International arbitration law and rules in the Czech Republic

1.1.1 The pre-communist Czechoslovak legal roots were strongly influenced by the Austro-Hungarian legal system and, prior to 1939, commercial arbitration was well established.

1.1.2 After the communist reforms of the Czechoslovak legal system, only foreign trade disputes between state trading organisations of the member states of the Council for Mutual Economic Assistance (COMECON) could be referred to arbitration before the Permanent Court of Arbitration attached to the Czechoslovak Chamber of Commerce. Such arbitrations were governed by the relevant provisions of the 1972 Moscow Convention, 1  the 1963 Czech Arbitration Act (1963 Czech Arbitration Act) 2  and the 1963 Czech Civil Procedure Code (Czech Civil Procedure Code). 3

1.1.3 Following the velvet revolution of 1989, as part of an extensive programme of legal reform, a legislative commission was formed with the task of producing a new arbitration law. It was hoped that modernisation of the arbitration law would help to secure inward foreign investment by providing an internationally acceptable and politically neutral system of commercial dispute resolution. There was also a concern that, in the post-communist era, an increasing number of foreign investment contracts were providing for arbitration abroad (eg in Vienna or London) rather than in the Czech Republic.

1.1.4 As a result, the new Act No. 216/1994 Coll. on Arbitral Proceedings and Enforcement of Awards (Czech Arbitration Act) was adopted. The Czech Arbitration Act is based on the 1963 Czech Arbitration Act and, in contrast to the new arbitration laws in many jurisdictions elsewhere in Central and Eastern Europe, it is not based on the UNCITRAL Model Law (1985). 4  However, many of the underlying concepts and procedural provisions are similar.

1.1.5 The Czech Arbitration Act brought about wide-ranging changes to the Czech arbitration regime. A key change effected by the Czech Arbitration Act was to enable domestic as well as international disputes to be referred to arbitration. It also widened the range of disputes that are capable of being arbitrated. These were significant changes from the old law which restricted the use of arbitration to disputes arising from international trade agreements between state trading organisations .5

1.1.6 Since the dissolution of Czechoslovakia and the creation of the Czech Republic in 1993, the Permanent Court of Arbitration has operated under the name of the Czech Arbitration Court Attached to the Economic Chamber of the Czech Republic and the Agricultural Chamber of the Czech Republic (Czech Arbitration Court). It is the only permanent Czech arbitration court in the Czech Republic with general jurisdiction. The Czech Arbitration Court organises and supervises individual arbitral proceedings under its rules but does not itself resolve disputes. The arbitral tribunals appointed under the Czech Arbitration Court’s rules carry out this task. The Czech Arbitration Court provides overall support and administration services to arbitral tribunals, including services providing secretaries, a reception and a place for the delivery of documents. The President of the Czech Arbitration Court (President) may appoint arbitrators, upon the request of the parties or if the arbitrators appointed by the parties cannot agree on the identity of a third arbitrator. The other two Czech permanent arbitration courts, the Arbitration Court attached to the Commodity Exchange and the Arbitration Court attached to the Stock Exchange, are concerned with disputes arising from their exchanges.

1.1.7 Since 1994, the Czech Arbitration Court no longer has amonopoly in relation to institutional arbitration. Arbitrations under the rules of other international arbitral institutions, such as the LCIA 6  or the ICC, 7 are also permitted and used with increasing frequency in the Czech Republic, as are ad hoc arbitrations, including arbitrations under the UNCITRAL Rules (1976) 8  and UNCITRAL Rules (2010). 9

1.1.8 The Czech Arbitration Court remains the premier permanent arbitral institution in the Czech Republic for the resolution of both domestic and international disputes. It adopted two new sets of rules in 1996: one concerning international arbitration (Czech International Arbitration Rules) 10  and the other concerning domestic arbitration. The domestic and international arbitration rules differed on various issues including procedure, the fees charged and the language and place where arbitral proceedings are heard. There were several amendments and, ultimately, the two originally separate documents merged into one in 2012 – The Rules of the Arbitration Court Attached to the Czech Chamber of Commerce and the Agricultural Chamber of the Czech Republic (Rules of the Arbitration Court). The most recent version of the Rules of the Arbitration Court dates from 2023. The Czech Arbitration Court is also the Alternative Dispute Resolution Centre for disputes regarding domain names in accordance with the principles and rules set out by the European Commission .11

1.1.9 This chapter focuses on the statutory provisions that apply under the Czech Arbitration Act to the extent that the parties have not validly agreed on the application of institutional arbitral rules or otherwise determined the applicable procedural rules governing the arbitral proceedings. However, the Rules of the Arbitration Court are also mentioned where they contain provisions of particular interest.

2.1.1 The Czech Arbitration Act is applicable to the resolution of proprietary disputes 12  (ie claims of a financial or monetary nature) by independent and impartial arbitrators and also governs the enforcement of awards.

2.1.2 The Czech Arbitration Act governs all arbitral proceedings taking place under arbitration agreements made after 1 January 1995. Arbitrations arising from agreements made before 1 January 1995 will continue to be governed by the 1963 Czech Arbitration Act regardless of the date of commencement of the arbitral proceedings. 13  This provision of the Czech Arbitration Act is mandatory. The 1963 Czech Arbitration Act might therefore continue to be used for some years to come (however, this is not very likely already).

2.1.3 The Czech Arbitration Act has been amended several times in the past, notably in 2012, 2016 and 2017. Another amendment to the Czech Arbitration Act will be effective from 1 January 2024 but this amendment affects the Czech Arbitration Act only marginally and insignificantly.

2.1.4 The primary goal of the 2012 Amendment to the Czech Arbitration Act was to provide wider protection for consumers as required by the Council Directive 93/13/EEC on Unfair Terms in Consumer Contracts, dated 5 April 1993 (UTCC Directive). 14

2.1.5 The 2016 Amendment excludes consumer contracts from arbitration completely. Since 1 December 2016, the Czech Arbitration Court is no longer entitled to handle disputes between businesses and consumers (consumer disputes). According to section 2(1) of the Act, consumer contracts which contain arbitration agreement clauses will be considered void as they are explicitly exempted from arbitration proceedings.

2.1.6 The Czech Civil Procedure Code (as amended by the Czech Arbitration Act) also continues to apply to arbitral proceedings, subject to any expressly incorporated institutional rules, such as those of the Czech Arbitration Court or of the ICC. Where the arbitration involves foreign parties or elements, the 2012 Private International Law Act, 15  which deals with conflicts of law issues, applies.

2.2.1 The Czech Arbitration Act is rather brief; it only contains 50 sections. It is divided into the following ten parts:

(i) Part One (sections 1-3): subject matter and arbitration agreement;

(ii) Part Two (sections 4-13): arbitrators, appointment and exclusion of arbitrators and the permanent arbitration courts;

(iii) Part Three (sections 14-30): arbitral proceedings, awards and the use of the Czech Civil Procedure Code;

(iv) Part Four (sections 31-35): setting aside of an award by the court and interruption of enforcement proceedings;

(v) Part Five: repealed;

(vi) Part Six: repealed;

(vii) Part Seven (sections 40e-40k): association arbitration proceedings;

(viii) Part Eight (sections 41-44): factual and local jurisdiction of the courts;

(ix) Part Nine (section 45): amendment to the Civil Procedure Code; and

(x) Part Ten (sections 46-50): transitional and final provisions.

2.2.1 The Czech Arbitration Act is rather brief; it only contains 50 sections. It is divided into the following ten parts:

1. Part one (sections 1-3): subject matter and arbitration agreement;
2. Part two (sections 4-13): arbitrators, appointment and exclusion of arbitrators and the permanent arbitration courts;
3. Part three (sections 14-30): arbitral proceedings, awards and the use of the Czech Civil Procedure Code;
4. Part four (sections 31-35): setting aside of an award by the court and interruption of enforcement proceedings;
5. Part five: repealed;
6. Part six: repealed;
7. Part seven (sections 40e-40k): association arbitration proceedings; 
8. Part eight (sections 41-44): factual and local jurisdiction of the courts;
9. Part nine (section 45): amendment to the Civil Procedure Code; and
10. Part ten (sections 46-50): transitional and final provisions. 

2.3.1 The general principles of the Czech Arbitration Act, and Czech arbitration law in general, include:

• the equal treatment of the parties in the arbitral proceedings;
•  the rights of parties to be given the full opportunity to present their respective cases;
•  the freedom of parties to agree on the procedural rules to be followed in the arbitral proceedings;
•  in international arbitrations, the freedom of parties to determine the law applicable to the substance of their dispute;
•  the independence and impartiality of arbitrators;
• non-publicity of arbitral proceedings, including hearings; and
• the statutory duty of confidentiality of arbitrators.

3.1.1 There is no specific definition of an arbitration agreement in the Czech Arbitration Act save for a general clause. According to the general clause, parties may agree that any proprietary disputes arising from their relations (except for consumer contracts), will be decided by one or more arbitrators in ad hoc arbitration or institutional proceedings in a permanent arbitration court (ie one established by an Act of the Parliament of the Czech Republic, such as the Czech Arbitration Court). 16

3.2.1 Pursuant to the Czech Arbitration Act, an arbitration agreement may be entered into either in relation to a specific pre-existing dispute, or in relation to future disputes arising out of a given legal relationship. 17

3.2.2 The Czech Arbitration Act requires arbitration agreements to be in writing. An arbitration agreement made by telegram, telex, or other electronic means, enabling the contents of the agreement to be ascertained and the parties to the agreement to be determined, is deemed to have been made in writing. 18

3.2.3 If the arbitration agreement is contained in general terms and conditions governing the main contract to which the arbitration agreement applies, then the arbitration agreement is validly concluded – provided that the offer of the main contract is accepted by the other party and there is no doubt that this acceptance extends to the arbitration agreement.

3.2.4 The arbitration agreement also binds the legal successors of the parties thereto, unless expressly agreed otherwise.

3.2.5 In international arbitrations, the issue as to whether disputes can be arbitrated in the Czech Republic is determined according to Czech law. However, the arbitration agreement will be valid if its form complies either with Czech law or the law of the place where the arbitration agreement was made.

3.3.1 Most disputes relating to “property” can be settled by arbitration. The precise ambit of this term is unclear, but it generally comprises most claims of a financial or monetary nature. Generally, parties may enter into an arbitration agreement if they could otherwise conclude a court settlement in respect of the subject matter of the dispute referred to

arbitration. 19

3.3.2 Accordingly, the only disputes that cannot, in principle, be arbitrated are:

— those regarding personal status (eg divorce, annulment of marriage and paternity);

— those where court proceedings can be initiated in the absence of a motion (eg cases involving care of minors, legal capacity and guardianship, and inheritance); and

— those in which the substantive law does not permit an agreement between the parties which is contrary to mandatory statutory requirements (e.g. disputes relating to the enforcement of decisions and disputes arising out of insolvency proceedings or receivership).

3.4.1 A binding arbitration agreement effectively prevents the parties from submitting their dispute to an ordinary court, unless both parties expressly or tacitly agree that their dispute is to be resolved by an ordinary court.

3.4.2 If a person brings a claim before an ordinary court in respect of a dispute which is subject to an arbitration agreement, the respondent should raise its objection to those court proceedings at the time at which it is required to take its first step in the proceedings. If the court finds that the dispute is subject to a valid arbitration agreement between the parties, it is obliged to terminate the court proceedings, unless both parties expressly declare that they do not insist on the arbitration agreement. 20

3.4.3 An ordinary court is also authorised to continue with court proceedings despite the objection as to the existence of an arbitration agreement, if it finds that:

— the matter in question is non-arbitrable under Czech law;

— the arbitration agreement is not valid or is non-existent;

— the resolution of the matter in question by the arbitral tribunal, or in arbitration, would exceed the powers given to the arbitral tribunal by the arbitration agreement; or

— the arbitral tribunal refused to discuss and resolve the matter in question. 21

3.4.4 Where a court declines jurisdiction on the basis that the dispute is subject to a valid arbitration agreement, for the purposes of determining whether the claim was filed within the relevant statutory limitation period, the deemed date of filing will remain the date on which the court claim was originally filed, providing arbitral proceedings are commenced within 30 days of the court’s decision.

3.4.5 Where arbitral proceedings have already been commenced before the filing of a claim in an ordinary court relating to the same dispute, the court must stay its proceedings concerning whether the dispute is subject to a valid arbitration agreement until the arbitral tribunal has decided on its competence and/or on the merits of the claim.

4.1.1 Both Czech and foreign citizens may act as arbitrators if they are of adult age and have capacity to act under the law of their country or under the law of the Czech Republic .22

4.1.2 The parties are free to determine the number of arbitrators in the arbitration agreement. The arbitration agreement should set out the identity of the arbitrators or the procedure for determining the number of arbitrator(s) and procedure for their appointment. The arbitral tribunal must always be composed of an odd number of arbitrators.

4.1.3 If the parties have not made any provisions in relation to the number or appointment of arbitrator(s) in the arbitration agreement, each party shall be entitled to appoint one arbitrator. The arbitrators appointed by the parties shall then select the

presiding arbitrator to act as the chair. 23

4.1.4 The Czech Arbitration Act sets out the procedure to be followed in the event that a party fails to appoint an arbitrator within 30 days of receipt of an invitation by the other party to make the appointment, or if the arbitrators appointed by the parties are unable to agree on the identity of the chair. 24  In the latter case – unless otherwise agreed by the parties in their arbitration agreement – the court shall appoint the chair. The application to the court to make a nomination can be made by any party to the arbitral proceedings, or by any of the arbitrators that have already been appointed.

4.1.5 The Rules of the Arbitration Court state that arbitral tribunals should consist of three arbitrators (or a sole arbitrator, if so agreed by the parties to the arbitral proceedings). 25  Generally, if the parties, or the arbitrators appointed by the parties, fail to make an appointment, the President appoints the chair.

The challenge of arbitrators

4.2.1 The Czech Arbitration Act requires a proposed arbitrator to disclose to the parties or to the court forthwith all circumstances which are likely to give rise to serious doubts as to his or her impartiality or which would otherwise disqualify the arbitrator from the arbitration proceedings .26

4.2.2 The Czech Arbitration Act also strictly provides that arbitrators are excluded from hearing and making a decision in the matter if there is a reason to doubt their impartiality based on their relationship with the parties or their representatives.

4.2.3 An arbitrator who has been named in the arbitration agreement, or appointed by the parties, shall be disqualified from hearing the dispute if circumstances giving rise to serious doubts as to his or her impartiality are disclosed later. The arbitrator is required to step down upon disclosure of such circumstances.

4.2.4 Each party has a right to challenge any of the arbitrators, experts or interpreters employed in the arbitral proceedings on the grounds that, in its opinion, they are biased or if it may be presumed that they are directly or indirectly interested in the outcome of the arbitral proceeding

4.2.5 The same conditions and rules also apply if a nominating party decides to challenge its own nominee.

Procedure for challenging an arbitrator

4.2.6 If an arbitrator fails to resign from his or her office, notwithstanding the existence of reasons for disqualification, the parties have the right to agree on further steps to be taken. In addition, either party has the right to apply to the court for a disqualification order. If the parties do not agree on the steps to be taken, and if the arbitration is subject to rules that do not resolve this issue, the Czech Arbitration Act does not provide a clear answer as to whether the arbitral tribunal may determine the issue. In this respect the matter is usually submitted to the ordinary court for a decision.

Substitution of arbitrators

4.2.7 In the event that an already appointed arbitrator resigns, or is otherwise no longer in a position to exercise their function as an arbitrator, the court shall appoint a new arbitrator, unless otherwise agreed by the parties. When making the substitute appointment, the court is required to take into consideration circumstances guaranteeing the arbitrator’s independence and impartiality.

4.2.8 If a substitute arbitrator is appointed and if the arbitration is subject to rules that do not resolve this issue, the Czech Arbitration Act does not provide a clear answer as to whether the hearings, which have already occurred, need to be repeated. In arbitral proceedings subject to the Rules of the Arbitration Court it would be at the discretion of the arbitral tribunal as to whether the questions already discussed at earlier hearings would be reopened. Since there is no unified legal practice in this respect, the need for repetition of hearings would depend on particular circumstances and this is usually decided on a case-by-case basis. However, to minimise the risk of later annulment of the award by an ordinary court, it is recommended to repeat the hearings to include the new arbitrator. This is, however, at the discretion of the arbitral tribunal.

4.3.1 The acceptance of the office of arbitrator must be made in writing. 27

4.3.2 No person is obliged to accept the role of an arbitrator. However, once accepted, the arbitrator is obliged to pursue the office in accordance with Czech law and other regulations and is obliged to keep strictly confidential any facts and issues that come to their attention during the term of their office. 28

4.3.3 Only the parties may relieve arbitrators from their confidentiality obligations. However, if the parties refuse, the chair of an ordinary district court may decide on relieving an arbitrator from these obligations, but only if there are serious and grave reasons to do so.  29

4.3.4 Relieving arbitrators from their confidentiality obligations is always decided on a case- by-case basis. However, one of the reasons for which arbitrators may be relieved from their confidentiality obligations might be the need to disclose certain facts known to the arbitrators relating to pending criminal proceedings.

4.4.1 The Czech Arbitration Act does not contain any express provisions in relation to the payment of fees and costs of the arbitral proceedings or their allocation between the parties.

4.4.2 In ad hoc arbitral proceedings, the arbitral tribunal will, upon an application by a party, decide on the allocation and payment of the costs of the arbitral proceedings between the parties, including a party’s reasonable costs of legal representation, if the arbitration agreement between the parties so provides.

4.4.3 In institutional arbitral proceedings, the rules of the relevant arbitral institution will generally contain detailed costs provisions. The Annex to the Rules of the Arbitration Court makes detailed provision on the costs of arbitral proceedings before the Czech Arbitration Court. The arbitration fees are calculated by reference to the value of the claim although other factors, such as the number of parties and arbitrators, are also taken into account. The arbitration fee is payable upon the filing of the statement of claim or counterclaim, as the case may be. A lump sum payment on account of administrative costs will also be requested from the claimant.

4.4.4 The arbitral tribunal’s expenses might cover costs for: document production; translation; holding hearings outside the seat of the arbitration court; travel costs and accommodation of arbitrators. These specific costs shall be paid in amounts actually incurred and cannot, therefore, be determined in advance.

4.5.1 The Czech Arbitration Act does not contain any express provisions in relation to the immunity of arbitrators. However, the issue has been considered by the judiciary but only in respect of institutional arbitral proceedings at the Czech Arbitration Court.

4.5.2 An award made by arbitrators in proceedings brought under the auspices of the Czech Arbitration Court, is deemed to have been issued on behalf of the Czech Arbitration Court. Therefore, the Czech Arbitration Court is directly liable rather than the individual arbitrators.

4.5.3 In respect of ad hoc arbitrators, the situation is less clear, but the prevailing opinion is that questions as to the liability of an arbitrator should be dealt with in the contract concluded between the parties to the dispute and the arbitrator(s).

5.1.1 The scope of the arbitral tribunal’s jurisdiction is determined in the first instance by the terms of the arbitration agreement between the parties. The Czech Arbitration Act provides that the arbitral tribunal has the power to rule on its own jurisdiction. 30  If the arbitral tribunal concludes that it lacks the necessary jurisdiction, it shall order the discontinuance of the arbitral proceedings. An objection by a party to the jurisdiction of the arbitral tribunal on the grounds of the non-existence, invalidity or termination of the arbitration agreement, must be raised no later than when taking the first step in the arbitral proceedings relating to the merits of the case, unless the objection is based on an allegation that the subject matter of the dispute is not capable of arbitration.  31  In that event, the objection is available at any stage of the arbitral proceedings. The right to object to the award may otherwise be lost.

5.2.1 The Czech Arbitration Act does not give arbitral tribunals the power to order interim measures such as injunctions. However, the ordinary courts have jurisdiction to grant such measures in support of the arbitral process. 32

6.1.1 Arbitral proceedings commence on the date when a claimant lodges a statement of claim with the arbitral tribunal. 33  Lodging a statement of claim with an arbitral tribunal has the same legal consequences (e.g. with regard to limitation of claims) as if the same were lodged with a court.

6.1.2 In institutional arbitral proceedings, the statement of claim must be lodged with the Czech Arbitration Court. In ad hoc arbitral proceedings, the statement of claim must be lodged with the chair of the arbitral tribunal, provided that the chair has already been determined or appointed. If the chair of the arbitral tribunal has not yet been determined or appointed, then the statement of claim shall be lodged with any arbitrator already determined or appointed. 34

6.1.3 The Rules of the Arbitration Court contain similar parallel provisions for the commencement of institutional arbitral proceedings. 35 However, they require the claimant to pre-pay the arbitration fees and a lump sum to cover the administrative costs of the Czech Arbitration Court upon filing the statement of claim.

6.1.4 The Czech Arbitration Act does not contain express provisions in relation to the format, content or timetable of the parties’ submissions to the arbitral tribunal. Unless the arbitration agreement provides for a specific procedure, the arbitral tribunal or the chair set it out. If none of the above apply, the general provisions of the Czech Civil Procedure Code regarding the contents and form of statement of claim will apply as appropriate.

6.1.5 In contrast, the Rules of the Arbitration Court set out the mandatory minimum content necessary for the statement of claim in arbitral proceedings before the Czech Arbitration Court. 36  Upon filing, the statement of claim will be reviewed by the secretary of the Czech Arbitration Court and, if necessary, the claimant will be invited to remedy any defects .37

6.1.6 With effect from 1 June 2004, the Czech Arbitration Court has introduced the concept of “online arbitration”. The parties to an arbitration dispute may, if they agree, initiate arbitration under the online rules. 38

6.2.1 The parties have the freedom to agree on the procedural rules for the arbitration. Such agreement by the parties is binding on the arbitral tribunal. To the extent that the parties have not made provision for procedural issues in their arbitration agreement, procedural issues may be decided by the chair, provided that the parties or all of the other arbitrators authorise the chair to do so. 39  If there is no such agreement, the arbitral tribunal shall be free to conduct the arbitral proceedings in the manner that it considers optimal. The Czech Arbitration Act expressly provides that, when doing so, the arbitral tribunal shall avoid all superfluous formalities. On the other hand, it shall give full opportunity to the parties to present their respective cases and shall make findings of fact necessary for the final ruling. 40

6.2.2 The arbitral tribunal shall apply the provisions of the Czech Civil Procedure Code to the arbitral proceedings before it in a reasonable manner, unless otherwise provided by the Czech Arbitration Act. 41  The Czech Civil Procedure Code therefore provides a fallback position in the event that the Czech Arbitration Act or the arbitration agreement between the parties does not contain any provisions in relation to a given procedural issue arising in the arbitral proceedings.

6.2.3 The Rules of the Arbitration Court apply in institutional arbitral proceedings before the Czech Arbitration Court.

6.3.1 The arbitral proceedings are conducted at the seat of arbitration that has been agreed on by the parties. If no such seat of arbitration is agreed, then the arbitral proceedings are conducted at the seat of arbitration that has been determined by the arbitral tribunal. When determining the seat of arbitration, the arbitral tribunal shall take the legitimate interests of the parties into due consideration.

6.3.2 In institutional arbitral proceedings held under the Rules of the Arbitration Court, hearings generally take place at the Czech Arbitration Court in Prague .42  On the initiative of the arbitral tribunal or by agreement between the parties, hearings may also be held elsewhere in the Czech Republic or abroad.

6.3.3 The Czech Arbitration Act does not contain any express provisions in relation to the language of the arbitral proceedings. Generally, all hearings are held and decisions made in the Czech (or Slovak) language, unless otherwise provided in the arbitration agreement, agreed upon by the parties or determined by the rules of the relevant arbitral institution. Similar provisions apply to arbitral proceedings before the Czech Arbitration Court. 43

6.4.1 In addition to the parties, anyone who has a legal interest in the outcome of the arbitration may participate as an intervener and shall pay the arbitration fee if the arbitral tribunal so permits. The intervener shall have the same rights and obligations as a party to the proceedings, except for the right to appoint an arbitrator. 44

6.4.2 On the claimant’s motion, another party may intervene in the proceedings on the claimant’s side:

a) if the arbitral tribunal, on the claimant’s application, so permits; and

b) if the third party or parties propose to intervene on the claimant's side consent in writing to both the intervention and the composition of the arbitration panel.

6.4.3 The other party to the proceedings may, at the request of the claimant, intervene on the defendant's side at such time:

a) if the arbitration tribunal, on the claimant’s application, so permits; and

b) if the third party or parties propose to join the defendant consent in writing to both the joinder and the composition of the arbitration tribunal; the consent of the original defendant shall not be required. 45

6.5.1 The Czech Arbitration Act requires an oral hearing, unless otherwise agreed by the parties. 46  The parties are, therefore, free to agree that all or part of the arbitral proceedings shall be conducted in writing or the parties can take the opportunity to use the online arbitration facility. 47

6.5.2 The Rules of the Arbitration Court make detailed provision for the conduct of hearings in arbitral proceedings before the Czech Arbitration Court and set out simplified procedures for “document only” arbitrations, as well as for arbitral proceedings that result in an award without any grounds (these types of arbitral proceedings are significantly cheaper than standard arbitration). 48

6.6.1 The Czech Arbitration Act contains an express provision that a party which, through no fault of its own, has failed to take a step in the arbitral proceedings which was necessary in order for it to defend its rights or otherwise participate in the arbitral proceedings, should be allowed to remedy its failure. In these circumstances, an arbitral tribunal is obliged to permit the party to later take whatever steps it ought previously to have taken, in order that it can defend its rights or otherwise continue to participate in the arbitral proceedings. 49

6.7.1 The arbitral tribunal has the power to hear witnesses, experts and the parties, provided that they appear voluntarily and do not refuse to give evidence. The arbitral tribunal may also consider other evidence if it is given voluntarily. However, the arbitral tribunal does not have the power under the Czech Arbitration Act to compel witnesses, experts or the parties to appear or to give evidence before it. If necessary, the arbitral tribunal can apply to the court to take any steps in the arbitral proceedings which the arbitral tribunal itself is unable to take. 50

6.7.2 Pursuant to the rules of evidence applicable to arbitral proceedings at the Czech Arbitration Court, the parties are obliged to prove the circumstances on which they rely in respect of their claims or pleas, as well as in their other assertions. The parties may produce written evidence either in the original counterpart or in a copy. The arbitral tribunal may request the original counterpart of a produced deed. Evidence shall be taken in the manner stipulated by the arbitral tribunal. The presiding arbitrator or several arbitrators may be entrusted to take evidence by ruling of the arbitral tribunal.  51

6.8.1 The arbitral tribunal does not have the power to appoint experts. However, the parties may agree on such an appointment and on the related costs. Alternatively, the arbitral tribunal can hear experts if the experts agree. 52

6.9.1 Pursuant to the Czech Arbitration Act, arbitral proceedings are not public. 53 Confidentiality of arbitral proceedings is further secured by a statutory duty of confidentiality on the arbitral tribunal. 54 The arbitral tribunal may be relieved of this duty only by the agreement of the parties or (for serious reasons) by an order of the court. 55

6.9.2 The arbitrators’ confidentiality obligation extends to all the information which comes to their attention during the term of their office in a particular case, including documents, which become part of the arbitration file, notifications or witness testimonies.

6.9.3 Parties to a dispute are not obligated to keep the proceedings confidential but it is the prevailing good practice to do so. Even though the parties are not bound by a specific confidentiality obligation regarding arbitral proceedings, they must keep confidential information or documents covered by business, trade and/or state secret or similar confidentiality obligations arising from other acts and laws. In this respect, it is always recommended to identify a document or information covered by trade, business, or other secret obligations.

6.10.1 The Czech Arbitration Act provides that to the extent that the arbitral tribunal is unable to take steps in the arbitral proceedings (due to the limits on their procedural powers), the competent court has jurisdiction to take those steps upon an application by the arbitral tribunal. 56  This relates primarily to the power to compel witnesses, experts and parties to give evidence to the court for use in the arbitral proceedings where such evidence is not voluntarily given to the arbitral tribunal directly. The courts usually assist with requests made by the arbitral tribunals which have been constituted under the rules of the Czech Arbitration Court, ICC, LCIA or other similar well-established arbitration courts or institutions. There is no specific standard that the courts apply when deciding on such requests, but the requests must be well reasoned and cannot be demonstrably illegal or discriminatory.

6.11.1 One of major innovations introduced by the Czech Arbitration Court is the new set of rules for proceedings regarding domain names – Domain Dispute Resolution Rules (Domain Resolution Rules). Domain dispute resolution is conducted on a contractual basis and the only relief that can be claimed is cancelling the domain name registration or transferring the domain name to the claimant. These disputes are meant to be resolved by an independent expert (or a panel of experts consisting of three experts) who is a person who must be listed on the list of experts led by the Arbitration Court – through alternative dispute resolution via an online platform, rather than by traditional arbitration.

6.11.2 The costs of the proceedings or damages cannot be awarded. However, termination of the dispute in these proceedings is not an obstacle to res judicata, thus it does not prevent the entitled person from bringing their claim in the ordinary court.

6.11.3 Domain Resolution Rules apply to domain names that are registered or extended from 1 March 2015. The decisions taken in accordance with the Domain Resolution Rules do not constitute an enforceable title for enforcement.

6.11.4 It should be noted that this kind of proceeding is subject to mandatory fees according to the Price List attached as an Appendix to the Domain Resolution Rules. The fees are non-refundable.

6.11.5 By initiating this procedure, there is no automatic blocking of the domain name; the petitioner must apply for it separately.

7.1.1 If the arbitral proceedings involve an international element, the arbitral tribunal shall take its decision under the applicable law chosen by the parties. If the parties have not determined the applicable law in their contract, the arbitral tribunal shall apply the local conflict of law rules in determining the applicable law. A choice of law by the parties, or the determination of the applicable law by the arbitral tribunal under the conflict of law rules shall, unless otherwise agreed by the parties, be taken as a reference to the substantive law of the jurisdiction so chosen or determined, excluding that jurisdiction’s conflict of law rules.

7.1.2 In domestic arbitrations, the arbitral tribunal shall base its decision on the material law applicable to the case. The arbitral tribunal may also decide the case ex aequo et bono, provided that the parties expressly authorise it to do so.

7.1.3 In arbitral proceedings before the Czech Arbitration Court, the arbitral tribunal is additionally required to have regard to trade customs. 57

7.2.1 There are no specific periods for the issuance of an award or on the length of the arbitral proceedings.

7.2.2 An award must be adopted by a majority of the arbitral tribunal. 58

7.2.3 After the voting procedure on an arbitral award is completed (meaning an award is approved by a majority of the arbitral tribunal), the award must be produced in writing and signed by at least a majority of the arbitral tribunal. The Czech Arbitration Act expressly requires the operative part of the award to be unambiguous. 59

7.2.4 An opinion setting out the arbitral tribunal’s reasons for the decision shall be attached to the award, unless the parties dispense with this requirement by agreement or unless the tribunal decides reasoning is not necessary. This rule also applies to awards recording a settlement between the parties.

7.2.5 The written award must be served on the parties and delivered in person. The awards are usually delivered through a postal service provider or by the court. If a party refuses to receive the award or does not collect the award within ten days following the date when the postal service provider or court clerk attempted to serve it upon the party, the award is deemed to have been delivered. 60  Currently, the delivery of documents takes place mostly via data box as it is the easiest and most convenient way of efficiently delivering documents (from court and vice versa).

7.3.1 Based on the circumstances of the case, in each phase of the proceedings, the arbitral tribunal is authorised to invite the parties to conclude an amicable settlement and to make proposals, recommendations and instigations that may contribute, in tribunal’s view, to the settlement. 61

7.4.1 In principle, the arbitration fees, the administrative costs of the arbitral proceedings and other specific costs incurred by the Czech Arbitration Court are generally borne by the party who loses the case or are split between the parties in proportion to their relative success. In making its award on costs, the arbitral tribunal may take into account the parties’ conduct during the arbitral proceedings. However, each party will generally have to bear its own legal costs, although the arbitral tribunal may

order a partial recovery of costs from the other party if good cause is shown for an order in such terms, or if agreed between the parties.

7.4.2 Besides the above arbitration fees, the administrative costs and other costs, there is also default interest on the claimed principal amount, which might be claimed by a party.

7.5.1 The arbitral proceedings shall be terminated either by an award being issued, or by a decree of discontinuance in cases where no award will be issued (eg because the arbitral tribunal declines jurisdiction over the dispute submitted to it for decision). The decree of discontinuance must be adopted, signed, accompanied by an opinion, and served on the parties in the same way as an award. 62

7.5.2 The Rules of the Arbitration Court contain a similar provision for the discontinuance of arbitral proceedings without an award if:

— the claimant withdraws the statement of claim;

— the arbitration fee and/or lump sum for administrative services is not paid; or

— the Czech Arbitration Court lacks jurisdiction. 63

7.6.1 An award which is not subject to appeal by a second-tier arbitral tribunal, or in respect of which the time limit for lodging an application for revision has expired, acquires the force of res judicata upon service and thus becomes enforceable in the courts. An award made in institutional arbitral proceedings before the Czech Arbitration Court is final, binding, and enforceable.

7.6.2 In arbitral proceedings before the Czech Arbitration Court, the arbitral tribunal may also make partial awards (final awards in relation to certain issues in dispute), interim awards (on liability before deciding on quantum), or awards recording a settlement reached between the parties.

7.6.3 Generally speaking, these sorts of awards can also be issued in ad hoc proceedings. These issues should always be a matter of agreement between the arbitrator(s) and the parties or agreed in the rules of the ad hoc arbitration.

7.7.1 Clerical errors, errors of calculation and other obvious defects of a similar nature in the award may be corrected by the arbitral tribunal or, if applicable, by the Czech Arbitration Court, at any time upon an application by a party. Such errors are rectified by way of a decree of correction, which shall be adopted, signed, and served on the parties by the arbitral

tribunal in the same way as an award. 64  This might also apply to non-institutional arbitral proceedings if agreed in the particular rules.

7.7.2 In addition, the parties are free to agree in their arbitration agreement that the arbitral tribunal’s award shall be subject to appeal to a second-tier arbitral tribunal consisting of different arbitrators. However, unless the parties expressly make such an agreement, the arbitral tribunal’s award will be final and binding, subject only to the limited circumstances in which an award may be set aside by the court. 65  If an appeal procedure was agreed by the parties, the application for revision must be served on the other party within 30 days, unless otherwise agreed. The appeal process forms part of the arbitral proceedings and the provisions of the Czech Arbitration Act apply thereto.

8.1.1 The Czech Arbitration Act contains express provisions on the courts’ powers in relation to arbitration matters, namely instances in which the courts will invalidate an arbitration award. 66  Furthermore, the courts have jurisdiction to support the arbitral process in certain circumstances (eg by appointing arbitrators, taking evidence and granting conservatory or other interim measures).

8.1.2 The proceedings for the annulment of an arbitration agreement and the proceedings for the annulment of an arbitral award are at the first instance with the competent regional court. For other proceedings, the first instance court shall be the competent court, which would have jurisdiction in the matter under a special regulation if there were no arbitration agreements. 67

8.1.3 Certain proceedings (usually relating to operations that require courts’ assistance) have jurisdiction specifically assigned unless the arbitration agreement states otherwise. 68

8.1.4 For arbitration proceedings the competent court is the local court in which the arbitration proceedings are held or were held if the place is in the Czech Republic. Otherwise, the local court is competent if it would have jurisdiction if there were no arbitration agreements. 69

8.2.1The Czech Republic is a signatory to the New York Convention. When dealing with an action in respect of which the parties have made a written arbitration agreement, the Czech courts are, at the request of one of the parties, obliged to refer the dispute to arbitration unless the said agreement is found to be null and void, inoperative or incapable of being performed. 70

8.2.2 The Czech Arbitration Act does not contain any express provisions regarding the stay of court proceedings commenced by a party in relation to a subject matter that is covered by a valid and binding arbitration agreement. The stay of court proceedings in such circumstances is dealt with by the Czech Civil Procedure Code (as amended). 71 As soon as a court becomes aware, through the respondent, that a case should properly be dealt with by arbitration, it must stay the court proceedings. 72  The respondent must inform the court at the earliest opportunity, as soon as the first contact with the court is established. However, if the parties both declare that they do not wish the dispute to be resolved by arbitration, the court may hear the case.

8.2.3 The court can also hear the case if it establishes that:

— under Czech law, the case cannot be dealt with in arbitral proceedings;

— there is no valid and binding arbitration agreement;

— the claim falls outside the jurisdiction of the arbitral tribunal; or

— the relevant arbitration body has refused to deal with the case .73

8.2.4 Where court proceedings are stayed and arbitral proceedings are commenced within 30 days of service of the order staying the court proceedings, the legal effects of the initial action remain in force (eg for the purpose of calculating the applicable limitation period). 74

8.2.5 Where court proceedings are commenced after arbitral proceedings have been initiated, the court must suspend such proceedings if they relate to the existence, validity or termination of the agreement until the arbitral tribunal has made a decision either as to its competence and/or on the merits of the case.

8.3.1 The arbitral tribunal has the power to decide on its own jurisdiction. The courts therefore do not have jurisdiction to make preliminary rulings on the arbitral tribunal’s jurisdiction (other than indirectly in connection with applications for a stay of court proceedings). However, the parties may subsequently challenge the arbitral tribunal’s findings on its jurisdiction by

applying to the courts for the award to be set aside for lack of jurisdiction. 75

8.4.1 As explained at paragraph 5.2.1 above, the arbitral tribunal does not have the power to order interim protective measures or to grant injunctions in support of the enforcement of awards. Thus the courts have jurisdiction upon the application of any party to order a preliminary measure or injunction if, during or prior to the commencement of arbitral proceedings, circumstances arise which are likely to jeopardise the enforcement of the award. 76

8.5.1 To the extent that the arbitral tribunal is unable to take steps in the arbitral proceedings (due to the limits on its procedural powers), the competent court has jurisdiction to take such steps upon an application by the arbitral tribunal. This relates primarily to the power to compel witnesses, experts and parties to give evidence to the court for use in the arbitral proceedings where such evidence is not voluntarily given to the arbitral tribunal directly. 77  The court will implement the application by the arbitral tribunal unless the requested steps are prohibited by law. When taking its decision, the court shall take all measures necessary to ensure the successful implementation of the application.

8.5.2 The costs incurred by the court in taking the steps applied for by the arbitral tribunal in support of the arbitral proceedings shall be covered by the Czech Arbitration Court or the arbitral tribunal, as the case may be. 78  This provision may at first appear somewhat unusual, but the arbitral tribunal will generally only make such an application if the parties have advanced reasonable funds to the arbitral tribunal to cover the costs of the application. Also, any such costs incurred by the arbitral tribunal in making an application to the court will ordinarily be included in the arbitral tribunal’s award on costs.

9.1.1 An application to the court to take steps to support the arbitral proceedings shall be made to the court within the jurisdiction in which the steps are to be taken. If such a step or measure is to be taken abroad, then the jurisdiction and venue to order such a step or measure shall be the district court within the jurisdiction in which the arbitral proceedings are taking place.

9.1.2 Jurisdiction to hear applications for a declaration that an arbitral agreement is null and void lies with the court that would have so-called “functional” jurisdiction under certain provisions of the Czech Civil Procedure Code or other enactments which would apply, but for the existence of the arbitration agreement (ie the level of court allocated to hear the specific case, depending on a variety of complex factors including, but not limited to, the subject matter and the amount claimed). If such an application is heard at first instance by a court that does not have proper jurisdiction, the application will be heard and then referred to a court which has jurisdiction. This process may be lengthy.

9.1.3 The venue for applications relating to arbitral proceedings under the provisions of the Czech Arbitration Act is the court seated in the local jurisdiction where the arbitral proceedings are taking place, or have taken place, provided that such places are in the Czech Republic. 79  Otherwise, the court that would have had jurisdiction to hear and determine the dispute were it not for the arbitration agreement shall be the venue for hearing the application.

9.1.4 In addition to the general rules on venue, the venue for the conduct of proceedings relating to the appointment of arbitrators and challenge of arbitrators shall be vested in the court at the place or residence of the applicant or respondent, as the case may be, if no venue can otherwise be established in the Czech Republic.

9.1.5 When hearing arbitration applications under the Czech Arbitration Act, the courts shall apply the provisions of the Czech Civil Procedure Code.

9.2.1 An award cannot be appealed to the court. However, as stated at paragraph 7.7.2 above, the parties are free to agree in their arbitration agreement that the arbitral tribunal’s award shall be subject to review by a second-tier arbitral tribunal consisting of other arbitrators.

9.3.1 The circumstances in which an award may be set aside by the court upon application by a party include the:

— non-arbitrability of the subject matter of the dispute (eg consumer disputes);

— arbitration agreement being void for other reasons, or having been otherwise terminated or failing to cover the subject matter of the dispute;

— involvement of an arbitrator who takes part in the decision and has not been named in the arbitration agreement or otherwise duly appointed to decide the dispute, or lacks the capacity to act as an arbitrator;

— award has not been adopted by a majority of the arbitral tribunal;

— failure to give one of the parties the opportunity to present their case;

— award contains an order against the losing party for relief not claimed by the winning party or the performance of which is impossible or illegal; 80  or

— court is satisfied that there are grounds on which it would be possible to apply for a new trial in civil proceedings. 81

9.3.2 An application to set aside an award must be lodged with the court no later than three months following service of the award on the party seeking to set the same aside. The filing of an application to set aside an award does not have the effect of staying the enforceability of the award. However, the court may, upon an application of the losing party, stay the enforceability of the award if execution of the award would inflict serious harm on the losing party. 82

9.3.3 The court may set an award aside when the subject matter of the dispute was not arbitrable, or where the arbitration agreement was void for other reasons, had been terminated or did not cover the subject matter of the dispute. In these situations, the court shall, upon an application by either party lodged after the judgment on the setting aside of the award, proceed with hearing the matter anew and render a decision.

10.1.1 An award, which is not subject to revision by a second-tier arbitral tribunal, or in respect of which the term for lodging an application for revision has lapsed, acquires the force of res judicata when served on the parties, and is enforceable in the courts in accordance with the provisions of the Czech Civil Procedure Code. 83

10.1.2 A party against whom the award is being enforced may in certain circumstances apply for a stay of enforcement, even if it failed to lodge an application with the court for the award to be set aside. In addition to certain grounds set out in the Czech Civil Procedure Code, the application may be based on the following grounds:

— the subject matter of the dispute was not arbitrable;

— the award was not adopted by a majority of the arbitral tribunal;

— the award contains an order against the losing party for relief not claimed by the winning party, or the performance of which is impossible or illegal;

— a party, who can act only through a statutory representative, is not represented in the arbitral proceedings and its acts and measures have not subsequently been ratified; or

— a representative, having taken part in the arbitral proceedings in the name and on behalf of a party, lacks the necessary authority and his or her steps or measures taken have not subsequently been ratified by that party. 84

10.1.3 If an application for a stay of enforcement is lodged with the court in charge of the enforcement, it shall stay the proceedings and order that the applicant shall lodge an application for the award to be set aside within 30 days. If no such application is lodged, the court shall proceed with the enforcement proceedings. If the award is set aside as a result of such an application, the parties are free to apply to the court to hear the matter anew and to decide the same after the judgment setting aside the award has acquired the force of res judicata.

10.2.1 Czechoslovakia was one of the first countries to ratify the New York Convention and the Czech Republic has become a party to the New York Convention as a legal successor state. New York Convention awards are, therefore, enforceable in the Czech Republic in accordance with the terms of the New York Convention.

10.2.2 It should be noted that the Czech Supreme Court has made a ground-breaking decision creating an obstacle to the enforcement of foreign arbitral awards. The court followed the literal wording of section 37(4) of the Czech Enforcement Code 85  and held that for a foreign arbitral award to serve as a valid execution title, it requires a formal declaration of enforceability pursuant to a directly applicable EU regulation or international treaty.

11.1.1 Consumer disputes may no longer be submitted to arbitration according to the 2016 Amendment to the Arbitration Act. 86

11.2.1 Although not expressly barred, disputes arising from employment relations are usually resolved before ordinary courts and it would be highly unusual to submit these to arbitration. There are also serious discussions as to whether such disputes would even be arbitrable. However, no firm conclusions have yet been reached on this issue.

11.2.2 Similar limitations and comments to those previously imposed on consumer disputes might arguably apply to the potential arbitrability of disputes arising from employment relations and could lead to a complete exclusion from arbitration proceedings as well. Another limitation to this effect would be the fact that, under Czech law, only disputes relating to claims of a financial or monetary nature may be arbitrable. 87  For example, a dispute as to whether or not an employment relationship had been validly terminated may not be resolved through arbitration due to this limitation.