Romanian Arbitration Law – one step forward, two steps back

On 15 February 2013, a new Civil Procedure Code (the ‘Code’) entered into force in Romania. The Code governs the conduct of domestic and international arbitration, as well as the recognition and enforcement of foreign arbitral awards, and it has been generally welcomed as a step forward in the field of arbitration. The Code was intended to enhance the legal framework for arbitration in Romania with several notable amendments, such as:

• distinct rules for international arbitrations as opposed to domestic arbitration;
• provisions regarding the support granted by the state courts throughout the arbitral proceedings, similar to the juge d’appui in France;
• further clarity as to the arbitrability of disputes involving State entities;
• express acknowledgement of arbitrators’ capacity to rule on the transfer of rights over immovable assets, subject to certain formalities;
• and implementation of New York Convention principles on recognition and enforcement of foreign awards.

Nonetheless, the legislator’s declared intention of turning Romania into a user-friendly seat for arbitration may be undermined by several loopholes in the new rules due to several questionable solutions enshrined in the new provisions dealing with key legal aspects of arbitration (such as the definition of international arbitration, arbitrability, validity of arbitration agreements, procedural rules, costs, and enforcement of certain awards). These issues may thus deter rather than encourage parties’ choice of seat in Romania.