International arbitration in Montenegro

  1. OVERVIEW OF ARBITRATION IN MONTENEGRO 
    1. Historical background and legislative framework
  2. SCOPE OF APPLICATION AND GENERAL PROVISIONS OF THE MONTENEGRIN ARBITRATION LAW
    1. Subject matter
    2. Structure of the Montenegrin Arbitration Law
    3. General principles
  3. THE ARBITRATION AGREEMENT
    1. Definitions
    2. Formal requirements
    3. Arbitrability
    4. Legal consequences of a binding arbitration agreement 
  4. COMPOSITION OF THE ARBITRAL TRIBUNAL
    1. Constitution of the arbitral tribunal
    2. Procedure for challenging and substituting arbitrators
    3. Arbitrator’s fees
  5. JURISDICTION OF THE ARBITRAL TRIBUNAL
    1. Competence to rule on jurisdiction
    2. Power to order interim measures
  6. CONDUCT OF ARBITRAL PROCEEDINGS
    1. Commencement of arbitration
    2. General procedural principles
    3. Seat and language of arbitration
    4. Statements of case
    5. Oral hearings and written proceedings
    6. Default by one of the parties
    7. Appointment of experts
    8. Court assistance in taking evidence
  7. MAKING OF THE AWARD AND TERMINATION OF PROCEEDINGS
    1. Choice of law
    2. Decision-making by the arbitrators
    3. Timing, form, content and notification of the award
    4. Settlement
    5. Termination of the proceedings
    6. Effect of the award
    7. Correction, interpretation and issue of a supplemental award
  8. ROLE OF THE COURTS
    1. Jurisdiction of the courts
    2. Plea as to the lack of jurisdiction and exceeding the scope of authority
    3. Recognition and enforcement of interim measures
    4. Court-ordered interim measures
  9. CHALLENGING AND APPEALING AN AWARD THROUGH THE COURTS
    1. Jurisdiction of the courts
    2. Applications to set aside an award
  10. RECOGNITION AND ENFORCEMENT OF AWARDS
    1. General provisions 
    2. Grounds for refusal of recognition and enforcement 
    3. Decision on recognition and enforcement of the award 
    4. Appeal against a decision rendered in the proceedings for recognition 

Arbitration is slowly but steadily becoming increasingly popular as a way of resolving commercial disputes. Parties are introducing arbitration clauses into their agreements that provide for domestic and international arbitration. However, arbitration is still most common in agreements governing international business relations, where there is a traditional mistrust among foreign companies in the competence of domestic courts. The courts in Montenegro are showing a positive attitude towards arbitration even in cases where arbitration clauses are either unclear or imprecise.

1. OVERVIEW OF ARBITRATION IN MONTENEGRO 

1.1 Historical background and legislative framework

1.1.1 The origins of arbitration in Montenegro date back to the Middle Ages when the trade cities (Republics) in the Mediterranean settled their trade disputes in a manner similar to contemporary arbitration. The seeds of arbitration germinated from the Montenegrin General Property Code of 1888. In the area of conflict of jurisdictions, the Code dealt with the recognition and enforcement of foreign court decisions. Foreign court decisions were accorded the same recognition as local decisions. The conditions for the recognition of foreign arbitral awards established during this time remain largely in effect today.

1.1.2 The Yugoslav Chamber of Commerce founded the Foreign Trade Arbitration in 1947 in Belgrade. The former Yugoslavia (which comprised Montenegro as a federal republic) was the only European socialist country that managed to develop some kind of arbitration practice for national disputes. Even though the Law on the Civil Code from 1956, reserved arbitration only for “disputes with foreigners”, in 1963 this changed and Yugoslavia made arbitration in relations between domestic companies possible, which led to the formation of arbitration institutions within the chambers of commerce of the republics and provinces of Yugoslavia. 

1.1.3 After 1990, significant changes emerged as arbitration was allowed into relations between all domestic legal entities (legal and natural persons) not only for resolving commercial disputes but for resolving all disputes regarding rights that all parties are free to waive, if the law did not prescribe that those types of disputes are to be settled exclusively by other courts.

1.1.4 The Montenegrin Arbitration Law (MAL) was enacted in 2015 (Official Gazette no. 47/2015). Montenegro adopted this law in accordance with the UNCITRAL Model Law (1985) thus joining over 90 countries worldwide that have also modelled their arbitration laws on the UNCITRAL Model Law. Montenegrin Arbitration Law governs domestic and international arbitration, recognition and enforcement of arbitral awards, as well as matters of jurisdiction and court procedure in relation to the arbitration.

1.1.5 The first institution for arbitration was established in Montenegro in 2003 (when the Foreign Trade arbitration and the Permanently Elected Court were founded within the Chamber of Commerce of Montenegro).

1.1.6 The Arbitration Court at the Chamber of Commerce of Montenegro is an autonomous and independent institution before which domestic commercial disputes and disputes with an international element are resolved in accordance with the Arbitration Rules of the Arbitration Court at the Chamber of Commerce of Montenegro which were enacted in 2015 (the Montenegro Rules) and other rules and procedures agreed by the parties.

2. SCOPE OF APPLICATION AND GENERAL PROVISIONS OF THE MONTENEGRIN ARBITRATION LAW

2.1 Subject matter

2.1.1 The MAL defines arbitration as conduct of arbitral proceedings before an arbitral tribunal for the resolution of a dispute in which the parties are natural persons with domicile or habitual residence in Montenegro, and/or legal persons established under Montenegrin law (domestic arbitration).

2.1.2 In addition, MAL provides a separate definition for international arbitration which is defined as a dispute with an international element in which one of the parties is a natural person with domicile or habitual residence in another State or a legal person established under a foreign law whose seat is in another State. 1 Montenegrin Arbitration Law, art 2.

2.2 Structure of the Montenegrin Arbitration Law

2.2.1 As stated above, the MAL is based on the UNCITRAL Model Law (1985), the framework of which is as follows:

  • Chapter 1: Basic provisions, for instance, the scope of application of the law, the extent of court intervention, definitions etc. 
  • Chapter 2: The arbitration agreement.
  • Chapter 3: The composition of the arbitral tribunal. 
  • Chapter 4: The jurisdiction of the arbitral tribunal.
  • Chapter 5: Interim measures. 
  • Chapters 6 & 7: Provisions relating to the conduct of arbitral proceedings and the rendering of the award.
  • Chapter 8: Setting aside an award. 
  • Chapter 9: Recognition and enforcement of foreign awards.

2.3 General principles

2.3.1 The underlying principles of the MAL are:

  • equality, meaning that all parties must be treated fairly and equally; 2 Montenegrin Arbitration Law, art 30.  
  • party autonomy, meaning that the parties can decide upon the procedure of the arbitration in many aspects, although the mandatory provisions of the MAL must be observed; 3 Ibid, art 31.  
  • due process, meaning that all parties must have the opportunity to present their case, evidence and position with respect to acts and proposals of the opposing party. 4 Ibid, art 30.  

3. THE ARBITRATION AGREEMENT

3.1 Definitions

3.1.1 The MAL defines an arbitration agreement as an agreement by the parties to submit to arbitration all or certain disputes which have arisen, or which may arise, between them in respect of a defined legal relationship, whether contractual or not (resembling article 7 of Model Law 1985). 5 Ibid, art 9 based on the Model Law (1985), art 7.  

3.2 Formal requirements

3.2.1 An arbitration agreement must be in writing and comply with the formal requirements prescribed in the MAL. An arbitration agreement may be concluded in the form of a separate agreement or in the form of an arbitration clause as an integral part of a contract between the parties on a legal transaction between them.

3.2.2 Furthermore, the MAL stipulates that an arbitration agreement has been concluded in writing if:

  • it is contained in documents signed by the parties or has been concluded in an exchange of messages by means of communication which provide a written record of the agreement of the parties, regardless of whether those messages have been signed by the parties;
  • after an orally concluded arbitration agreement, one party sends to the other party a notice in writing referring to the previously concluded oral agreement and the other party does not object to the contents of the received notice in a timely manner. This is considered to constitute acceptance of the offer according to common business practice;
  • the parties in a written contract make reference to another document containing an arbitration agreement (general terms of business, general terms for the conclusion of a legal transaction, a text of another agreement, etc.), provided that the purpose of such reference is to make the arbitration agreement an integral part of the main contract;
  • a bill of lading contains an express reference to an arbitration clause in a charter party;
  • the claimant initiates arbitral proceedings in writing, and the respondent expressly accepts arbitration and agrees to it in writing or in the statement made on the record at the hearing or takes part in arbitral proceedings and does not deny the existence of the arbitration agreement or does not object to the jurisdiction of the arbitral tribunal before raising issues related to the substance of the dispute.

3.3 Arbitrability

3.3.1 The MAL entitles any natural or legal person (including public authorities) who has the capacity to be a party in civil proceedings to be a party to an arbitration agreement. 6 Ibid, art 2.

3.4.1 The MAL further stipulates that if the parties have agreed to submit a dispute to arbitration, and the matter is brought before the court instead, the court shall, upon a party’s objection, declare its lack of jurisdiction. The court shall also annul all actions taken in the court proceedings and will refuse to rule on the statement of claim, unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. 7 Ibid, art 10.

4. COMPOSITION OF THE ARBITRAL TRIBUNAL

4.1 Constitution of the arbitral tribunal

4.1.1 The MAL provides that the parties shall determine the number of arbitrators of an arbitral tribunal. If the arbitration agreement provides for more than one arbitrator, there must be an odd number of arbitrators. If the parties fail to determine the number of arbitrators, the arbitral tribunal shall be composed of three arbitrators. Ibid, art 12.

4.1.2 If a dispute is to be resolved by a sole arbitrator, said arbitrator shall be appointed by mutual agreement of the parties within 30 days from the date when one party invites the other party to jointly appoint the arbitrator. 9 Ibid, art 13.  

4.1.3 If a sole arbitrator has not been appointed by mutual agreement of the parties, a legal or a natural person, designated by the parties under the agreement (i.e. the appointing authority) shall make the appointment. 10 Ibid.  

4.1.4 If the arbitration rules adopted by an arbitral institution provide for a mechanism for choosing or designating an appointing authority, the appointing authority shall be designated in accordance with those rules. 11 Ibid.  

4.1.5 If the arbitral tribunal is to be composed of three arbitrators, each party shall appoint one arbitrator within 30 days from the date of an invitation to do so from the other party. If the requested party fails to appoint an arbitrator within the set time limit, the appointing authority shall appoint the arbitrator. If the appointing authority has not been designated or if it fails to appoint the arbitrator, the decision on the appointment shall be made by the competent court (i.e. the Commercial Court of Montenegro). 12  Ibid.

4.1.6 The appointed arbitrators shall choose the presiding arbitrator within 30 days from the date of their appointment. 

4.1.7 If the arbitrators fail to choose the presiding arbitrator within the set time limit, the appointing authority shall make the appointment. If the appointing authority has not been designated or if it fails to appoint the presiding arbitrator, the appointment shall be made by the competent court (i.e. the Commercial Court of Montenegro). 13 The MAL (art. 6) prescribes jurisdiction of the Commercial Court of Montenegro in a specified number of cases in relation to deciding on the appointment of arbitrators, objecting the jurisdiction of an arbitral tribunal, submitting a decision, deciding on an action for annulment of an arbitral award, and requesting recognition of a foreign arbitral award or provisional measure.

4.2 Procedure for challenging and substituting arbitrators

4.2.1 The MAL stipulates that a person proposed to be appointed as an arbitrator shall disclose any circumstances likely to give rise to justifiable doubts as to his independence or impartiality. 14 Ibid, art 15.  

4.2.2 An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or if an arbitrator does not possess the requisite qualifications agreed to by the parties. 15 Ibid.  

4.2.3 A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only if the ground for challenge occurred, or if the party becomes aware of it, after the arbitrator has been appointed. 16 Ibid.

4.2.4 The MAL stipulates that the parties are free to agree on a procedure for challenging an arbitrator. 17  Ibid, art 16

4.2.5 If the parties fail to agree on a procedure for challenging an arbitrator, a party may, within 15 days from the date of becoming aware of the appointment of an arbitrator or of becoming aware of any grounds for challenge, submit a written request for the challenge of an arbitrator to the arbitral tribunal. 18 Ibid.  

4.2.6 Unless the challenged arbitrator withdraws from his position or the other party agrees to the request for challenge, the arbitral tribunal, including the challenged arbitrator, shall decide on the challenge without delay.

4.2.7 If the parties do not agree on challenging an arbitrator or if the arbitral tribunal rejects the request for challenging an arbitrator, the challenging party may submit such request to the competent court (i.e., the Commercial Court of Montenegro.

4.2.8 The arbitral tribunal may continue the arbitral proceedings and make an arbitral award even if the procedure upon the request for challenging an arbitrator is pending.

Appointment of substitute arbitrators

4.2.9 If the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the provisions of the MAL rules on appointment of an arbitrator. 19 Ibid, art 18.  

4.3 Arbitrator’s fees

4.3.1 The MAL provides that an arbitrator has the right to reimbursement of expenses and a fee for work performed unless he has waived those rights expressly in writing. The parties shall be jointly and severally liable for the payment of such expenses and fee. 20 Ibid, art 14.  

4.3.2 If the arbitrator has determined his expenses and fee, his decision on this matter shall not be binding upon the parties if they do not accept it.

4.3.3 If the parties do not accept the expenses and fees determined by the arbitrator, a decision on his expenses and fees shall be made by the arbitral institution or the appointing authority, on a proposal from the arbitrator or a party, and such decision shall be an enforceable instrument.

5. JURISDICTION OF THE ARBITRAL TRIBUNAL

5.1 Competence to rule on jurisdiction

5.1.1 The MAL provides that the arbitral tribunal is competent to decide on its own jurisdiction (the principle of competence-competence). The arbitral tribunal shall have regard to its own jurisdiction, including any objection with respect to the existence or validity of the arbitration agreement. 21 Ibid, art 19.

5.2 Power to order interim measures

5.2.1 The MAL states that it is not incompatible with an arbitration agreement for a party to request an interim measure from a court, before or during arbitral proceedings, and for a court to grant such measure. 22 Ibid, art 11.

6. CONDUCT OF ARBITRAL PROCEEDINGS

6.1 Commencement of arbitration

6.1.1 When it comes to regulating the date of commencement of arbitral proceedings, the MAL (unlike the UNCITRAL Model Law) makes a distinction between institutional and ad hoc arbitral proceedings.

6.1.2 Namely, if the arbitration is conducted before an arbitral tribunal administered by an arbitral institution, the arbitral proceedings commence on the date on which such arbitral institution receives the notice of arbitration. In case of an ad hoc arbitration, arbitral proceedings commence on the date on which the respondent receives a notification that the opposing party appointed an arbitrator or proposed a sole arbitrator, accompanied by an invitation to appoint the other arbitrator or declare whether he accepts the proposed sole arbitrator. 23 Ibid, art 33.  

6.2 General procedural principles

6.2.1 The MAL stipulates that the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings or to refer to specific rules of arbitration. If the parties fail to agree on the rules of the arbitration proceedings, the arbitral tribunal may, subject to MAL, conduct the arbitration proceedings in the manner which it considers appropriate. 24 Ibid, art 31.

6.2.2 Once a party becomes aware of a derogation from the arbitration agreement, if it continues to participate in the arbitral proceedings without raising an objection, it thereby waives its right to do so.

6.3 Seat and language of arbitration

6.3.1 The MAL stipulates that the parties are free to agree on the seat of arbitration. If the parties fail to agree on the seat, it shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. 25 Ibid, art 32.

6.3.2 In such circumstances, if the parties agreed to entrust the arbitral institution to organize the arbitration, the seat shall be determined according to the rules of that arbitral institution. 26 Ibid.

6.3.3 If the seat has not been determined in accordance with the above-mentioned principles, it shall be considered the place designated in the arbitral award as the place where the arbitral award was made.

6.3.4 According to the MAL, the parties are free to agree on the language of the arbitral proceedings; if parties fail to agree, the arbitral tribunal shall determine the language or languages to be used in the arbitral proceedings. 27 Ibid, art 34.  

6.3.5 Until the language of arbitration has been determined, the statement of claim, defence and other statements can be submitted in the language of the contract, the language of the arbitration agreement or in the Montenegrin language.

6.4 Statements of case

6.4.1 Pursuant to the MAL, the claimant shall state in the statement of claim the facts supporting his claim, the points in issue and the relief or remedy sought. On the other hand, the respondent shall state in his statement of defence his defence in respect of the claimant’s allegations, proposals and claims. 28 Ibid, art 35.  

6.4.2 The parties may submit with their statements, documents they consider to be relevant or may add a reference to the documents or other evidence they intend to submit.

6.4.3 If the claimant submitted the request for arbitration prior to submitting his statement of claim, the statement of claim shall be submitted within the period of time mutually agreed by the parties, or, failing such agreement, within the period of time determined by the arbitral tribunal. 29 Ibid.  

6.4.4 Either party may amend or supplement their claim or defence during the course of the proceedings, unless otherwise agreed by the parties or unless the arbitral tribunal considers it inappropriate to allow such amendments or supplementation for the purpose of the efficiency of the proceedings.

6.5 Oral hearings and written proceedings

6.5.1 The MAL stipulates that unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to hold oral hearings, or whether the arbitral proceedings shall be conducted on the basis of documents and other materials. 30 Ibid, art 36.  

6.5.2 Unless the parties have agreed that no oral hearings shall be held, the arbitral tribunal shall hold such hearings, if so requested by a party. 31 Ibid.  

6.5.3 The MAL further stipulates that the parties should be notified sufficiently in advance of the oral hearing and of any meeting of the arbitral tribunal for the purposes of inspection of goods, other property or documents. All statements, documents or other information supplied to the arbitral tribunal by one party shall be communicated to the other party. 32 Ibid.

6.5.4 Any evidentiary expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties. Furthermore, if the parties do not agree otherwise, arbitral proceedings shall be closed to the public. 33 Ibid.  

6.6 Default by one of the parties

6.6.1 Article 37 of the MAL deals with the problems that can arise if there is a default of a party with regard to the arbitral proceedings without a justified cause.

6.6.2 If the claimant fails to communicate his statement of claim in accordance with the MAL, the arbitral tribunal shall terminate the proceedings. 34 Ibid, art 37.

6.6.3 If the respondent fails to communicate his statement of defence in accordance with the MAL, the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations. 35 Ibid.  

6.6.4 If one of the parties fails to appear at a hearing or to produce documentary evidence within the set time limit, the arbitral tribunal may continue the proceedings and make the award based on the outcome of proceedings and on the evidence submitted. 36 Ibid.  

6.6.5 The parties are free to agree on the different consequences of a default.

6.7 Appointment of experts

6.7.1 Unless otherwise agreed by the parties, the MAL stipulates the arbitral tribunal may:

  • appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal;
  • require a party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his inspection. 37 Ibid, art 38.  

6.7.2 The MAL further stipulates that, unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his written or oral report, participate in an oral hearing where the parties have the opportunity to put questions to him and to present other expert witnesses in order to testify on the points at issue.

6.7.3 Provisions regarding the challenge of arbitrators are also applicable to challenging an expert.

6.8 Court assistance in taking evidence

6.8.1 The arbitral tribunal, or a party with the approval of the arbitral tribunal, may request from the competent court legal assistance in taking evidence that the arbitral tribunal itself could not take.

6.8.2 The requested court shall take evidence within its competence and according to the law governing taking evidence before that court. The arbitrators may participate in the procedure of taking evidence before the court. 38 Ibid, art 39.  

7. MAKING OF THE AWARD AND TERMINATION OF PROCEEDINGS

7.1 Choice of law

7.1.1 The MAL stipulates that the arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by parties as applicable to the substance of the dispute. Any reference to the law or legal system of a given State shall, unless otherwise agreed by the parties, be construed as directly referring to the substantive law of that State and not to its conflict of laws rules. 39  Ibid, art 40.

7.1.2 In cases where the parties do not agree on the applicable law, the arbitral tribunal shall apply the law determined by the conflict of laws rules, which it considers applicable. 40 Ibid.  

7.1.3 The arbitral tribunal shall decide the dispute ex aequo et bono only if the parties have expressly authorized it to do so. When making a decision, the arbitral tribunal shall decide in accordance with the provisions of the arbitration agreement, taking into account the common business practices applicable to the transaction in relation to which the dispute to be resolved by arbitration arose.

7.2 Decision-making by the arbitrators

7.2.1 The MAL provides that, unless otherwise agreed by the parties, a panel of arbitrators shall make any decision by a majority of all arbitrators. 41 Ibid, art 41.  

7.2.2 If the majority cannot make an arbitral award, the panel of arbitrators shall continue deliberations on each opinion presented and, if after the repetition a majority cannot be reached, the presiding arbitrator shall make the arbitral award. 42 Ibid.  

7.3 Timing, form, content and notification of the award

7.3.1 The MAL stipulates that the award made by the arbitral tribunal should resolve all requests of the parties. The arbitral tribunal can also make a partial or interim award. 43 Ibid, art 43.

7.3.2 The arbitral award shall be made in writing and shall be signed by the members of the panel of arbitrators or the sole arbitrator. If the arbitral award has been made by a panel of arbitrators, the signatures of the majority shall be sufficient (provided that reasons for any omitted signature of any member are stated). 44 Ibid.

7.3.3 The arbitral award shall state the reasoning behind it, unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms. 45 Ibid.  

7.3.4 The arbitral award shall state the date when it was made and the place where it was made.

7.4 Settlement

7.4.1 As for the settlement in arbitration proceedings, the MAL stipulates that in case of settling the dispute during the arbitral proceedings, the tribunal should terminate the proceedings. The settlement can be recorded in the form of arbitral award if the parties so request.

7.4.2 The award rendered by recording a settlement has the same legal effect of an arbitral award resolving the dispute. The content of the settlement cannot be in conflict with the public policy of Montenegro. 46 Ibid, art 42.

7.5 Termination of the proceedings

7.5.1 The final arbitral award terminates the arbitral proceedings.

7.5.2 The proceedings may also be terminated by an order of the arbitral tribunal when:

  • the claimant withdraws his claim, unless the respondent objects thereto and the arbitral tribunal recognizes a legitimate interest on the respondent’s part in obtaining a final arbitral award;
  • the parties agree on the termination of the proceedings;
  • the arbitral tribunal finds that the continuation of the arbitral proceedings has become unnecessary or impossible; or
  • the arbitral proceedings have been terminated in accordance with the MAL.

7.6 Effect of the award

7.6.1 An arbitral award made by an arbitral tribunal in the territory of Montenegro shall have the force and effect of an enforceable document. 

7.6.2 According to the MAL, such an arbitral award shall be enforced in accordance with the law governing the procedure for enforcement and security. 47 Ibid, art 46.  

7.7 Correction, interpretation and issue of a supplemental award

7.7.1 On request from a party, the arbitral tribunal can make language-related and technical corrections to an award that has been rendered or give specific interpretation of such an award.

7.7.2 On request from a party, the arbitral tribunal can make an additional award regarding claims presented in the arbitral proceedings but not decided in the arbitral award.

7.7.3 Both requests referred to above must be submitted within 30 days from the date of receipt of the award.

7.7.4 If the arbitral tribunal considers the request to be justified, it shall make the correction or give the requested interpretation of the award. 48 Ibid, art 45.

8. ROLE OF THE COURTS

8.1 Jurisdiction of the courts

8.1.1 MAL expressly stipulates that in matters relating to arbitration, no court shall intervene except where so provided in the law. 49 Ibid, art 5.

8.1.2 As to court competence for certain functions in support of an arbitration, the MAL stipulates that the Commercial Court in Podgorica shall be competent for deciding on the appointment of arbitrators, objections as to the lack of jurisdiction of the arbitral tribunal, service of the award, determination of applications for setting aside an arbitral award and applications for recognition of foreign arbitral awards or interim measure. 50 Ibid, art 6.

8.1.3 As noted in paragraph above, the MAL provides that legal assistance in taking evidence and service of a foreign arbitral award may be provided by a competent court. The competent court shall be the court having subject matter jurisdiction for provision of the legal assistance requested. 51 Ibid.

8.2 Plea as to the lack of jurisdiction and exceeding the scope of authority

8.2.1 The MAL stipulates that a plea claiming the lack of jurisdiction of the arbitral tribunal shall be raised by the respondent no later than the submission of the statement of defence. A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised by an objecting party as soon as the matter alleged to be beyond the scope of its authority arises during the course of the arbitral proceedings. 52 Ibid, art 20.

8.2.2 If the arbitral tribunal rules on such a plea as a preliminary question, within 30 days from the date of service of that ruling, any party may request that the Commercial Court of Montenegro decide on the matter. 53 Ibid.

8.3 Recognition and enforcement of interim measures

8.3.1 The MAL stipulates that unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order an interim measure. 54 Ibid, art 21.

8.3.2 Unless the parties have agreed otherwise, by interim measure, and at any time prior to the issuance of a final arbitral award, the arbitral tribunal may order a party to:

  • Maintain or restore the status quo pending determination of the dispute;
  • Take action that would prevent, or refrain from taking action that is likely to cause current or future harm or prejudice to the arbitral process itself;
  • Preserve assets from which the obligations imposed in the arbitral award may subsequently be enforced; or
  • Preserve evidence that may be relevant to the resolution of the dispute. 55 Ibid.

8.3.3 An interim measure ordered by an arbitral tribunal, irrespective of the country in which it was ordered, shall be recognised as binding and enforced based on the decision of the Commercial Court of Montenegro. 56 Ibid, art 27.

8.4 Court-ordered interim measures

8.4.1 When ordering an interim measure in arbitration proceedings, the court shall act in accordance with the rules of procedure of enforcement and security, irrespective of whether the seat of the arbitration is in the territory of Montenegro or otherwise, while taking into consideration the specific features of international arbitration. 57 Ibid, art 29.

9. CHALLENGING AND APPEALING AN AWARD THROUGH THE COURTS

9.1 Jurisdiction of the courts

9.1.1 An arbitral award may be contested by an application for setting aside; no other legal remedies shall be permitted. The competent court ie the Commercial Court of Montenegro, shall have jurisdiction for ruling on an application for setting aside arbitral award. 58 Ibid, art 47.

9.2 Applications to set aside an award

9.2.1 An arbitral award may be set aside if the party making the application is able to prove that: 

  • the arbitration agreement was not concluded or the arbitration agreement is not valid either under the law designated by mutual agreement of the parties or under the law of Montenegro, unless otherwise agreed by the parties (there being no official opinion on this provision, it is unclear whether ‘the law designated by mutual agreement of the parties’ is intended to capture anything additional to the law of Montenegro);
  • the party to the proceedings did not have the capacity to conclude the arbitration agreement or to be a party to the dispute or a party was not duly represented;
  • the party making the application was not given proper notice of the initiation of the arbitral proceedings or was otherwise unable to present their case before the arbitral tribunal;
  • the award deals with a dispute not contemplated by the arbitration agreement or contains decisions on matters beyond the scope of the arbitration agreement, provided that only the part of the award regarding those matters not submitted to arbitration may be set aside if it can be separated from the rest of the decision on matters submitted to arbitration;
  • the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the MAL or the agreement of the parties (which fact could have affected the content of the arbitral award); or
  • the award does not contain the statement of reasons (where it was required to do so) or has not been properly signed. 59 Ibid, art 48

9.2.2 Further to the above, the court shall also set aside an arbitral award if it finds that:

  • the subject-matter of the dispute is not capable of settlement by arbitration under the laws of Montenegro; or
  • the award is in conflict with the public policy of Montenegro. 60 Ibid.

9.2.3 If an application for setting aside an arbitral award is to be made, it must be done so within three months from the date on which the award is delivered to the parties. The parties cannot waive their right to make an application for setting aside an arbitral award. 61 Ibid.

10. RECOGNITION AND ENFORCEMENT OF AWARDS

10.1 General provisions 

10.1.1 The MAL regulates the issue of recognition and enforcement of foreign awards. These provisions of the law are based on the New York Convention, to which Montenegro is a signatory, and the UNCITRAL Model Law (1985). Foreign arbitral award shall mean an award made by an arbitral tribunal whose seat is outside Montenegro and shall be considered to be the award of the State in which it was made. 62 Ibid, art 50.

10.2 Grounds for refusal of recognition and enforcement 

10.2.1 Foreign arbitral awards shall be recognised as binding and enforced in Montenegro unless, upon objection by a party, the court makes any of the following findings:

  • the existence of grounds for refusing recognition and enforcement (article 52 of the MAL);
  • the award has not yet become binding on the parties; or
  • the award has been set aside or suspended by a court of the country in which, or under the law of which, the award was made. 63 Ibid, art 51.

10.2.2 The recognition and enforcement of a foreign arbitral award shall be determined by the Commercial Court of Montenegro. 64 Ibid.

10.2.3 According to the MAL, recognition and enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, if that party proves that:

  • the arbitration agreement is not valid under the law to which the parties have subjected it or under the law of the country where the award was made;
  • proper notice of the appointment of an arbitrator or of the arbitral proceedings was not given, or the objecting party was otherwise unable to present his case;
  • the award deals with a dispute not contemplated by the arbitration agreement or it contains decisions on matters beyond the scope of that agreement (provided that the recognition and enforcement of that award may be partially refused if it is found that the part of the award which contains decisions on matters beyond the scope of the arbitration agreement can be separated from the remaining part of the award);
  • the arbitral tribunal or the arbitral procedure was not in accordance with the arbitration agreement or, failing such agreement, was not in accordance with the law of the seat of the arbitration; or
  • the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made. 65 Ibid, art 52.

10.2.4 The court shall in any case refuse recognition and enforcement of an arbitral award if it finds that: 

  • the subject matter of the dispute is ineligible for settlement by arbitration under the law of Montenegro; or
  • the effects of the arbitral award would be contrary to the public policy of Montenegro. 66 Ibid.

10.3 Decision on recognition and enforcement of the award 

10.3.1 The MAL stipulates that, when ruling on a petition for recognition or enforcement of a foreign arbitral award, the court shall confine itself to determining whether the requirements laid down in the law have been met. When it considers it necessary, it may seek an explanation from the tribunal which has rendered the award, the parties or the public notary or other person with whom the award was deposited. 67 Ibid, art 54.

10.3.2 In the course of a petition for recognition of a foreign arbitral award, the court shall give an opportunity to the opposing party to be heard on the main issues. A decision on recognition and enforcement of an arbitral award shall contain a statement of reasons. 

10.4 Appeal against a decision rendered in the proceedings for recognition 

10.4.1 The MAL also stipulates that an appeal against a decision rendered in proceedings for recognition must be submitted to the Appellate Court of Montenegro within 15 days from the date on which the decision on recognition was delivered to the party. 68 Ibid.

Daniela-Karollus-Bruner-CMS-AT
Daniela Karollus-Bruner
Partner
Vienna
Picture of Nedeljko Velisavljevic
Nedeljko Velisavljević
Partner
Belgrade
Picture of Nenad Kovacevic
Nenad Kovačević
Attorney-at-Law
Belgrade