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11 April 2019
Before a major amendment to the Arbitration Act in 2015, Slovakia appeared to be an unfriendly jurisdiction in which to conduct arbitration. Among other things, the amendment aimed to:
Recent decisions suggest that the attitude of the Slovak courts is improving in this respect; however, there is still progress to be made.
In 2018 the Slovak courts addressed the following issues while upholding arbitral awards:
The grounds for setting aside an award under the Arbitration Act have been amended to follow the UNCITRAL Model Law. Nonetheless, as the Constitutional Court has observed, these grounds substantially remain the same.(1) One major difference following the amendment is that the Arbitration Act now includes a violation of public policy as a new ground for setting aside an award.(2)
The Arbitration Act has never expressly empowered the Slovak courts to review the merits of an award (ie, to review the application of substantive law and determination of facts by a tribunal). However, the Constitutional Court recently set aside an award on the grounds that the erroneous application of substantive law by an arbitral tribunal violates due process under Article 6(1) of the European Convention on Human Rights.(3) This decision seemingly opened the door to unsuccessful parties to file an application with the Constitutional Court without following the procedure for setting aside an award before the general courts.
Following the amendment to the Arbitration Act, the Constitutional Court issued a decision in which it found that the only grounds for setting aside arbitral awards are those set out in Section 40 of the Arbitration Act, and that the setting aside procedure must be followed.(4) In other words, it is impossible to appeal against an arbitral award directly to the Constitutional Court. The court considered that public policy as a new ground for setting aside an award can be applied in cases of a material breach of due process (ie, the court implied that it includes erroneous applications of substantive law). However, the court left the matter for the general courts to decide.(5)
The attitude of the general courts, as evidenced in recent decisions, is that they should not review awards on the merits. The courts have repeatedly rejected attempts by unsuccessful parties to challenge awards on the grounds of an erroneous application of law or determination of facts by an arbitral tribunal.(6)
Numerous courts have considered whether erroneous applications of law can be subsumed on public policy grounds for setting aside an award. However, the Slovak courts have concluded that this reasoning should be applied restrictively (eg, to cases relating to the criminal conduct of arbitrators, expert witnesses or witnesses of fact).(7) This approach upholds the intentions of the National Council, as outlined in the bill which introduced the amendment to the Arbitration Act.
For further information on this topic please contact Matej Kosalko at Allen & Overy Bratislava sro by telephone (+421 2 5920 2400) or by email (email@example.com). The Allen & Overy LLP Bratislava sro website can be accessed at www.allenovery.com.
(6) See Supreme Court decision of 12 June 2018 (3Obdo/18/2018); Banska Bystrica Regional Court decisions of 29 November 2018 (43CoR/9/2018) and 15 November 2018 (43CoSr/11/2018); and Bratislava V District Court decisions of 19 November 2018 (23Cr/11/2015) and 20 November 2018 (23Cr/33/2016).
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