Arbitration in Serbia

Arbitration in Serbia is governed primarily by the Arbitration Act of 2006, based on the UNCITRAL Model Law (1985). This framework provides a structured yet flexible approach to resolving disputes outside of traditional court systems. It adheres to the principles of autonomy, fairness, and neutrality while providing a swift and cost-effective dispute resolution mechanism.

Legal Framework

• Arbitration Act: Enacted in 2006, this Act regulates all arbitrations seated in Serbia and reflects international standards, ensuring enforceability and clarity in arbitration processes.
• Arbitral Institutions: The two main arbitral institutions in Serbia are (1) the Permanent Arbitration at the Chamber of Commerce and Industry of Serbia and (2) the Belgrade Arbitration Centre (BAC).

These institutions offer comprehensive procedural rules (Rules of the Permanent Arbitration at the Chamber of Commerce and Industry of Serbia and the BAC Rules) designed to ensure efficient and fair dispute resolution. These rules provide a structured framework for arbitration proceedings, covering aspects such as the appointment of arbitrators, case management, and the conduct of hearings.

Arbitration Agreement

According to Article 9 of the Arbitration Act, parties can entrust their future disputes or disputes which have arisen between them in respect of a defined legal relationship to an arbitral tribunal by virtue of an arbitration agreement.[1] Additionally, the arbitration agreement must be in writing.[2] It may be included in a contractual clause or in a separate contract.[3]

For an arbitration agreement to be valid, the parties must have the necessary qualities or capacity to conclude it, and no party may conclude it under duress, fraud, or mistake.[4]

However, certain disputes are deemed non-arbitrable, including:

• Property rights over real estate;
• Serbian insolvency proceedings;
• Privatization issues;
• Intellectual property; and
• Certain corporate matters related to Serbian companies.[5]

Arbitral Jurisdiction

The arbitral tribunal is competent to decide on its own jurisdiction,[6] pursuant to the principle of competence-competence. Additionally, the arbitral tribunal will consider objections relating to the existence or validity of the arbitration agreement, as set out in Article 28.

It is important to note that each party may, before or during arbitral proceedings, request interim measures from a court.[7]

Arbitral Proceedings

Similar to other contemporary arbitration laws, arbitration in Serbia differentiates between institutional and ad hoc arbitration proceedings.[8] In the case of institutional arbitration, proceedings shall commence on the day the institution receives a request for arbitration or a statement of claim.[9] On the other hand, in ad hoc arbitration, proceedings commence when the respondent receives the request for arbitration or a statement of claim and a notification that the claimant has appointed an arbitrator or proposed a sole arbitrator.[10]

Arbitral Tribunal

According to Article 16, the parties can choose the number of arbitrators, which must be odd to avoid deadlocks.[11] The parties are free to appoint their arbitrators. However, if the parties fail to appoint the arbitrators, the chosen arbitral institution or a competent Serbian court shall appoint them.[12]

Choice of Law

Regarding the choice of law, parties can choose any applicable law to govern their contract. In the absence of an agreement between the parties, the tribunal may apply the relevant law or rules as indicated by the conflict of law provisions it finds appropriate. The tribunal shall always take into account the terms of the contract and usages.[13]

Arbitration Rules

The parties may agree on the procedural rules for the arbitral tribunal through mutual agreement or by referencing specific arbitration rules. In case of the absence of such an agreement, the arbitral tribunal has the discretion to conduct proceedings in a manner it considers appropriate and in accordance with the provisions of the Arbitration Act.[14]

Seat and Language

The parties are free to agree on the seat of arbitration proceedings. If the parties do not reach an agreement, the tribunal will decide based on the circumstances of the case and the convenience of the location for all parties involved. Moreover, if the parties have entrusted the administration of arbitration to an arbitral institution, the seat of arbitration will be determined by the rules of the institution.[15]

Furthermore, the parties can mutually agree on the language or languages for the proceedings. However, if they do not reach such an agreement, the arbitral tribunal will determine the language or languages to be used, taking into account the place of arbitration and the language used by the parties in their legal relationship.[16]

The Conduct of the Proceedings

Firstly, the claimant presents the facts supporting its claims, the points at issue and the relief or remedy sought. The respondent, in its response, addresses the allegations, proposals, and demands put forth by the claimant.[17] Unless otherwise agreed by the parties, the respondent may submit a counterclaim.[18]

Additionally, the parties have the right to amend or supplement their pleadings during the arbitration proceedings unless the arbitral tribunal determines that this would undermine the efficiency of the proceedings.[19]

Unless the parties agree otherwise, the arbitral tribunal will determine whether to hold an oral hearing or conduct the proceedings based on documents and other written materials. However, if one of the parties requests an oral hearing, the arbitral tribunal shall hold such a hearing.[20]

Witnesses

As with other modern arbitration laws, the Serbian Arbitration Act recognizes the role of witnesses in the proceeding. As a rule, witnesses shall be examined at a hearing without taking an oath. Additionally, witnesses may be examined outside the hearing if they agree and the parties do not object. The tribunal does not have the discretion to set procedural measures or penalties against witnesses.[21]

Experts

Arbitration in Serbia allows the use of experts. Pursuant to Article 45 of the Arbitration Act, the arbitral tribunal may appoint one or more experts to provide it with reports and opinions on specific issues. Moreover, the tribunal may require parties to provide any necessary information, documents or access to documents, goods or other property to the expert.[22]

Court Assistance in Taking Evidence

If certain evidence cannot be obtained, the tribunal may request assistance from the competent court. The arbitral tribunal shall assess the evidence taken before the court as evidence taken by itself.[23]

Termination of the Proceedings

Usually, the proceedings are terminated when the tribunal renders the award. Although, in certain cases, the tribunal may terminate the proceedings if:

• The claimant withdraws its claim, unless the respondent objects and the arbitral tribunal finds that the respondent has a legitimate interest in obtaining a final award;
• The parties agree to terminate the proceedings;
• The arbitral tribunal finds that the continuation of the arbitral proceedings has become impossible;
• The arbitral proceedings have been suspended in accordance with the Serbian Arbitration Act.[24]

Award

Pursuant to Article 48, an award can be rendered as a final award, an interim award or a partial award.[25] The arbitral tribunal shall render its award in accordance with the law chosen by the parties. Only in case of the parties’ explicit intent may the tribunal decide on the basis of justice and equity, i.e., ex aequo et bono.[26]

The tribunal must render the award in writing and sign it. It is considered that the award is rendered after deliberation and by majority vote, unless otherwise agreed by the parties.[27]

Furthermore, an arbitrator who disagrees with the award may write a dissenting opinion and communicate it to the parties along with the award if the dissenting arbitrator so requests.[28]

Settlement

In the event that the parties settle their dispute during the proceedings, the tribunal shall, at their request, render the award on agreed terms. However, the settlement cannot be in conflict with the Republic of Serbia’s public policy.[29]

An award on agreed terms has the same legal effect as any other award.[30]

Application for Setting Aside

As a legal remedy against domestic awards, the Serbian Arbitration Act provides for an application for setting aside within three months of the date of delivery of the award.[31]

The competent court shall set aside the award if the applicant proves that:

• The arbitration agreement is invalid under the law determined by the parties’ agreement or under Serbian law;
• The party against whom the arbitral award was made was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case;
• The award deals with a dispute not falling within the terms of the arbitration agreement or contains decisions on matters beyond the scope of that agreement;
• The composition of the arbitral tribunal or the conduct of the arbitral proceedings was not in accordance with the arbitration agreement or the rules of the arbitral institution that was entrusted with the administration of the arbitration, or if such agreement was not in accordance with the provisions of the Arbitration Act;
• No agreement regarding the composition of the arbitral tribunal was made, the composition of the arbitral tribunal or the conduct of the arbitral proceedings was not in accordance with the provisions of the Serbian Arbitration Act;
• The award was based on a false statement of a witness or expert or on a forged document, or the award results from a criminal act of an arbitrator or a party if these grounds are proven by a final judgement.[32]

Additionally, the Serbian court shall also set aside the award if it finds that:

• The subject matter of the dispute is non-arbitrable under Serbian law;
• The award is contrary to Serbian public policy.[33]

Enforcement

According to Serbian law, any award rendered outside of Serbian borders is a foreign award. Thus, it requires recognition. Serbia has been a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) since 1981. Thus, it is no surprise that the Arbitration Act bases the process of recognition on it, as well as on the UNCITRAL Model Law (1985). It should be noted that Serbia set non-retroactivity and reciprocity as its main reservations.

Article 66 sets grounds for refusing recognition and enforcement.[34] These grounds include the award not yet becoming binding on the parties and being set aside or suspended by a court in the country where it was rendered. In any event, the award shall not be recognized if:

• The subject matter of the dispute is not eligible for settlement by arbitration under Serbian law;
• The award is contrary to Serbian public policy.[35]

Third-Party Funding

The Arbitration Act does not regulate third-party funding. Therefore, there are no limitations in place.[36]

Costs

The parties shall bear the costs of the arbitration in the amount determined by the arbitral tribunal. If requested, the parties shall pay the costs in advance. In case an arbitral institution conducts the proceedings, it shall independently establish the costs of the arbitration and the scale of these costs.[37]

Selecting Serbia as the seat of arbitration offers the advantage of lower fees and expenses compared to most other European arbitration centres, such as Paris, Geneva, and London.

Investor-State Cases

As previously noted, to date, at least eleven investor-State arbitrations have been initiated against Serbia:

• Mera Investment Fund Limited v. Republic of Serbia;
• Zelena N.V. and Energo-Zelena d.o.o Inđija v. Republic of Serbia;
• Rand Investments Ltd. and others v. Republic of Serbia;
• Coropi Holdings Limited, Kalemegdan Investments Limited and Erinn Bernard Broshko v. Republic of Serbia;
• APG SGA SA and D.O.O. za promet i usluge Alma Quattro Beograd v. Republic of Serbia;
• United Group B.V., Adria Serbia Holdco B.V., and Serbia Broadband–srpske kablovske mreže d.o.o. Beograd v. Republic of Serbia;
• BRIF TRES d.o.o. Beograd and BRIF-TC d.o.o. Beograd v. Republic of Serbia;
• Kornikom EOOD v. Serbia;
• Mytilineos Holdings SA v. The State Union of Serbia & Montenegro and Republic of Serbia (I);
• Mytilineos Holdings SA v. Republic of Serbia (II);
• Kunsttrans Holding GmbH and Kunsttrans d.o.o. Beograd v. Republic of Serbia.

However, the investor-State arbitrations involving Serbia have not yielded particularly favourable results for the country. Serbia was found to have breached its bilateral investment treaties on multiple occasions. Nevertheless, the compensation that Serbia has been ordered to pay is relatively small.

Conclusion

Arbitration in Serbia is becoming an increasingly attractive option for resolving disputes efficiently and cost-effectively. It strikes a balance between meeting global standards and embracing regional characteristics. With an established legal framework, Serbia offers businesses and individuals a reliable alternative to traditional court proceedings. As Serbia modernizes its dispute resolution systems and continues to draw international investment, arbitration will play a key role in building trust and stability in its legal environment. By adopting best practices and increasing awareness, Serbia has the opportunity to establish itself as a leading regional hub for arbitration.

• Marta Milanovic, William Kirtley, Aceris Law LLC

[1] Arbitration Act, Article 9.

[2] Arbitration Act, Article 12.

[3] Arbitration Act, Article 9.

[4] Arbitration Act, Article 10.

[5] J. Bezarevic Pajic, T. Sumar, N. Lalatovic Djordjevic, Commercial Arbitration: Serbia (11 April 2024), available at: https://globalarbitrationreview.com/insight/know-how/commercial-arbitration/report/serbia.

[6] Arbitration Act, Article 28.

[7] Arbitration Act, Article 15.

[8] Arbitration Act, Article 38.

[9] Arbitration Act, Article 38.1.

[10] Arbitration Act, Article 38.2.

[11] Arbitration Act, Article 16.

[12] Arbitration Act, Article 17.

[13] Arbitration Act, Article 50.

[14] Arbitration Act, Article 32.

[15] Arbitration Act, Article 34.

[16] Arbitration Act, Article 35.

[17] Arbitration Act, Article 36.

[18] Arbitration Act, Article 37.

[19] Arbitration Act, Article 36.

[20] Arbitration Act, Article 39.

[21] Arbitration Act, Article 44.

[22] Arbitration Act, Article 45.

[23] Arbitration Act, Article 46.

[24] Arbitration Act, Article 47.

[25] Arbitration Act, Article 48.

[26] Arbitration Act, Article 49.

[27] Arbitration Act, Article 51.

[28] Arbitration Act, Article 52.

[29] Arbitration Act, Article 54.

[30] Arbitration Act, Article 54.

[31] Arbitration Act, Article 57.

[32] Arbitration Act, Article 58.

[33] Arbitration Act, Article 58.

[34] Arbitration Act, Article 66.

[35] Arbitration Act, Article 66.

[36] J. Bezarevic Pajic, T. Sumar, N. Lalatovic Djordjevic, Commercial Arbitration: Serbia (11 April 2024), available at: https://globalarbitrationreview.com/insight/know-how/commercial-arbitration/report/serbia.

[37] Arbitration Act, Article 18.