Current Case Law of the National Courts Regarding Arbitration: A.2. Czech Republic (2010-2011)

CYArb - CZECH (& CENTRAL EUROPEAN) YEARBOOK OF ARBITRATION, pp. 291-363, A. Belohlavek & N. Rozehnalova, eds., JurisNet, Inc., 2012

86 Pages Posted: 4 Jul 2012

Date Written: April 2, 2012

Abstract

Arbitration has a large tradition in the Czech Republic and it is the most popular alternative method of civil disputes´ settlement, both in domestig and international issues. As domestic arbitral awards are enforceable without exequatur, there are no exact statistics on the number of arbitrations conducted within the country. However the Ministry of Justice of the Czech Republic extects at least 150 thousand of arbitral awards rendered within the Czech Republic per year. It is therefore easy to understand that the Czech courts reporting wide range of decisions, mainly in set-aside proceedings.

Probably the most important decision of 2011 is the judgment of the the Constitutional court of March 8, 2011 switched from contractual nature of arbitration to the jurisdictional one. The same decision as well as a number of another judgments placing stress on predictability of arbitral decisions, while predictability will be qualified as subject of procedural public policy.

Pursuant to Supreme Court decision of 11 May 2011 the principle of party autonomy must not be (mis-)used to negate [the consequences consisting in the invalidity] of arbitration clauses that violate the law and that clearly indicate an intention to harm the “weaker” contracting party (a party to the contractual relationship). A democratic country honouring the principle of the rule of law must not give up on the protection of rights and legitimate interests that could be jeopardized in alternative proceedings conducted instead of litigation. If the arbitration agreement lacks any direct identification of an ad hoc arbitrator, or a specific description of the method of his or her appointment, and refers to “Rules on Arbitration” issued by a legal entity (corporation) other than a permanent arbitral institution established under the law, the arbitration agreement is invalid pursuant to the particular provisions of the Civil Code.

Nevertheless the Constitutional Court [of the Czech Republic has repeatedly stressed the principle of freedom of contract, also in relation to arbitration clauses, which – when incorporated in laws and regulations – are not considered a restriction of the access to court (judgmenet of 5 October 2011), i.e. not a violation of Article 36(1) of the Charter of Constitutional Rights. However, it is desirable for the waiver of the right to have the dispute reviewed by a court to be permissible, unambiguous and made out of one’s own free will. This requirement entails the obligation of the court to examine the arbitration clause, in each particular case, from the perspective of the reasonability of the clause (see the Directive), taking into account the unequal position of the consumer as a party to the arbitration agreement. the published paper contains detailed summaries of all reported court decision related to arbitration of the end 2010 until the end of 2011.

Keywords: arbitration, arbitration clause, contractual freedom, Czech Republic, recognition and enforcement, arbitral tribunal, scope of arbitration clause, party autonomy, equal procedural rights of parties, predictability, settlement agreement, jurisdiction, consumers protection, B2C arbitration

JEL Classification: K10, K11, K12, K33, K40, K41, K42

Suggested Citation

Belohlavek, Alexander J., Current Case Law of the National Courts Regarding Arbitration: A.2. Czech Republic (2010-2011) (April 2, 2012). CYArb - CZECH (& CENTRAL EUROPEAN) YEARBOOK OF ARBITRATION, pp. 291-363, A. Belohlavek & N. Rozehnalova, eds., JurisNet, Inc., 2012, Available at SSRN: https://ssrn.com/abstract=2099755

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