According to the Dayton Agreement of 1995, Bosnia and Herzegovina consists of two entities: the Federation of Bosnia and Herzegovina and the Republic of Srpska (each presiding over one half of the territory). Both of them, as well as the Brcko District, a self-governing administrative unit under the sovereignty of Bosnia and Herzegovina, have authority to legislate in respect of matters of civil procedure. As a result, since there were three separate acts governing the area of civil procedure, the law on arbitration is contained in the 2003 Civil Procedure Act of the Federation of Bosnia and Herzegovina (Articles 434–453); the 2003 Civil Procedure Act of the Republic of Srpska (Articles 434–453); and the 2003 Civil Procedure Act of the Brcko District (Articles 380–399). Bearing in mind that the provisions governing arbitration are exactly the same in all the above listed Acts, the issues concerning arbitration in the country shall be analysed for the purposes of this Chapter by reference only to the Civil Procedure Act of the Federation of Bosnia and Herzegovina (hereinafter referred to as “CPA”). In the CPA, the provisions on arbitral proceedings and the procedure for setting aside an arbitral award are included in Chapter V. Furthermore, the Conflict of Laws Act (hereinafter referred to as “CLA”), Chapter IV, regulates the procedure for the recognition and enforcement of foreign arbitral awards.

In the same year as the new Civil Procedure Acts were enacted, the Arbitration Court with the Foreign Trade Chamber of Bosnia and Herzegovina (hereinafter referred to as “FBH”) adopted its Rulebook on Arbitration. The Rules of Arbitration of the FBH are set out in this Rulebook.

Definition (Articles 435 and 436 of CPA)
An arbitration agreement may be concluded with regard to any present or future dispute that may arise out of a legal relationship established between the parties. Furthermore, an arbitration agreement shall be deemed to exist when the claimant asserts that an arbitration agreement between the parties exists and the respondent does not challenge this assertion in its defence. According to Article 436 of the CPA, the arbitration agreement exists when it is contained in general terms and conditions which apply to the legal relationship existing between the parties.

Formal requirements (Article 435 of CPA)
According to the CPA, an arbitration agreement shall be in writing, signed by all parties to the agreement. This formal requirement is also fulfilled if an arbitration agreement is either contained in a larger document signed by the parties or concluded by an exchange of messages through a means of communication that provides a written record of the parties’ agreement. Bosnian law provides that the existence of an arbitration agreement must be evidenced by written documents.

Claims before court (Article 438 of CPA)
The Bosnian CPA stipulates that a court before which an action is brought in a matter which is the subject of an arbitration agreement shall, upon the application of the respondent, dismiss the action for lack of jurisdiction. This application may be submitted as part of the respondent’s answer to the claim, at the latest.

Termination of the arbitration agreement
(Articles 440, 441 and 446 of CPA)
Each party may file a request for termination of the arbitration agreement to the court, in the following cases:

• when the parties fail to agree on the arbitrator who should be appointed jointly by the parties;
• when a person who should be an arbitrator according to the arbitration agreement cannot or does not want to perform that duty;
• when the parties do not wish to exercise their right to request the court to appoint the arbitrator or the presiding arbitrator; and
• when the arbitrators cannot render an award by majority vote and the parties have not agreed on how to resolve that situation.

Formation of the arbitral tribunal (Article 437 CPA)
The parties are free to determine the number of arbitrators to conduct the proceedings but the number of arbitrators must be an odd number. If the number of the arbitrators is not determined by the agreement of the parties, then that number shall be three. In that case, each party shall appoint one arbitrator and the appointed arbitrators shall jointly choose the presiding arbitrator. One party can be requested by the other party to appoint its arbitrator within 15 days and provide notification of such appointment. Such request shall take effect only if the requesting party has already appointed its arbitrator and notified the other party. In the event that one of the arbitrators is not appointed on time, the court shall, upon the party’s request, decide on the appointment of that member of the tribunal. If the arbitrators fail to agree on the person who will preside over the arbitral tribunal, the presiding arbitrator shall be nominated by the court (if so requested by the parties).

Grounds for challenging arbitrators (Article 442 of CPA)
According to Article 442 of the CPA, the reasons for challenging arbitrators are the same as the reasons which prevent judges from performing their judicial function. These reasons are listed in Article 357 of the CPA; accordingly, an arbitrator may be challenged if:

• he is a party to the proceedings, a legal representative or an attorney of a party, or is in a co-attorney relationship with a party, or is questioned as a witness or expert in the same case;
• a party or a legal representative or attorney is his lineal relative to any degree, lateral relative to the fourth degree, spouse or common-law spouse or in-law to the second degree, regardless of whether the marriage has ended or not;
• he is a guardian, adoptive parent or adopted child of a party to the proceedings, their legal representative or attorney;
• he participated in the handing down of a ruling of a lower instance court or other authority in the same case; or
• existing circumstances raise doubts regarding his impartiality.

An arbitrator may be challenged only if grounds for the challenge have occurred, or the party has become aware of those grounds, after the arbitrator was appointed. Article 453 expressly provides that these provisions are mandatory, and cannot be waived by the agreement of the parties.

Arbitral proceedings (Articles 443–448 of CPA)
Bosnian arbitration law does not regulate the arbitral proceedings in detail. However, it does regulate the following matters:

Determination of arbitration rules: Article 443 of the CPA establishes the autonomy of the parties to choose arbitration rules. Failing such an agreement, the arbitral tribunal shall determine the procedural rules.

Court assistance in arbitral proceedings: Article 444 of the CPA governs court assistance in arbitral proceedings. Accordingly, the arbitral tribunal is entitled, for example, to request court assistance in taking evidence. This provision of the CPA is mandatory and cannot be excluded or amended by agreement between the parties (Article 453 of the CPA).

Arbitral award: apart from where proceedings are conducted by a sole arbitrator, an arbitral award must be rendered by majority vote of the arbitrators (Article 446 of the CPA). Furthermore, according to Article 447, an arbitral award shall contain the reasons for the decision(s) reached, unless the parties have agreed otherwise.

The award rendered by an arbitral tribunal shall be valid if it is signed by the majority of arbitrators, or if a note is included in the award identifying the arbitrator(s) who have refused to sign the award (Article 446 of the CPA). Article 453 of the CPA stipulates that this provision cannot be waived by the agreement of the parties.

Applicable law: the parties are free to choose the law that shall govern the dispute. The arbitral tribunal can decide ex aequo et bono if the parties expressly so agree (Article 445 of the CPA).

Court assistance following the arbitral proceedings: Article 447 of the CPA provides that the court which would have had jurisdiction over the dispute, in the absence of an arbitration clause, should deliver the arbitral award to the parties. The arbitral award as well as proof of delivery of the award shall be kept by that court.

The procedure for setting aside the arbitral award falls under the jurisdiction of the court which would have had jurisdiction over the dispute in the absence of an arbitration agreement. The application for setting aside must be filed within 30 days of the date on which the arbitral award was rendered.

The grounds for setting aside the arbitration award are listed in Article 451 of the CPA:

• if no arbitration agreement was concluded or if the arbitration agreement was invalid or ineffective;
• if there was any violation of the rules concerning the composition of the arbitral tribunal, the conduct of the arbitration proceedings or the rendering of the award;
• if the award does not contain reasons or if the original award or its copies have not been signed in the prescribed manner;
• if the arbitral tribunal has exceeded its powers;
• if the statement of reasons in the award is inadequate or contradicts the tribunal’s findings as set out in the award;
• if the arbitral award is contrary to the Constitution of Bosnia and Herzegovina or to the Constitutions of its entities; or
• if any of the reasons for re-hearing the dispute pursuant to Article 255 of the CPA exist.

The procedure for setting aside an arbitral award is mandatory and cannot be waived by the agreement of the parties.

Domestic arbitral awards (Article 449 of CPA)
An arbitral award has the effect of a final judgment, unless the parties have agreed that the award can be appealed to a second instance arbitral tribunal. The court that would have had jurisdiction over the dispute if the parties had not agreed to arbitration can make a note on the arbitral award declaring it to be enforceable, if so requested by any party.

Foreign arbitral awards (Articles 97–101 of CLA)
The State of Bosnia and Herzegovina is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. It should be noted, however, that when ratifying the New York Convention, the Government expressly declared that: (a) the local courts will only recognise and enforce awards rendered in other states that are party to the Convention; and (b) the local courts will only recognise and enforce awards relating to disputes that qualify as “commercial” under local law.

The procedure for recognition and enforcement of foreign arbitral awards is regulated by Articles 97–101 of the CLA. According to these provisions, a foreign arbitral award is an award rendered abroad, as well as an arbitral award rendered in proceedings held in Bosnia and Herzegovina with a foreign governing law (Article 97 of the CLA). When requesting recognition and enforcement of the foreign arbitral award, a party shall submit the original or a certified copy of the arbitral award and the original or a certified copy of the arbitration agreement.

Pursuant to Article 99 of the CLA, the recognition and enforcement of the foreign arbitral award may be refused at the request of the party against whom it is invoked, if that party supplies evidence proving that:

• the subject matter of the dispute is not arbitrable;
• the courts have exclusive jurisdiction over the subject matter of the dispute;
• recognition and enforcement would be contrary to public policy;
• the local courts in the country in which the award was rendered do not enforce arbitral awards rendered in the territory of Bosnia and Herzegovina (i.e. no reciprocity);
• the arbitral agreement does not fulfil the formal requirements provided under Article 435 of the CLA;
• the arbitration agreement is null and void;
• the party against whom the award was rendered was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present its case;
• the arbitral tribunal was not appointed or the arbitral proceedings were not conducted in accordance with the arbitration agreement;
• the award deals with a dispute not falling within the terms of the arbitration agreement or contains decisions on matters beyond the scope of that agreement. Any part of the award that exceeds the scope of the arbitration agreement may be severed from the remaining part of the award;
• 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; or
• the arbitral award is unclear or contradictory.

The court with territorial jurisdiction to hear applications for the recognition and enforcement of arbitral awards is the court in the territory in which enforcement of the award is sought (Article 101 CPA).

CMS Reich-Rohrwig Hainz
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Maria Theresa Trofaier
T +43 1 404 43-255
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