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The Chamber organized the first Montenegrin Arbitration Day

14/11/2019

Arbitration contributes to the improvement of the business and investment environment

The establishment and activities of the Permanent Arbitration Court at the Montenegrin Chamber have provided new quality to our legal system by means of extrajudicial dispute resolution. The business community and the state benefit from arbitration dispute resolution.

The arbitration contributes to improving the business and investment environment, it was said during the first Montenegrin Arbitration Day. On this occasion, the Chamber of Economy organized the roundtable "Arbitration - benefits and challenges of resolving economic disputes", attended by representatives of companies, eminent lawyers from Montenegro and the region, experts in this field, representatives of the public authorities, judiciary and academia.

Introductory speeches were delivered by Vlastimir Golubović, the President of the Montenegrin Chamber, Vesna Medenica, the President of the Supreme Court of Montenegro, Ibrahim Smailović, the Director General of the Directorate for Civil Legislation and Supervision at the Ministry of Justice. The roundtable was attended by the Chairman of the Constitutional Court Dragoljub Drašković, the President of the Commercial Court of Montenegro Blažo Jovanić, the President of the Chamber Assembly Vojo Banović as well as the presidents of the Arbitration Courts in the region.

The President of the Montenegrin Chamber said that renowned local and foreign investors require a predictable business environment, which includes the rule of law and efficient judicial system. The Chamber established the Arbitration Court, as an independent and autonomous institution under the Arbitration Law. This regulation, which is in line with the United Nations Commission on International Trade Law (UNCITRAL), provides additional legitimacy to Montenegro within the international framework as a country with a safe and effective legal business protection and encourages economic cooperation with foreign partners.

- The establishment and operation of the Permanent Arbitration Court at the Montenegrin Chamber have provided new quality to our legal system by means of extrajudicial dispute resolution. The business community and the state benefit from dispute resolution through arbitration. This kind of dispute settlement provides business community with an opportunity to quickly and conveniently reach the awards, which can be enforced in the country and abroad, while it provides the state with an opportunity to disburden the judiciary, increase its efficiency and strengthens the credibility and prestige of the national economy in terms of attracting investments - said Golubović.

He points out that this model of dispute settlement preserves the culture of a business partnership, unlike the court dispute settlement, which usually deteriorates the business relationship between the parties to a dispute.

According to him, in recent years Montenegro has made significant strides in improving legal certainty and the quality of legislation.

- Reform activities should now be focused on improving the efficiency of the judiciary, which entails the acceleration of judicial procedures and cost reduction, as well as building of capacities for alternative dispute resolution - said Golubović.

The Chamber, he added, has been making great efforts to encourage the economic relations and ensure their effective legal protection. Therefore, he expects companies to respond positively to the legal reforms and use the arbitration to a greater extent.

- Appropriate use of arbitration in practice, together with important systemic laws, regulating civil procedure, the enforcement and security, contribute to faster and more efficient operations and incorporates the highest European standards in the Montenegrin legal system - said Golubović.

Arbitration, as an alternative dispute resolution model, has a number of advantages. Therefore, there is a need for its wider application in the commercial disputes, said the President of the Supreme Court Vesna Medenica.

- It is important to emphasize the numerous advantages of arbitration and the need for its wider application in the commercial disputes, because this is the only way to achieve reconciliation of the parties, cost effectiveness of proceedings and the final decision - said Medenica.

She stated that the judicial authorities will make further efforts to achieve a higher level of legal security in order to contribute to improving the business environment.

- We, as representatives of judicial authorities, strongly support any promotion of alternative dispute resolution in order to provide citizens and all enterprises with effective and efficient judicial system. Bearing in mind that the development of the private sector in Montenegro should be further enhanced, I am convinced that the judiciary is your reliable partner which will do everything to fully respect the rule of law principles - said Medenica.

The Director General of the Directorate for Civil Legislation and Supervision within the Ministry of Justice Ibrahim Smailović said that more efficient use of alternative, extrajudicial ways of dispute resolution is among the priorities in the judiciary reform. He points out that the development of arbitration provides citizens and businesses with an opportunity to opt for other methods to resolve disputes instead of the court.

- Arbitration is a desirable and effective extrajudicial dispute resolution model, because it contributes to maintaining good business relations between the parties - said Smailović.

He adds that arbitration is a desirable way which guarantees fast, efficient and professional dispute settlement.

- It will contribute to further boosting of the confidence of foreign investors in Montenegro, the growth of gross domestic product and its positioning among the leading European countries when it comes to this indicator - said Smailović.

The topic of the first session was the resolution of the commercial disputes by means of arbitration in Montenegro, which was presented by the President of the Arbitration Court at the Chamber of Economy of Montenegro Vesko Božović. He also spoke about the history of arbitration in Montenegro and clarified the regulatory framework and conducting of arbitration proceeding in our country. The first arbitration institution was established in 2003. The Foreign-trade Arbitration Court and the Permanent Court at the Chamber of Economy of Montenegro were established. Since December 2015, there is only the Arbitration Court at the Chamber. The Arbitration Law of Montenegro was adopted in 2015 and thus Montenegro joined the countries that have regulated this area based on the UNCITRAL.

- Our Arbitration Law is contemporary and provides the parties with dispute resolution in one instance arbitration proceedings and the awards are made in a relatively short period of time - said Božović.

He added that the arbitration agreement must be concluded in writing. It may be in the form of an arbitration clause, as an integral part of a contract or a separate agreement. According to Božović, the Arbitration Court at the Chamber of Economy of Montenegro has very good cooperation with similar institutions in many countries.

- We have signed cooperation agreements with permanent arbitration courts of Slovenia, North Macedonia, Serbia, Croatia, the Federation of B&H, Kosovo, Bulgaria, the Federal Republic of Germany and the Shanghai International Arbitration Centre - he said.

He concludes that it is good that the state recognizes the importance of alternative dispute resolution through arbitration and mediation.

- It ensures both domestic and foreign businesses that their disputes before the Arbitration Court and Mediation Centre will be resolved efficiently and fairly - said Vesko Božović.

The second panel “The resolution of commercial disputes by means of arbitration in the region (experiences and challenges)” was discussed by PhD Mirko Vasiljević, the president of the Permanent Court of Arbitration at the Chamber of Commerce and Industry of Serbia, PhD. Hrvoje Sikirić, the president of the Permanent Arbitration Court at the Croatian Chamber of Economy, PhD. Abedin Bikić, the president of the Arbitration Court at the Foreign Trade Chamber of Bosnia and Herzegovina, Virtyt Ibrahimaga, the president of the Permanent Tribunal of Arbitration at the Kosovo Chamber of Commerce, Nena Nikolovska, the secretary of the Permanent Court of Arbitration at the Economic Chamber of Macedonia. The panel was moderated by MA Vuksan Vuksanović, a member of the Presidency of the Arbitration Court at the Chamber of Economy of Montenegro.

According to PhD. Mirko Vasiljević, the participation of the leading people in the judiciary in the first Montenegrin Arbitration Day represents a very good signal for further affirmation of arbitration in Montenegro.

The focus of his discussions was the attitude of the judiciary towards the arbitration dispute resolution, with a special emphasis on the instrument of annulling the arbitration award.

- This is a major risk facing an affirmation of arbitration. The arbitration proceeding will not be efficient, if the award is annulled before the competent court - said Vasiljević.

He illustrated the said with the examples of arbitration in Serbia.

- Arbitration agreement is the alpha and omega of arbitration and it has to be crystal clear - said the professor.

He pointed out that one of the prerequisites for the success of arbitration lies in harmonization of the entire legal infrastructure so that certain acts important for this area do not annul each other.

- It is necessary to develop arbitration in domestic terms and raise awareness of its importance among our business communities. This collection is one of the steps in this direction - concluded Vasiljević.

PhD. Hrvoje Sikirić said that the main advantages of arbitration with respect to court proceeding are autonomy, efficiency and cost-effectiveness, enforcement of decisions, a limited number of remedies and the possibility of introducing the institute of accelerated procedure.

- An arbitration agreement must be clear agreement between the parties to resolve business disputes in this way. The simplest way is to copy and include the recommended arbitration clause into the provisions of the contract - said Sikirić.

He shared the Croatian experience, where 25 percent of arbitration proceedings have an international element. Most disputes occur in the construction contracts (33 percent) and the purchase of real estate (22 percent). According to him, the importance of arbitration must be further promoted. There are opportunities to promote the arbitration in fairs, meetings with the authorities, but also to introduce elective courses on arbitration at faculties.

According to PhD. Abedin Bikić, business people are always in a dilemma whether to opt for a court or arbitration when resolving commercial disputes.

- In Bosnia and Herzegovina court disputes are very slow and it is necessary to wait for five or more years in order to reach the final decision. This is not the case with the arbitration and proceedings are generally completed in eight months - said Bikić.

He added that his country has no arbitration law due to the complex internal regulation, but arbitration rules are very well applied.

- Our arbitrators are usually professors at law and economic faculties and majority of them are lawyers in the field of business - said Bikic.

Virtyt Ibrahimaga stated that the Permanent Tribunal of Arbitration of Kosovo was established in 2011 and has been operating at the Chamber of Commerce. He informed the participants about the legislation, regulating the area of arbitration.

- The 2015-2018 Government Program paid special attention to the consolidation of arbitration and mediation systems, which avoid bureaucracy and contribute to the efficient resolution of commercial disputes - said Ibrahimaga.

In the forthcoming period the Permanent Tribunal of Arbitration of Kosovo will work on promotion of this kind of dispute resolution, the revision of the arbitration rules, the creation of a forum for resolving legal disputes with state authorities, further improvement of the list of arbitrators, organization of trainings for them, as well as the arbitration conferences and encouraging regional cooperation this area.

Nena Nikolovska pointed out that during the previous two years 54% of disputes before the Permanent Court of Arbitration at the Economic Chamber of Macedonia had an international element, while 46% had the national one. Commercial disputes involved domestic enterprises and companies from Russia, Turkey, Romania, Croatia, Serbia, Bulgaria and China and most of them related to the issue of debt and damage compensation in the sectors of construction, freight forwarding, public procurement. The amount of disputes initiated before the Court of Arbitration in 2015 were EUR 21 million, while in 2018 it was EUR 1.4 million.

- The arbitration was accepted by large companies which operate on the international market, while rarely used by small and medium-sized enterprises, which rely on the traditional legal instruments. Although a modern regulatory framework has been established a decade ago, arbitration in North Macedonia is in an early stage of development - said Nikolovska.

According to her, the first step that needs to be made is to strengthen the awareness of the need to anticipate disputes in commercial transactions (domestic and international) and the importance of the arbitration agreement.

- The aforementioned, the modernization of the arbitration legislation in the country and further improvement of the work of the Permanent Court of Arbitration within the Economic Chamber of Macedonia should result in a significant improvement of the business climate in the country - concludes Nikolovska.

The meeting was ended with a discussion during which the representatives of companies and institutions asked questions and commented on topics related to this important field.