Order for payment procedures and arbitration
clauses – Recent trends in Romanian practice
Dan Cristea
Associate
Competence – Competence Principle.
Recurring Issues
ICC YAF Conference, Bucharest
27 September 2010
Applicable legislation
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Romanian Civil Proceedings Code
Government Ordinance no. 5/2001 regarding injunction for
payment (“G.O. no. 5/2001”)
Government Emergency Ordinance no. 119/2007
regarding measures to prevent delays in execution of
payments deriving from commercial contracts (“G.E.O. no.
119/2007”)
Regulation (EC) No 1896/2006 of the European Parliament
and of the Council of 12 December 2006 creating a
European order for payment procedure
Applicable legislation
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G.O. no. 5/2001, art. 1 (1): “The injunction for payment procedure
is performed at the request of the creditor, in the purpose of
recovery of debt that is certain, liquid and outstanding, based on
a contract or a written statement acknowledged by the parties”.
G.E.O. no. 119/2007, art. 2 (1): “The present ordinance applies to
receivables that are certain, liquid and outstanding, and
represent duties to pay sums of money, as resulting from
commercial contracts”.
Regulation (EC) No 1896/2006, art. 4: “The European order for
payment procedure shall be established for the collection of
pecuniary claims for a specific amount that have fallen due at the
time when the application for a European order for payment is
submitted.”
What are we going to discuss today…
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Existing jurisprudence on possibility of Romanian
courts to withhold jurisdiction in presence of arbitration
clause.
Critique of existing jurisprudence.
Applicable tests in order to establish jurisdiction in
case of orders for payments submitted in the
presence of an arbitration clause.
Applicable solutions for Romanian courts faced with
arbitration clause in order for payment procedures.
Existing Romanian jurisprudence on-topic
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“Every time parties have agreed that disputes stemming
from the execution of their contractual rights and
obligations are to be submitted to arbitration, court
jurisdiction is excluded by the disposition of art. 3433 of the
Civil Proceedings Code, irrespective of the general or
special character of the judicial procedure.” (Constanța
Tribunal, civil sentence no. 3610/2001)
“In the presence of an arbitration clause, courts do not
have jurisdiction over the dispute, irrespective of applicable
procedure, be it common procedure or a special order for
payment procedure.” (Cluj Court of Appeals, commercial
sentence no. 571/2003)
Existing Romanian jurisprudence on-topic (2)
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“In the case of injunction for payments, as regulated by G.O. no.
5/2001, even if parties have opted for an arbitration clause, G.O.
no. 5/2001 institutes a special procedure, including in relation to
material jurisdiction. These special norms depart from both
common procedural law and the convention of the parties; the
court has no reason to decline jurisdiction in such a matter”
(Bucharest Court of Appeals, commercial sentence no.
1689/2002)
“Given the fact that art. 2 alin. (1) of G.O. no. 5/2001 establishes
exclusive jurisdiction in favor of courts in solving requests for
payment injunctions, in view of the general law principle specialia
generalibus derogant, arbitration courts cannot have jurisdiction
over injunctions for payment.” (Bucharest Tribunal, commercial
sentence no. 6005/2002)
Proposed criteria for establishing jurisdiction
1. The “binding nature of contractual
clauses test” (art. 969 Civil Code)
2. The “preservation of status quo" test
3. The “contentious nature of dispute” test
4. The “derogatory character” test
1. The “binding nature of contractual clauses” test
1. Fundamental assumption: courts may issue injunctive
relief only if the contract between the parties so
provides
2. Legal ground: pacta sunt servanda
3. Common law precedents: Merrill Lynch, Pierce,
Fenner & Smith, Inc. v. Hovey, 726 F.2d 1286 (8th
Cir. 1984) – “if there is an enforceable arbitration
agreement between the parties that does not explicitly
authorize judicially ordered injunctive relief, all
remedies, including preliminary injunctions, are for the
arbitrator to decide”
2. The “preservation of status quo” test
1.
2.
3.
Fundamental assumption: preliminary injunctions for payment
empty the substance of possible subsequent arbitration
Legal ground: art. 3433 (1) of Civil proceedings Code: “an
arbitration clause excludes jurisdiction of courts, for disputes
relating to its object”
Common law precedents: Guinness-Harp Corp. v. Jos. Schlitz
Brewing Co., 613 F.2d 468 (2nd Cir. 1980) – “as a practical matter
the preliminary injunction award should be more properly classified
as a final injunction, since its issuance was not dependent on any
subsequent confirmation by the arbitrators. By construing the
arbitration clause of the agreement to explicitly preclude termination
prior to arbitration, the court finds Guinness’s petition for provisional
relief as nothing more than a suit for specific performance of a
contractual term”
3. The “contentious nature of dispute” test
1.
2.
3.
Fundamental assumption: arbitration courts can judge only upon disputes.
Legal ground: art. 340 of Civil proceedings Code: “an arbitration clause excludes
jurisdiction of courts, for disputes relating to its object”
Do order for payment procedures hold a contentious character?
1. Distinction between contentious nature and contradictoriality of proceedings
2. Should a distinction be made between G.O. no. 5/2001 and G.E.O. no.
119/2007?
3. Majority of jurisprudence as to uncontentious character of orders for
payment:
1. “The procedure of injunction for payment, as regulated by G.O. no.
5/2001 is an uncontentious one” (Bucharest Tribunal, Sentence no.
4779/23.11.2005).
2. “The norms of G.O. no. 5/2001 institute an uncontentious procedure,
and according to the provision of art. 335 of the Civil proceedings code,
“if the request, through its mere content, or due to parties’ objections,
achieves a contentious nature, the court will reject it””.
4.
Courts retain sole jurisdiction over uncontentious matters.
4. The “derogatory character” test
1.
2.
3.
Fundamental assumption: preliminary injunctions for payment
depart from common law provisions, and cannot be judged by the
same jurisdiction standards
Legal ground: scope of application of order for payment legal
provisions
Does the “special” character of a procedure prevent arbitrability?
1.
2.
3.
Concept of abstract non arbitrability
Derogatory competence norms.
Tacit consent to relinquish special procedures possibly provided by
common law
Solution for courts faced with an order for payment, in case of
applicability of arbitration clause
1.
2.
Declinatory plea
“After admitting its lack of jurisdiction, the tribunal erroneously rejected as
inadmissible the request of the claimant, ignoring the provisions of art. 158
para. (1) and (3) of the Civil Proceedings Code, according to which, when
confronted with a jurisdiction incident, the court is obliged to identify the
organ who has authority over the case” (Timisoara Court of Appeals,
commercial Decision no. 40/2009)
Rejection of claim, for general lack of jurisdiction of Romanian courts
“Observing its lack of jurisdiction, due to the arbitration clause, the court will
only be able to annull the order for payment, without declining jurisdiction to
any other organ. This is because a civil court can only decline jurisdiction to
another civil court, and, anyway, an arbitration court cannot become
competent in this way, because arbitration is performed through specific
rules that must be established or accepted by parties, when they are not
established through contract (concerning place of arbitration, constitution of
tribunal, rules of dispute)” (Cluj Court of Appeals, decision no.
1472/10.10.2002).
Miscellaneous topics for discussion
1. Can arbitration courts judge cases on basis of the
provision of G.O. no. 5/2001 or G.E.O. no. 119/2007?
2. Does the use of one of the ordinances stated above
confer any advantage/disadvantage in what concerns
arbitrability and jurisdiction?
3. De lege ferenda proposals.
Competence – Competence Principle. Recurring Issues
ICC YAF Conference, 27 September 2010, Bucharest, Romania
Dan CRISTEA
Associate
E-mail: dan.cristea@tuca.ro
Tel: (40-21) 204 88 90
Web: www.tuca.ro