Question 1

What advantage does arbitration before the Arbitration Court have over litigation before a state court?

Accepted Answer

There are many advantages. Beyond the fundamentals—such as single-instance proceedings, speed, informality, the easy enforceability of arbitral awards abroad, and reasonable costs—the parties can influence procedural aspects that would be beyond their control in litigation before state courts. For instance, they can choose the venue for hearings, meaning the parties can agree to hold hearings at a location of their choice. The Arbitration Court attached to the Czech Chamber of Commerce and the Czech Agrarian Chamber maintains regional venues in Brno, Plzeň, Ostrava, and Hradec Králové, where oral hearings may be held.

Additionally, the parties can influence the selection of the arbitrator(s) as established in the arbitration agreement or the Court’s Rules. The parties may agree on both the number of arbitrators and on who these arbitrators will be, as well as how they shall be appointed. For example, for simpler contracts, the parties may prefer to have a single arbitrator. In cases where they prefer a three-member panel, each party typically appoints one arbitrator, and those appointed arbitrators then select the chair of the arbitral tribunal. A distinct advantage is the possibility of appointing an arbitrator with expertise not only in law but also in the specific field relevant to the contract at issue.

Question 2

Does the arbitration clause have to be in writing?

Accepted Answer

Yes, the arbitration clause must be agreed in writing, otherwise it is invalid. However, the written form is maintained even if the arbitration agreement is agreed by telegraph, telex or electronic means that allow the recording of their content and the identification of the persons who agreed on the arbitration agreement.

However, if the arbitration clause forms part of the conditions governing the main contract to which the arbitration clause applies, the arbitration clause is validly agreed even if the written draft of the main contract with the arbitration clause was accepted by the other party in a manner that shows its agreement with the content of the arbitration agreement.

Question 3

When can one turn to the Arbitration Court?

Accepted Answer

Arbitration can be used to resolve property disputes which would otherwise fall under the jurisdiction of state courts and which can be settled amicably (subject to certain exceptions, such as disputes related to enforcement of decisions and incidental disputes). Naturally, a valid arbitration agreement—either an arbitration clause within another contract (for example, a purchase agreement, a contract for work, an insurance contract, a loan agreement, or a lease) or a separate arbitration agreement covering an already-existing dispute—is a prerequisite. If there is no valid arbitration agreement, arbitration cannot proceed.

Question 4

Who will decide my dispute at the Arbitration Court?

Accepted Answer

The dispute is typically decided by a three-member arbitral tribunal. However, if the parties agree, the dispute may be decided by a sole arbitrator.

The Arbitration Court prescribes the criteria required of an arbitrator in the Directive on the Prerequisites for Performing Arbitrator Duties (View PDF)(https://www.soud.cz/en/_files/ugd/8b4341_66a23963890f486382cf984b57955ba4.pdf). Arbitrators may be lawyers, economists, or civil engineers. If a party does not select its own nominee, it may delegate the appointment to the President of the Arbitration Court, who will nominate a proven arbitrator from among those recognized by the Court.

If the dispute is decided by a three-member tribunal, each party appoints one arbitrator, who then jointly select the chair of the tribunal. If a party fails to appoint an arbitrator within the set time, the President of the Arbitration Court will do so on that party’s behalf.
All nominated arbitrators must be approved by the President of the Arbitration Court.

If the dispute is to be resolved by a sole arbitrator, that individual is appointed by the President of the Arbitration Court, unless the parties agree otherwise. A single arbitrator may be specified by name in the arbitration agreement or agreed upon by the parties after the proceedings have begun. A sole arbitrator cannot be appointed solely by one party.

In online arbitration proceedings, the dispute is always decided by a sole arbitrator.

Any arbitrator—whether appointed by a party or selected/appointed by a third party—must meet the requirements of independence and impartiality.

Question 5

What are the costs for initiating proceedings before the Arbitration Court?

Accepted Answer

The costs depend on the value of the dispute and on whether it is considered “domestic” or “other”:
 • Domestic Disputes: For disputes valued up to CZK 100,000,000, the arbitration fee is 5% of the amount in dispute, but no less than CZK 15,000.
 • Other Disputes: A minimum arbitration fee of CZK 16,000 is payable, plus an administrative flat fee of at least CZK 6,000.

A schedule of fees specifying the exact amounts based on the value of the dispute (which forms an appendix to the Arbitration Court Rules) is available under the Fee Schedules section on our website.

The initial costs may also be lower or higher. For example, if the dispute is decided by a sole arbitrator, the arbitration fee is reduced by 20%. Conversely, if an expedited procedure is requested, the arbitration fee is increased (by 50% for a dispute resolved within four months, or 75% for a dispute resolved within two months).

Question 6

Does the Arbitration Court also handle international disputes?

Accepted Answer

Yes. International disputes, i.e. disputes where one or more parties are not Czech nationals/Czech legal entities, can and usually are resolved in arbitration proceedings before the Arbitration Court. The Arbitration Court currently decides around 60 disputes with an international element per year.

Even in such a case, the arbitration proceedings are held in Czech (or Slovak); however, the parties may agree otherwise in writing regarding the language of the proceedings (of the languages other than Czech, the Arbitration Court most often hears disputes in English).

Question 7

Is it possible to resolve disputes arising from consumer contracts in arbitration proceedings?

Accepted Answer

Effective from 1 December 2016, when the amendment to Act No. 216/1994 Coll., on arbitration proceedings and the enforcement of arbitration awards, came into effect, it is no longer possible to hear disputes arising from consumer contracts in arbitration proceedings. The arbitration court therefore does not have the authority to decide disputes arising from consumer contracts concluded after this date.

The arbitration court may hear disputes arising from consumer contracts concluded before 30 November 2016. However, it is necessary to remember the amendment to Act No. 216/1994 Coll., on arbitration proceedings and the enforcement of arbitration awards, which entered into force on 1 April 2012. According to this legislation, if an arbitration agreement is negotiated to resolve disputes arising from consumer contracts, it must be negotiated separately and not as part of the conditions governing the main contract; otherwise it is invalid. Sufficiently in advance of the conclusion of the arbitration clause, the entrepreneur shall provide the consumer with a proper explanation so that he or she can assess what consequences may arise for him or her as a result of concluding the arbitration clause. A proper explanation shall be understood as an explanation of all the consequences of the arbitration clause.

In addition, the arbitration clause for the resolution of disputes arising from consumer contracts must contain the information prescribed by law (true, accurate and complete information about the arbitrator or that a permanent arbitration court is deciding, the method of initiating and conducting the arbitration, the arbitrator's remuneration and the expected types of costs that the consumer may incur in the arbitration and the rules for their award, the place of the arbitration, the method of delivering the arbitration award to the consumer and that the final arbitration award is enforceable). However, if the arbitration clause entrusts the resolution of the dispute to a permanent arbitration court, this requirement is also met by a reference to the statutes and rules of the permanent arbitration courts.

Question 8

How long does an arbitration proceeding conducted at the Arbitration Court last?

Accepted Answer

The length of a particular arbitration depends on many factors, in particular the nature and complexity of the dispute and the activity of the parties (the amount of evidence proposed and presented, the need for oral hearings, etc.), as well as other individual circumstances.

Currently, the average length of arbitration proceedings before the Arbitration Court is around 4 months. The average length of arbitration proceedings is lower in online disputes, where it is around 2 months.

If a party to the proceedings wants to be sure that their dispute will be resolved within a certain period of time (within 2 or 4 months), they can agree to conduct expedited proceedings with a decision within two or four months directly in the arbitration agreement (in the arbitration clause), or they can request expedited proceedings with a decision within four months when the proceedings are initiated or at any time during the conduct of the arbitration. In such a case, the arbitration fee increases by 50% if the dispute is resolved within four months or by 75% if the dispute is resolved within two months.