After gaining independence in 1991, Slovenia assumed those international obligations entrusted to Slovenia by the former Yugoslavia. Subsequently, Slovenia ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the European Convention on International Commercial Arbitration and the Convention on the Settlement of Investment Disputes. There has not, however, been any significant increase in arbitration, despite Slovenia’s ratification of these Conventions and the enactment of laws governing arbitration proceedings.

Slovenia has three arbitral institutions: the permanent arbitration centre of the Chamber of Commerce and Industry of Slovenia (hereinafter “GZS”), and two new arbitration institutions called the Arbitration Court of the Triglav Insurance Company and the Arbitration Court of the Ljubljana Stock Exchange.

Overview of arbitration in Slovenia
Until recently, arbitration in Slovenia was regulated by two different Acts: the Slovenian Civil Procedure Act (Zakon o pravdnem postopku, hereinafter “ZPP”, Official Gazette of Republic of Slovenia No. 26/1999, 73/2007), which was originally enacted in 1999, and which set out various provisions relating to arbitration in its Thirty-first Chapter; and the Private International Law and Procedure Act (Zakon o mednarodnem zasebnem pravu in postopku, ­ hereinafter “ZMZPP”, Official Gazette of Republic of Slovenia No. 56/1999), which regulated the recognition and enforcement of foreign arbitration awards.

However, the above Acts failed to address numerous important issues in the sphere of arbitration.

To address the shortcomings of the above Acts, and to promote the use of arbitration as a dispute resolution mechanism, a new Arbitration Act was enacted and entered into force on 9 August 2008 (Zakon o Arbitaži, hereinafter “ZArbit”, Official Gazette of Republic of Slovenia No. 45/2008). ZArbit incorporates the principal features of the UNCITRAL Model Law. It should be noted, however, that the old Acts continue to apply to arbitration proceedings commenced prior to 9 August 2008, unless otherwise agreed by the contracting parties.

GZS institutional arbitration proceedings are conducted pursuant to the “Rules regulating the arbitration procedure at the permanent arbitration commission of the Chamber of Commerce and Industry of Slovenia” (Pravilnik o arbitražnem postopku pred Stalno arbitražo pri GZS, hereinafter “Rules”, Official Gazette of Republic of Slovenia Nos. 49/2000 and 66/2003).

Scope of application
The provisions of Articles 1 et seq. of ZArbit apply to all arbitrable disputes. When defining arbitrability, ZArbit considers any pecuniary claim as capable of resolution by way of arbitration proceedings. However, non-pecuniary claims may also be subject to an arbitration agreement if the matter is capable of settlement (see Point 3.2). For consumer-related matters, special provisions, set out in the Ninth and Tenth Chapters of ZArbit, apply (see Point 11).

The structure of the law
The structure of the law closely follows the UNCITRAL Model Law. The First Chapter contains general provisions on the scope of application of the law and the service of proceedings. The Second Chapter deals with the arbitration agreement itself. The Third Chapter deals with the composition of the arbitral tribunal and the challenging of arbitrators, and the Fourth Chapter with jurisdiction. The Fifth and Sixth Chapters set out the provisions on the organisation of proceedings and the rendering of the award. The Seventh Chapter deals with recourse against the award. The Eighth Chapter deals with the recognition and enforcement of foreign awards. The Ninth and Tenth Chapters contain special provisions on consumer-related and employment-related issues.

The role of the courts (Articles 8 and 9 ZArbit)
Slovenian arbitration law almost completely removes arbitration proceedings from the supervision of the national courts. ZArbit envisages court involvement only in the instances set out below: the first group of rules comprises provisions on the appointment, challenge and termination of an arbitrator’s mandate (Articles 14 (3, 4), 16 (3) and 17 (1) ZArbit), the jurisdiction of the arbitral tribunal (Article 19 (3) ZArbit) and setting aside the arbitral award (Article 40 (2) ZArbit). The second group of rules comprises provisions on court assistance in taking evidence (Article 31 ZArbit), recognition of the arbitration agreement, including its compatibility with court-ordered interim measures (Articles 11 and 12 ZArbit), and the admissibility or inadmissibility of arbitration proceedings (Article 11 (3) ZArbit).

Except where the abovementioned Articles provide otherwise, the courts shall refrain from intervening in arbitration proceedings altogether (Article 8 ZArbit). The procedure to be followed by the Slovenian courts in arbitration-related matters is set out either in the rules of civil procedure or in the non-litigious civil procedure rules.

According to Article 9 ZArbit, the Court of First Instance in Ljubljana (Okrožno sodišce v Ljubljani, hereinafter “the court”) is the generally competent court to hear arbitration-related applications.

General principles
The general principles underlying ZArbit are as follows:

• equality and objectivity: all parties must be treated fairly and shall have the right to be heard (Article 21 ZArbit);
• due process: all parties must have the opportunity to present their case;
• principle of good faith (Article 2 (1) ZArbit); and
• autonomy of the parties.

Definition (Article 10 ZArbit)
The definition of an arbitration agreement is set out in Article 10 ZArbit, which corresponds to the definition in Article 7 (1) of the UNCITRAL Model Law. The arbitration agreement is 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.

An arbitration agreement may either be concluded by way of a separate agreement or included as an arbitration clause in a contract. The arbitration agreement shall be set out in writing and needs clearly to express the intention of both parties to submit the dispute in question to arbitration.

Arbitrability (Article 4 ZArbit)
Generally, all pecuniary claims are arbitrable. In addition, disputes relating to non-pecuniary claims can be arbitrable provided the parties are entitled under Slovenian law to conclude a settlement in relation to such dispute. As specified in Article 1053 of the Code of Obligations (Obligacijski zakonik, hereinafter “OZ”, Official Gazette of Republic of Slovenia No. 83/2001, 89/2007), disputes relating to the status of natural and legal persons (for example, questions regarding marriage, motherhood, fatherhood, adoption, paternal rights, etc.) are not capable of settlement and are therefore non-arbitrable.

The formal requirements of the agreement (Article 10 ZArbit)
Article 10 ZArbit governs all arbitration agreements concluded on or after 9 August 2008. The formal requirements of a written arbitration agreement in accordance with Article 10 ZArbit correspond to those set out in Article 7 (2) of the UNCITRAL Model Law. The document must either be signed by the contracting parties or can be contained in correspondence between the parties, if such correspondence provides a record of their agreement (i.e. letters, facsimiles, e-mails or other means of communication).

The reference in a contract to any document containing an arbitration clause constitutes a valid arbitration agreement in writing provided that the reference is such as to make that clause part of the contract. It should be noted that a formal defect in the arbitration agreement is cured if the parties do not object to the existence of such defect before entering into the merits of the case.

An arbitration agreement may also be validly concluded if the claimant submits a request for arbitration and the respondent fails to object to the competence of the arbitral tribunal in its Statement of Defence or earlier.

Claims before the national court and interim measures
(Articles 11 and 12 ZArbit)
Modelled on Article 8 of the UNCITRAL Model Law, Article 11 of the ZArbit provides that the court before which an action is brought in a dispute which is subject to an arbitration agreement, upon the request of the respondent (which needs to be submitted no later than with the defence to the claim), shall dismiss the action unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. Once arbitration proceedings are commenced, no claim concerning the same subject matter may be brought before a national court.

Article 12 ZArbit expresses the principle that – even in the face of an arbitration agreement – a national court can grant any interim measure of protection in support of arbitration proceedings that would be available under its own procedural law. The Rules contain a similar provision in Article 36 (3) stating that a request for interim measures of protection to a national court does not constitute an infringement or waiver of the arbitration agreement. Arbitral tribunals may also order interim measures at the request of a party before or during the arbitration proceedings (Article 12 ZArbit).

The constitution of the arbitral tribunal (Articles 13, 14 ZArbit)
Only a natural person who has full capacity may be appointed as an arbitrator. There is no requirement that an arbitrator be qualified as a lawyer or a registered member of the bar. However, Article 14 of the Rules states that an arbitrator should have special knowledge of and experience in the law, economics or any other relevant field. Furthermore, nationality is not a reasonable ground for precluding someone from acting as an arbitrator, unless otherwise agreed by the parties.

The parties are free to agree on the number of arbitrators (Article 13 (1) ZArbit). If the parties agree on an even number, the arbitrators shall appoint an additional arbitrator as chairman. Unless the parties agree on the number of arbitrators, the number shall be three (Article 13 (2) ZArbit). According to Article 14 (2) ZArbit, the parties are also free to agree on the procedure for appointing the arbitrator(s). If the parties fail to appoint an arbitrator, the mandatory provisions of Article 14 (3) ZArbit et seq. will apply:

• in an arbitration with a sole arbitrator, the arbitrator is appointed by the court upon the request of a party, if the parties are unable to agree on the arbitrator (Article 14 (3) 2 ZArbit);
• if there are three arbitrators, each party appoints one arbitrator and the two party-appointed arbitrators shall appoint the third arbitrator to act as chairman (Article14 (3) 1 ZArbit); and
• in an arbitration with three arbitrators, the third arbitrator is appointed by the court upon the request of a party, if a party or the two party-appointed arbitrators fail to appoint the third arbitrator within 30 days of receipt of a request to do so from the other party or within 30 days of their appointment (Article 14 (3) 1 ZArbit).

The above mandatory provisions also apply if the parties agree on the appointment procedure (Article 14 (4) ZArbit) but:

• a party fails to follow the agreed procedure;
• the parties, or the party-appointed arbitrators, are unable to reach agreement as envisaged under such procedure; or
• a third party, including an institution, fails to perform a function entrusted to it under such procedure.

Any party may request the court to take the necessary measures to appoint an arbitrator, unless the agreement on the appointment procedure provides other means of securing the necessary appointment(s).

The court’s decision as to the appointment of an arbitrator is not subject to appeal.

Grounds for challenge of arbitrators (Article 15 ZArbit)
Article 15 ZArbit, which sets out the grounds for challenging an arbitrator, is mandatory. Accordingly, arbitrators may be challenged only if circumstances exist that give rise to justifiable doubts as to their impartiality or independence, or if the arbitrator does not possess the qualifications agreed upon by the parties. Moreover, a party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he became aware after the appointment was made.

Challenge procedure, early termination of mandate and appointment of a substitute arbitrator (Articles 16–18 ZArbit)
In accordance with Article 16 (1) ZArbit, the parties are free to agree on the procedure for challenging an arbitrator. If the parties fail to agree upon a specific procedure, the provisions of 16 (2) ZArbit apply. These provisions are in accordance with Article 13 (2) of the UNCITRAL Model Law. A party that intends to challenge an arbitrator shall – within 15 days of becoming aware of the constitution of the arbitral tribunal or of any other circumstances referred to in Article 15 ZArbit (see Point 4.2) – send a written statement to the arbitral tribunal. Unless the challenged arbitrator withdraws or the other party agrees to the challenge, the arbitral tribunal, including the challenged arbitrator, shall decide on the challenge. Furthermore, if such a challenge is not successful, the challenging party may, within 30 days of receiving notice of the decision rejecting the challenge, file a request to the court to rule on the challenge. The court’s decision cannot be appealed. Whilst such a request is pending, the arbitral tribunal, including the challenged arbitrator, may continue the proceedings and render an award.

In the case of institutional arbitration proceedings conducted under the Rules, the President of the permanent arbitration court has the authority to decide on any challenge to an arbitrator. The decision of the President is final.

Early termination of an arbitrator’s mandate is possible if the parties so agree or if the arbitrator himself withdraws from office (Article 17 (1) ZArbit). On the other hand, if no agreement is reached, any party may request the court to rule on the issue. The court’s decision cannot be appealed.

A substitute arbitrator is appointed in accordance with the provisions of Article 18 ZArbit. Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed in accordance with the rules that were applicable to the appointment of the arbitrator being replaced.

Competence to rule on jurisdiction (Article 19 ZArbit)
In accordance with 19 (1) ZArbit, the arbitral tribunal has the power to rule on its own jurisdiction (“Kompetenz-Kompetenz”), including any objections with respect to the existence or validity of the arbitration agreement. This provision follows the wording of Article 16 of the UNCITRAL Model Law.

Article 19 (1) ZArbit follows the provisions on the doctrine of separability set out in Article 16 (1) of the UNCITRAL Model Law. An arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall therefore not entail ipso jure the invalidity of the arbitration clause.

Power to order interim measures (Article 20 ZArbit)
Upon hearing the submissions of both parties, the arbitral tribunal is entitled to order whatever interim measures it considers necessary to protect the subject matter of the proceedings. The arbitral tribunal may require the party requesting interim measures to provide appropriate security.

Exceptionally, the arbitral tribunal may, if it considers it to be necessary, order interim measures of its own motion.

The arbitral tribunal may modify, suspend and/or terminate interim measures, upon the application of any party, or, in exceptional circumstances, of its own motion.

It is the court, however, that has the power to enforce interim measures in the event of a party’s noncompliance (Article 43 ZArbit).

General provisions
The parties are free to agree on the procedure to be followed during the proceedings (Article 23 (1) ZArbit). The parties are free to refer to the rules of an arbitration institution, if they so wish. If the parties do not agree upon the procedure to be followed, the arbitral tribunal shall conduct the arbitration in the manner it considers appropriate.

The parties should be treated equally and be given a full opportunity to present their case (Article 21 ZArbit).

Unless otherwise agreed by the parties, the arbitral proceedings commence on the date on which the request for resolution of the dispute by arbitration is received by the respondent.

The parties also have the right to be represented by a proxy (Article 22 ZArbit). A proxy may be any natural person with full capacity, either a Slovenian national or a foreigner. Furthermore, a foreign or national law firm may be a proxy.

Seat of the tribunal and language of arbitration
(Articles 24 and 26 ZArbit)
The parties are free to agree on the seat (or place) of the arbitration (Articles 24 (1) ZArbit). It should be noted that this provision does not refer to the actual place of the oral hearings, but only to the legal seat or place of the arbitration.

In accordance with Article 22 of the UNCITRAL Model Law, the parties are free to choose the language of the arbitral proceedings. If the parties fail to reach agreement on this issue, the language or languages to be used in the proceedings shall be determined by the arbitral tribunal (Article 26 ZArbit).

Statements of case (Article 27 ZArbit)
The claimant has a duty to submit his claim, state the facts supporting his claim and identify the issues in dispute. The respondent must state his defence to these claims, unless the parties agree otherwise. Either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal decides that this would lead to undue delay.

Oral and written proceedings, notice, taking of evidence
(Article 28 ZArbit)
The parties are free to agree on the issue of whether proceedings shall be conducted orally or in writing. In the absence of an agreement between the parties, the arbitral tribunal shall decide whether to hold an oral hearing, or whether the proceedings should be conducted on a ‘documents only’ basis.

According to Article 23 ZArbit, the arbitral tribunal has the power to determine the admissibility, relevance, materiality and weight of any evidence. The parties are entitled to receive sufficient advance notice of any hearing scheduled by the arbitral tribunal for the purposes of inspection of evidence. Furthermore, the parties are entitled to receive submissions, documents or communications supplied to the arbitral tribunal by the other party, and expert reports or other evidentiary documents on which the arbitral tribunal may rely in making its decision (Article 28 ZArbit).

Default of a party (Article 29 ZArbit)
Article 29 empowers the arbitral tribunal to continue with the proceedings and render an award even if one of the parties does not participate. The arbitral proceedings may be continued in the absence of the party if: (a) the respondent fails to communicate his Statement of Defence within the agreed or ordered timeframe; or (b) any party fails to appear at a hearing or to produce documentary evidence. On the other hand, the arbitral proceedings are terminated if the claimant fails to file a Statement of Claim.

Appointment of experts and court assistance
(Articles 30 and 31 ZArbit)
The arbitral tribunal has the authority to appoint experts to produce a report on specific issues to be determined by the arbitral tribunal (Article 30 (1) ZArbit). Furthermore, the arbitral tribunal may require a party to give the expert any relevant information or to produce, or provide access to, any relevant documents, goods or other property for inspection (Article 30 (1) 2 ZArbit).

In accordance with Article 31 ZArbit, the arbitral tribunal or a party with the approval of the arbitral tribunal may request court assistance in the taking of evidence or performance of any other acts for which the arbitral tribunal does not have the authority. The court executes the request according to its rules on the taking of evidence.

The arbitrators are entitled to participate in the taking of evidence before the court and to pose questions.

Choice of law (Article 32 ZArbit)
The arbitral tribunal shall decide on the dispute in accordance with the rules of law chosen by the parties. Any designation of the law or legal system of a given state shall be interpreted as directly referring to the substantive law of that State, and not to its conflict of laws rules. The parties are free to decide on the applicable law. Failing any designation by the parties, the arbitral tribunal shall apply the rules of law which it considers appropriate (Article 32 (2) ZArbit).

The arbitral tribunal may also decide ex aequo et bono if the parties have expressly authorised it to do so. Decisionmaking by the arbitral tribunal (Article 33 ZArbit)

The arbitrators render awards and take other decisions by a majority of all the members of the tribunal, except when deciding on questions of a procedural nature, which may be decided upon by the presiding arbitrator, if he is authorised to do so by the parties or by all members of the arbitral tribunal.

Settlement (Article 34 ZArbit)
The parties may conclude a settlement at any time during the proceedings. If the parties so request and the terms of a settlement are in accordance with Slovenian public policy, the settlement may be recorded in the form of an arbitral award. Such an award has the same status and effect as any other award on the merits of the case.

The arbitral award and its effect (Articles 35 ZArbit)
The award shall be made in writing and shall be signed by the arbitrator(s). If there is more than one arbitrator, the signatures of the majority of the arbitrators will suffice. The award shall state the reasons upon which it is based, the date of issue and the place of arbitration. Each party has a right to receive a copy of the award, signed by the arbitrators.

The award has the same effect as a final judgment between the parties (Article 38 ZArbit).

The award can be enforced as soon as the court declares it to be enforceable.

Termination of proceedings (Article 36 ZArbit)
Arbitration proceedings usually terminate as a result of a settlement or the rendering of a final award on the merits. The proceedings can also terminate, however, if:

• the claimant withdraws his claim, unless the respondent objects thereto and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final award;
• the parties agree on the termination; or
• the proceedings’ continuation is impossible or unnecessary.

The mandate of the arbitral tribunal terminates with the termination of the arbitral proceedings.

Costs (Article 39 ZArbit)
Unless otherwise agreed by the parties, the arbitral tribunal may decide at its own discretion which party is obliged to reimburse the costs of the arbitration proceedings, including the arbitrators’ fees, the fees of any arbitral institution and each party’s lawyers’ fees.

The tribunal’s decision on the amount and the allocation of costs between the parties shall be recorded in the arbitral award or in a separate order.

Correction and interpretation of the award (Article 37 ZArbit)
The arbitrators may, within 30 days of receipt of the award by the parties, correct any errors in computation, any clerical or typographical errors or any errors of a similar nature, either on their own initiative or at the request of the parties.

Furthermore, the parties can request that the arbitral tribunal give an interpretation of a specific point or part of the award. Additionally, they can request the issuance of an additional award on claims presented to the arbitral tribunal but omitted from the award. Any interpretation or corrections are considered to be part of the arbitral award. This provision of ZArbit is in accordance with Article 33 of the UNCITRAL Model law.

The only judicial means of challenging an arbitral award is to apply to have the award set aside. The award shall be set aside only if:

1. the party making the application furnishes proof that:

• a party to the arbitration agreement was under some incapacity; or the arbitration agreement is invalid under the law to which the parties have subjected it or, failing any indication thereon, under Slovenian law;
• the party 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 award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains a decision on matters beyond the scope of the submission to arbitration; or
• the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties; or

2. the court finds that:

• the subject matter of the dispute is not capable of settlement by arbitration; or
• the arbitral award violates Slovenian public policy.

The parties cannot waive their right to apply to set aside an award.

It should be noted, however, that the setting aside of the award does not automatically invalidate the underlying arbitration agreement.

The court may, where appropriate and if so requested by a party, suspend the application to set aside for a certain period of time in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such actions as in the arbitral tribunal’s opinion would cure the grounds for setting aside.

Slovenia is a signatory State to the 1958 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 Slovenian Government expressly declared that: (a) Slovenian courts will only recognise and enforce awards rendered in other States that are party to the Convention; and (b) Slovenian courts will only recognise and enforce awards relating to disputes that qualify as “commercial” under Slovenian law. Recognition and enforcement of foreign arbitral awards is governed by the provisions of ZArbit. The formal requirements of the arbitration agreement are met if the (foreign) arbitration agreement complies with the formalities of Article 10 ZArbit as well as with the formalities of the law applicable to the arbitration agreement (if different).

The party applying for enforcement of an award shall supply the original award or a certified copy thereof. In addition, if requested by the court, the party shall provide the court with the original arbitral agreement or its certified copy.

The grounds for refusing the enforcement of an award, as laid down in Article 36 of the UNCITRAL Model Law, have not been specifically included in ZArbit.

Jurisdiction
Article 9 ZArbit states that the Court of First Instance in Ljubljana (Okrožno sodišce v Ljubljani) is the generally competent court for judicial tasks in relation to arbitration matters.

Court proceedings
Generally speaking, applications relating to the jurisdiction of the arbitral tribunal, the setting aside of an award and the admissibility or inadmissibility of arbitration proceedings are governed by the general provisions of Slovenian civil procedure. Other court proceedings in connection with arbitration, such as those relating to the appointment, challenge and termination of the mandate of an arbitrator or recognition of the arbitration agreement, are governed by the rules of non-litigious Slovenian civil procedure.

The public are excluded from court proceedings regarding arbitration matters upon the legitimate request of a party (Article 9 (2) ZArbit).

Provisions governing consumer disputes are, due to the specific nature of consumer relations, governed in a separate chapter of the ZArbit. Provisions regarding the arbitration agreement, language of the arbitration and recourse against an award are adjusted in order to assure the protection of the weaker party (i.e. the consumer). According to the Consumer Protection Act (Zakon o varstvu potrošnikov, hereinafter “ZVPot”, Official Gazette of Republic of Slovenia Nos. 20/1998, 98/2004) a consumer is a natural person who acquires or uses goods and services for purposes other than in the course of his business.

Unlike the UNCITRAL Model Law, Slovenian law offers protection for consumers who are involved in arbitration. An arbitration agreement between an entrepreneur and a consumer can only be effectively concluded after the dispute has arisen.

The arbitration agreement must be written on a separate document directly signed by the consumer (and not in the entrepreneur’s general terms and conditions).

In addition to the general grounds for setting aside awards, the provisions relating to consumers include other grounds, such as the violation of mandatory consumer protection provisions.

CMS Reich-Rohrwig Hainz
Ebendorferstrasse 3
1010 Vienna, Austria


Maria Theresa Trofaier
T +43 1 404 43-255
F +43 1 404 43-9255
E maria-theresa.trofaier@cms-rrh.com