Croatian Chamber of Economy: A Faster and Simpler Way to Resolve Disputes

The Croatian Chamber of Economy established the first Permanent Arbitration Court almost 170 years ago, which remains the only such institution in Croatia today. The Permanent Arbitration Court provides administrative, professional, and technical support in organizing the arbitration process, a procedure in which a dispute between parties is resolved by an arbitration tribunal consisting of one or three arbitrators. The objectives of the Arbitration Court are: to expedite the resolution of all disputes arising from commercial contracts (sales, execution of all types of construction works, construction investments, insurance, etc.), to ensure confidentiality of the process for the parties and the possibility of choosing arbitrators, and to reduce the costs of the procedure.

Arbitration is fundamentally a ‘right’ trial, but under more flexible rules than those of litigation before a state court. The procedure is regulated by the Arbitration Act, under which the substantive decision of the court, the ruling, has the legal significance of a final court judgment. Parties voluntarily agree to arbitration already in the basic contract, indicating that they will resolve their dispute through arbitration rather than in a regular state court.

Best Legal Experts

In addition, parties can voluntarily choose one or three arbitrators from a list of arbitrators, which includes judges from all courts in the Republic of Croatia, esteemed professors of legal sciences, specialized lawyers, and other legal experts, who then sign a declaration stating that they are independent and impartial in relation to the parties. In this way, parties can select experts who are closely specialized in the contentious issue to be adjudicated in the arbitration process.

– In the past ten years, we have successfully resolved more than 300 arbitration disputes, involving over 600 domestic and foreign parties. We are proud to have assembled a team of the best legal experts in Croatia, who, in their role as arbitrators, assist all legal and economic entities in resolving commercial disputes. The arbitration process has proven to be the fastest, most favorable, and most efficient way to resolve investment disputes – stated Dr. Branimir Kos, Vice President of the Permanent Arbitration Court and Legal Affairs Advisor at the Croatian Chamber of Economy, adding that in the past ten years, the total value of resolved disputes amounted to around three billion kuna.

Relieving the Courts

According to HGK data, in the past ten years, the Permanent Arbitration Court has mostly dealt with large construction and investment disputes (as much as 40 percent). Additionally, 30 percent of disputes had an international character and involved parties from abroad.

The arbitration process lasts significantly shorter than court proceedings before a state court because there is no multi-tier decision-making in arbitration. After an advance payment for conducting the arbitration process, the court sends a summons to the defendant, forms a tribunal, and organizes hearings and discussions. Ultimately, the court issues an arbitration award, that is, a ruling, which has the same legal force as a judgment of a state court and allows for enforcement in the appropriate procedure. Due to the significantly shorter duration of the arbitration process, which on average lasts up to one year, and the single-tier decision-making, parties in the arbitration process pay lower interest on the principal obligation, incur lower attorney fees, and have lower overall costs of the procedure.

Guaranteed Confidentiality

The amount of arbitration costs depends on the value of the subject of the dispute (VPS) and the number of arbitrators. If the parties choose three arbitrators, the process will be more expensive, but still cheaper than if the dispute were conducted before a state court. The arbitration process is, according to the law, a confidential procedure, which means that the public is completely excluded from the process and has no right to attend hearings or request access to arbitration files. These procedures guarantee complete confidentiality and data protection for the parties, freedom to choose expert personnel in the role of arbitrator, and a simpler, cheaper, and faster course of the procedure. By resolving disputes more quickly and efficiently, liquidity for entrepreneurs and the overall economy is freed up, and pressure on state courts is reduced.

More information about the Permanent Arbitration Court at the Croatian Chamber of Economy can be read at www.hgk.hr.