise, the International Chamber of Commerce Rules of

Arbitration, commonly known as ICC Rules5, do not provide for any material

restrictions in filing of a counterclaim, only asking the defendant/respondent to

provide a description of the nature and circumstances of the dispute giving rise to

the counterclaim [Article 5(5) of the ICC Rules].

What happens if the counterclaim filed by the defendant is not derived from

the same juridical rapport as the main claim? The solution, in an ordinary state

jurisdiction will be to form a distinct file that will be separately tried. This option

will not work, as a principle, in the arbitration provided for by Book IV of the

Romanian Code of Civil Procedure; if the counterclaim is contested on the grounds

that is not arising out of the same contract that contains the arbitration agreement,

the arbitral tribunal has to dismiss the counterclaim. This solution is based on the

principle that “the arbitral tribunal may not exercise jurisdiction over claims that are not

within the scope of the arbitration agreement”6.

Nevertheless, Article 592(3) RCCP is stating that any irregularity of the

procedural acts is purged if not invoked, in due time, by the interested party; that

4 Such discussion heavily depends on the definition of the juridical rapport. Stricto sensu, the

juridical rapport is construed as a single contract; lato sensu, it may be conceived as a net of various

acts that compose the entirety of the parties’ will to conclude a unique juridical rapport (e.g. a sale

contract, additional acts, technical assistance agreement, licence agreement, etc.)

5 The International Chamber of Commerce Arbitration Rules have been revised in 2012 and

constitute the substance of ICC Publication 850E.

6 Redfern and Hunter on International Arbitration, Fifth Edition, Oxford University Press, 2009,

p. 383.

86 IOAN SCHIAU

means that, since the counterclaim, as well as the claim, is considered by the

Romanian law as an “act of procedure”7, the arbitral tribunal may retain

jurisdiction on the counterclaim, especially when the contract that it arises from

contains the same arbitration clause as the contract giving rise to the claimant’s

claim. Such a solution may be grounded, also, upon an extensive construction of

the legal expression “the same juridical rapport”, since one may consider that a

collection of closely related and interdependent contracts may constitute the

substance of the same complex juridical rapport, expressed in various facets or

hypostases.8

The counterclaim may be filled only within the 30 days period of time granted

to the defendant in order to file the statement of defense or, at latest, prior to the

first hearing for which the defendant was duly summoned [Article 574(2) RCCP].

If the counterclaim is filed after the elapse of such time limit, the arbitral

tribunal may retain it, if the claimant is not objecting, Article 592(3) RCCP being

applicable. But, if the main claim is ready to be decided and the late filed

counterclaim is delaying the solution of the arbitration dispute, the arbitral tribunal

may decide to judge separately the claim and the counterclaim, unless the joint

judgment of both said claims is required for the unitary solution of the arbitration

file (Article 210 RCCP).

The counterclaim will meet the same conditions as the request for arbitration.

It will be submitted in written and will include all the requirements provided for

by Article 571(1) RCCP; likewise, a copy of the counterclaim and of the attached

documents will be communicated to the claimant and to the arbitrators.

Since the claimant will be a respondent to the counterclaim, he will assume all

the procedural rights and obligation of a defendant; he will have to file a statement

of defense against the counterclaim, which will be delivered within a time limit

that, in absence of any legal indication, will be established by the arbitration

tribunal. Its statement of defense will have the same regime as the one delivered by

the defendant against the main claim.

5. PROCEDURAL ACTS

There is no legal definition of the procedural acts, but the wording of Article

148 and following provisions of RCCP allows the conclusion that any request

addressed to a court as well as summons, orders or judgments of the court are

procedural acts. Likewise, when regulating the communication of the procedural

acts, Article 577(1) RCCP mentions the written submissions of the parties, the

summons, the arbitral awards and the minutes of hearings.

7 See Article 148 RCCP.

8 For a similar rationale, but based on the economical interdependence of several contracts, see

R. B. Bobei, Arbitrajul intern si international. Texte.Comentarii. Mentalitati, Editura C.H.Beck, Bucuresti,

2013, p.574

The commencement of the arbitral proceedings 87

All these procedural acts will be circulated through the parties or to the parties

and, as the case may be, to the arbitrators. The communication will be made

through a registered letter (declaring the content), with acknowledgement of

receipt; such precautions provided by the law are designed to secure the proper

information of the parties and to protect their rights to defense. It is worth

mentioning that, when regulating the communication of the procedural acts in the

arbitration proceedings, the law is, pointless, more restrictive than it is when is

addressing the standard procedure before the state courts; in such cases, the

communication of the procedural acts may be done through facsimile messages,

electronic mail and any other means that secure the conveying of the text and

acknowledgement of the receipt, provided that the parties delivered to the court

the required information like e-mail address and facsimile machine numbers.

Notices addressed to the parties regarding other measures ordered by the

arbitral tribunal may be sent by facsimile messages, electronic mail or any other

means that secure the conveying of the text and acknowledgement of the receipt.

These are procedural acts of lesser importance or that require a speedier delivery

and, therefore, the law promotes more rapid and modern means of communication.

As an alternative, any procedural act that is a written document may be hand

delivered to the interested party, the receipt being acknowledged through

signature affixed on the document or on the notice of delivery.

In order to secure proof of delivery of the procedural acts, the arbitral tribunal

will file any evidence attesting the communication of the procedural acts, which

may be later referred to by the parties or by the arbitral tribunal.

Whenever the arbitral tribunal communicates a summons, it will take

measures as to allow for a 15 days interval between the receipt of the summons

and the hearing so convened. This period is provided in order to allow the

convened party to react and to prepare any written submissions or evidence

required by the tribunal.

In order to produce their legal effects, the procedural acts must be fulfilled or

communicated under the conditions set out by the law; as a rule, a procedural act

that is carried on by infringement of the legal material or formal requirements is

null.

Nevertheless, with regard to the arbitration proceedings, the lawmaker has

adopted the doctrine of safeguard of the procedural acts, aiming to preserve their

validity as long as the parties and the arbitral procedure were not harmed. To this

effect, Article 592(3) RCCP provides that any irregularity of the procedural acts is

covered if the affected party did not invoke it at the same hearing during which the

irregularity has been produced or, if the party missed that hearing, at the first next

hearing for which the parties were legally summoned, but before the closing

hearing.

This approach widely differs from the common rules that govern the nullity of

the procedural act. Articles 174-179 RCCP regulate the causes, the forms, the

88 IOAN SCHIAU

remedies and the effects of the nullity of the procedural acts. The procedural acts

stricken by nullity may be cured only if their cause has been eliminated and, if the

irregularity consists in breach of imperative rules of law, the nullity is absolute and

may be invoked not only by the concerned party, but by any interested party, the

judge or the prosecutor.

This is one of the few areas where the Romanian Code of Civil Procedure

adopted an innovative and audacious approach, renouncing to simply adapt the

common procedure rules and providing an uncomplicated system that offers

efficiency to the arbitral proceedings.

REFERENCES

[1] Redfern and Hunter on International Arbitration, Fifth Edition, Oxford

University Press, 2009

[2] Arbitration in Romania. A Practioner’s Guide, edited by C. LEAUA and F. A.

BAIAS, and published by Kluwer Law International B. V., The Netherlands.

[3] R. B. Bobei, Arbitrajul intern si international. Texte.Comentarii. Mentalitati,

Editura C.H.Beck, Bucuresti, 2013

[4] V. Ros, Arbitrajul comercial international, Regia autonom "Monitor oficial",

2000

[5] Monica Ionaş Slgean, Arbitrajul comercial, Ed. All Beck, Bucureşti, 2001.

[6] Titus Prescure, Radu Crisan, Arbitrajul comercial – Modalitate alternativa de

soluţionare a litigiilor patrimoniale, Editura Universul Juridic, 2010.

[7] Titus Prescure; ”Contractul de arbitraj”, in revista Curentul juridic

nr. 3-4/2003

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