6.1 Can a foreign jurisdiction (either a court or arbitral tribunal) be chosen to settle disputes and under what circumstances may such a choice not be recognised?
Romanian law generally allows that a foreign court or arbitration tribunal be chosen to settle disputes involving Romanian parties, with the exception of disputes where Romanian courts have exclusive (mandatory) jurisdiction.
Romanian courts have exclusive jurisdiction on matters concerning inter alia:
(a) immovable property located in Romania;
(b) insolvency of Romanian companies;
(c) enforcement of a writ of execution on the territory of Romania (such as real estate mortgages).
6.2 Does the local law allow for the enforcement of arbitral awards or foreign judgements without review?
Romanian law allows for the enforcement in Romania of arbitral awards or foreign judgements regarding the debt instrument without a re-examination by a Romanian court of their merits. The Romanian courts will only consider whether that foreign arbitral award or judgement may be enforced in Romania or not.
Hence a Romanian court will allow enforcement on condition that:
(a) that the foreign judgement is final, according to the law of the state where it was rendered;
(b) that the court that rendered the foreign judgement had jurisdiction to do so;
(c) that enforcement reciprocity exists between Romania and the state of the court which rendered the decision;
(d) that there is evidence that the legal proceedings have been properly served in accordance with the law of the state where the decision was rendered and that the parties were given the possibility to defend themselves and to exercise their right to appeal the foreign judgement;
(e) that the foreign judgement can be enforced as a matter of law in the state of the court that has rendered the foreign judgement; and
(f) that the right to seek enforcement of the foreign judgement has not expired under the applicable statute of limitation under Romanian law (currently a period of three years from the date on which the foreign judgement becomes a “writ of execution” (an enforceable foreign judgement) in the jurisdiction in which it was obtained);
To the extent applicable, a Romanian court may dismiss a petition for the enforcement of a foreign judgment in the following circumstances:
(a) the judgement breaches the public order provisions of Romanian private international law;
(b) the judgement rendered in a subject matter where persons cannot freely dispose of their rights was obtained with the exclusive purpose to avoid the law that would be applicable in accordance with the Romanian private international law;
(c) the foreign judgement is incompatible with another judgement previously rendered abroad and susceptible of being recognized in Romania;
(d) Romanian courts were exclusively competent to settle the case;
(e) the right to a defence was violated;
(f) the judgement can be challenged in the jurisdiction where it was rendered;
(g) the same issue between the same parties has been resolved or is in the course of being resolved by or through the Romanian courts.
As regards the recognition and enforcement in the Romanian courts of judgments obtained in the courts of European Union member states, it is a condition pursuant to the Brussels I Regulation that the judgment is capable of being enforced under the law of the state of that court.
Such judgment may not be recognised and enforced if:
a) recognition is manifestly contrary to public policy in Romania;
(b) where it was given in default of appearance, the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so;
(c) it is irreconcilable with a judgment given in a dispute between the same parties in Romania;
(d) if it is irreconcilable with an earlier judgment given in another member state or in a third state involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the member state addressed.
6.3 How can that security be enforced? Can it be sold to a third party? Is it possible for a secured party to appoint receivers/liquidators and if so how and what are their powers? Can security be enforced directly without recourse to the courts and are private sales of security possible? Does it have to be sold by auction?
A mortgage agreement is as a matter of Romanian law a writ of execution. Thus the mortgagee should be able to apply to court directly for its enforcement without any examination of the merits of the underlying claim.
However, some courts in Bucharest have rejected enforcement proceedings on the grounds that a security document qualifies as an executory title only if the credit instrument it secures also qualifies as such. If it is governed by a foreign law, the credit instrument may not qualify as an executory title. In such a case, further action (e.g. registering in the Romanian courts a foreign court judgment on the credit instrument) may be required to continue the enforcement process.
The enforcement of a mortgage is coordinated by an enforcement officer appointed by the mortgagee under the supervision of an enforcement court. No appropriation is possible, however private sale is permitted if the debtor and creditor agree on such enforcement method.
The outcome of the enforcement procedure is that the mortgagor loses title to the mortgaged property. The title to this property is transferred directly from the mortgagor to a purchaser further to the mortgaged property being sold by public auction.
Romanian law does not allow title to immovable property located in Romania to be held by foreign entities which are not incorporated in EEA. As such, for the time being, the only practical option a non-EEA foreign lender may have is to proceed with the sale by public auction.
EEA entities are allowed, in principle, to acquire title to immovable properties in Romania (though certain restrictions may apply).
6.4 Is the lender responsible for maintenance and insurance of the real estate after default until sale?
If the lender takes title in the mortgaged property, it will be bound to meet all obligations attaching to that property.
The position is not clear however where the lender takes possession of the mortgaged property with a view to selling it by public auction. Normally, in such circumstance, the mortgagor would be in charge of those obligations until the title in such property is transferred.
In any case, the costs of maintenance of the mortgaged asset up to adjudication are borne by the debtor and their repayment is secured by way of a general legal privilege.
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