1 Legal framework
1.1 What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime – for example, does it govern oral arbitration agreements?
The Arbitration Act (Official Gazette of Republic of Croatia 88/2001) is the relevant Croatian legislation on arbitration.
Pursuant to Article 6/2 of the Arbitration Act, an arbitration agreement must be in written form. An oral arbitration agreement will be deemed valid if one party invokes the oral agreement in writing and the other party does not dispute the conclusion of an oral arbitration agreement (Article 6/3/2).
1.2 Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?
Croatian residents and legal persons established under the laws of Croatia may agree on domestic arbitration only. International arbitration is allowed in disputes with an international element (ie, where at least one party resides outside Croatia).
1.3 Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?
The UNCITRAL Model Law on International Commercial Arbitration was followed in the drafting of the Arbitration Act, although there are some deviations from its current wording, as the act was reformed six years prior to the 2006 amendments to the UNCITRAL Model Law. Unlike the UNCITRAL Model Law, the Arbitration Act applies to both national and international disputes, as well as to disputes which are not necessarily considered as commercial.
1.4 Are all provisions of the legislation in your jurisdiction mandatory?
No. The parties are generally free to choose the rules of conduct, although there are some mandatory rules from which the parties cannot deviate. These include the rules on arbitrability and public order, as well as some mandatory provisions of the Arbitration Act, such as those on:
- fair trial and equal treatment;
- grounds for the challenge of arbitrators;
- the appointment of judges of the regular courts in Croatia as arbitrators;
- the form and content of the arbitral award;
- annulment of the arbitral award; and
1.5 Are there any current plans to amend the arbitration legislation in your jurisdiction?
There are no plans to amend the arbitration legislation in Croatia.
1.6 Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?
Croatia is a party to the New York Convention. The convention was initially acceded to by the former Socialist Federal Republic of Yugoslavia (SFRY) in 1982 and entered into force on 8 October 1991. After the dissolution of the SFRY, Croatia became a party to the convention by way of notification of succession on 26 July 1993. Croatia adhered to the reservations to the general obligations of the convention made by the SFRY. Thus, the convention applies only to arbitral awards which were adopted in the territory of another contracting state and to disputes which are considered as commercial under national law.
Additionally, Croatia has formulated a reservation with regard to retroactive application of the convention.
1.7 Is your jurisdiction a signatory to any other treaties relevant to arbitration?
Croatia is a party to:
- the 1965 Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States;
- the 1961 European Convention on International Commercial Arbitration;
- the 1927 Geneva Convention on the Execution of Foreign Arbitration Decisions; and
- the 1923 Geneva Protocol on Arbitration Clauses.
2 Arbitrability and restrictions on arbitration
2.1 How is it determined whether a dispute is arbitrable in your jurisdiction?
Article 3(1) of the Arbitration Act prescribes that disputes regarding rights of which the parties may freely dispose are arbitrable.
2.2 Are there any restrictions on the choice of seat of arbitration for certain disputes?
In domestic arbitrations – that is, where both parties are Croatian residents or legal persons established under the laws of Croatia – the seat of arbitration must be in Croatia.
Further, if the exclusive jurisdiction of the Croatian courts has been provided for, the subject matter is not capable of being resolved through arbitration where the seat is outside Croatia.
3 Arbitration agreement
3.1 What are the validity requirements for an arbitration agreement in your jurisdiction?
The agreement must be in written form. A number of situations are considered to constitute valid written agreements (even though in some of these situations the written form requirement is only fictitiously fulfilled). These situations are expressly provided for by law and include the following:
- tacit acceptance of a written offer or of written confirmation of an oral offer (Articles 6(3)(1) and (2));
- reference to general conditions that contain an arbitration clause, provided that the reference is such as to make that clause part of the contract (Article 6(4)); and
- arbitration agreements concluded by the issuance of a bill of lading, which are valid if the bill of lading contains an express reference to an arbitration clause in a charterparty (Article 6(5)).
The formal requirements are much stricter for arbitration agreements in consumer contracts. In such cases the arbitration agreement must be contained in a separate document signed by both parties, which includes no agreements other than the arbitration agreement. This latter condition does not apply if the agreement is drawn up by a notary public.
3.2 Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements?
Yes. Separability is provided for in Article 15(1) of the Arbitration Act, according to which an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. It is also expressly provided that a decision that renders a contract null and void shall not affect the validity of the arbitration clause.
3.3 Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties?
In the absence of an agreement between the parties, the place of arbitration will be determined by the arbitral tribunal, taking into consideration the circumstances of the case, including the convenience of the parties. If the arbitrators fail to determine the seat of the arbitration during the arbitral proceedings, it is presumed that the place of arbitration is that designated in the award as the place where the award was rendered.
In the absence of agreement between the parties, the language of the arbitration may be decided by the arbitrators. Until the language is determined, submissions may be exchanged in the language of the main contract, the language of the arbitration agreement or the Croatian language. The Croatian language will also be the default language if both the parties and the arbitrators fail to reach agreement on the language of the proceedings.
4 Objections to jurisdiction
4.1 When must a party raise an objection to the jurisdiction of the tribunal and how can this objection be raised?
At the latest, in the reply to the statement of claim through which the party engages in the case.
4.2 Can a tribunal rule on its own jurisdiction?
4.3 Can a party apply to the courts of the seat for a ruling on the jurisdiction of the tribunal? In what circumstances?
Yes, a party may apply to the court if the arbitration tribunal does not accept its challenge to the tribunal's competence.
5 The parties
5.1 Are there any restrictions on who can be a party to an arbitration agreement?
No. Croatian citizens, legal persons established under the laws of Croatia, governments and local governments may be party to an arbitration agreement.
5.2 Are the parties under any duties in relation to the arbitration?
5.3 Are there any provisions of law which deal with multi-party disputes?
6 Applicable law issues
6.1 How is the law of the arbitration agreement determined in your jurisdiction?
By agreement of the parties. In the absence of such agreement, either the law related to the matter in dispute or Croatian law will govern the agreement.
6.2 Will the tribunal uphold a party agreement as to the substantive law of the dispute? Where the substantive law is unclear, how will the tribunal determine what it should be?
Yes, the tribunal will uphold the parties' agreement as to the substantive law of the dispute. In the absence of such agreement, the tribunal will apply the law which is closest to the matter in dispute, based on the contract and customary practices.
7 Consolidation and third parties
7.1 Does the law in your jurisdiction permit consolidation of separate arbitrations into a single arbitration proceeding? Are there any conditions which apply to consolidation?
Croatian law does not regulate the consolidation of arbitration proceedings or the details of such proceedings. The rules of the Permanent Court of Arbitration at the Croatian Chamber of Economy contain more detailed procedural provisions.
7.2 Does the law in your jurisdiction permit the joinder of additional parties to an arbitration which has already commenced?
Croatian law does not regulate this issue. The rules of the Permanent Court of Arbitration at the Croatian Chamber of Economy contain more detailed procedural provisions.
7.3 Does an arbitration agreement bind assignees or other third parties?
No. However, any party that does not object to the competence of the tribunal will be deemed to have agreed to the arbitration.
8 The tribunal
8.1 How is the tribunal appointed?
The tribunal is appointed by agreement of the parties. In the absence of such agreement, the tribunal may be appointed by the arbitration institution or by the appointing authority.
If there are three arbitrators, each party will choose one arbitrator, who will then choose the third arbitrator. If a party fails to appoint its arbitrator within 30 days of notification to do so, or if the two appointed arbitrators cannot agree on who should serve as president of the tribunal:
- a third party appointed by the parties or the president of the Zagreb Commercial Court will appoint the missing arbitrator in commercial disputes; and
- the president of the Zagreb County Court in Zagreb will appoint the missing arbitrator in non-commercial disputes.
If there is one arbitrator, the parties will choose him or her by agreement. If the parties cannot reach agreement in this regard:
- a third party appointed by the parties or the president of the Zagreb Commercial Court will appoint the missing arbitrator in commercial disputes; and
- the president of the Zagreb County Court will appoint the missing arbitrator in non-commercial disputes.
8.2 Are there any requirements as to the number or qualification of arbitrators in your jurisdiction?
Croatian law does not require arbitrators to have any special qualifications. However, judges of the Croatian courts may be appointed only as presiding arbitrators or sole arbitrators - they cannot act as party-appointed arbitrators.
8.3 Can an arbitrator be challenged in your jurisdiction? If so, on what basis? Are there any restrictions on the challenge of an arbitrator?
An arbitrator may be challenged on the following grounds:
- There are justifiable doubts as to the arbitrator's independence or impartiality;
- The arbitrator lacks the qualifications agreed by the parties; or
- The arbitrator has failed to conduct the arbitration with due expediency.
There are no restrictions on the challenge of an arbitrator.
8.4 If a challenge is successful, how is the arbitrator replaced?
Under same procedure as for his or her appointment.
8.5 What duties are imposed on arbitrators? Are these all imposed by legislation?
The arbitrator must consent to his or her appointment in writing. Further, the arbitrator must conduct the proceedings with due expediency, conduct procedural actions in a timely fashion and avoid any delay to the proceedings.
8.6 What powers does an arbitrator have in relation to: (a) procedure, including evidence; (b) interim relief; (c) parties which do not comply with its orders; (d) issuing partial final awards; (e) the remedies it can grant in a final award and (f) interest?
(a) Procedure, including evidence?
The arbitral tribunal may conduct the arbitration in such a manner as it considers appropriate, provided that the parties are treated equally and that at each stage of the proceedings each party is given a full opportunity to present its case. Croatian law expressly recognises the arbitral tribunal's authority to decide on the admissibility, relevance and weight of any evidence presented. The tribunal may further decide how witnesses will be heard in the proceedings and may appoint one or more experts to report on specific issues, even without consulting the parties in this regard.
(b) Interim relief?
Unless the parties have agreed otherwise, the arbitral tribunal may, at the request of a party, order such interim measures as it may consider necessary in respect of the subject matter of the dispute. The arbitral tribunal may require any party to provide appropriate security in connection with such measures.
(c) Parties which do not comply with its orders?
The arbitral tribunal cannot compel the parties to comply with its orders.
(d) Issuing partial final awards?
The Arbitration Act provides that, unless the parties have agreed otherwise, the arbitral tribunal may issue not only final awards, but also partial and interim awards. Partial award can also be regarded as a ‘final award' under Article 2(1)(9) of the Arbitration Act.
(e) The remedies it can grant in a final award?
The Arbitration Act imposes no limits on the remedies which may be ordered by the arbitral tribunal. Thus, unless the parties have agreed otherwise, the arbitral tribunal may order any remedy which could be ordered by a national court. In any case, the national courts will not enforce remedies ordered by the arbitral tribunal which are contrary to Croatian public order.
Article 35 of the Arbitration Act expressly provides that the arbitrators have the right to decide on the costs of the proceedings upon a party's request. This includes the power to apportion costs among the parties and, if necessary, to order that one party reimburse the full amount or a portion of the costs to the other. Pre-award interest can be included in the award (if this was included in the claim and up to the extent permitted by substantive law). Post-award interest is the statutory default interest if the amounts determined by the award are not paid by maturity.
8.7 How may a tribunal seated in your jurisdiction proceed if a party does not participate in the arbitration?
The failure of a duly notified party to appear before the arbitral tribunal or to undertake certain actions does not prevent the arbitrators from continuing the proceedings. In such situations, it is within the discretion of the arbitrators to assess whether there is sufficient cause for the party's default. Default has no implications regarding recognition of facts and/or claims, and will not automatically be treated as an admission. In such cases the arbitrators may make an award based on the evidence available.
8.8 Are arbitrators immune from liability?
There are no explicit rules on the liability of the arbitrators in Croatian law.
9 The role of the court during an arbitration
9.1 Will the court in your jurisdiction stay proceedings and refer parties to arbitration if there is an arbitration agreement?
A regular court will dismiss a lawsuit due to lack of jurisdiction if an arbitration agreement exists. It will then set aside all actions taken in the proceedings and refuse to rule on the statement of claims, unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed.
9.2 Does the court in your jurisdiction have any powers in relation to an arbitration seated in your jurisdiction and/or seated outside your jurisdiction? What are these powers? Under what conditions are these powers exercised?
In the case of arbitration seated in Croatia, the powers of the Croatian courts are limited to:
- appointing and removing the arbitrators;
- deciding on the validity of the tribunal's decision on competence;
- awarding the costs of the arbitrators in certain cases;
- deciding on the deposition of the award;
- deciding on an application to set aside the award; and
- enforcing the arbitral award.
The arbitral tribunal, or a party with the approval of the arbitral tribunal, may also request legal assistance from a competent national court in taking evidence that the arbitral tribunal itself could not take.
In the case of arbitration seated outside of Croatia, the powers of the Croatian courts are limited to:
- accepting delivery and deposition of the awards;
- assisting with the taking of evidence; and
- rendering a decision on recognition and enforcement of a foreign arbitral award.
9.3 Can the parties exclude the court's powers by agreement?
10.1 How will the tribunal approach the issue of costs?
Article 35 of the Arbitration Act expressly provides that the arbitrators have the right to decide on the costs of the proceedings upon a party's request. This includes the power to apportion costs among the parties and, if necessary, to order that one party reimburse the full amount or a portion of the costs to the other. The law provides that the arbitrators will decide on the issue of costs according to their discretion, taking into account all circumstances of the case, and in particular the outcome of the dispute.
If the parties do not accept the decision on costs, the president of the Zagreb Commercial Court will decide on the costs in commercial matters and the president of the Zagreb County Court in other matters.
10.2 Are there any restrictions on what the parties can agree in terms of costs in an arbitration seated in your jurisdiction?
None are specified by law.
11.1 Is third-party funding permitted for arbitrations seated in your jurisdiction?
No provisions prohibit third-party funding in Croatia.
12.1 What procedural and substantive requirements must be met by an award?
The award must be in writing and include an explanation of the reasons for the decision. The award must further state the date on which and the place in which it was rendered. All arbitrators must sign the original of the award.
12.2 Must the award be produced within a certain timeframe?
This is not specified by law, but the procedure must be conducted expediently and in a timely manner.
13 Enforcement of awards
13.1 Are awards enforced in your jurisdiction? Under what procedure?
Yes. The rules on enforcement differ with respect to domestic awards and foreign awards. Domestic awards are directly enforceable (ie, no special leave for enforcement (exequatur) is needed). Leave to enforce foreign awards only can be sought through a separate action for recognition of the award. Alternatively, the court can grant leave for enforcement in the process of enforcement, where recognition of the foreign award will be handled as a preliminary issue in the proceedings. The application for enforcement must be submitted to the competent court. In the case of commercial arbitration, this is the Zagreb Commercial Court; in non-commercial cases, it is the Zagreb County Court. Jurisdiction to undertake particular enforcement actions is determined according to the Law on Enforcement.
Upon receiving an application for enforcement, the court shall order enforcement, unless it finds that:
- the subject matter of the dispute is incapable of being submitted to arbitration;
- enforcement would violate public policy;
- the opposing party has successfully proved the existence of one of the reasons to set aside an award as set out in Article 40(1) of the Arbitration Act; or
- the award has not yet become binding.
With regard to foreign arbitral awards, the Croatian Arbitration Act has incorporated all provisions of Article V of the New York Convention on the recognition and enforcement of foreign arbitral awards, adding one additional ground for refusal of recognition and enforcement: the award does not contain the reasons for the decision or lacks the signatures of all arbitrators.
14 Grounds for challenging an award
14.1 What are the grounds on which an award can be challenged, appealed or otherwise set aside in your jurisdiction?
An arbitral award may be challenged on the following grounds:
- The arbitration agreement was not validly concluded or is otherwise invalid;
- A party did not have the capacity to enter into an arbitration agreement and participate in arbitration proceedings, or was not duly represented;
- A party was not duly notified of the arbitration or was prevented from participating in the arbitration;
- The award concerns a dispute not contemplated by, or not falling within the terms of, the arbitration agreement, or contains issues beyond the scope of the arbitration agreement;
- The composition of the tribunal or the conduct of the arbitral proceedings was not in accordance with the law or the agreement of the parties;
- The award does not adequately or appropriately state the reasoning (unless this has been waived by the parties), or has not been signed;
- The subject matter of the dispute is not arbitrable under Croatian law; or
- The award violates the public order of Croatia.
14.2 Are there are any time limits and/or other requirements to bring a challenge?
The challenge must be brought within three months of delivery of the award.
14.3 Are parties permitted to exclude any rights of challenge or appeal?
15.1 Is arbitration seated in your jurisdiction confidential? Is a duty of confidentiality found in the arbitration legislation?
Yes, according to Article 23(5), unless the parties have agreed otherwise, arbitration proceedings shall not be public.
15.2 Are there any exceptions to confidentiality?
None are specified by law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.