The International Comparative Legal Guide to Litigation and Dispute Resolution 2009 (The...

Litigation & Dispute Resolution 2009

Published by Global Legal Group with contributions from:

A practical insight to cross-border Litigation & Dispute Resolution

www.ICLG.co.uk

The International Comparative Legal Guide to:

Aivar Pilv Law Office

Anderson Mori & Tomotsune

Arias & Muñoz

Binder Grösswang

Boga & Associates

Borislav Boyanov & Co.

Bredin Prat

Carey y Cía.

Coronel & Peréz

Dechert LLP

Dittmar & Indrenius

Eversheds Saladzius

Fenech & Fenech Advocates

Gencs Valters Law Firm

Georgiades & Mylonas

Gleiss Lutz

Gómez-Acebo & Pombo Abogados, S.L.P.

Ivor Fitzpatrick & Company

Janezic & Jarkovic

Kim & Chang

Konecná & Šafár

Kromann Reumert

Lloreda Camacho & Co.

Lovells

Lydian

M. & M. Bomchil

Magisters

Meitar Liquornik Geva & Leshem Brandwein

Molitor, Fisch & Associés

Pachiu & Associates

Portilla, Ruy-Diaz y Aguilar, S.C.

Premnath Rai Associates

Schellenberg Wittmer

Sergio Bermudes Advogados

SJ Berwin LLP

Stikeman Elliott LLP

Yukov, Khrenov & Partners

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DisclaimerThis publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice.Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication.This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualifiedprofessional when dealing with specific situations.

Further copies of this book and others in the series can be ordered from the publisher at a price of £200. Please call +44 20 7367 0720

Contributing EditorsCraig Pollack and GordonBlanke, SJ Berwin LLP

Brand ManagerOliver Smith

Marketing ManagerRocio Cortinas

Cover DesignF&F Studio Design

EditorCaroline Blad

Senior EditorPenny Smale

Managing EditorAlan Falach

PublisherRichard Firth

Published byGlobal Legal Group Ltd.59 Tanner StreetLondon SE1 3PL, UKTel: +44 20 7367 0720Fax: +44 20 7407 5255Email: [email protected]: www.glgroup.co.uk

Printed byAshford Colour Press Ltd.February 2009

Copyright © 2009Global Legal Group Ltd.All rights reservedNo photocopying

ISBN 978-1-904654-57-5ISSN 1755-1889

The International Comparative Legal Guide to: Litigation & Dispute Resolution 2009

General Chapters:1 Litigating, Arbitrating and Mediating Competition Law Disptues: An Update -

Gordon Blanke, SJ Berwin LLP & Dr. Renato Nazzini, University of Southampton 1

Country Question and Answer Chapters:2 Albania Boga & Associates: Gerhard Velaj & Valbona Gjonçari 93 Argentina M. & M. Bomchil: María Inés Corrá & Ignacio J. Minorini Lima 164 Austria Binder Grösswang: Christian Klausegger & Anne-Karin Grill 235 Belgium Lydian: Hugo Keulers & Annick Mottet Haugaard 306 Brazil Sergio Bermudes Advogados: Marcio Vieira Souto Costa Ferreira &

Fabiano Robalinho Cavalcanti 377 Bulgaria Borislav Boyanov & Co.: Kina Chuturkova & Georgitsa Petkova 458 Canada Stikeman Elliott LLP: David R. Byers & Peter F. C. Howard 53 9 Chile Carey y Cía.: Esteban Ovalle & Eduardo Ugarte 6010 Colombia Lloreda Camacho & Co.: Gustavo Tamayo Arango & Bernardo Salazar Parra 6711 Costa Rica Arias & Muñoz: Melissa Ramírez Zamora & Roy de Jesús Herrera Muñoz 7512 Cyprus Georgiades & Mylonas: Yiannos G. Georgiades 8113 Czech Republic Konecná & Šafár: Ondrej Kuchar & Adam Cerný 9014 Denmark Kromann Reumert: Jens Rostock-Jensen 9715 Ecuador Coronel & Peréz: César Coronel Jones & Jorge Sicouret 10416 El Salvador Arias & Muñoz: Josué Reyes 11117 England & Wales SJ Berwin LLP: Gordon Blanke & Craig Pollack 11718 Estonia Aivar Pilv Law Office: Pirkka-Marja Põldvere & Aivar Pilv 12619 Finland Dittmar & Indrenius: Jussi Lehtinen & Eva Storskrubb 13420 France Bredin Prat: Tim Portwood 14021 Germany Gleiss Lutz: Michael Christ & Claudia Krapfl 15022 Guatemala Arias & Muñoz: Luis Fernando Zelada López & Shajida Beatriz Espat Godoy 15723 Honduras Arias & Muñoz: Fanny Rodríguez & Raul Villars 16224 India Premnath Rai Associates: Premnath Rai & R. Jawahar Lal 16725 Ireland Ivor Fitzpatrick & Company: Dympna Murphy & David Harris 17526 Israel Meitar Liquornik Geva & Leshem Brandwein: Dr. Israel (Reli) Leshem &

Ron Peleg 18327 Italy Lovells: Francesco Minà & Daniele La Cognata 19328 Japan Anderson Mori & Tomotsune: Kenichi Sadaka & Nobuhito Sawasaki 20029 Korea Kim & Chang: Jin Yeong Chung & Jun Ki Park 20730 Latvia Gencs Valters Law Firm: Valters Gencs 21531 Lithuania Eversheds Saladzius: Dr. Alvydas Gineitis 22132 Luxembourg Molitor, Fisch & Associés: Nadine Bogelmann & Paulo Lopes da Silva 22833 Malta Fenech & Fenech Advocates: Dr. Ann Fenech & Dr. Edward DeBono 23634 Mexico Portilla, Ruy-Diaz y Aguilar, S.C.: Carlos Fernando Portilla Robertson &

Enrique Aguilar Hernández 24535 Nicaragua Arias & Muñoz: Edgard Leonel Torres Mendieta & Ana Cecilia Chamorro Callejas 25336 Romania Pachiu & Associates: Voichita Craciun & Silviu Predescu 25937 Russia Yukov, Khrenov & Partners: Alexander Khrenov & Andrew Yukov 26638 Slovakia Konecná & Šafár: Dagmar Yoder & Diana Herényiová 27339 Slovenia Janezic & Jarkovic: Andrej Jarkovic & Sara Pavlovic 28140 Spain Gómez-Acebo & Pombo Abogados, S.L.P.: Francisco Peña & Diego Saavedra 28841 Switzerland Schellenberg Wittmer: Alexander Jolles & Stefan Leimgruber 29642 Ukraine Magisters: Alexey Reznikov & Arseniy Milyutin 30443 USA Dechert LLP: Robert A. Cohen & David M. Bigge 309

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EDITORIAL

Welcome to the second edition of The International Comparative Legal Guideto: Litigation & Dispute Resolution.

This guide provides corporate counsel and international practitioners with acomprehensive worldwide legal analysis of the laws and regulations oflitigation and dispute resolution.

It is divided into two main sections:

One general chapter. This chapter underlines the recent updates in litigating,arbitrating and mediating competition law disputes.

Country question and answer chapters. These provide a broad overview ofcommon issues in litigation and dispute resolution in 42 jurisdictions.

All chapters are written by leading litigation and dispute resolution lawyersand we are extremely grateful for their excellent contributions.

Special thanks are reserved for the contributing editors Craig Pollack andGordon Blanke of SJ Berwin LLP for their invaluable assistance.

Global Legal Group hopes that you find this guide practical and interesting.

The International Comparative Legal Guide series is also available online atwww.iclg.co.uk.

Alan Falach LL.MManaging EditorGlobal Legal [email protected]

1WWW.ICLG.CO.UKICLG TO: LITIGATION & DISPUTE RESOLUTION 2009

© Published and reproduced with kind permission by Global Legal Group Ltd, London

Chapter 1

SJ Berwin LLP

Litigating, Arbitrating andMediating CompetitionLaw Disputes: An Update

1. Introduction

This chapter sets out some strategic and tactical considerations thatshould be taken into account when deciding how best to deal withcompetition law claims as a private party either bringing ordefending proceedings involving competition law issues. Given thevast scope of the area of competition law and the number ofcompetition law regimes world-wide, this chapter does not aim to beexhaustive. Any competition law specifics mentioned in the text areby way of illustration only and should not be understood as legaladvice. The following analysis offers a framework within which toassess the various methods of private resolution of competition lawclaims (see section 2 in particular). For present purposes, we haveidentified litigation, arbitration and mediation as the three mainmethods of dispute resolution (see sections 3 to 5 below). This doesnot mean that under specific circumstances, other methods, such asexpert determination, may not offer an equally or (depending on theindividual case) even more promising outcome.

2. Some Generics

To set the scene, this section offers some generic information on thenature of competition law disputes. A good understanding of thenature of competition law disputes is vital to the choice of the mostappropriate dispute resolution mechanism on a case-by-case basis.

Competition regimes and the public interest

Most industrial nations world-wide have adopted some form ofcompetition law regime whereby anti-competitive distortions of themarket are prohibited and attract administrative fines and/orcriminal sanctions, including imprisonment of the individualsresponsible for the infringement concerned. Most of these regimesare based on a bifurcated approach, prohibiting both (i) anti-competitive practices such as collusive behaviour or the abuse of adominant position and (ii) corporate transactions, such as mergersand acquisitions that have an anti-competitive effect on thestructure of the relevant market. Some competition regimes havespread more widely, encompassing entire regions, such as theEuropean Union (comprising a current total of 27 Member States,namely: Austria, Belgium, Bulgaria, Cyprus, Czech Republic,Denmark, Estonia, Finland, France, Germany, Greece, Hungary,Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Poland,Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, TheNetherlands and the United Kingdom).The main concern of any competition law regime is the protectionof the public interest, which - in the present context - consists in the

preservation of a public economic good. In short, competitivemarkets generate low prices, better and cheaper products, andpromote technological development, which in turn raises the livingstandards of the average individual consumer.

The trend towards increased private enforcement

At the dawn of the 21st century, many competition law regimes areundergoing a move towards increased private enforcement,whereby the individual consumer or business is empowered directlyto enforce its rights before the domestic courts. Within the contextof the European Union, the introduction of the full privateenforcement of the EC competition law rules has gained currencyunder the catchphrase “Modernisation” (see Council Regulation(EC) No 1/2003 of 16 December 2002 on the implementation of therules on competition laid down in Articles 81 and 82 of the Treaty(OJ L 1, 4.1.2003, pp. 1-25, 04.01.2003)), meaning that Article 81EC on the prohibition of collusive anti-competitive behaviour isnow fully enforceable before the Member State courts.Increased private enforcement of the competition law rules raises thequestion of which forum may be most suitable for the resolution ofdisputes arising in relation to competition law matters. In sections 3to 6 below, we share some strategic and tactical considerations witha view to facilitating an informed choice of forum.

The complexity of competition disputes

The determination of a suitable forum for the resolution ofcompetition law disputes cannot be done in isolation, but has to beviewed against the background of the complexity of competitionlaw as applied in a real-life context.A finding of infringement of relevant competition law provisionsinvariably requires a detailed analysis of a particular factual matrixwithin a wider market environment, which under most competitionregimes is referred to as the relevant market. The relevant market,in turn, has a product and a geographic dimension. To assesswhether market participants are using their market power in a waythat produces anti-competitive effects on the relevant productmarket in a particular geographic area requires detailed factualevidence and economic analysis. To determine whether a marketparticipant has e.g. abused a dominant position or whether aproposed merger may have an anti-competitive effect on the marketor even result in its monopolisation, it is necessary to understand therelevant industry sector at hand and how market power isappropriately measured in that sector. Further, the determination ofmarket power cannot generally be based only on market share andentry barrier analysis, but may have to take account of more

Dr. Renato Nazzini, MCIArbUniversity of Southampton

Gordon Blanke, MCIArbSJ Berwin LLP

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SJ Berwin LLP Litigating, Arbitrating and Mediating Competition Law Disputes

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sophisticated economic theories, such as (i) portfolio power,whereby an undertaking can leverage the market power it holds inone product market into a secondary market, or (ii) the concept ofcollective dominance, whereby a number of ‘smaller’ companiescan dominate a market jointly, rather than unilaterally.The adjudication of competition law disputes is therefore often verycomplex, fact-intensive and time-consuming, and requires balancedeconomic analysis and acumen.

The multi-cultural nature of competition disputes

Many competition law disputes arise from international commercialrelationships and therefore tend to have a cross-border element.This means that the parties are often of differing nationalbackgrounds and may well come from different legal traditions(such as the common and civil law traditions). Relevant evidentiarydata and documents, as well as witnesses to be called in futureproceedings in the event of a dispute, may well have to be dealt within a language different from that used in the underlyingproceedings. Multi-culturalism is hence a natural given in manycompetition law disputes.

Confidentiality and business secrets

Parties accused of a competition law infringement generally havean interest in keeping any proceedings confidential. First,confidentiality minimises the risk of further disputes with otherparties. Second, it may facilitate settlement in certain circumstancesas parties have not publicly committed to a given outcome. Third,the competent competition authorities and courts, may require thedisclosure of business secrets and confidential information, which -if mishandled - can compromise the parties’ market position, forinstance if such secrets and information fall into the hands ofcompetitors. The maintenance of confidentiality is therefore ofmajor importance to parties involved in the investigation andadjudication of competition law infringements.

Leniency and self-incrimination

To avoid or reduce public law sanctions, an undertaking that isaware of its involvement in a competition law infringement, and, inparticular, of its participation in a cartel, has, or should have, astrong incentive to report relevant information regarding theinfringement to the competent competition authorities. This maytrigger a leniency programme operated by that competitionauthority (usually depending on the continued full co-operation ofthe undertaking concerned).By way of caution, it should be noted that there is no commonleniency programme applicable throughout the European Union, sothat applications for leniency have to be made to the variousMember States’ authorities individually (although see now the ECNModel Leniency Programme, available on the EC Commission’swebsite). It should also be borne in mind that the lawyer-clientprivilege may be less generous at the European Union level than itis in individual Member States (see Case 155/79 - AM&S Ltd v.Commission, Judgment of the European Court of Justice of 18 May1982, [1982] ECR 1575; and T-125/03 and T-253/03 - Akzo NobelChemicals Ltd v. European Commission, Judgment of the CourtFirst Instance of 17 September 2007). Individuals may, however,benefit from a prohibition of self-incrimination at both the EU andthe individual Member State levels.

Private law damages

A victim’s main interest in bringing a complaint with thecompetition law authorities may well be the recovery of private lawdamages it has suffered from the perpetrator’s infringement. Itshould be noted that competition authorities are usually notempowered to grant private law redress. Jurisdiction to awarddamages usually lies with the national courts or arbitral tribunals.The competent administrative authorities, such as the nationalcompetition authorities and, where available, specialist courtshaving jurisdiction to review their decisions, are usually wellequipped to deal with complex competition law issues. Mandated toprotect the public interest more generally, competition authorities areempowered to mete out sanctions, generally fines to punish theperpetrators and deter future infringements. In certain jurisdictions,such as the United States and the United Kingdom, individuals maycommit a criminal offence if they engage in anti-competitivebehaviour. This may result in prison sentences. In the UnitedKingdom, where the cartel offence entered into force on 20 June2003, the first successful prosecution was brought in the MarineHose cartel, which resulted in the conviction and imprisonment ofthree UK businessmen. In this case the US authorities have evenextradited English chief executives responsible for cartelinfringements in the UK.

Group complaints and collective actions

Where the nature of the infringement is such that numerous smallparties are affected by the infringement - whether as suppliers orcustomers and consumers - group complaints or complaints on behalfof a number of affected parties may be initiated with the relevantcompetition authorities (e.g. so-called super-complaints which may bemade by designated bodies to the UK Office of Fair Trading).When a single infringement affects a significant number of victims,a so-called opt-out class action may be an effective mechanism ofsolving the dispute. The principal feature of an opt-out class actionis that the action is brought on behalf of all the persons belonging toa defined group unless they state their intention not to be bound bythe outcome of the litigation. It should be noted, however, that classactions per se are not currently a mainstream feature of Europeanlegal systems while they are well-known and used not only in the USbut also, for instance, in Canada and Australia. In such actions,third-party litigation funders may well become the norm, especiallyin jurisdictions where contingency fees are not available. In the UK more particularly, a first representative action wasbrought by the consumer group Which? against JJB Sports onbehalf of named customers who purchased allegedly over-pricedreplica football shirts in 2000 and 2001. The action was brought onan opt-in basis as opt-out actions are currently not allowed in theUK. Furthermore, the English Civil Procedure Rules (CPR)provide for group litigation in the form of Group Litigation Orders(GLOs). In a GLO, differently to a class action, each claimant mustissue its own claim but the claims will be managed by the court asa group and common issues of law and fact may be decided in oneconsolidated proceeding in a way which binds the entire group.Finally, the CPR also provide for a representative party action inwhich when more than one person has the same interest in theclaim, the claim may be brought by one interested party asrepresentative of any other interested party. It is unlikely that thisprocedure may be used to claim damages since, by definition, eachparty will have a different interest in a damages claim (for instance,because damages have to be assessed on an individual basis).However, it can probably be used in order to claim for a declarationthat the interested parties are entitled to damages caused by the

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same infringement of competition law.In the EU, discussions continue on how to address the existingbarriers to businesses and consumers obtaining effective redress ofthe harm they may suffer as a result of competition lawinfringements. In England and Wales, in August 2008, the CivilJustice Council recommended the introduction of general opt-outclass action (see Improving Access to Justice through CollectiveActions: A Series of Recommendations to the Lord Chancellor,available on the website of the Civil Justice Council, Final Report,November 2008). This procedure would not be specific tocompetition law claims but would include them. At EU level, on 2April 2008, The European Commission published a White Paper onDamages Actions for Breach of the EC Antitrust Rules (COM (2008)165, 2 April 2008). The prominence of this issue in the EU is furtherdemonstrated by the publication, on 27 November 2008, of theEuropean Commission’s Green Paper on Consumer CollectiveRedress (Com(2008) 794 final, 27 November 2008). The GreenPaper does not, however, address collective redress for victims of ECcompetition law infringements because of the specific nature ofcompetition law and the wider scope of victims which includes alsosmall and medium-sized enterprises (SMEs). Collective redress forvictims of competition law infringements is dealt with only by theWhite Paper on Damages Actions.

The desired swiftness of the proceedings

The swiftness of competition law proceedings - whether beforecompetent competition authority national courts, or an arbitral tribunal- is of the essence given that competition disputes are best resolved assoon as possible to secure the parties’ competitive position in themarket, dispel any uncertainty, and allow businesses to compete on themerits without diverting resources to lengthy and costly proceedings.

Extraterritorial jurisdiction

Many competition law regimes incorporate a notion ofextraterritorial jurisdiction. These regimes are, in other words,effects-based in the sense that they will claim jurisdiction over aparticular competition law infringement to the extent that itproduces relevant anti-competitive effects in that State’s territory,even though the actual infringement took place abroad. Both theUnited States (see F Hoffman La Roche Ltd v. Empagran SA, USSupreme Court, 14 June 2004, excluding from the US jurisdictioncases where there is only ‘independent foreign harm’) and theEuropean Union (Joined cases 89, 104, 114, 116, 117, and 125-129/85 A. Ahlström Oy v. Commission (Woodpulp), Judgment of theEuropean Court of Justice of 27 September 1988, [1988] ECR 5193and M.877 - Boeing/McDonnell Douglas, Commission decision of30 July 1997, OJ 1997 L336/16) are examples of legal systems thatexercise extraterritorial jurisdiction based on the effects doctrinealbeit under different tests.

3. Specifics (I): Litigating Competition Law Disputes

Litigating competition law issues has gained in importance giventhe current move towards increased private enforcement at thenational and regional levels (see section 2 above).

Private damages actions before the national courts

Access to the courts allows victims of a competition lawinfringement to remove the damages they have suffered as a result

of the infringement. Courts are, however, not empowered toimpose public law sanctions at the behest of private litigants.Public law sanctions remain the preserve of the competentcompetition authorities. Within the context of EC competition lawmore specifically, it is now established that any person harmed by apractice prohibited by Article 81 or 82 EC is entitled to recoverdamages provided that there is a causal relationship between theinfringement and the loss (see Case C-453/99 - Courage Ltd v.Bernard Crehan, Judgment of the European Court of Justice of 20September 2001, [2001] ECR I-6297 and Case C-295/04 - VincenzoManfredi v. Lloyd Adriatico Assicurazioni SpA, Judgment of theEuropean Court of Justice of 13 July 2006, [2006] ECR I-6619).Before bringing an action for damages before a domestic court,litigants should consider whether it may be practicable to obtain aninfringement decision from the competent competition authority.Such a decision may be binding on the court (for instance, if it is adecision of the European Commission and the civil action is beforethe courts of an EU Member State) or, to the extent that it is notbinding, it may be adduced as evidence before the court. Thisavoids the need to establish liability (if the decision is binding) or islikely to facilitate the task of providing liability (if the decision isnot binding). Once liability is proved, all the claimant will need todemonstrate is causation to end loss by establishing, to the requisitelegal standard depending on the applicable law, a link between theinfringement as found by the competition authority and the loss orquantum it has suffered (so-called “follow-on” actions).

Co-operation between the courts and competitionauthorities

At the national or regional levels, a special co-operation regimemay be in place between the domestic courts and the competentnational competition authorities and the competition authority mayhave powers of intervention as amicus curiae.By way of example, at the EU level, the Member State courts andthe European Commission may co-operate within the framework ofthe Co-operation Notice (Commission Notice on the co-operationbetween the Commission and the courts of the EU Member Statesin the application of Articles 81 and 82 EC, OJ 2004 C 101/4).Further, in accordance with the Art. 234 EC reference procedure, aMember State court may (be obliged to) refer a question ofCommunity law to the European Court of Justice (ECJ) to obtain abinding ruling on the question referred.

Discovery, client-lawyer privilege and confidentiality

Discovery regimes around the world differ considerably.Competition law claims are normally very fact-intensive andrequire considerable evidentiary disclosure to prove them. It isgenerally in the claimant’s interest to bring proceedings in a countrywith a generous disclosure regime, such as prevails in the US and,to a more limited extent, in England and Wales.As a note of caution, to ensure its protection under the client-lawyerprivilege, a corporate defendant is well-advised to hire outside legalcounsel to assess the merits of the claimant’s case as well as its owndefence. Under EU law in particular, communications with in-house counsel are not covered by the client-lawyer privilege (seeCase 155/79 - AM&S Ltd v. Commission, Judgment of the EuropeanCourt of Justice of 18 May 1982, [1982] ECR 1575 and T-253/03 -Akzo Nobel Chemicals Ltd v. European Commission, Judgment ofthe Court First Instance of 17 September 2007).Finally, once the dispute reaches the court room, it will beimpossible to keep the proceedings confidential and concealed from

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the general public.

Lack of expertise and national bias

It should be cautioned that judges in domestic courts often lackspecialist knowledge and experience in applying competition law.Further, in a cross-border dispute, if proceedings take place in thehome jurisdiction of one of the parties, the national court may notbe entirely free from a perception of national bias.

Appeals and swiftness of the proceedings

Given the possibility to appeal judgments ruling on competition lawissues, proceedings may be unduly prolonged before a finaldecision is taken by the highest court in the country. This may beparticularly discouraging for a third-party competitor seeking swiftrelief.

Enforceability of judgments

The enforceability of judgments is generally governed by bi-lateralconventions, with the exception of the Brussels Regulation(Council Regulation (EC) No. 44/2001 of 22 December 2000 onjurisdiction and the recognition and enforcement of judgments incivil and commercial matters (OJ 2001 L 12/1, 16.01.2001)), whichprovides for the free movement of judgments throughout theEuropean Union, including Denmark.For the reasons indicated previously, compliance with the relevantcompetition law provisions is vital to ensure the enforceability of ajudgment dealing with aspects of competition law.

4. Specifics (II): Arbitrating Competition Law Disputes

It is common ground that competition law issues are arbitrable.This is in particular so in the aftermath of the famous Mitsubishidecision (Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,Inc., 473 U.S. 614, 628 (1985)), in which the US Supreme Courtconfirmed the arbitrability of antitrust law disputes within thecontext of the New York Convention (Convention on theRecognition and Enforcement of foreign arbitral awards, done atNew York, on 10 June 1958). For the purposes of Europeancompetition law, the European Court of Justice (ECJ) held in its EcoSwiss judgment (Case C-126/97, Eco Swiss China Ltd v. BenettonInternational NV, Judgment of the European Court of Justice of 1June 1999) that Article 81 EC qualifies as a ground of public policywithin the meaning of the New York Convention. Following onfrom Eco Swiss, domestic courts around the European Union haveconfirmed the arbitrability of EC and national competition lawdisputes, including the abuse of dominant positions within themeaning of Article 82 EC and their corresponding nationalequivalents.

Enforceability of arbitral awards

Like any other awards, arbitral awards involving competition laware enforceable under the New York Convention.It should be noted that the Swiss courts have shown some reticenceto recognise EC and national competition laws as falling within themeaning of the Swiss international public policy concept (Judgmentof the Swiss Supreme Court, 8 March 2006, 4P.278/2005) andtherefore, tend to recognise and enforce awards irrespective of their

compliance with relevant competition law provisions.In the EU, however, it is arguable that due to (i) the doctrine ofsupremacy, whereby European law prevails over mentioned law (ii)the direct effect of EU law in the Member State legal systems and(iii) the duty of loyal co-operation under Article 10 EC, MemberState courts are not empowered to recognise and enforce an awardthat manifestly violates the core policy values of EC competitionlaw (see La SNF SAS c/ La CYTEC INDUSTRIE, Judgment of theTribunal de Première Instance de Bruxelles of 8 March 2007, R.G.2005/7721/A No 53 71ième Chambre, at p. 20). A Member Statecourt will be bound by a previous Commission decision on the samesubject-matter and between the same parties of the dispute decidedin the award (see Case C-344/98 Masterfoods Ltd v. HB Ice CreamLtd [2000] ECR I-11369 and Article 16(2) of Council Regulation(EC) No 1/2003 of 16 December 2002 on the implementation of therules on competition laid down in Articles 81 and 82 of the TreatyOJ 2003 l1/1 04.01.2003). Against this background, it has beensubmitted (and this submission cannot be lightly dismissed) that anarbitrator - whether sitting in the EU or outside - may be subject toan implicit duty to raise EC competition law issues ex officio (i.e. ofhis own motion), especially where he is required to ensure theenforceability of an award within the internal market.

The Commission’s support of competition law arbitration

It is noteworthy that the European Commission has now fullyendorsed the use of arbitration to adjudicate EC competition lawissues. This is clearly demonstrated by the Commission’s use ofarbitration for the purpose of monitoring its behavioural remedypackages in EC merger control (most recently, see e.g. Comp./M.4494 - Evraz/Highveld, Commission decision of 20 February 2007and the Commission Notice on remedies acceptable under CouncilRegulation (EC) No 139/2004 and under Commission Regulation(EC) No 802/2004 (2008)). It has been argued that arbitration is aparticularly suitable forum for monitoring the correct implementationof the relevant behavioural remedies by the merged entity given theexpertise of the arbitral tribunal and the availability of a fast-trackarbitration procedure. Affected third-party competitors are likely toreceive redress swiftly in the form of specific performance of theremedies concerned to secure their market position.

Article 234 EC references

As regards the application of EC competition law in arbitrations,arbitral tribunals are prevented from making references for theinterpretation of the EC competition law provisions to the ECJunder Article 234 of the EC Treaty. This, however, should notdetract from the possibility of tribunals to make indirect referencesvia the Member State courts (e.g. section 27(2) of the DanishArbitration Act 2005). It should be noted in this context that theMember State courts may be under a duty to make an Art. 234 ECreference to the ECJ to ascertain the correct interpretation of anunclear competition law issue arising within the context ofenforcement of domestic or foreign awards, including under theNew York Convention, or in setting aside proceedings. Thispossibility may nevertheless be limited in view of the fact thatcourts at the enforcement stage may not review the merits of theaward and setting aside proceedings may likewise be of limitedscope. However, the arbitrators will be, in most circumstances, wellplaced to decide the competition law questions by themselves.Recourse to national courts in the course of arbitration for thepurpose of referring a competition law question to the ECJ shouldbe the exception rather than the rule, not least because it runscounter to the parties’ common intention, enshrined in the

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arbitration agreement, to have their disputes determined by thearbitral tribunal and not by the courts.

Separability of the arbitration clause

It is widely recognised in international arbitration that an arbitrationclause is separable from the main contract. This is vital in competitionlaw disputes to the extent that the tribunal is required to assess whetherthe main contract is illegal and therefore null and void ab initio, as isthe case e.g. when applying Article 81 EC (e.g. Fiona Trust & HoldingCorp v. Yuri Privalov [2007] UKHL 40).When initially drafting the main contract, the parties should ensurethat the arbitration clause is wide enough to cover the adjudicationof competition law disputes.

Advantages of arbitration in a competition law context

Arbitration is an ideal means of private enforcement forcompetition law claims. This is in particular so for the followingreasons:

Composition of the tribunal - The parties can determine thecomposition of the arbitral tribunal and thus choose thearbitrators such that they have expertise in competition lawand the relevant industry sector involved. This is notpossible in proceedings before State courts, which normallydo not have any particular competition law expertise.Exceptions may exist at a particular stage of the domesticproceedings in the sense that competition law claims orappeals may or must be brought before a specialistcompetition court or tribunal. In the UK, for example,follow-on claims may be brought before the specialistCompetition Appeal Tribunal (CAT), which is also theappellate review tribunal with jurisdiction to hear appealsfrom decisions of the UK competition authorities.Further, the arbitrators can be specified to possess particularknowledge of applied economics to ensure they adopt anaward that is in compliance with the current economicunderstanding of the application of the relevant competitionlaw provisions. The chosen arbitrators’ experience may alsospan several legal traditions and the tribunal can benationally balanced (or a sole arbitrator can possess anationality different from that of either of the parties).Finally, the arbitrators can be selected based on their abilityto review evidence in several foreign languages which mayhave been used in the negotiation of the initial businessrelationship between the parties. In domestic courts,evidentiary material is usually required to be submitted in thelanguage of the country of the court.Flexible remedies - Arbitral tribunals can order specificperformance to make an infringing party comply withcontractual obligations towards a competitor with a view tomaintaining a particular commercial relationship betweenthe parties. In addition or alternatively, tribunals may beempowered to issue injunctions to prevent the infringingparty from engaging in infringing conduct. This may includeinterim relief whilst the final resolution of the dispute is stillpending. Within the context of EC merger controlarbitrations more specifically, the arbitral tribunal isempowered to make the recalcitrant merged entity performthe behavioural remedies requested under the originalremedy package of the initial Commission clearancedecision (even as an interim measure).Confidentiality - Arbitration proceedings are subject to strictprinciples of confidentiality and the existence of thecompetition dispute subject to arbitration remains thereforeunknown to the public. Hence, to the extent that parties havetheir competition law differences arbitrated, they will be

largely free from adverse publicity. This may, of course,change where enforcement proceedings (e.g. under the NewYork Convention or otherwise) or an application for thesetting aside of the arbitral award is brought before adomestic court.Speed of the proceedings - Arbitration proceedings can beconducted with extraordinary speed when compared to courtproceedings, provided the arbitrating parties co-operateproperly and one of the parties does not try to delay theproceedings for tactical reasons. The sooner competition inthe market can be re-established, the better for (i) thecompetitor, who is less likely to be permanently driven out ofbusiness, and (ii) the average consumer, who will benefitfrom a wider choice of products and lower overall pricelevels. Infringing parties also benefit from a swift resolutionof disputes as they may avoid adverse publicity, save costs,and quickly refocus their resources on competing on themerits rather than dealing with prolonged and expensiveproceedings.Continuing business relations - Given that arbitration ismeant to be less confrontational than litigation and leavesample opportunity for amicable settlement, the parties maybe able to continue their business relationship (even afterresolution of their dispute). Competition disputes oftenrelate to an existing commercial relationship between theparties. The affected party often seeks redress in the form ofa continuation of the existing or former business relationshipbetween the parties, which has turned sour or has beenrendered unviable due to the infringing party’s anti-competitive behaviour.Enforceability of award - Arbitration awards are enforceablein more than 140 countries world-wide under the New YorkConvention, including the current 27 Member States of theEuropean Union. This stands in marked contrast to theenforceability of court judgments, which is mostly governedby bilateral conventions between individual States or at bestby the Brussels Regulation (Council Regulation (EC) No.44/2001 of 22 December 2000 on jurisdiction and therecognition and enforcement of judgments in civil andcommercial matters (OJ 2001 L 12/1, 16.01.2001)) for thepurposes of the free movement of judgments throughout theEU internal market. Given the often international nature ofthe underlying corporate structure of competition lawoffenders (with assets against which to enforce an awardspread throughout the world), the quasi global enforceabilityof arbitral awards is bound to be a real advantage overlitigation.Tiered dispute resolution - Arbitration offers the opportunityfor an intelligent use of tiered dispute resolution. Amicablesettlement is often specified as a precursor to full arbitrationproceedings (escalating arbitration clauses). Arbitrationclauses can also be formulated to provide for viablecombinations of arbitration and mediation, whereby thealternate or subsequent recourse to mediation and arbitrationmay provide for the most creative and commercially viablesolution of the dispute at hand. It should be noted in particularthat on occasion, the parties need to go through the entire or atleast part of the arbitration procedure for issues of their disputeto crystallise sufficiently to make mediation work.

Co-operation with the competition authorities

To ensure the enforceability of competition law awards, the tribunalmay wish to co-operate to a certain extent with the relevantcompetition authorities (including the European Commission whereEC competition law is at stake), subject to approval by thearbitrating parties. When doing so, the tribunal will have to makesure not to be unduly guided in its decision-making process by thecompetition authority concerned. The tribunal may ask the

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authority (i) questions of interpretation of relevant competition lawprovisions and for (ii) market information that is in the authority’spossession and that may assist the tribunal, e.g. in defining thescope of the relevant product market.There may even be scope for the competition authority to interveneas amicus curiae to assist the tribunal in rendering an enforceableaward that will not conflict with previous or future decisions on thesame or, possibly, a related subject-matter between the same parties.The competition authority concerned should take care not unduly toinfluence the arbitral decision-making process, which remains thepreserve of the arbitral tribunal. In the interest of safeguarding dueprocess and in particular the audi alteram partem (fair hearing)rule, whatever information or opinion is made available by theauthority has to be submitted by the tribunal to the arbitratingparties for their comments.

5. Specifics (III): Mediating Competition Law Disputes

Mediating competition law disputes is relatively novel in thatmediation in and of itself is not as wide-spread as the other methodsof dispute resolution. Mediation has mostly found recognition in theUnited Kingdom and Anglo-Saxon/common-law jurisdictions moregenerally, in particular the United States, Australia and Canada. Itis well-known that some high-profile competition cases have beenmediated or mediation has been tried to settle the dispute (see, forinstance, the recent US fuel surcharge cartel class action against anumber of large airlines and the never-ending Microsoft saga).

Continuation of existing business relationship

Importantly, mediation is not meant to produce an enforceabledecision, as is the case in arbitration and litigation. Mediationproceedings are primarily concerned with assisting the parties infinding their own commercially viable solution to the dispute inhand. Given that at the heart of competition law disputes lies theabuse of commercial relationships in a way that renders markets un-or at least less competitive, it is compelling that mediation can beconstructively used to mend the commercial relationship concernedto bring it back into line with what is required by the application ofthe relevant competition rules, without jeopardising thecontinuation of that relationship. It is vital in this context that thebusiness people who are responsible for the everyday conduct of thecommercial relationship with the other side remain involved in theproceedings to ensure that the mediation stay focused on theparties’ respective commercial interests.

The settlement agreement

Instead of a judgment, it is common for mediating parties to enterinto a settlement agreement at the end of the mediation to make thedeal they have negotiated contractually enforceable.In a competition law context, it is vital for such an agreement tocomply with the relevant competition law provisions to ensure itsenforceability before the domestic courts. In the internal marketmore specifically, an agreement which infringes Article 81(1) ECand does not meet the conditions in Article 81(3) EC is void underArticle 81(2) EC. The Member State courts are bound by theprinciples of supremacy, the doctrine of direct effect and the duty ofloyal co-operation under Article 10 EC and will therefore not beable to enforce an agreement that infringes EC competition law.Importantly in this context, the parties can choose the mediator onthe basis that he has relevant knowledge in competition law and a

proper understanding of the industry sector involved.With the entry into force of the EU Mediation Directive (Directive2008/52/EC of the European Parliament and of the Council of 21May 2008 on certain aspects of mediation in civil and commercialmatters, OJ2008 L136/3, 24.5.2008), Member States will beobliged to set up a mechanism that ensures that mediationsettlement agreements be enforceable before the Member Statecourts at the parties’ request (Article 6(2) of the Directive). As aresult, parties will be saved from having to enforce the settlementagreement contractually, saving cost and valuable time.

Confidentiality and arb-med

Like arbitration proceedings, mediation is a private and confidentialprocess, which allows the parties to keep the dispute confidential,thus avoiding any adverse publicity. Generally speaking, topreserve the confidential nature of a mediation, it may be vital to tryto mediate the dispute before complaining to the relevantcompetition authorities or issuing proceedings in court (in case themediation should fail). On the other hand, though, some disputesmay be too complicated for a mediation to succeed initially andrequire a good deal of groundwork to clarify the issues that are indispute between the parties. In such a situation, it may make sensefor the parties to opt for a combination of arbitration and mediation,which will allow for the parties’ cases to mature in the initialarbitration proceedings before resorting to mediation.If the parties opt for this dispute resolution mechanism, they do nothave to follow the established arb-med procedures whereby thesame person acts as mediator and arbitrator. In competition lawdisputes it is advisable to keep the two roles separate and this canbe achieved by appropriately drafted dispute resolution agreementsregulating the arbitration, the mediation and the interplay betweenthe two.By way of caution, it should be noted, however, that some recentdicta of the English courts have thrown into doubt the integrity ofthe mediation process and the preservation of the mediationprivilege in the court room (see Brown v. Rice and Patel [2007]EWCH 625 (ch), [2007] All ER (D) 252 (Mar); Chantrey Vellacottv. Convergence Group plc [2007] EWCH 1774 (ch), [2007] All ER(D) 492 (Jul); and SITA SC v. Wyatt Co (UK) Ltd, (Maxwell Batley(a firm), Pt 20 defendant) [2002] EWCH 2401 (Ch), [2002] All ER(D) 189 (N0v.)). Importantly in this context, the EU MediationDirective (see above) encourages Member States to introducelegislation providing for the non-admissibility of evidence from themediator on the content of the meditation (Article 7 of theDirective).

Cost-efficiency and the parties’ bargaining positions

Provided that the parties are focused from the very start on theresolution of their dispute, it is likely that mediation is the mostcost-efficient way to resolve the competition law issues betweenthem. However, it should be borne in mind that a party mayenhance its bargaining position if it has a statement of claim and/ora relevant complaint to the competent competition authority alreadyprepared, thus being in a position to exercise pressure on thedefendant. This is so in particular given that if there is any merit inthe claims, the likely settlement value may be much lower than thefines likely to be meted out by the competent competition authority.

6. Strategy and Tactics

Strategy and tactics in international dispute resolution are generally

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about choosing one dispute resolution method over another orcombining several methods in a particular sequence to ensure the mostefficient use of the various methods available. The combination ofarbitration and mediation is an obvious example (as briefly referred toin sections 4 and 5 above). Another viable option for a claimant whowants to put pressure on the other side is to bring parallel proceedingsbefore the competent competition authority and the domestic courts oran arbitral tribunal. In the following, we set out some guidance as tothe general framework for designing and implementing an effectivedispute resolution strategy in a multi-jurisdictional environment.

Parallel administrative and civil/arbitral proceedings

The first and most important decision facing potential claimants iswhether to file an administrative complaint, issue civil proceedings orcommence an arbitration, press for criminal charges, or pursue morethan one set of proceedings at the same time. Generally, the decisionwill depend on the evidence available to the complainant/claimantand the nature of the infringement. If the infringement is relativelyeasy to prove with evidence that is in the claimant’s possession or iseasily obtainable by him, as may be the case if the dispute arises inthe context of an ongoing contractual relationship, then it may bemore cost-effective to commence civil or arbitral proceedingswithout first complaining to the competent competition authority.However, often competition infringements are complex and covertand the evidence needed to establish them will not be readilyavailable to the claimants. It may be worthwhile, therefore,approaching informally the competent competition authority to checkwhether it would be likely to pursue the case itself. If so, then theclaimant, if the dispute has not been successfully settled, may be welladvised to submit a complaint to the competition authority beforeissuing proceedings in court. The complaint should be as thoroughand evidentially-based as possible and the complainant should co-operate with the competition authority in establishing theinfringement. In this way, when the competition authority hasestablished the infringement in a final decision, the complainant mayuse the decision in court. The status of such a decision varies fromsystem to system but is likely to have at least some evidential value.In the European Union, decisions of the European Commission arebinding on the courts of the EU Member States. In a number ofcountries, such as the UK, the decisions of the national competitionauthorities are binding on the courts of that country.If parallel administrative and civil or arbitral proceedings arepursued, the claimant must be aware that limitation periods are notnecessarily suspended during the administrative investigation.Therefore, it may be necessary to issue civil proceedings orcommence the arbitration before the administrative investigation isconcluded even if civil proceedings or the arbitration may then bestayed awaiting the outcome of the administrative investigation.The interest of claimants in pressing for criminal charges dependson whether the criminal conviction will create an estoppel in favourof the claimant in civil proceedings and whether the criminalproceedings may complicate matters in that the investigatingauthorities may be less forthcoming in co-operating with theclaimants (for instance, by disclosing certain evidence to it) in ordernot to jeopardise the integrity of the criminal process.

Choice of judicial forum

If civil proceedings are pursued for damages or other relief, theclaimant will have to choose where to sue. It is possible that theremay be some degree of choice between two or more States whosecourts would assume jurisdiction. The claimant will have to

consider, among many other factors, the extent of such jurisdiction(for instance, would it cover all the damages suffered or only thedamages suffered within the territory of the State in question?), theavailability of specialist judges (see, in the UK, the possibility tobringing follow-on claims before the specialist Competition AppealTribunal), the extent of the disclosure from the defendant and thirdparties (likely to be wider in common law jurisdictions than in civillaw jurisdictions), and the conflicts of laws rules (which law willthe court apply to the substance of the dispute?).

Collective redress

Where a significant number of persons have been harmed by thesame anti-competitive practice, the availability of an effectivecollective redress mechanism is an important factor in choosing theforum. From the claimant’s perspective, it is generally accepted thatopt-out systems are preferable to opt-in systems. Therefore, in globalcartels, jurisdictions such as the United States, Canada and Australiawill offer significant advantages over legal systems where no opt-outproceedings are available. In this area, significant reforms may takeplace in Europe over the coming years, following the EuropeanCommission’s White Paper on actions for damages for breach ofArticle 81 or 82 EC early in 2008 (see above).

Interim injunctions

The main interest of the claimant may be not to obtain damages butto stop the anti-competitive behaviour of the defendant. Theappropriate remedy in such circumstances is an interim injunction.The claimant will often have to decide whether to apply to thecompetent competition authority, provided that the latter hasinjunctive relief powers as is the case of EC competition authoritiesand the European Commission, or to a court having jurisdiction.Generally, courts have more experience than competitionauthorities in granting interim relief in a very short time frame.However, while competition authorities may carry out their owninvestigation into the matter using their own intrusive investigativepowers, national courts would generally require the applicant tomeet the evidential threshold for granting interim relief.Alternatively, some arbitral tribunals (depending on the seat ofarbitration) may have the power to grant interim injunctions.

7. Conclusion

Following the above tour d’horizon of available dispute resolutionmethods for competition law claims, businesses that believe theyhave been harmed by competition law infringements are welladvised to garner specialist advice with a view to developing themost effective dispute resolution strategy to obtain appropriateredress. The development of a viable dispute resolution strategy iskey to succeeding in the recovery of private law damages or inobtaining an injunction in the most cost-efficient way withoutjeopardising the future continuation of the parties’ businessrelationship. Equally, prospective defendants will need to assess therisks of competition proceedings in a multi-jurisdictionalenvironment and take into account the real prospect of parallelproceedings. When proceedings are brought, the development of aneffective dispute resolution strategy will be vital to ensuring that thebest possible outcome is achieved at the lowest possible cost.

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Gordon Blanke

SJ Berwin LLP10 Queen Street PlaceLondon EC4R 1BEUnited Kingdom

Tel: +44 20 7111 2127Fax: +44 20 7111 2000Email: [email protected]: www.sjberwin.com

Gordon Blanke is an associate with SJ Berwin’s InternationalArbitration Group with a specialism in European competition law.Gordon regularly advises clients and acts as AdministrativeSecretary in international arbitration proceedings. He is a memberof the Chartered Institute of Arbitrators in London, the GermanInstitution of Arbitration, the London Court of InternationalArbitration, the Swiss Arbitration Association, the ICC UK NationalCommittee, the ICC Commission on Competition, the InternationalBar Association and the IBA Antitrust and Arbitration Committees.Gordon is the author of The Use and Utility of InternationalArbitration in EC Commission Merger Remedies, published withEuropa Law Publishing in July 2006, and is currently co-editing TheTreatment of US Antitrust and EC Competition Law in InternationalArbitration - A Handbook for Practitioners, which is scheduled forpublication with Kluwer Law International in early 2009, as well as(together with R. Nazzini) a looseleaf on Global Cartel Litigation tobe published with Kluwer Law International in 2009 and is a regularspeaker on arbitration and competition law in the UK and abroad.Gordon is fluent in English, French, Spanish and German.

Dr Renato Nazzini

School of Law, University of SouthamptonHighfieldSouthampton SO17 IBJ United Kingdom

Tel: +44 23 8059 3886Fax: +44 23 8059 3024Email: [email protected]: www.law.soton.ac.uk

Dr Nazzini is a Reader in law at the University of Southampton anda member of the Chartered Institute of Arbitrators. He has vastexperience in competition law, arbitration, and litigation both inprivate practice and at the UK Office of Fair Trading. He has advisedon major cases involving alleged predatory/excess pricing, cartels,vertical price restraints, parallel imports of pharmaceutical products,competition in the financial sector, arbitrations, and injunctions. Heis the author of Concurrent Proceedings in Competition Law:Procedure, Evidence, and Remedies (Oxford: OUP, 2004) and haswidely published on competition law, arbitration, and litigation. Heis currently working on a book on Foundations of EU CompetitionLaw: The Scope and Principles of Article 82 (Oxford UniversityPress), a book on The Application of EU Competition Law to PoolingAgreements in the Tramp Shipping Sector (Kluwer LawInternational, with F Lorenzon), and is co-editing (together with G.Blanke) a looseleaf on Global Cartel Litigation to be published withKluwer Law International in 2009. He is a frequent speaker in theUK and abroad.

Established in 1982, SJ Berwin LLP is a leading corporate and commercial law firm. It was created and thrives as a leading-edge legal services business, focusing on the European and international market place. Our clients are sophisticated buyersof legal services, ranging from entrepreneurial companies and financial institutions to leading multi-national companies, whomwe advise on a comprehensive range of services including Corporate Finance, Commercial, Real Estate, Banking,Reconstruction & Insolvency, Financial Services, Litigation, Intellectual Property, Employment & Pensions, EU & Competitionand Tax.

The Litigation Department and International Arbitration Group have wide global and industry experience, an understanding ofdifferent national laws, and a broad range of technical and linguistic skills. We offer flexible solutions to resolving disputes onneutral ground, under agreed rules and with qualified arbitrators. We also boast unrivalled mediation services in a European-wide context. We are proactive problem-solvers and pride ourselves on challenging orthodox and parochial thinking.



Chapter 2

Boga & Associates

Albania

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Albania got? Are there anyrules that govern civil procedure in Albania?

The legal system of Albania is based on the continental judicialsystem and the courts are leaded by the law. Civil procedure inAlbania is governed by the Civil Procedure Code (hereinafterreferred to as CPC) approved with law no.7850, dated 29.07.1994,amended by law no.8536, dated 18.10.1999 and no.8781, dated03.05.2001.The legal profession is ruled by the law no. 9109, dated 17.07.2003“On the legal profession in the Republic of Albania” that definesadvocacy as free, independent, self-regulated and self-governedprofession. Lawyers are free to act in front of all the AlbanianCourts, without restrictions.

1.2 How is the civil court system in Albania structured? Whatare the various levels of appeal and are there anyspecialist courts?

According to the law no.9877, dated 18.2.2008 “On Organisation ofthe judicial system in the Republic of Albania”, the civil courtsystem is organised in the following structures:(i) District Court; (ii) Appeal Court; and(iii) Supreme Court.There are 2 levels of appeal: (i) Courts of Appeal; and (ii) SupremeCourt.Under the provisions of the CPC, the parties can appeal the DistrictCourt decisions to the Court of Appeal within 15 days. The AppealCourt decisions may be appealed to the Supreme Court within 30days. Against the decisions of the District Court regarding jurisdictionand competence issues can be filed special appeal to the SupremeCourt within 5 days. The abovementioned appeal terms start from thenext day of the announcement or notification date of the decision. Under the CPC, the first level of the Albanian court is organised inspecialised sections for allocation of the particular cases accordingto the subject of the claim such as: (i) section for family disputes;(ii) section for commercial disputes; and (iii) section foradministrative disputes. According to the law no.9877, dated 18.2.2008 “On Organisation ofthe judicial system”, the section for the administrative disputes will

be reorganised in the form of a separate court, specialised in suchissues, by a new law that has not been approved yet.

1.3 What are the main stages in civil proceedings in Albania?What is their underlying timeframe?

The main stages in civil proceedings in the District Court are: filing the lawsuit with the court;notification of the lawsuit to the defendant and other parties;preliminary hearing (i.e. exchange of evidences between theparties);judicial hearings and examination;last summons; andfinal decision.

The CPC provides limitation terms regarding the filing of the law suitwith the court (question 2.2 below), and a minimal term of 10 days forthe notification of the lawsuit to the defendant or third parties.Based on our judiciary practice, the preliminary hearing can takeplace within 3 weeks from the filing of the lawsuit with the court bythe plaintiff, including the notification phase. The duration of theproceedings in the District Court may last approximately 3-6months. While, the hearing of the appeal before the Court ofAppeal takes place within 6-12 months from the filing date. In theSupreme Court the cases are not examined before 1 year.

1.4 What is Albania’s local judiciary’s approach to exclusivejurisdiction clauses?

Regarding the exclusive jurisdiction clauses, the Albanian Courtbases its decision to the article 37 of CPC, which provides thatjurisdiction of Albanian Courts can not be transferred to a foreignjurisdiction by agreement of the parties, except when the legalproceeding is related to an obligation among foreign parties, oramong an Albanian and a foreign party (physical person or legalentity), when such exemptions have been stipulated in the agreement.

1.5 What are the costs of civil court proceedings in Albania?Who bears these costs?

Under the provision of the CPC, the costs of civil proceedings inAlbania are: (i) the tax on the acts, expenses for the acts to becarried out (i.e. notification); (ii) the costs for the acts of expertise;and (iii) the lawyer expenses and other necessary expenses occurredduring the trial (i.e. expenses for witness, different examination).The tax on the act is calculated according to the value of the claim.Such tax is paid by the plaintiff upon filing the claim.

Valbona Gjonçari

Gerhard Velaj

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Boga & Associates Albania


The expert and the lawyer costs vary significantly depending on thesize and complexity of the case, working hours and fee levels. TheCPC provides for the obligation of the unsuccessful party to pay thelegal costs.Despite the above, the cases where the claim is partially accepted orwhen the court finds justified reasons, may decide for the costs tobe paid by the unsuccessful party in proportion with the acceptedclaim, or that each party should pay its own costs.

1.6 Are there any particular rules about funding litigation inAlbania? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

There are no particular rules about funding litigation in Albania.Under the CPC, any person that has a legal, actual and directlyinterest may file a lawsuit with the court. The law does not provide specific regulation on the contingency or

conditional fee, but permits the lawyer and the client to define the feein mutual agreement. Under the provisions of the Law no. 9109, dated17.07.2003, “On the legal profession in the Republic of Albania” theremuneration for the service rendered by the lawyers is defined: (i) in agreement between the client and the lawyer; (ii) by the court and the prosecutor’s office when the lawyer is

nominated ex officio; and(iii) by law.Regarding the security costs the Albanian legislation does notprovide any concrete regulation.

2 Before Commencing Proceedings

2.1 Are there any pre-action procedures in place in Albania?What is their scope?

The pre-action procedures are not obligatory to be followed in allcivil cases. Under Civil Code, article 463, such procedures aremandatory when the obligation of the parties derives from acontract without a predefined term. In such case, before starting thecourt proceedings, the parties undertake all the necessary actions toresolve the dispute out of court. The party pretending the defaultdelivers to the other party a written request for the voluntaryexecution of the obligation. The Civil Code provides for a 15-dayterm for the execution of the obligation. Referring to our judiciary practice, the parties in dispute followthese procedures also in other civil cases. The scope of suchprocedures is to resolve the dispute in agreement between theparties, without going to court.

2.2 What limitation periods apply to different classes of claimfor the bringing of proceedings before your civil courts?How are they calculated? Are time limits treated as asubstantive or procedural law issue?

The Albanian Civil Code provides various limitation termsaccording to the types of the claims. The limitation term to file claims deriving from the payment ofcontractual penalty clauses is 6 months; 1 year for claims derivingfrom the spedition contracts; 6 months for claims deriving from thetransport contracts either of goods or travellers by railway, vehicles,or airplanes; 2 years for claims for the payment of compensationsfrom the insurance and reinsurance contracts; 3 years for claims forthe payment deriving from rent contracts (i.e. apartments, shops,and other immovable property); 3 years for claims for the payment

arising out of contractual duty and the claims for the return of unjustprofit. The Civil Code also provides a general limitation term of 10 years forclaims, the limitation terms of which are not provided differently bythe law. The limitation terms or any other provision defined in theCivil can not be changed upon agreement of the parties. The limitation term for claims regarding administrative issues isthirty days from the date of the announcement of the decision of thehigher administrative organ which has considered the complaint inadministrative scale, except when the law stipulates the direct appealto the Court. In this case, the term starts from the date of theannouncement or of the notification of the administrative act againstwhich the lawsuit is filed. Under the Civil Code the limitation termstarts from the day when the subject acquires the right to file theclaim. Pursuant the CPC the limitation term, defined in weeks,months or years terminates their respective last day. The right of the claim which is not exercised within the limitationterm defined by law extinguishes and can be not exercised any morein front of the court.

3 Commencing Proceedings

3.1 How are civil proceedings commenced (issued and served)in Albania? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Albania?

Is there a preferred method of service of foreign proceedings inAlbania?Under the CPC, the legal proceedings of the case in court start withthe submission of the lawsuit by the plaintiff or by his legalrepresentative. The court should notify the defendant and any thirdparties regarding the lawsuit within 10 days from the submission bythe plaintiff. The court officer delivers the notification. The defendant or thethird party is deemed as notified upon receipt of the notificationdelivered by the court officer. Even when the defendant or the thirdparty refuses to accept the notification he is considered notified. Insuch case the court officer notes in the notification act the refusaland when possible attests such fact through potential witnesses. When notification personally to the defendant is not possible, thecourt addresses the notification to the residence or working place ofthe defendant and when such addresses are unknown, thenotification is announced in the District Court and other publiclocation used for the announcements, in the city of residence orbirth of the defendant. The notification of the acts to a foreign state is made upon orderedletter through the Ministry of Justice, which sends such acts to therespective country.

3.2 Are any pre-action interim remedies available in Albania?How do you apply for them? What are the main criteria forobtaining these?

According to article 202 of CPC, the plaintiff may apply for pre-action interim remedies when there are reasons to doubt that theexecution of the decision shall become impossible or difficult. The court may accept the request for the pre-action interim remedywhen:a. the lawsuit is based on evidence in writing; andb. the plaintiff gives guarantees at the amount and type set by

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the court for the potential damage that might be caused to thedefendant by the injunction measures.

The pre-action interim remedies are allowed for all types of claimsand at any stage of the proceedings, until the final decision. Suchrequest may be filed also before filing the lawsuit. In such case thelawsuit must be filed within 15 days from the Court decision thatapproved the pre-action interim remedies request. The pre-action interim remedies consist in:a. sequestering the movable and immovable assets as well as

the credits of the debtor; andb. other appropriate measures taken by the court including the

suspension of execution.Against the decision of the court which has decided to accept, tochange or to reject the request for pre-action interim remedies, theparties may appeal to the Appeal Court within 5 days from the dateof the announcement or the notification date of the court decision.

3.3 What are the main elements of the claimant’s pleadings?

Under article 154 of the CPC, the lawsuit should be written in theAlbanian and must indicate the competent court; first name, father’sname, surname, place of residence of the plaintiff and of the defendantand of their representatives, if there are any; the subject of the lawsuit;the indication of the facts, circumstances, documents and otherevidences and the legal base of the lawsuit; the requirements of theplaintiff; and the value of the lawsuit when the subject is measurable.

3.4 Can the pleadings be amended? If so, are there anyrestrictions?

Article 185 of CPC, provides that the plaintiff during the judicialproceedings has the right to add, reduce or amend the subject of theclaim, without changing its legal cause. When such changes aremade during the absence of the other party, the latest should benotified in writing.

4 Defending a Claim

4.1 What are the main elements of a statement of defence?Can the defendant bring counterclaims/claim or defence ofset-off?

Under the CPC, the main elements of the defence against the claimare the rejections and the counterclaim. The defendant has the rightto file a counterclaim when has a related subject with the claim orwhen between the claim and the counterclaim can be madecompensation. The counterclaim can be filed at any time prior tothe conclusion of the judicial examination.

4.2 What is the time-limit within which the statement ofdefence has to be served?

The civil proceedings in Albania are adversarial and based on suchprinciple the CPC provides that the defendant may perform hisdefence throughout the civil proceeding.

4.3 Is there a mechanism in your civil justice system wherebya defendant can pass on liability by bringing an actionagainst a third party?

Under the CPC (article 192) the parties may call into the proceedingsa third person they believe to have a common case with, or from

whom they may request a guarantee or compensation related to theconclusion of the case. The third person has the right to perform allprocedural actions which are allowed to the parties, except thosewhich constitute the possession of the subject of the dispute.

4.4 What happens if the defendant does not defend the claim?

Under the CPC is provided that the court resolves the dispute inconformity with the mandatory legal provisions and makes anaccurate determination of the facts and actions related to thedispute, without being bound to any determination proposed by theparties. Even when the defendant does not defend the claim or doesnot take part in the proceedings, the Court has the duty to performa complete and accurate judicial examination and to base itsdecision only on facts submitted during the legal proceedings.

4.5 Can the defendant dispute the court’s jurisdiction?

Under the CPC the defendant has the right to dispute thejurisdiction of the court. The court of its on motion, at any stage ofthe proceedings, can take into consideration, whether the case underconsideration falls under judicial or administrative jurisdiction.Decisions regarding jurisdiction issues can be appealed directly tothe Supreme Court.

5 Joinder & Consolidation

5.1 Is there a mechanism in your civil justice system wherebya third party can be joined into ongoing proceedings inappropriate circumstances? If so, what are thosecircumstances?

Under the CPC, everyone may intervene in a judicial process takingplace among other persons by filing a claim with the court againsteither parties or one of them, when he claims partially or totally theownership of the asset/item or the right, subject of the dispute inconsideration, or related to the conclusion of the proceedings.Under the CPC such action is defined as the main intervention. As secondary intervention is defined the right of a third person tointervene in a legal proceeding, taking place between others, whenhas interest to support one of the parties. Such person joins theparty during the proceeding to assist it. As mentioned in question 4.3 above the parties may call into theproceedings a person they believe have a common case with offrom whom they may request a guarantee or compensation relatedto the conclusion of the case. Third persons are also summoned bythe court, when the latest estimates that they should be present in aproceeding of their interest.

5.2 Does your civil justice system allow for the consolidationof two sets of proceedings in appropriate circumstances? Ifso, what are those circumstances?

It is possible to consolidate claims with connected subjects evenwhen those are considered by different judicial bodies. In such casethe claims may be examined into a joint proceeding and judged bythe court of the place of residence of one of the defendants. Severalclaims may be joined into a single claim, when are addressed to thesame administrative organ, have the same subject and fall within thecompetence of same court.

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5.3 Do you have split trials/bifurcation of proceedings?

Albanian courts have discretion to allow the splitting of trials whenit is deemed that the complexity of the case may delay theproceedings. According to the article 159 of the CPC the plaintiffmay present in a lawsuit many claims. In such case the Court maydecide to consider the claims separately, when estimates that theirjoint consideration may cause difficulties in the proceedings.

6 Duties & Powers of the Courts

6.1 Is there any particular case allocation system before thecivil courts in Albania? How are cases allocated?

Under the CPC the first level of the Albanian court is organised inspecialised sections, where cases are allocated according to thesubject of the claim. According to the article 320 of CPC thesections are divided as follows: (i) section for family disputes;(ii) section for commercial disputes; and(iii) section for administrative disputes.

6.2 Do the courts in Albania have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The Court rules for all requests of the parties without exceeding thelimits of the claim, conducting a fair independent and impartial trialwithin a reasonable time frame and bases its decision upon theevidence presented during the hearings. During the proceedings the court upon request of the parties or ofits own motion may rule on the following interim applications:

interim injunction; amendment of the subject or change of the legal base of theclaim; orders for specific disclosure; sanctions for the parties that do not comply the procedurerules; unification of claims; bifurcation of the case; andsuspension of the trial process.

Regarding the cost consequences please see question 1.5 above.

6.3 What sanctions are the courts in Albania empowered toimpose on a party that disobeys the court’s orders ordirections?

The Court may impose fines up to ALL 30,000 to parties thatdisobey the court orders or directions. Furthermore, the Court mayimpose fines up to ALL 30,000 to the witness or expert that has notappeared to the Court without reasonable causes and is entitled toorder their obligatory presence during the hearing. Also fines areimposed to the witness refusing to testify or to experts refusing todeliver their opinion.

6.4 Do the courts in Albania have the power to strike out partof a statement of case? If so, in what circumstances?

The court has the power to strike out the whole or part of astatement of case of its own motion when the claim is not based inlaw and is not supported by evidence, or the parties are not

legitimated to file the claim. The court may strike out the statementof case upon request of the parties when the claim has been filedbeyond the legal terms provided by the CPC or by other laws.

6.5 Can the civil courts in Albania enter summary judgment?

The definition of the summary judgment is not regulated in theCPC. The Albanian civil courts are obliged to carry out a completejudicial examination and follow all the proceeding phases, beforegiving a final decision.

6.6 Do the courts in Albania have any powers to discontinueor stay the proceedings? If so, in what circumstances?

Under the CPC the Albanian court has the power to decide to staythe proceeding when:

the case can not be solved prior to the termination of anadministrative, criminal, or civil case;the stay of the proceeding is requested by both parties; one of the parties dies or the juridical person terminates itsactivity; one of the parties does not posses or has lost the juridicalcapacity to act and is necessary to appoint a legalrepresentative for this party; andis required by law.

The court may discontinue the proceedings when:none of the parties has requested within six months therecommencement of the suspended proceeding, when suchsuspension was decided by the court upon their request; the plaintiff withdraws from the case; andis required by law.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Albania? Are there any classes of documents that do notrequire disclosure?

Under the CPC the documents should be disclosed by the parties toeach other and to the Court during the preliminary hearing or untilthe conclusion of the judicial examination. The Court upon requestof the interested party may order the other party or a third party tosubmit documents, when deemed as necessary. As well the Courtmay officially request by the public administration authorities toprovide the documentation kept on their files or information uponsuch documentation. The parties should disclose only evidencerelevant to the dispute. It is not required to disclose evidencesupporting facts widely or officially known.

7.2 What are the rules on privilege in civil proceedings inAlbania?

Under article 235 of the CPC the representatives of the parties cannot be summoned to testify on information they have received intheir capacity of representatives. Also, the spouse, children, parents, grandparents, or cousins of theparties until the second line, are included in the category ofprivilege. They can not be summoned as witnesses in a civilproceeding with the exception of the cases when their testimony isnecessary for the case resolution. The above-mentioned personscan not be punished in case they refuse to testify.

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The CPC does not provide specific rules for the disclosure of thedocuments classified as privileged. However article 173 of theCPC defines the cases when the hearings are conducted without thepresence of the public, such as when related to the safety of theclassified information of national security; when required by theinterest of the underage persons or the private life of the parties andother persons involved in the process; when named commercialsecrets or industrial patents, which publication might damageinterests protected by law; and the cases when the court reasons thatthe publication of certain information might prejudice the interest ofjustice.

7.3 What are the rules in Albania with respect to disclosure bythird parties?

The Court upon the request of the interested party, and when deemsnecessary may order a third person to present evidences related to thedispute. The court informs the third person for the time, place andmanner of disclosing the evidence. The requesting party has the dutyto inform the court on the location of such evidence, its characteristicsand the facts aimed to prove with the requested evidence.

7.4 What is the court’s role in disclosure in civil proceedingsin Albania?

The Court supports the disclosure process in a civil proceeding.Upon parties request or of its own motion the court may order theparties or a third person for specific disclosure of evidence.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Albania?

Under the CPC the evidence disclosed in a proceeding may be usedfor these proceeding and for no other purposes. However, in caseswhen disclose of evidence has taken place in a public hearing, thereare no restrictions for the publication of such evidence.

8 Evidence

8.1 What are the basic rules of evidence in Albania?

Under the CPC, (article 213), the parties are permitted to prove thefacts they claim during the legal proceeding by presenting to thecourt only evidences related and necessary for the proceeding.

8.2 What types of evidence are admissible, which ones arenot? What about expert evidence in particular?

The evidence in order to be admissible by the Court should be takenin accordance with the provisions and principles of the CPC.Constitute evidence the confessions of the parties; witnesstestimony; documents; and opinion of experts. The Court appoints one ore more experts when for the identificationor clarification of facts related to the dispute is required a certainexpertise in science, technical issues or art. The experts providetheir opinion in writing, but can be summoned to testify in a hearingwhere and to be cross examined by the court and the parties. Theopinion of the expert is not binding but is estimated by the Court inharmony with the other disclosed evidence.

8.3 Are there any particular rules regarding the calling ofwitnesses of fact? The making of witness statements ordepositions?

The proof of fact through a witness is widely accepted by the Courtwith the exception of the cases when is specifically required theproof through a document. The witnesses are examined in thehearing séance, in the presence of the parties and theirrepresentatives. When the witness can not attend the hearing due tospecial circumstances as provided in the CPC, the Court may decideto examine him outside the Court, by a member of the judging body.The testimony of such witness is taken prior to the hearing and isread during the hearing in presence of the parties. The Court uponrequest of the parties may summon the witnesses. When thewitnesses refuse to appear in Court, the latest may apply a fine onthe witnesses and order its obligatory attendance.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Albania?

Under the CPC the Albanian Court plays a supportive role duringthe disclosure process. The Court issues orders for disclosure ofevidence by the parties or third persons, either upon the requests ofthe parties or of its own motion.

9 Judgments & Orders

9.1 What different types of judgments and orders are the civilcourts in Albania empowered to issue and in whatcircumstances?

The court takes interim, non-final and final decisions and to issueorders. The interim decisions are taken by the court during thehearings in order to assure that the judgment is carried out incompliance with the provisions of the CPC. The decision todiscontinue the case is a non-final decision. Characteristic of thenon-final decision is that such decisions terminate the legalproceeding without solving the case. Upon the final decision thecourt resolves thoroughly the case. The court issues orders to support the disclosing procedure, theappearance of the witnesses or experts, etc.

9.2 What powers do your local courts have to make rulings ondamages/interests/costs of the litigation?

The Albanian court is entitled to rule on the damages, interests andcosts of the litigation through its decisions.

9.3 How can a domestic/foreign judgment be enforced?

Under the CPC the domestic/foreign judgment can be enforcedupon the request of the party. For this purpose, on request of theparty an order of execution is issued by:a. the court which has taken the decision; andb. the Court of Appeals with regard to decisions by courts of

foreign countries and of foreign arbitration courts whichhave been given implementation power in conformity withthe provisions of CPC.

The execution order with the respective court decision is enforcedby the Bailiff Office upon request of the creditor.

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9.4 What are the rules of appeal against a judgment of a civilcourt of Albania?

The parties can appeal the District Court decisions to the Court ofAppeal. The Appeal Court decisions may be appealed to theSupreme Court only for the specific reasons defined in the CPC.The decisions of the District Court, regarding competence andjurisdiction issues, may also be directly appealed to the SupremeCourt. Also the CPC provides for the special appeals against theDistrict Court decisions, the term of which is settled to 5 days. Another manner of appeal is the request for the revision of a finalcourt decision. It can be filed directly to the Supreme Court within30 days from the day when the revision cause was discovered by theparty.

II. DISPUTE RESOLUTION

1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Albania?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

In Albania the disputes can be resolved in the tribunals and also byarbitration and mediation. Arbitration proceeding can be followedonly if the parties have defined in the executed agreement, to solveby arbitration the any potential disputes.Mediation, according to law no.9090, dated 26.6.2003 “On disputesresolution through mediation” (hereinafter referred to as Mediationlaw), is applicable in resolving all civil, commercial, familiardisputes, subject to the court consideration. Mediation, isapplicable in the cases when it is requested and accepted by theparties, prior or after the dispute has arisen, when it is obligatory bylaw, and in the cases when it is required by the court, arbitraltribunal or the respective state institution according to law.

1.2 What are the laws or rules governing the different methodsof dispute resolution?

Arbitration proceedings in Albania are governed by the CPC andinternational arbitration is regulated by special law. On the otherhand, meditation as dispute resolution method is regulated by themeditation law (question 1.1 above).

1.3 Are there any areas of law in Albania that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Under the CPC any monetary claim deriving from an agreementbetween the parties can be subject to the arbitration proceeding.However the arbitration proceedings can not be applied when theagreement between the parties or the documents related to suchagreement do not provide for the solution of the potential disputesthrough arbitration.Under the Mediation law, the dispute resolution by mediation, cannot be applied when it (i) contains obligations assessable in moneyand cannot be formulated in writing; (ii) contains obligations forsubjects that have not participated in mediation; (iii) has simulationand, for the real conflict, has invalidity reasons; and (iv) when thelaw requires the dispute resolution in a legal court proceeding.

2 Dispute Resolution Institutions

2.1 What are the major dispute resolution institutions inAlbania?

Either the CPC or the Mediation law provides for consolidatedinstitutions for the dispute resolution through arbitration andmeditation procedures. The mediators and arbiters are appointed adhoc by the parties pursuant the provisions of the Mediation law andthe CPC.

2.2 Do any of the mentioned dispute resolution mechanismsprovide binding and enforceable solutions?

Arbitration awards are binding on the parties and enforceable underthe CPC. Under Mediation law, the settlement agreements reachedin mediation are binding on the parties and enforceable in the samemanner as arbitration award. The arbitration awards and thesettlement agreement reached through meditation are enforceableupon issuance of the execution order by the competent court.

3 Trends & Developments

3.1 Are there any trends in the use of the different disputeresolution methods?

The dispute resolution through arbitration proceeding or mediationis not a commonly used method. For the dispute resolution, theparties usually address to the courts.However, being that the use of mediation results in savings in costand time, in promoting communication between the parties byoffering a wide variety of settlement options and assuringconfidentiality, this dispute resolution form has gained theconsideration as a dispute resolution method.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Albania?

Since dispute resolution through arbitration or mediation is notwidely practiced in Albania, there are not current issues orproceedings that have affected the use of such dispute resolutionmethods.

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Boga & Associates


Gerhard Velaj

Boga & Associates Deshmoret e 4 Shkurtit P.O Box 8264Albania

Tel: +355 4 225 1050Fax: +355 4 225 1055Email: [email protected]: www.bogalaw.com

Work experience:Boga & Associates (2000-present).Law Firm M&M (1999-2000).Key qualifications:Mr. Velaj has acquired excellent knowledge and experience onlitigation regarding a wide range of business issues in Albania. He has an extensive experience in litigation representinginternational client in all court levels in cases related mainly tobanking and finance, real estate, taxation, competition, intellectualproperty and all sorts of other commercial/corporate disputes. Mr. Velaj has managed a number of legal advices regarding realestate development issues, property disputes, banking issues,intellectual property, etc. Education:Law Faculty University of Tirana, Albania (1998).Languages:Albanian, English, Italian.

Valbona Gjonçari

Boga & Associates Deshmoret e 4 Shkurtit P.O Box 8264Albania

Tel: +355 4 225 1050Fax: +355 4 225 1055Email: [email protected]: www.bogalaw.com

Work experience:Boga & Associates (2005 - present).“VEGA” Company, Tirana, Albania (March 2005- November 2005).Attorney at Law, Tirana, Albania (2004-2005).Tirana District Court, Albania (2003 - 2004).Real Estate Office, Vlora, Albania (2002 - 2003).Key qualifications:Ms. Gjonçari has acquired rich experience in the field of disputeresolution regarding most of the commercial and business issuesinvestors face in Albania. She has been representing clients in cases related mainly to localand national taxes, contractual disputes, administrative issues, laborlaw disputes and other corporate disputes in all the court levels. Ms. Gjonçari has participated in a series of legal advices regardingcorporate issues, local taxes, property issues, etc. Education:Law Faculty University of Tirana, Albania (2002).Languages:Albanian, English, Italian.

Boga & Associates, established in 1994, has emerged as one of the premiere law firms in Albania, earning a reputationfor providing the highest quality legal services to its clients.

The practice maintains its commitment to quality through the skills and determination of a team of attorneys and otherprofessionals with a wide range of skills and experience.

Boga & Associates represents a broad spectrum of high-profile clients, including financial institutions, local andinternational, banking entities, commercial companies, international and governmental agencies, airlines, industrialcomplexes, mining and petroleum concerns, non-profit organisations, embassies, public utilities.

Over the years the firm has advised in the areas of privatization of national resources and enterprises, concessions, realestate transactions, credit facilities, custom issues, tax and accounting issues, etc.

During 2007 and 2008 Boga & Associates was rated as the best legal firm in Albania from Chambers and Partnersand International Financial Law Review (IFLR) in the fields of Corporate, Finance, Dispute Resolution, Real Estate andIntellectual Property.

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Chapter 3


M. & M. Bomchil

Argentina

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Argentina got? Are thereany rules that govern civil procedure in Argentina?

Argentine Private Law is based on the Civil Law tradition.Notwithstanding so, it is worth mentioning that the main source forthe Argentine Constitution is the U.S. Constitution.Argentina is a federal country, with both federal and provinciallevels of legal organisation. At the federal level and within the cityof Buenos Aires, civil procedure is governed by the National Civiland Commercial Procedural Code (“NCCPC”). Each province hasits own procedural rules.The answers to the questions below will be based on the NCCPC.

1.2 How is the civil court system in Argentina structured?What are the various levels of appeal and are there anyspecialist courts?

Argentina has a federal and a provincial judiciary structure. TheArgentine Constitution provides that the federal judicial power isvested in one Supreme Court of Justice and in such inferior courtsas Congress may establish. At the federal level, most claims should be filed before the firstinstance courts (district courts). The decisions adopted by thesecourts may be appealed before courts of appeal (circuit courts),which are divided -as well as first instance courtsaccording to theirsubject matter and territorial jurisdiction. Federal court of appeals’decisions and rulings by provincial superior courts, involving afederal question, may be brought before the Federal Supreme Courtthrough an extraordinary appeal (restrictive review). Decisionsdirectly or indirectly involving the Federal Government whichexceed a certain amount may be appealed by the Federal SupremeCourt through an ordinary appeal (broad review). Each provincemaintains its own provincial court system with a similar structure.

1.3 What are the main stages in civil proceedings inArgentina? What is their underlying timeframe?

Under the NCCPC, there are mainly two kinds of proceedings: fasttrack proceedings and ordinary proceedings (longer). In both cases,terms are established in working days.Pursuant to the ordinary proceedings rules, having had the claimant

file its claim before the first instance courts and having had it beserved to the other party, the defendant has 15 days to submit itsanswer and, eventually, any counterclaim. If a counterclaim isfiled, the claimant may provide an answer to it within 15 days asfrom when it receives formal notice of it. Further on, the court callsthe parties to a preliminary hearing in which, among other issues, itshall invite the parties to reach an amicable settlement of the disputeand, if no agreement is reached on the matter, the court shall decideon the evidence that could be produced by the parties and,eventually, shall declare the evidentiary period opened for a termthat cannot exceed 40 days. Once the evidentiary period is declaredclosed, both parties may submit a brief on the evidence in acommon term of six days for each party. Judgment should be issuedin a 40-day term. Any party may file an appeal (without providinggrounds) within five days as from having received notice of thejudgment. A further pleading providing the grounds of the appealshould be filed within 10 days as from when the dossier is receivedby the Court of Appeal.In fast track proceedings time limits are shorter and some of theabovementioned stages are omitted (i.e. the preliminary hearing,etc.).In practice, civil proceedings in Argentina tend to last years.

1.4 What is Argentina’s local judiciary’s approach to exclusivejurisdiction clauses?

Except otherwise provided in treaties, exclusive jurisdiction clausesin contracts are admitted by the Judiciary if they only modify thecourt’s territorial jurisdiction and the matter under dispute isexclusively pecuniary. In international cases, jurisdiction can beextended to foreign courts or arbitral tribunals, except in caseArgentine courts hold exclusive jurisdiction or the extension ofjurisdiction is forbidden by law.

1.5 What are the costs of civil court proceedings in Argentina?Who bears these costs?

The costs of civil court proceedings are, mainly, the filing fee(generally, 3% of the amount claimed) and the attorney’s and otherprofessional’s fees (i.e. expert fees) which ranges within thepercentages established by law. The general principle provides thatthe losing party shall bear all costs. The court may depart from thegeneral principle based on the particular circumstances of the case.

Ignacio J. Minorini Lima

María Inés Corrá

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M. & M. Bomchil Argentina

1.6 Are there any particular rules about funding litigation inArgentina? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

There are no broad-developed rules on funding litigation. TheNCCPC establishes a summary proceeding through which any personwho intends to file a claim but could not afford the underlyinglitigation costs could be totally or partially exempted from bearingjudicial costs under certain conditions and limitations. As well, somelaw firms and institutions provide pro-bono litigation. However,private funding is the widest method to which people resort. Conditional fee arrangements are allowed provided that they do notexceed 40% of the amounts awarded to the client (Law No. 21,839).Rules on security for costs are limited to those cases in which theclaimant neither has domicile nor real estate in the country. In thatcase, the defendant may apply to the court for an order that theclaimant provide security for costs (arraigo, NCCPC, section 348).


2.1 Are there any pre-action procedures in place in Argentina?What is their scope?

In the federal district mediation is a mandatory pre-action procedurethat should be followed prior to almost all kinds of civil proceedings(some exceptions apply such as family law cases or cases involvingthe State) in order for the parties to a dispute to explore the possibilityof reaching a settlement. The proceeding is confidential and isconducted by a mediator authorised by law.Any potential claimant or defendant could apply to certain pre-actionsprocedures (NCCPC, sections 323-329) which are aimed at assuringthe parties the opportunity to efficiently present its case -i.e. preciseidentification of the defendant- or at securing evidence in advance orthe assets upon which the claim will be filed. In general, the claimshould be submitted within 30 days as of the preliminary remedybeing granted.


There are many different limitation periods according to the classes ofclaim. For instance, claims for payment of debts or claims seekingannulment of legal acts are subjected to the general statute oflimitation of 10 years as from the triggering event taking place orbeing known by the claimant. However, exceptions apply.Torts claims are generally subject to a two-year statute of limitationsas of the injury taking place or being known to the claimant.Statutes of limitation are ruled by substantive law, namely theArgentine Civil Code, the Commercial Law Code and the CriminalCode.


3.1 How are civil proceedings commenced (issued and served)in Argentina? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Argentina? Is there a preferred method ofservice of foreign proceedings in Argentina?

A civil proceeding commences with the filing of the claim with the

clerk’s general office of the competent court of appeals which allotsthe case to a first instance court. The claim is generally served tothe defendant through a judicial notice delivered by a judicialofficer. However, the NCCPC allows for other means such asspontaneous appearance by the defendant before the court attestingin the record that it receives notice of the claim, certified telegram,certified letter or through a notary public. Service throughpublication in newspapers is only allowed in those cases in whichthe defendant has not been identified or its domicile is ignored.The deemed date of service is the day in which notice is received bythe defendant or the day after the last publication in the newspaper.Service outside the court jurisdiction, but within Argentina, is madethrough judicial request to the competent court in the jurisdiction inwhich defendant resides. Service outside the country is effectedthrough rogatory letters.In Argentina, the existence of foreign proceedings is generallyserved through rogatory letters. If applicable, treaties concerningjudicial assistance prevail over domestic procedural law.

3.2 Are any pre-action interim remedies available inArgentina? How do you apply for them? What are the maincriteria for obtaining these?

Yes, a claimant could seek for precautionary injunctions evenbefore filing its claim. The request should be made through asubmission before the court specifying the particular injunctionorder requested, the right it seeks to secure and the legal provisionsupon which its petition is grounded. The claimant should furtherevidence that an irreparable injury may result if the injunction is notgranted (periculum in mora), show that his claim on the merits isprima facie well-grounded under the applicable law (fumus bonisiuris) and provide a security on the costs and damages that theinjunction may eventually cause to the other party under certaincircumstances. Each kind of injunction (i.e. attachment of assets,judicial intervention on companies, etc.) establishes additionalparticular requirements to be met. Generally, once the pre-action injunction is granted, the claimantmust file its claim within a 10-day term under penalty of theinjunction being automatically lifted.


A claimant’s claim shall contain the following information: theclaimant’s and the defendant’s name and address; the object of itsclaim; and the facts and legal provisions upon which its claim isgrounded and the relief sought (indicating, if possible, the amountsclaimed). Documentary evidence available to the claimant shall beattached to the claim, while any other evidence that claimantintends to produce shall be indicated in its pleading (i.e. expert andfactual witness evidence, etc.).


A claimant’s claim can be amended only prior to the defendantbeing served with it. From such date on, the claim cannot beamended. However, facts that take place or come to the claimant’sknowledge after the claim was served can be alleged up to fiveworking days after the parties having received notice of thepreliminary hearing referred to in question 1.3 above.Exceptionally, new facts can be brought up before the Court ofAppeal.

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4 Defending a Claim


The statement of defence shall contain any and all the defendant’spreliminary objections and defences on the merits. In particular, thedefendant should:(i) state its full name and address;(ii) acknowledge or deny (a) the facts alleged in the claimant’s

claim in a one-by-one basis, (b) the authenticity of thedocuments filed by the claimant and allegedly produced bythe defendant and (c) reception of letters and telegramsaddressed to it whose copies were submitted by the claimant(silence on the matter or an answer in general terms could beimplied as acknowledgment of the facts, of the documents’authenticity and of having received the letters and telegrams);

(iii) clearly state the facts alleged as grounds of its defence;(iv) specify the legal provisions upon which its defence is based;(v) indicate the relief sought; and(vi) attach any documentary evidence available to it and indicate

any other evidence it intends to produce.Counterclaims are admitted and should be included in the samebrief as the statement of defence. In order to be admissible, thecounterclaim shall bear some connection with the claims brought bythe claimant. A defence of set-off is admitted and will be sustained if it complieswith the requirements under Argentina’s Civil Code.


The statement of defence has to be filed within 15 working days(ordinary proceedings) and 10 working days (fast trackproceedings) as of the claim being served to the defendant(domiciled within the court’s territorial jurisdiction). Time limitsare extended according to the distance. For States and stateagencies the time limit for this purpose is 60 working days. See also question 6.6 below.


In its statement of defence, the defendant may request the court tosummon a third party. If the petition is sustained, proceedings willmove forward against both the defendant and the third party. Underthe NCCPC, the court may allocate liability to any or both of them.


In that case, the proceedings move forward without the defendant’sparticipation. If the defendant’s failure to act is expressly declared bythe court, it is assumed that the licit facts alleged by the claimant aretrue. However, the court shall decide the case according to its merits.


Yes. It can do so in its statement of defence. The court is alsoempowered to decide on its own jurisdiction ex officio.



Yes. A third party may request to be joined to an ongoingproceeding if (i) the judgment could affect the third party’s interest(voluntary joinder), or (ii) according to substantive law, it couldhave acted as the claimant or defendant in the proceeding. Theclaimant or defendant may request the joining of a third party intheir claim and statement of defence respectively by showing thatthe dispute involves such third party (mandatory joinder).


Consolidation is allowed in case the underlying claims are relatedby their cause of action or object and, in general, if the judgment tobe issued in one of the proceedings could produce res judicataeffects in the other one. As well, (i) both proceedings should be atthe same stage (i.e. first instance), (ii) the court must be competentto hear both claims which as well should be able to be subjected tothe same kind of proceeding -i.e. ordinary proceedings- and (iii) nounjustified delay should be caused to the more advance proceeding.


No, Argentina does not have split trials/bifurcation of proceedings.


6.1 Is there any particular case allocation system before thecivil courts in Argentina? How are cases allocated?

Yes. The clerk’s general office of the court of appeals competent tohear the case randomly allots the case to a first instance court. Onappeal proceedings, the same office selects the court of appeals’courtroom at random as well.

6.2 Do the courts in Argentina have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

Yes. Although our civil procedure is based on an adversarialsystem, courts are empowered to conduct proceedings and in theexercise of their duties are able to, among other measures, requirethe parties to attend the court, request the submission of documents,move forward the case on its own initiative, summon factual andexpert witnesses, provide for measures in order to establish the factsof the case and propose a settlement among the parties.During the proceeding, parties may file, at the appropriate time,several kinds of applications related to the main subject matter ofthe case. The issues thus raised are dealt within an incidentalproceeding and the losing party in it should bear the underlyinglegal costs (i.e. professional fees).

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6.3 What sanctions are the courts in Argentina empowered toimpose on a party that disobeys the court’s orders ordirections?

Courts may impose pecuniary sanctions in favour of the other party.They may also impose disciplinary sanctions (such as the exclusionof a party from a hearing, the application of fines, etc.).

6.4 Do the courts in Argentina have the power to strike outpart of a statement of case? If so, in what circumstances?

Yes, courts can strike out slanderous allegations from a statement ofcase. They can also strike out any statement put forward in breachof the procedural law (i.e. untimely allegations, etc.).

6.5 Can the civil courts in Argentina enter summary judgment?

Yes, albeit it does not work as in the United States. If facts areundisputed among the parties, or the parties have produced all theirevidence in their statement of claim and defence, the court shalldeclare the proceedings closed after the preliminary hearing takesplace (see question 1.3 above) and proceed with the elaboration ofits judgment.

6.6 Do the courts in Argentina have any powers to discontinueor stay the proceedings? If so, in what circumstances?

Yes. Courts may stay proceedings (i) upon joint request by theparties (no more than 20 working days), (ii) when they consider itappropriate during prosecution of an incidental proceeding and (iii)due to force majeure. As well, civil courts must stay proceedingsprior to entering judgment until a related criminal case is decided. Courts should discontinue proceedings if the claimant does notmove its motion forward in the period of time set forth by theprocedural code (e.g. six months in ordinary proceedings beforefirst instance courts).

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Argentina? Are there any classes of documents that donot require disclosure?

There are no discovery proceedings in Argentina as known in thecommon law (i.e., the United States procedure system).The parties to a civil proceeding and any third party should submitor show documents that are deemed essential to the case upon acourt order. The party’s refusal is regarded as an assumptionagainst its own interests. A third party may refuse to abide by thecourt order if, being of its exclusive property, the exhibition of thedocument could impair him.

7.2 What are the rules on privilege in civil proceedings inArgentina?

Privilege matters -such as client-attorney privilege- are protected bylaw and are not subject to disclosure. In general, civil proceedings are public, except for those concerningfamily matters or expressly declared confidential by the court. Aswell, the parties can request courts to keep certain documentationconfidential.

7.3 What are the rules in Argentina with respect to disclosureby third parties?

See question 7.1 above.

7.4 What is the court’s role in disclosure in civil proceedingsin Argentina?


7.5 Are there any restrictions on the use of documentsobtained by disclosure in Argentina?

In case any document is obtained through a deliberate andspontaneous disclosure by the other party, it cannot be used in courtif such disclosure took place under a confidentiality agreement.

8 Evidence

8.1 What are the basic rules of evidence in Argentina?

Documentary evidence shall be attached to the claim or statementof defence, while any other evidence the parties intend to produceshall be offered in those main pleadings. At the preliminaryhearing, the court decides which evidence could be produced by theparties and declares the evidentiary period opened for a term thatcould not exceed 40 working days in the ordinary proceedings.The court decides on the probative value of the evidence producedaccording to logical and reasonable rules of evaluation andprocedure.


Any type of evidence is admissible provided that it is moral, it doesnot affect the parties’ or any third party’s personal freedom or it isnot expressly forbidden by law in the case at hand. Types of evidence specifically provided under the NCCPC:documentary; factual witness; expert evidence; judicial requests forinformation from private and public entities; judicial confession;and judicial examination of sites or assets. Expert evidence is admissible in case evaluation of the disputedfacts requires particular expertise in a certain field (i.e.accountability). The expert is appointed by the court and shouldsubmit a report according to the terms of reference filed by theparties. The parties are entitled to appoint expert consultants toassist them.


Witnesses of fact must be 14 years old or more and cannot holdlineal consanguinity, lineal affinity or be married to any of theparties. Under ordinary proceedings, each party shall call no morethan eight witnesses, which should be identified in its statement ofclaim or defence.The NCCPC does not provide for written witness statements.Witnesses provide oral depositions at a hearing specifically calledby the court, in which they should answer the questions posed byboth parties and the court.



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8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Argentina?

The court decides on the admissibility of evidence, follows up itsproduction and rules on its probative value. See also question 6.2 above.


9.1 What different types of judgments and orders are the civilcourts in Argentina empowered to issue and in whatcircumstances?

Courts are empowered to issue (i) simple procedural decisionsaimed at moving forward or conducting the case, (ii) interlocutoryjudgments which decide ancillary matters dealt within incidentalproceedings (see question 6.2 above), and (iii) final judgments. Aswell, courts are empowered, among other measures, to issueinjunction orders (see question 3.2 above) and enforcement orders.


Courts are empowered to decide on all three issues (the amount ofcompensation owed, the applicable rate of interest and the date asfrom when it should accrue, and also how the parties should bearlitigation costs -see question 1.5 above). In doing so, courts resortto the applicable law and case law.


Final domestic judgments can be enforced through courtenforcement proceedings set out in the NCCPC. Foreign judgments should be first recognised by a court in order tobe regarded as a local judgment (that is, the court shall verify theircompliance with the formal, substantive and procedural conditionsfor recognition as established in the NCCPC except otherwiseprovided in treaties) prior to being submitted to enforcementproceedings -if applicable.

9.4 What are the rules of appeal against a judgment of a civilcourt of Argentina?

Judgments on the merits, interlocutory judgments, and even simpleprocedural decisions that cause irreparable harm to any party aresubject to appeal within a five-day term (see question 1.3 above).The statement of grievance must be submitted once the appeal isformally conceded.As a general principle, the decision against which a party files anappeal is provisionally stayed until the court of appeals delivers itsjudgment.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Argentina?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

The most frequently used methods are mediation and arbitration inlaw or in equity. The ombudsman is not a dispute resolutionmethod under Argentine law, but a Government officer that isentitled to represent collective interests at court.Concerning mediation, see question 2.1 above. Absence anyagreement by the parties on the applicable procedural rules,arbitration at federal level is governed by the NCCPC.


Under federal regulations, mediation is governed by Law No.24.573 and arbitration is governed by the NCCPC (arbitration inlaw, sections 736 to 765, and arbitration in equity, sections 766 to772). See question 3.1 below.

1.3 Are there any areas of law in Argentina that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Issues that cannot be subjected to out-of-court settlement (such as,family law issues in general and any other issues involving theorder public) cannot be submitted to arbitration or mediation.


2.1 What are the major dispute resolution institutions inArgentina?

The Tribunal de Arbitraje de la Bolsa de Comercio de BuenosAires, the Cámara Arbitral de la Bolsa de Cereales, the MercadoAbierto Electrónico S.A. and the Centro Empresarial de Mediacióny Arbitraje, among others.


Settlements reached through mediation proceedings and furtherapproved by the court are enforceable through court enforcementproceedings.Arbitration awards are subject to the same remedies available tocourt judgments (i.e. appeal). The parties are free to waive them allin advance, but the right to request the award’s clarification andannulment. Final arbitration awards (not annulled or revoked bycourts) are enforceable as any local judgment without having to gothrough any confirmation proceedings.

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Arbitration is being increasingly used in Argentina as an alternativedispute settlement method since it is regarded as a fast and flexiblemeans of dispute resolution. Despite the fact that Argentina has notyet issued a modern law on arbitration (i.e. based on theUNCITRAL model law), commercial contracts more and moreinclude an arbitration agreement within their clauses.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Argentina?

Recent court decisions have brought serious concerns regarding theautonomy of arbitration proceedings.

The broad doctrine set out by the Federal Supreme Court onannulment of arbitral awards in the Cartellone case –according towhich courts can review an award on its merits and annul it if foundunconstitutional, illegal or unreasonable– has been extended bycertain local courts to any procedural decisions taken by arbitrationpanels.In a bilateral investment treaty (BIT) arbitration under UNCITRALrules involving National Grid and the Argentine Republic, therespondent turned to its own domestic courts to annul an ICC’sdecision rejecting Argentina’s challenge to the President of theTribunal. In a recent decision, the domestic court declared itselfcompetent to hear the case even though the arbitration seat wasWashington DC, since it found inter alia that the extension ofjurisdiction in favour of arbitral tribunals cannot prevent theArgentine State from having access to its natural judges. Goingbeyond the boundaries established in Cartellone, the court held thatnot only final awards but procedural orders as well may bechallenged before the Judiciary if held unconstitutional, illegal,unreasonable or arbitrary.

María Inés Corrá

M. & M. BomchilSuipacha 268, piso 12C1008AAF Buenos AiresArgentina

Tel: +54 11 4321 7517Fax: +54 11 4321 7555Email: [email protected] URL: www.bomchil.com

María Inés Corrá graduated from the Universidad Nacional de laPlata School of Law in 1993 and obtained a Master Degree inAdministrative Law from the Universidad Austral School of Law in1995.She is a partner of M. & M. Bomchil and member of the EconomicRegulation, Administrative Law and International Arbitration area ofthe firm. She is a visiting professor in different graduate courses atthe Universidad Austral and Pontificia Universidad Católica deBuenos Aires. She has provided public lectures in several seminarsand published papers on constitutional, administrative law andinternational economic integration matters.Mrs. Corrá is an experienced litigator, with wide experience both inarbitration and local litigation. She has represented local andforeign companies in both administrative and constitutional lawdisputes before the Argentine Federal Supreme Court, acting asleading counsel. She has also represented foreign investors beforethe International Centre for Settlement of Investment Disputes(ICSID), the International Court of Arbitration of the InternationalChamber of Commerce (ICC) as well as domestic companies in adhoc arbitration under the UNCITRAL rules.



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ArgentinaM. & M. Bomchil

Ignacio J. Minorini Lima

M. & M. BomchilSuipacha 268, piso 12C1008AAF Buenos AiresArgentina

Tel: +54 11 4321 7517Fax: +54 11 4321 7555Email: [email protected] URL: www.bomchil.com

Ignacio J. Minorini Lima graduated from the Universidad de BuenosAires School of Law in 2002 and obtained a Master Degree inAdministrative Law from the Universidad Austral School of Law in2007.He is a senior associate of M. & M. Bomchil and a member of theEconomic Regulation, Administrative Law and InternationalArbitration area of the firm. He is an assistant professor ofAdministrative Law at the Universidad de Buenos Aires. He haspublished papers and provided lectures on arbitration andadministrative law issues.Mr. Minorini Lima has been actively involved in domestic litigationbefore the Argentine Federal Supreme Court and lower courts, ininternational arbitration proceedings under ICSID and ICC rules, anddomestic arbitrations pursuant to the UNCITRAL rules.

M. & M. Bomchil was founded in 1923. It is one of the major law firms in the Argentine Republic providingcomprehensive legal services to local and foreign clients in the different branches of law, with specialisation incommercial, financial, tax, anti-trust, administrative and regulatory law, arbitration and domestic litigation. Its lawyersactively act in litigation and domestic and international arbitration as attorneys and arbitrators.

The firm regularly represents foreign and national companies at federal, national and provincial courts in civil,commercial, administrative and regulatory matters and provides legal representation to investors in gas, electricity,telecommunications, drinking water and technology sectors before federal courts and at international arbitrationproceedings under the ICSID, ICC and UNCITRAL rules, among others.

The firm’s clientele, mainly formed by multinational companies that invest in Argentina and by medium and large localcompanies, is involved in diverse sectors of the economy: commercial and industrial companies, public utilities, banksand financial institutions, insurance companies, entertainment enterprises and service companies, as well as foreigngovernments and embassies, foundations and non-profit organisations.



Chapter 4

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Austria

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Austria got? Are there anyrules that govern civil procedure in Austria?

In line with the civil law tradition, Austrian law is primarily statutelaw.“Civil procedure” encompasses a variety of procedures conductedin civil courts and is governed by a number of laws: the AustrianJurisdiction Act (“Jurisdiktionsnorm”, AJA) determines theorganisation and jurisdiction of courts in contentious matters. TheAustrian Code of Civil Procedure (“Zivilprozessordnung”, ACCP)applies to contentious proceedings in civil courts and - to someextent - to national and international arbitration. The AustrianEnforcement Code (“Exekutionsordnung”, AEC) regulates theenforcement of judgments, arbitral awards and preliminaryremedies.On an international level, Austria is inter alia a party to theEuropean Convention on Jurisdiction and Enforcement ofJudgments in Civil and Commercial Matters (“BrusselsConvention”), the Lugano Convention on Jurisdiction andEnforcement of Judgments in Civil and Commercial Matters, andother international treaties, such as the Convention on theRecognition and Enforcement of Foreign Arbitral Awards (“NewYork Convention”), and the European Convention on InternationalCommercial Arbitration.

1.2 How is the civil court system in Austria structured? Whatare the various levels of appeal and are there anyspecialist courts?

In Austria, there are two different sequences of courts, each ofwhich encompasses up to three stages. In the first instance, civilproceedings can be conducted either in the district courts(“Bezirksgerichte”) or the regional courts (“Landesgerichte”).District courts have monetary jurisdiction in cases involving anamount in dispute of up to EUR 10,000 and subject-matterjurisdiction in most disputes relating to family law orlandlord/tenant disputes. Appeals on points of fact and law lie tothe regional courts. In cases concerning legal issues of fundamentalimportance, a further appeal may be taken to the Supreme Court(“Oberster Gerichtshof”).Regional courts have monetary jurisdiction in cases involving anamount in dispute of over EUR 10,000 and subject-matter

jurisdiction in disputes pursuant to the Austrian Nuclear LiabilityAct, Public Liability Act, Data Protection Act, and in mostcompetition or IP matters.Appeals on points of fact and law lie to the Higher Regional Courts(“Oberlandesgerichte”). In cases concerning legal issues offundamental importance, a further appeal may be taken to theSupreme Court.In some provinces, specialised courts for commercial or labour lawmatters exist.

1.3 What are the main stages in civil proceedings in Austria?What is their underlying timeframe?

A civil law suit is initiated by a statement of claim (“Klage”) filedwith the court. The statement of claim is served on the defendanttogether with an order to file a brief in response thereto(“Klagebeantwortung”) if the claim is disputed.If the defendant responds within the given time period, the courtwill summon the parties to a preparatory hearing, which has thepurpose of determining whether or not the dispute is amenable to asettlement or - if that is not the case - to determine the programmeof the proceedings (see question 6.2 below). The law suit as suchmay consist of several hearings spread over several months oryears. The average duration of first instance proceedings is lessthan a year - complex proceedings may take substantially longer.Appeal proceedings take six to nine months on average.

1.4 What is Austria’s local judiciary’s approach to exclusivejurisdiction clauses?

Generally, the parties are free to submit to the jurisdiction of a courtof their choice (national and international) by explicit mutualagreement (section 104 AJA). Jurisdiction clauses as to the venuejurisdiction of a court are generally admissible unless expresslyprohibited by law (e.g. with regard to legal disputes arising out ofthe relationship between incorporated companies and theirshareholders). If a valid jurisdiction clause refers a case exclusivelyto a court which may render a judgment enforceable in Austria,(other) Austrian courts will dismiss the case.

1.5 What are the costs of civil court proceedings in Austria?Who bears these costs?

Legal costs comprise court fees and, if required, fees for experts,interpreters, and witnesses, the costs of announcements. Under theAustrian Court Fees Act (“Gerichtsbegührengesetz”), the claimantor appellant has to pay the entire court fees in advance. The amount

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is usually determined on a graduated scale in accordance with theamount in dispute (“Streitwert”).In most proceedings, the court’s decision on the merits also containsa decision concerning the reimbursement of costs by the losingparty. Attorneys’ costs are reimbursed only in the amountdetermined pursuant to the Austrian Attorneys’ Fees Act(“Rechtsanwaltstarifgesetz”) (see question 9.2 below).

1.6 Are there any particular rules about funding litigation inAustria? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

In the absence of a separate agreement, the attorneys’ fees aregoverned by the Austrian Attorneys’ Fees Act, which also forms thebasis of the courts’ decisions on cost reimbursement between theparties. Other (more common) methods of determining attorneys’fees include agreements on hourly rates or contingency fees, whichare permissible as long as the latter are not calculated as apercentage of the amount awarded by the court (pactum de quotalitis). Lump-sum fee arrangements are also admissible in Austria,but rarely used for litigious matters.Provided that the conduct of a civil law suit is not patently frivolousand does not entirely lack any chance of success, legal aid(“Verfahrenshilfe”) is granted to parties with insufficient financialmeans who cannot afford to litigate without compromising theirlivelihood. In such cases, the court will grant a respite or evenwaive the costs. Oftentimes an attorney is provided free of charge.According to section 57(1) ACCP, foreigners filing a complaintbefore Austrian courts are required to make a security deposit forlegal costs upon defendant’s request and unless an internationalagreement provides otherwise. There is no legal obligation toprovide security for costs if the claimant habitually takes residencein Austria, if a cost decision by an Austrian court is subject toenforcement in the claimant’s state of residency, or if the claimantdisposes of sufficient immovable assets in Austria. In accordancewith the principle of non-discrimination, section 57(1) ACCP doesnot apply to EU citizens in cases where a complaint is related to theexercise of the fundamental freedoms granted by the EC Treaty.


2.1 Are there any pre-action procedures in place in Austria?What is their scope?

Generally, there are no pre-action procedures to be complied with.


The limitation periods relevant for the bringing of proceedingsbefore Austrian courts are determined by applicable substantivelaw. They generally commence at the point in time when a rightcould have been first exercised. There are various limitationperiods in Austria, the most relevant being three years. It applies tomonetary claims, including claims for damages. The statute oflimitations is not observed ex officio, but must be pleaded. It cannotbe waived in advance.


3.1 How are civil proceedings commenced (issued and served)in Austria? What various means of service are there? Whatis the deemed date of service? How is service effectedoutside Austria? Is there a preferred method of service offoreign proceedings in Austria?

Civil proceedings are commenced by filing a statement of claim(“Klage”) with the court. The statement of claim is consideredofficially lodged upon receipt by the competent court.There are various means of service available to Austrian courts,depending on the documents to be served. Within Austria, serviceis usually effected by registered mail. The deemed date of serviceis the date on which the document is physically delivered to therecipient. Deposit is admissible under certain conditions, thedeemed date of service being the day on which the depositeddocument was first available for pickup.The requirements for the service of documents abroad differdepending on the respective addressee: Service to internationalorganisations or foreigners enjoying immunities under publicinternational law is to be effected with the mandatory assistance ofthe Austrian Ministry for Foreign Affairs or another competentAustrian Ministry. In all other cases, service abroad is effected inaccordance with existing state treaties, in particular the 1954 HagueConvention on Civil Procedure. In the European context, the EUService Regulation (Council Regulation (EC) No 1348/2000) is ofparticular relevance.

3.2 Are any pre-action interim remedies available in Austria?How do you apply for them? What are the main criteria forobtaining these?

In principle, no discovery or other pre-trial exchange of documents orother forms of evidence exists under Austrian civil procedure law.However, the court may grant an application for the taking of certainmeasures for the safeguarding of evidence (sections 384 to 389ACCP) both prior or after a statement of claim has been filed, as longas a legal interest of the requesting party is established: e.g. in caseswhere the future availability of the evidence is uncertain (life-threatening sickness of a witness) or where it is necessary to examinethe current status of an object (impeding repair after damage).In order to prevent irretrievable damage to the claimant, courts mayissue preliminary injunctions before or during litigation. Possiblemeasures include freezing orders on bank accounts or theattachment of the defendant’s assets. Courts may order third partiesnot to pay accounts receivable to the defendant.


Under the ACCP, the statement of claim shall: specify the relief sought;state the facts on which the claim is based; andpresent the evidence supporting the claim.

If the jurisdiction of the court is determined on the basis on theamount in dispute and if the claim is not one for money, thestatement of claim must also specify the amount in dispute.


Amendments to the pleadings are admissible as long as the legal

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prerequisites for bringing the claim (“Prozessvoraussetzungen”)remain unaffected. Pleadings may be amended from the moment ofsubmission of the statement of claim up until the closing of firstinstance proceedings. Once the statement of claim has been served,however, the pleadings can only be amended with the consent of theother party. This rule serves the protection of the defendant whomay already have prepared a defence against the claims containedin the claimant’s original writ.

4 Defending a Claim


The statement of defence must fulfil the formal requirements of alegal brief. As regards the content, it must include a specifiedrequest (e.g. an objection as to the jurisdiction of the court seized orthe dismissal of the case in whole or in part) and must further list allfacts and evidence in support of the defence.Under Austrian law, the defendant may choose between bringing acounterclaim (“Widerklage”) and submitting a plea for set-off(“Aufrechnungseinrede”):

A counterclaim can be brought as a defence against theplaintiff’s main claim as long as first instance proceedingsare pending. It seeks independent enforcement of a crossclaim that is closely connected to the main claim. A plea for set-off seeks the court’s dismissal of the mainclaim based on the argument that it can be set-off against anexisting cross claim.

The basic difference between the two defences is that a plea for set-off does not require that the court have jurisdiction over thedefendant’s cross claim, while for a counterclaim the court musthave jurisdiction for both the main claim and the cross claim. Aplea for set-off does not trigger court fees, as it merely constitutesan objection against the main claim.


The time period within which the statement of defence has to beserved is four weeks. If the defendant fails to submit a statement ofdefence in time, the other party can apply for a judgment by default.


If a civil law suit concerns a certain object or a right in rem whichappertains to the defendant only on behalf of a third party, he may callupon the latter to submit a written statement of defence within fourweeks time. Apart from this case, which is only of limited practicalrelevance, Austrian civil procedure law does not provide anymechanisms whereby a defendant can pass on liability to a third party.


If a defendant fails to submit a statement of defence, the other partycan apply for a judgment by default.


At district court level, the defendant can dispute the court’s venueand subject-matter jurisdiction by entering an according plea priorto making any submissions in defence (“Streiteinlassung”). Atregional court level pleas disputing the court’s jurisdiction have tobe submitted as part of the defendant’s written statement of defence.



Austrian civil procedure law permits third party intervention if thecourt’s prospective judgment directly/indirectly affects the thirdparty’s legal position.


In the interest of practicability and cost-effectiveness, Austriancourts are vested with the power to consolidate two or moreproceedings which involve the same parties (section 187(1) ACCP).A decision on the consolidation of proceedings cannot be appealedand may be revoked by the court at any time. Despite theirconsolidation, a final judgment may be announced separately foreach of the proceedings. The court may, however, also render ajoint judgment.


Austrian courts are competent to split proceedings in order toseparately hear claims originally brought forward in one singlesubmission (section 188 ACCP).


6.1 Is there any particular case allocation system before thecivil courts in Austria? How are cases allocated?

Article 87 of the Austrian Constitution provides that the allocationof cases falls within the exclusive competence of the courts. Thus,every court allocates the cases in accordance with criteria definedon a yearly basis by a senate of judges.

6.2 Do the courts in Austria have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

Proceedings are primarily controlled by the judge who schedules,opens, chairs and closes the oral hearings. The courts’ casemanagement powers inter alia include the right to order the partiesto submit briefs within a certain period of time or to produce certaindocuments. As to interim applications, the parties may fileprocedural motions (e.g. motions to postpone a hearing) orunanimously agree to stay the proceedings for a period of at leastthree months.

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6.3 What sanctions are the courts in Austria empowered toimpose on a party that disobeys the court’s orders ordirections?

Austrian courts have limited powers to impose sanctions on partieswho fail to obey their orders. It is only in relation with thequestioning of witnesses that Austrian civil procedure law providessanctioning mechanisms (section 220 ACCP). If a duly calledwitness fails to attend an oral hearing, the court may impose anadministrative penalty. Furthermore, if a witness refuses to giveevidence, the court has the power to enforce a statement byimposing penalties (maximum amount EUR 100,000) or evenimprisonment of up to six weeks (section 354 AEC).Furthermore, section 381 ACCP vests the court with the power tofreely weigh the circumstance that

a party refuses to give testimony or to answer a particularquestion without stating the reasons therefore; a party fails to appear before the court; or a statement under oath diverts significantly from a previousunchartered statement in its consideration of the evidence inthe given case.

6.4 Do the courts in Austria have the power to strike out partof a statement of case? If so, in what circumstances?

When considering the legal implications of a case, Austrian courtsonly deal with those parts of the claim which they consider relevantfor their decision-making.

6.5 Can the civil courts in Austria enter summary judgments?

Under the ACCP, courts may render judgments by default if thedefendant fails to submit a statement of defence within the givenperiod of time or if the defendant fails to appear for the first hearing.The ACCP further provides for specific summary proceedings forpecuniary claims not exceeding EUR 30,000 (“Mahnverfahren”).As applications in such proceedings are electronically processed,the proceedings are accelerated and simplified. The court issues apayment order on the basis of the statement of claim filed by theclaimant and without hearing the defendant. If the latter files anobjection within four weeks, the order expires and the court has toinitiate regular proceedings.

6.6 Do the courts in Austria have any powers to discontinue orstay the proceedings? If so, in what circumstances?

Under the ACCP, proceedings are stayed (“Ruhen des Verfahrens”)following a respective agreement by the parties or as a result of theparties’ failure to attend the first court hearing.Proceedings are discontinued (“Unterbrechung des Verfahrens”)either ex lege (e.g. death or insolvency of a party) or by courtdecision on application of a party.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Austria? Are there any classes of documents that do notrequire disclosure?

If a party credibly demonstrates that the opposing party is inpossession of a specific evidentiary document, the court may order thelatter to submit this document if and only if the party in possession:

has expressly referred to the document in question asevidence for its own factual allegations during theproceedings;is under a legal obligation to hand over the respectivedocuments to the other party requesting the document asevidence; or ifthe document in question was established in the legal interestof both parties, certifies a mutual legal relationship betweenthem, or contains written statements which were madebetween them during negotiations of a legal act (section 304ACCP).

For any other documents, there is only a limited obligation fordisclosure. Court orders for the submission of documents are notenforceable.

7.2 What are the rules on privilege in civil proceedings inAustria?

Legal advice - whether from in house counsel or attorneys at law -does not fall under the provisions of section 304 ACCP (seequestions 7.1 above and 7.3 below). It follows from the attorney’sprofessional secrecy obligations that there is no obligation toproduce documents except in cases where the attorney worked withboth parties with regard to the disputed legal act.As to the right of attorneys to refuse to give oral evidence, section321 ACCP explicitly lists the fact that certain information was madeavailable to the attorney in his/her professional capacity as a groundfor refusal. No comparable privileges exist for in-house counsel.

7.3 What are the rules in Austria with respect to disclosure bythird parties?

The court may order disclosure by third parties if: the third party is under a legal obligation to hand over aparticular document to the party requesting the document asevidence; or the document in question was established in the legal interestof both the requesting and the third party, certifies a mutuallegal relationship between them, or contains writtenstatements which were made between them during thenegotiation of a legal act (section 304 ACCP).

7.4 What is the court’s role in disclosure in civil proceedingsin Austria?

The taking of evidence in Austrian court proceedings follows aschedule drawn up jointly by the court and the parties and/or theirrepresentatives in a preparatory meeting. Document requests aregenerally very limited. However, a party may be ordered to submitdocuments to the court if prima facie evidence shows that the partyis in possession of such documents (see question 7.1 above).

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Austria?

No, there are no such restrictions.

8 Evidence

8.1 What are the basic rules of evidence in Austria?

In Austria, evidence is taken during the course of the proceedings.

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Each party is required to provide the appropriate evidence for allfactual allegations raised and carries the burden of proof for all factswhich lead to the application of rules favourable to it.


The ACCP distinguishes five different types of evidence:documentary evidence;witness testimony;expert testimony;judicial inspection; andtestimony by the parties.

In principle, any source of information may be admitted as evidenceand will be classified as one of the above types depending on theform it takes.Witnesses and parties give oral evidence. Written witnessstatements are not permitted under the ACCP. Experts generallyrender their reports and opinions in writing, however, the court mayalso consider oral presentations sufficient. Written reports must beexplained by the expert during the oral hearing if so requested bythe parties (section 357(2) ACCP).


Witnesses of fact residing in Austria are obliged to appear beforethe court to give testimony. They are entitled to refuse to giveevidence within the limits of section 321 ACCP (e.g. legal privilege,incrimination of close relatives), but there is no right to refuse totestify at all. If the witness wishes to make use of the possibility torefuse to give evidence, he or she must state the grounds for doingso (see also question 6.3 above).The court summons and examines the witnesses to establish thefacts alleged by the parties. It also inquires about the circumstanceson which the witnesses’ knowledge is based. The parties and theircounsel participate in the examination. They may ask furtherquestions with the aim of clarifying or completing the testimony,but there is no cross-examination.In principle, witnesses must be examined by the court which willadjudge the case. However, under certain conditions, witnessesmay be examined by another court by way of judicial assistance.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Austria?

In standard proceedings, Austrian courts have the power to take anyevidence they consider relevant with regard to the alleged facts.The court may instruct the parties to produce documentaryevidence, order a local inspection, appoint an expert, or takeevidence by examining the parties/witnesses. Documentaryevidence may be presented only if at least one of the parties hasreferred to it. It must not be admitted if opposed by both parties.The same rule applies to the hearing of witnesses.In all other cases, evidence is taken upon application of a party.


9.1 What different types of judgments and orders are the civilcourts in Austria empowered to issue and in whatcircumstances?

Court decisions on the merits are judgments (“Urteil”). They arepronounced in the name of the Republic, ideally orally at the end ofthe last hearing. In practice, they are handed down in writing acouple of weeks/months after the last hearing. The courts have thepower to make default and summary judgments (see questions 4.4and 6.5 above).All other decisions rendered during the proceedings (e.g. admittingor rejecting evidence) are orders (“Beschluss”).


Court decisions on costs do not require a formal application by theparties, as long as they submit an itemised cost statement before theformal closing of the proceedings. The decision on costs forms partof the court’s final decision and is open for complaint. As a matter of principle, the winning party is entitled to fullreimbursement of all costs accrued. If either party prevails/losesonly in part, the court divides the costs on a pro-rata basis. Thecourt may also decide to put the costs of a certain segment of theproceedings on the winning party, if it displayed unreasonablebehaviour during the course of the proceedings which causedadditional costs for its opponent. As far as a claim is substantiatedby material law, damages and interests are granted in judgmentspassed in action for performance.


In principle, domestic judgments are enforceable only once theyhave become final. They are enforced in accordance with thespecific procedures laid down in the AEC. The recognition andenforcement of foreign judgments is governed by various multi-lateral conventions to which Austria is a party, most importantly theEuropean (“Brussels”) Convention and the Lugano Convention. Anumber of bilateral treaties ensure reciprocity with countriesoutside the EU and EFTA.

9.4 What are the rules of appeal against a judgment of a civilcourt of Austria?

The ACCP provides for an ordinary appeal against the judgment ofa trial court (“Berufung”), and an appeal against the judgment of anappellate court (“Revision”). A specific appeal (“Rekurs”) may bebrought against a court order. Other requests for relief from courtdecisions are known as extraordinary remedies (actions forannulment, actions for the reopening of proceedings). Generally, a timely appeal against a judgment suspends its legalvalidity (res judicata) and in most instances also its enforceability.An appeal against a court decision usually does not suspend thedecision’s enforcement. In the appeals proceedings, no new claims,defences and evidence may be introduced.

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1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Austria?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

In Austria, a considerable number of dispute resolution methods areprovided for by statute: The ACCP provides for “praetoriansettlements”, which involve the courts but do not lead to a courtdecision. Further extra-judicial methods provided for by statuteinclude arbitration tribunals, conciliation boards in housing matters,mediation in civil law matters (especially family law), conciliationboards in telecommunications matters, and local authoritymediation offices set up at the behest of the federal states. Inaddition, representatives of professional bodies, such as those oflawyers, notaries public, doctors of medicine and civil engineers,mediate in disputes between their members or in disputes betweenmembers and their client.There are also a number of non statutory methods of disputeresolution, especially in consumer affairs. These include informalcomplaints departments of guilds and trade associations,conciliation boards in which the Austrian Association for ConsumerInformation participates, conciliation committees in chambers ofcommerce, and a conciliation office for medical liability matters.Austria also has a conciliation board for disputes relating toAustrian “.at” domains (ownership disputes, right to use a name oridentification code, trademarks, intellectual property andcompetition). Finally, there is also an Internet Ombudsman whodeals with complaints relating to forum shopping and providesconciliation services in disputes.


Austrian arbitration legislation is not codified in a separate act butforms part of the Code of Civil Procedure (sections 577 to 618ACCP). The respective provisions set out the general framework forarbitration proceedings without differentiating between purelydomestic and international procedures, or between business disputesand other matters. There are specific rules regarding groups requiringspecial protection, such as consumers and employees.The Civil Law Mediation Act (“Zivilrechts-Mediations-Gesetz”)sets out the rules on mediation in conflicts that fall under thejurisdiction of the ordinary civil courts. “Mediation” within themeaning of the Act refers to the services of a mediator who is aqualified expert and who applies recognised methods. Theconsensus reached with the use of the mediator’s techniques ofcommunication cannot be enforced by a court of law.

1.3 Are there any areas of law in Austria that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Section 582 ACCP classifies all pecuniary claims as generallyarbitrable and expressly exempts claims relating to family law(“Familienrecht”), the Austrian Tenancy Act (“Mietrechtsgesetz”),the Austrian Non-Profit Housing Act (“Wohnungsgemein-nützigkeits-gesetz”), as well as to the Austrian Condominium Act(“Wohnungseigentumsgesetz”) from arbitration. Further provisionsexempting certain claims from arbitration are to be found in

specialised legislation such as the Law on the Labour and SocialCourt (“Arbeits- und Sozialgerichtsgesetz”) or the Cartel Act(“Kartellgesetz”).


2.1 What are the major dispute resolution institutions inAustria?

The Vienna International Arbitral Centre of the Austrian FederalEconomic Chamber (VIAC) is Austria’s major arbitrationinstitution. It provides a modern framework for the conduct ofarbitration proceedings under the recently amended rules ofarbitration and conciliation of the VIAC (“Vienna Rules”) whichtook effect in 2006.


Arbitral awards are binding and enforceable by Austrian courts inthe same way as final binding decisions of state courts. As far asthey are not determined by international law or legal acts of theEuropean Union, the recognition and declaration of enforceabilityof foreign arbitral awards is also governed by the provisions of theAustrian Enforcement Code (section 614(1) ACCP). Settlementsbrought about with the assistance of local authority mediationoffices set up at the behest of the regional authorities have the sameeffect as court settlements and are therefore also enforceable underthe judicial executory process.



Following implementation of the new law on arbitration in 2006,increased interest in commercial arbitration could be noted. While anumber of disputes continue to be resolved through the application ofalternative dispute resolution methods, ADR, pre-arbitral referees ordispute resolution boards are generally not often used.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Austria?

The Austrian Supreme Court recently underlined the endorsementand support the Austrian legal system grants to the institution ofarbitration. In its decision of 22 February 2007 (3 Ob 281/06d), the AustrianSupreme Court held that when the wording of an arbitrationagreement allows for two equally justifiable interpretations, theinterpretation favouring the validity of the arbitration agreementtakes priority. This basic principle is also to be applied to thequestion of whether a certain dispute falls within the scope of anarbitration agreement or not. With regard to the setting aside of arbitral awards, the AustrianSupreme Court elaborated on what is to be understood as a violationof the Austrian ordre public. With a view to the right to be heardthe court held that such right would not be violated in case of anincomplete determination of the facts of the case, an inadequatediscussion of legally relevant allegations as well as a rejection of amotion to take evidence.

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Christian Klausegger

Binder Grösswang Sterngasse 131010 ViennaAustria

Tel: +43 1534 803 20Fax: +43 1534 808Email: [email protected]: www.bindergroesswang.at

Christian Klausegger is a partner of Binder Grösswang and headsthe firm’s dispute resolution department. His practice focuses onboth domestic and cross-border commercial litigation with anemphasis on corporate, banking and IT/telecommunication matters.Furthermore, he regularly represents parties before Austrian courtsin matters relating to arbitration, such as the challenge andenforcement of arbitral awards under the VIAC, ICC and UNCITRALrules and in ad-hoc arbitration proceedings. Christian Klauseggerpublishes regularly on international litigation and arbitration.

Anne-Karin Grill

Binder Grösswang Sterngasse 131010 ViennaAustria

Tel: +43 1534 804 63Fax: +43 1534 808Email: [email protected]: www.bindergroesswang.at

Anne-Karin Grill is a member of the dispute resolution departmentof Binder Grösswang. Specialised in international law, she mainlyworks for international clients. Her focus lies with internationallitigation / arbitration proceedings. Before joining BinderGrösswang, Anne-Karin Grill worked for the legal advisorydepartment of the Austrian Permanent Mission at the UnitedNations in New York. She is fluent in German, English, French andSwedish.

Binder Grösswang has ranked among Austria’s leading law firms for almost 50 years during which it has built anexcellent reputation for its sophisticated and business-oriented approach. Today the firm counts over 60 lawyers and isheaded by 12 partners.

Acting independently within a strong international network, Binder Grösswang advises major domestic and internationalcorporate, banking and industry clients and handles complex domestic and cross-border transactions. The firmmaintains an energetic dispute resolution department which advises on all aspects of commercial disputes. Teammembers have been recognised for their outstanding analytical capabilities, their excellent negotiation skills, and theirability to find creative solutions. The lawyers take a proactive approach to protecting clients’ interests across the fullspectrum of available dispute resolution techniques.

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Chapter 5


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Belgium

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Belgium got? Are there anyrules that govern civil procedure in Belgium?

The Belgian legal system is based on the Civil Law tradition. TheBelgian Courts are not bound by the principle of precedent (staredecisis). Case law, especially from the Belgian Supreme Court (inFrench: “Cour de Cassation”; in Dutch: “Hof van Cassatie”) hasimportant weight in interpreting legislation. The civil procedure inBelgium is governed by the Belgian Judicial Code of 10 October1967, which is regularly amended (BJC). The BJC is accessibleonline at www.just.fgov.be (in Dutch, French and German).Attorneys - members of the Bar -, and all independent professionalshave the legal monopoly to represent clients in court. However,companies are themselves entitled to appear in court via their legalrepresentatives. Some other exceptions apply in social law mattersand tax matters. Members of a Belgian Bar may appear before allEuropean courts. The advocacy in civil matters before the BelgianSupreme Court is open to 20 lawyers who are appointed by theBelgian government.

1.2 How is the civil court system in Belgium structured? Whatare the various levels of appeal and are there anyspecialist courts?

Civil proceedings in Belgium can be brought before: the Justice of Peace: dealing with matters of a value of nomore than EUR 1,860 and some specific matters, such asclaims arising from lease agreements;the Court of First Instance: dealing with all matters not dealtwith by other courts, especially litigation involving familylaw;the Labour Tribunal; orthe Commercial Tribunal: dealing with disputes betweenmerchants and disputes involving commercial transactions.

Appeals against judgments of the Justice of Peace go before theCourt of First Instance. Appeals to the Labour Tribunal go beforethe Labour Court of Appeal. Appeals against judgments of theCourt of First Instance and the Commercial Tribunals go before theCourt of Appeal. Belgium has five Courts of Appeal.The Belgian Supreme Court has jurisdiction to deal with appealslimited to a legal review and excluding a re-hearing of the facts.

The Commercial Tribunal is generally the competent forum toresolve national and international commercial disputes.

1.3 What are the main stages in civil proceedings in Belgium?What is their underlying timeframe?

The main stages are:introduction of a claim via the service by a bailiff of a writ ofsummons on the defendant(s);introductory hearing before the competent court, generallyresulting in an order setting the timeframe for exchangingwritten pleadings and the date for oral pleadings;exchange between the parties and submission to the court ofwritten pleadings together with documentary evidence;oral pleadings; andjudgment.

The BJC does not provide for strict time requirements. However,courts fix the timeframe of the proceedings 6 weeks after theintroductory hearing, except if the parties agree to postpone thematter sine die.The overall average duration of a court case (excluding appeal)varies between 1 and 2 years, depending notably on the nature ofthe matter at hand. Appeal proceedings have a similar averageduration. However, proceedings before the Belgian Supreme Courtmay take longer.

1.4 What is Belgium’s local judiciary’s approach to exclusivejurisdiction clauses?

The Belgian legal system is favourable to exclusive jurisdictionclauses. These are only valid for territorial jurisdiction. The partiescannot agree on substantive jurisdiction.The Belgian courts’ approach is also determined by Article 23 ofRegulation (EC) No 44/2001 (“the Brussels Regulation”). It setsout the rules for determining jurisdiction between the courts of themember states of the European Union and the rules for therecognition and enforcement of judgments in civil and commercialmatters.

1.5 What are the costs of civil court proceedings in Belgium?Who bears these costs?

The costs of civil proceedings include:stamp duties, registration fees and enrolment rights;cost and fees related to the service of legal documents, suchas writ of summons and judgment (i.e. bailiff fees and costs);

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Hugo Keulers

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costs of authenticated copies of the judgments;costs of investigating measures, such as court appointedexperts, if any; andthe procedural indemnity, which is a lump sum for lawyer’sfees and costs. The amounts depend on the value of the claimand the nature of the proceedings and vary between EUR 150and EUR 30,000. The court has limited powers to reduce orincrease these amounts.

The losing party bears the costs of the proceedings. There are someexceptions to this rule, depending on the conduct of the prevailingparty during the course of the proceedings.

1.6 Are there any particular rules about funding litigation inBelgium? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

Belgian ethical rules prohibit “no cure no pay” fee arrangements.Generally, attorneys work on an hourly rate basis. In addition, asuccess fee can be agreed upon.Belgium has a system of legal aid (“pro-bono”) whereby both legalfees and court costs may be funded. Defendants may apply for security of costs against a foreignplaintiff. This application must be filed before any other plea ofdefence. It is up to the court to decide the amount that the foreignplaintiff will have to secure. Failing to do so results in a stay of theproceedings. In various multi- and bi-lateral conventions, thisobligation for foreign plaintiffs is set aside.


2.1 Are there any pre-action procedures in place in Belgium?What is their scope?

The Belgian legal system does not impose pre-action procedures.However, in some specific areas (e.g. counterfeiting), a plaintiffmay follow a pre-action procedure.


Time limits are a matter of substantive law. The general rules are enacted in the Belgian Civil Code. Thelimitation period for contract claims is 10 years, starting to run fromthe date the cause of the action occurred. Tort claims are timebarred after 5 years, calculated from the day following the day onwhich the victim became aware of the damage and of the identity ofthe liable party. However, tort claims are time barred after 20 yearsfollowing the day of the occurrence of the tortuous act. In certain limited circumstances, the limitation period may beinterrupted or suspended.For specific classes of claims, other limitation periods may apply(e.g. insurance claims are time barred after 3 years from the date ofthe cause of the action).


3.1 How are civil proceedings commenced (issued and served)in Belgium? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Belgium? Is there a preferred method ofservice of foreign proceedings in Belgium?

Civil proceedings before Belgian courts are generally commencedby serving a writ of summons on the defendant(s). The service iseffected by a bailiff, who will register and enrol the matter with thecompetent court. In specific circumstances, civil proceedings canbe initiated by filing a request at the court. The court’s clerk willthen notify the defendant(s) by judicial letter (in French: “plijudiciaire”). Finally, civil proceedings can validly be commencedby the voluntary appearance of the parties in dispute before thecompetent court.The writ of summons must be served at least 8 days prior to theintroductory court hearing. This period is extended if the defendantis domiciled outside Belgium: by 15 days when the party isdomiciled in a neighbouring country or in the United Kingdom; by30 days when the defendant is domiciled in another Europeancountry; and by 80 days when the defendant is domiciled outsideEurope. A curtailment of these terms might be requested from thePresident of the Court with an ex parte request in urgent matters.If jurisdiction is governed by the Brussels Regulation, the Belgiancourt is considered seized as of the moment when the documentinstituting the proceedings or an equivalent document is lodgedwith the court, provided that the plaintiff has not subsequentlyfailed to take the steps required to have service effected on thedefendant. The Belgian court will generally be deemed to be seizedwhen the writ of summons is served. The BJC allows the following methods of service, all to be effectedby a bailiff:

personal service;service at the domicile of the defendant by handing over thewrit of summons to a representative of the defendant;if one of the above is not possible, service is effected byleaving in the mailbox at the domicile of the defendant acopy of the writ of summons. The following day the bailiffmust send a letter by registered mail to the defendantadvising him that a copy of the writ of summons can beobtained at his office; andif the above is not possible, the writ will be served at thePublic Prosecutor’s office.

For service abroad, the service on defendants outside Belgium is asa general rule effected by registered letter, notwithstanding anymulti- or bilateral treaty providing for specific rules. The HagueConvention on the service abroad of judicial and extra-judicialdocuments in civil and commercial matters of 1965 and Regulation(EC) No 1348/2000 on the service in member states of judicial andextra-judicial documents in civil or commercial matters providespecific rules on service in the countries which are party to theseinstruments. The preferred method of summary service is the personal service ofthe writ of summons on the defendant.

3.2 Are any pre-action interim remedies available in Belgium?How do you apply for them? What are the main criteria forobtaining these?

The BJC and other specific laws offer the plaintiff a wide variety ofinjunctions, freezing orders and protective measures.

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Freezing orders, seeking to freeze a party’s assets, including bankaccounts and real estate, may be applied via an ex parte requestbefore the Seizure Judge.If urgency can be established, interim or provisional relief can besought before the President of the Court of First Instance or thePresident of the Commercial Tribunal. They are applied for by awrit of summons. In the event of overwhelming urgency, an exparte request is allowed. In the event urgency cannot be established, interim relief may berequested before the judge on the merits at the introductory hearingor at any later stage of the proceedings (see question 6.2). The main criteria for obtaining these measures are that (i) theplaintiff has an appearance of entitlement, and (ii) the matter isurgent or it is otherwise desirable to grant interim relief in theinterest of justice.


In the Belgian legal system, the writ of summons is considered thefirst written pleadings, setting out the basis of its claim. The writ ofsummons should clearly set out:

the names and addresses of the parties;the facts giving rise to the dispute;the claimant’s claim and the basic elements of the underlyingreasons of action;sufficient reasoning for the defendant to know the case hehas to meet; andthe relief sought.

(See also question 3.1.)


The plaintiff is entitled to change the claim and its legal bases inwritten pleadings. Any amendment to the claim should howeverfind a basis in a fact or a document referred to in the introductorywrit of summons. For the sake of efficiency, the Belgian SupremeCourt adopts a flexible interpretation on this issue to facilitateamendments to a claim.

4 Defending a Claim


The main elements of the statement of defence in written pleadingsfiled by the defendant’s legal counsel should include:

challenging (international) jurisdiction, before any other pleaof defence on the merits; andreasons for the denial of any of the allegations made in thewrit of summons and the defence against those allegationsand any other alternative versions of the facts of theunderlying dispute.

The defendant can introduce a counterclaim in its written pleadings,provided the grounds or course of its action is against the claimantand/or any other party to the proceedings. A defence of set-off is also admissible.


The BJC does not provide for any time limit within which the partiesmust exchange their written pleadings. However, further to recentreform of the BJC, the court now sets a calendar for the parties tosubmit their written pleadings and, in principle, the date for oralpleadings within 6 weeks after the introductory hearing. The parties,however, may agree for the court not to set such a court calendar. If the parties fail to meet the deadlines determined in the courtcalendar, their written pleadings will not be taken into account bythe court. In that event, the party in default will nevertheless havethe right to present its case at the hearing in oral pleadings.


A third party may decide to voluntarily become a party to theproceedings (which is regularly done by e.g. insurers) or can becompelled to do so further to a writ of summons served by one ofthe parties in the proceedings. The claim against the third party (in general hold harmless claims)will be handled at the same time as the main claims and statementsof defence.This possibility does exist in all types of proceedings. To the extenta jurisdiction clause would prevent an order against a third party inthe main proceedings being obtained, the defendant might stillimplicate that third party requesting the court to declare thejudgment common to that third party.


If the defendant does not defend its claim or is not represented inthe proceedings, the court may render a default judgment. Thedefaulting party may introduce opposition proceedings within thirtydays of the judgment being been served to it. The oppositionproceedings are basically a re-hearing of the case. When rendering a judgment by default, the court is not allowed toreview the merits of the matter, save issues of mandatory lawrelating to public policy. The court is also entitled to reviewwhether it has jurisdiction. The defendant, who appeared at the introductory hearing but failedto defend its claim in written pleadings, is still entitled to defend itsclaim in oral pleadings.


The defendant can challenge the court’s jurisdiction. It must do sobefore any other action it undertakes or any defence argument itputs forward. Failing to comply with this “in limine litis” rule,results in the acceptance of jurisdiction and the dismissal of thejurisdiction argument.



The BJC allows the joining of any number of plaintiffs or

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defendants as parties to a claim, provided that the courses of actionby or against each party are closely connected. Claims areconsidered to be closely connected if there is a considerable overlapbetween the claims or if there is a risk of irreconcilable judgments.


Upon the parties’ request, the BJC allows the court to consolidateproceedings between the same parties provided that the claims areclosely connected (see question 5.1).Alternatively, the court may order to stay one of the proceedingspending determination of the other claim. This typically applies toclaims for damages before the civil courts seeking damagesresulting from criminal acts. The civil proceedings are stayedpending determination of the criminal proceedings (“le criminaltient le civil en état”).


The BJC allows the courts upon their own motion or upon theparties’ request to split the proceedings.


6.1 Is there any particular case allocation system before thecivil courts in Belgium? How are cases allocated?

Cases are allocated based on territorial jurisdiction and substantivejurisdiction of the courts. Substantive jurisdiction is determined bythe value of the claim and by the subject matter of the claim. Thecommercial tribunal is generally the competent court to deal withcommercial matters (see question 1.2).

6.2 Do the courts in Belgium have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The Belgian courts are obliged to manage the timeframe of theproceedings. Courts will, after having reviewed comments from theparties, determine a court calendar within 6 weeks after theintroductory hearing (see question 4.2). Other than the courts’power to re-open debates after the oral pleadings to discuss an issuethat the parties failed to argue, the court’s involvement in the waythe parties conduct the proceedings is limited.A limited number of interim applications are available to theparties, including the following:

security for costs (see question 1.6);interim injunctions or provisional measures (includingprovisional payment orders); andorders for submission of a specific document (see question7.4).

6.3 What sanctions are the courts in Belgium empowered toimpose on a party that disobeys the court’s orders ordirections?

Belgian courts are not entitled to impose any cost orders on one ofthe parties. The courts may impose a fine and award damages to theother party if the other party conducts the proceedings in a recklessway with the intent to damage the other party’s interest.

The courts are also empowered to make strike-out orders (seequestion 6.4) or draw adverse inferences in appropriatecircumstances.

6.4 Do the courts in Belgium have the power to strike out partof a statement of case? If so, in what circumstances?

A writ of summons or written pleadings can be rejected if they donot meet the formal requirements laid down in the BJC.Written pleadings will be disregarded if they are submitted out oftime (see question 4.2).

6.5 Can the civil courts in Belgium enter summary judgment?

No. The court is to hear the matters as presented to it. Generally,courts do not rule from the bench.

6.6 Do the courts in Belgium have any powers to discontinueor stay the proceedings? If so, in what circumstances?

The plaintiff may discontinue all or part of its claim against all orsome of the defendants.The courts have the power to order a stay of all or part of theproceeding to ensure the efficient conduct of the proceedings. Thistypically occurs if related criminal proceedings are pending (seequestion 5.2) or pending the outcome of a court ordered expertsurvey.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Belgium? Are there any classes of documents that donot require disclosure?

There are no disclosure proceedings.The parties are free to submit to the court any evidence they wish. The parties are nevertheless under the obligation to cooperate ingood faith with the burden of proof of the other parties. If a partydoes not comply with this obligation, the court may impose, at itsown discretion or upon the other party’s request, an obligation tosubmit a specific document (Article 877 BJC) provided that:

there are serious, certain and unequivocal presumptions thatthe party against which the injunction is sought has thedocument; andthe requested document is relevant to the matter.

Only documents that are privileged or contain company secretscannot be required to be submitted.

7.2 What are the rules on privilege in civil proceedings inBelgium?

All communications in written and oral form exchanged between anattorney and his client are covered by the professional legalprivilege, protected under the Belgian Criminal Code. The attorneyhas the duty not to disclose or to give testimonial evidence in legalproceedings about confidential documents or information protectedby legal privilege, except in very specific cases.Furthermore, all communication between attorneys, members ofone of the Belgian Bars, is protected by legal privilege except forthose communications explicitly identified as being nonconfidential.

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Legal opinions issued by in-house counsels, who are members ofthe Institute of In-House Counsels, are also protected by legalprivilege.

7.3 What are the rules in Belgium with respect to disclosureby third parties?

In certain circumstances, a court may compel a third party to submitspecific documentary evidence (see question 7.1).

7.4 What is the court’s role in disclosure in civil proceedingsin Belgium?

As there is no general disclosure, the court’s role in disclosure islimited to applying Article 877 BJC (see questions 7.1 and 7.3).

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Belgium?

There is no restriction on the use of documents obtained pursuant toArticle 877 BJC. However, abuse or misuse of those documentscould lead to a liability in tort.

8 Evidence

8.1 What are the basic rules of evidence in Belgium?

Documentary evidence must be submitted to the opposing partytogether with the written pleadings. Undisclosed documents cannotbe presented for the first time during oral pleadings.


Types of admissible evidence include all types of written material(faxes, letters, e-mails). Evidence in electronic or audiovisualformat are also permitted but should be transcribed for practicalreasons.In commercial matters, witnesses are extremely rarely heard (unlikein family or criminal law matters). Expert evidence has the same value as a party’s statement. To provetechnical or factual issues, parties should make an application forthe appointment of a court expert. The court may also appoint at itsown discretion a court expert. An application for a court expert can be made in summaryproceedings or via an interim application before the judge on themerits (see questions 3.2 and 6.2).


The BJC only provides for a set of rules for calling witnesses.Witnesses will testify before the judge who conducts theinterrogation. The parties’ lawyers cannot conduct an examinationand/or cross-examination.There are no particular rules on witness statements or depositions.The court will freely assess the evidence value of the submittedstatements or depositions. As stated above, witness evidence isgenerally not used in commercial proceedings.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Belgium?

See question 7.4.


9.1 What different types of judgments and orders are the civilcourts in Belgium empowered to issue and in whatcircumstances?

Courts have the power to make default and interim judgments (seequestions 4.4 and 6.4).A judgment can be for damages, loss of contractual profits orterminating and resolving contracts. Belgian courts are empoweredto adopt a wide variety of orders including the following injunctionorders prohibiting a party from doing a particular act or compellinga party to perform a particular act.Where appropriate, a court can link a fine (in French: “astreinte”;in Dutch: “dwangsom”) if the judgment is other than a paymentorder.Courts are empowered to deliver declaratory judgment undercertain conditions.


Courts may award damages for loss suffered including economicloss, applying interest on the damages and loss. The interest rateused is the judicial interest rate or a rate set by statute or contract.Belgian courts are not allowed to award punitive damages.Belgian courts will award costs of the litigation according to the“costs following the event” principle (see question 1.5).


Any enforcement of a judgment is subject to the prior service of thatjudgment by a bailiff on the debtor. Failing compliance by thelatter, attachments can be made on bank accounts and claims onthird parties. Attachment of real estate and assets must be precededby a formal order to pay.The direct enforcement of foreign judgments is governed by theBJC and several bi- and multi-lateral conventions to which Belgiumis a party. Most importantly, the Brussels Regulation provides forthe rules for enforcing judgments throughout the European Union.

9.4 What are the rules of appeal against a judgment of a civilcourt of Belgium?

Appeal is permitted against almost all first instance judgments,including interim judgments. The grounds for an appeal are notlimited.Appeal must be launched by filing a request with the competentcourt or tribunal. No permission to appeal is required.The appeal proceedings are a re-hearing, both on facts and on thelaw. As a general rule, an appeal must be filed within 1 monthfollowing the service of the first instance judgment. In case offoreign parties, this period will be extended.

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1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Belgium?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Besides state court litigation, arbitration and mediation are theavailable dispute resolution methods. For consumer claims andgovernment controlled sectors (e.g. energy, media and insurance),there is frequent recourse to an Ombudsman. In commercial matters, arbitration is the most frequently usedalternative method of dispute resolution. The New YorkConvention, to which Belgium is a party, allows the enforcement ofa Belgian arbitration award across all the Convention countries.Belgian courts will, in principle, respect the will of the parties asexpressed in their original arbitration agreement. Mediation is not yet a widely used method of dispute resolution inBelgium (see question 3.1).


Arbitration proceedings in Belgium are governed by the BJC. Theparties may freely opt for institutional arbitration (see question 1.3).The BJC contains a set of rules on mediation. It also includes alegal framework for the accreditation of mediators. The advantageof calling upon an accredited mediator is that the settlementagreement can easily obtain the value of a judgment, facilitating theenforcement process.

1.3 Are there any areas of law in Belgium that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Most commercial disputes can be settled through alternative disputeresolution. According to current case law, disputes on thetermination of exclusive distribution agreements where thedistributor operates on Belgian territory are only arbitrable ifBelgian law is applicable. Disputes involving family and labour law or against governmentinstitutions are considered non-arbitrable.


2.1 What are the major dispute resolution institutions inBelgium?

Apart from industry related institutions, the most important Belgianarbitration and mediation institutions are:

CEPINA (www.cepina.be); andVOBA (www.voba.be), for the Dutch-speaking Region.


Arbitration awards are binding on the parties and enforceable underthe New York Convention (see question 1.1).Settlement agreements resulting from mediation proceedings arebinding and enforceable in accordance with ordinary contract lawprinciples (see question 1.2).



Whereas arbitration is commonly known and used for(international) commercial matters, mediation is not yet. Becauseof increasing aversion to state court or arbitration litigation,perceived as being time and cost consuming, the legal professionpromotes mediation as a method for effective dispute resolution.Also judges adopt a more managerial role in litigation and try toencourage the parties to mediate. Mediation continues to bepromoted, recently by the adoption of the EU Directive 2008/52/ECof 21 May 2008, on certain aspects of mediation in civil andcommercial matters. This Directive aims for the introduction offramework legislation addressing key aspects of mediation in cross-border disputes.The BJC supports this trend. Since 2005, the BJC fully recognisesmediation and provides a legal framework. Further, the BJCempowers the courts to suggest that the parties refer to mediation,pending legal proceedings. However, given the voluntary nature ofmediation, courts cannot compel the parties to do so.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Belgium?

Belgian state courts tend to more rigorously apply the Belgian Acton the use of languages in court proceedings. This Act containsmandatory provisions that impose the parties to use Dutch, Frenchor German (depending on the location of the court) during theproceedings, including court documents and exhibits used in court.Therefore, despite contractual arrangements on the governinglanguage between the parties, this may result in additionaltranslation costs, increasing the cost of litigation. However, thelanguage in arbitration proceedings is not regulated.

AcknowledgmentThe authors would like to acknowledge the assistance of theircolleague Yves Lenders in the preparation of this chapter.

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Hugo Keulers

Lydian Tour & TaxisHavenlaan - Avenue du Port 86c b1131000 BrusselsBelgium

Tel: +32 2 787 9090Fax: +32 2 787 9099Email: [email protected]: www.lydian.be

Hugo Keulers is a partner at Lydian, where he leads the Commercial& Litigation Department with Annick Mottet Haugaard. Hugofrequently acts before the Belgian Courts upon the instruction ofinternational clients. He has worked on referrals from the world’smost prestigious law firms, often acting for listed multinationalcompanies. Several international guides recognise Hugo as aninsurance expert. He is in demand as a speaker at conferences onlitigation and insurance matters and has published articles on suchmatters in international publications. Before joining Lydian in2001, Hugo worked as a lawyer with Loeff Claeys Verbeke (nowAllen & Overy Belgium).

Annick Mottet Haugaard

Lydian Tour & TaxisHavenlaan - Avenue du Port 86c b1131000 BrusselsBelgium

Tel: +32 2 787 9013Fax: +32 2 787 9099Email: [email protected]: www.lydian.be

Annick Mottet Haugaard is a partner at Lydian, where she leads theCommercial & Litigation Department with Hugo Keulers. Annick’spractice encompasses the full range of areas linked to the launchingand marketing of products and services, including privacy issuesrelated to personal data protection, distribution, franchising,advertising, product regulations, consumer protection andintellectual property. She has solid experience in litigation andnegotiations, including with local and European authorities. Sheacts for numerous prestigious international companies and is arecommended attorney in particular in the areas of distribution andintellectual property. Annick is First Vice-President of the EuropeanCommunity Trademark Association (ECTA) and a member of theInternational League of Competition Law (LIDC). Before joiningLydian in 2006, she worked as a lawyer with Stibbe, where shebecame partner in 2000.

Lydian, formerly Lontings & Partners, is a full service independent law firm that was founded in 2001. With the namechange to Lydian in September 2007, the firm wants to consolidate and further enhance its strong position as one ofBelgium’s leading independent firms. ‘Lydian’ is a term used in jazz music and means ‘note system’ or ‘touchstone’,the backbone on which jazz musicians rely in jam sessions. In the same way the firm seeks to be the backbone of itsclients’ business ventures.

Frequently representing international companies in their disputes before Belgian court, Lydian’s litigation lawyers haveextensive experience in this area. Thanks to their thorough knowledge of the Belgian legal system and its differenceswith the systems of other countries, the team provides undeniable added value in Belgian litigation cases. With 12lawyers in its Commercial & Litigation Department, Lydian can boast one of the strongest litigation teams on the Belgianlegal market.

Lydian Belgium



Chapter 6

Sergio Bermudes Advogados

Brazil

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Brazil got? Are there anyrules that govern civil procedure in Brazil?

The Brazilian legal system is based on the Civil law regime withcivil and commercial litigation governed by the Civil ProcedureCode (Código de Processo Civil/CPC), enacted on January 11th,1973 and frequently updated thereafter. There are additionalstatutes that contain procedural rules.

1.2 How is the civil court system in Brazil structured? Whatare the various levels of appeal and are there anyspecialist courts?

Brazilian civil proceedings are divided into Federal and Statejurisdiction. Federal courts have jurisdiction over issues in whichthe Union, one of its organs, or a nationalised company (whollyowned by the Union) is a party to the lawsuit or has an interest init. Both Federal and State Courts are divided into two levels: (i) firstinstance courts; and (ii) appellate courts. First instance courts arepresided over by a judge sitting alone, who conducts theproceedings and gives judgment. Appeals against first instancejudgments are heard by Appellate Courts (Federal or State) dividedinto chambers (or benches), which are each composed of three tofive justices.Parties may lodge an appeal against a judgment of the Federal orState Appellate Courts to the Supreme Court or the Superior Courtof Justice. The grounds for appeals to the Supreme Court arealleged breach by the Appellate Court of the Federal Constitutionwhilst appeals may be lodged to the Superior Court of Justice if thejudgment of the Appellate Court breaches provisions of federal lawor if, in interpreting federal law, the Appellate Court diverges fromthe interpretation given to the same provision by another AppellateCourt.The Brazilian Constitution established three specialist courts,namely the Employment, Military and Election Courts, all of whichhave their own procedural rules. Within the civil court system,most jurisdictions have separate courts dealing with, inter alia,small claims, family matters, bankruptcy, commercial disputes andinheritance law.

1.3 What are the main stages in civil proceedings in Brazil?What is their underlying timeframe?

The main stages in civil proceedings before Brazilian Courts are:Claimant files a statement of case (initial pleading).The court orders the service of proceedings on theDefendant.Defendant presents his defence.Conciliation hearing.Evidence production stage: parties file supplementarydocuments, expert evidence is produced and witnesses areheard at a specific hearing.Judgment by the first instance court.Appeal to the Appellate Court.Respondent files a Reply to the Appeal.Hearing and Judgment by the Appellate Court.Possible appeal to the Supreme Court or the Superior Courtof Justice.

The timeframe varies, usually in relation to the complexity of theissue. Some courts are slower for a variety of reasons, including thevery high volume of cases at certain court centres. A lawsuit maytypically take from 1 to 4 years. If one or more of the parties lodgesan appeal to the Supreme Court or Superior Court of Justice, theproceedings are likely to take significantly longer.

1.4 What is your local judiciary’s approach to exclusivejurisdiction clauses?

Brazilian courts generally uphold exclusive jurisdiction clauses,with some exceptions. The Brazilian Constitution and the CPCcontain various provisions governing the jurisdiction of givencourts, based on distinctions such as the parties involved (‘identitycriteria’), their domicile (‘geographical criteria’), the amount inissue (‘value criteria’) and the subject matter of the dispute. Theparties may, by mutual consent, exclude the application of the valueor geographical criteria. Jurisdiction based on the identity of theparties or subject matter may never be excluded. The Brazilian Supreme Court held (in Súmula STF 335) thatexclusive jurisdiction clauses are valid in lawsuits arising out ofcontractual disputes.The courts have held exclusive jurisdiction clauses inserted intostandard form contracts to be unconscionable when such clauseshinder commencement of proceedings by consumers, for whom it isdifficult or impossible to appreciate the significance of the terms ofthe clause at the time of signature of the agreement (STJ-4ª T.,REsp. 34.186-7-RS, Justice Athos Gusmão Carneiro, DJU 26.6.93).

Marcio Vieira Souto Costa Ferreira

Fabiano Robalinho Cavalcanti



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Sergio Bermudes Advogados Brazil

Whether parties can use exclusive jurisdiction clauses to elect aforeign court, thereby limiting the jurisdiction of Brazilian courts isa moot point.

1.5 What are the costs of civil court proceedings in Brazil?Who bears these costs?

The costs of civil court proceedings in Brazil are relatively low,which is the result of a deliberate policy aimed at ensuring that thepopulation has access to justice. For example, the maximum courtfees charged by the Rio de Janeiro State Court (based on the amountin issue) is around US$ 10,000.Costs are generally borne by the losing party, in accordance witharticle 20 of the CPC. An award of costs may include an order forpayment of the winning party’s legal fees. Such order for costs isnormally based on the following criteria: (i) the nature of theprofessional services rendered, including the time involved and thedegree of care and dedication required; (ii) the geographical areawhere the legal services were rendered; and (iii) the amount in issueand the significance of the issue before the court.

1.6 Are there any particular rules about funding litigation inBrazil? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

Most Brazilian states have publicly funded Defence Services(“Defensoria Pública”), which provide free legal services to peoplewho cannot afford to fund court proceedings. Furthermore, partieswho can prove lack of financial means may be granted a waiver ofcourt fees and costs in accordance with the provisions of the LegalAid Law (Law nº 1.060, 5.2.50), and may be represented by privatepractice lawyers on a pro bono or contingency basis. Contingency fee agreements are permitted under the law thatregulates the legal profession (Law nº 8.906, 4th July 1994), whichgrants lawyers a considerable degree of flexibility in drawing up feearrangements.A defendant may apply for security for costs (so as to guarantee thesatisfaction of any award for costs that might be made againstclaimant). This security may be in the form of a payment into courteffected by the claimant, e.g. if a claimant is domiciled abroad andhas no real estate in Brazil with which to guarantee payment in theevent of an award of costs.


2.1 Are there any pre-action procedures in place in Brazil?What is their scope?

Brazilian civil litigation rules do not provide for any binding pre-action procedures.


Under Brazilian law, limitation periods are a matter of substantivelaw and are established by the Brazilian Civil Code and otherstatutes. The Civil Code creates a general 10-year limitation periodapplicable to issues for which a specific time limit has not beenestablished. Specific limitation periods vary from 30 days to 30years and some exceptional matters are not subject to time limits.

The law establishes a time limit of 3 years for tort claims. Thelimitation period for contractual claims varies depending on thenature of the dispute. The Brazilian Corporations Act establishestime periods that vary from 1 to 3 years. The Brazilian ConsumerCode fixes a limitation period of 5 years for consumer lawsuitsagainst the manufacturer in relation to defective products.Limitation periods are generally calculated from the date the causeof action arose.


3.1 How are civil proceedings commenced (issued and served)in Brazil? What various means of service are there? Whatis the deemed date of service? How is service effectedoutside Brazil? Is there a preferred method of service offoreign proceedings in Brazil?

Civil proceedings are commenced by issuing an initial petition(statement of case) which is addressed to the court and sets out thenames and addresses of the plaintiff(s) and defendant(s), the factsthat gave rise to the dispute, the legal grounds for the plaintiff’sapplication and the relief sought.The means of service are: a) postal service effected by the court; b)personal service by a court official (process server); or c)substituted service by publication of a public notice in a newspaper,should the other means prove ineffective or impossible. The Civil Procedure Code has been recently amended to enableservice by electronic mail, although it has not yet been implemented.Rogatory letters are the means for service of parties located outsideBrazilian jurisdiction, as well as for service of notice of foreignproceedings on parties located in Brazil. Brazilian courts willrefuse recognition of a foreign order if a defendant located in Brazilwas not served by means of letter rogatory, even if service was dulyeffected in accordance with the procedural rules of the country inwhich the order was made. A rogatory letter issued by a foreign court must be authorised(granted exequatur) by the Brazilian Superior Court of Justicebefore being enforced by lower courts.In general, the deemed date of service is that set out in theConfirmation of Service Record attached to the court records.

3.2 Are any pre-action interim remedies available in Brazil?How do you apply for them? What are the main criteria forobtaining these?

Brazilian Law allows parties to request various pre-action interimremedies, including ex parte orders. In general, there are two legalrequirements for the granting of such order (i) that the plaintiff hasdemonstrated reasonable legal grounds (fumus boni iuris) and (ii)risk of irreparable harm (periculum in mora), if the remedy soughtis not granted. Relief may not be granted if the effects of the order would beirreversible.


In accordance with article 282 of the Brazilian Civil ProcedureCode, the essential elements of claimant’s pleadings are:

the indication of the court which has jurisdiction; the names, marital status, professions and addresses of theparties;

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the factual and legal grounds that support the claim; the relief sought by claimant;the amount in issue;the evidence that the claimant intends to adduce in support ofthe application; andthe request for service upon defendant.


Under articles 264 and 294 of the Brazilian Civil Procedure Code,pleadings can be amended up until service of notice upon thedefendant. Thereafter, amendment will only be permitted with theexpress consent of the opposing party.

4 Defending a Claim


Before addressing the merits of the claim, the defendant must,where relevant, address the following matters as or when they arise:

non-existence or nullity of due service of notice, or defectthereof;lack of jurisdiction of the court before which proceedingswere commenced; defective pleading;statute barred claim, being the loss by a claimant of the rightto commence proceedings (which is distinct from statutorylimitation covering the expiry of the right, per se); lis pendens;res judicata;related proceedings before another court and consequentneed for consolidation;claimant’s lack of standing to sue;the existence of a valid arbitration agreement; andlack of security for costs in circumstances where the lawrequires that security be provided.

In relation to the substantive issue, the defence must challenge allthe factual and legal grounds raised by the claimant. Facts notexpressly or by implication challenged in the defence are deemed tohave been admitted by the defendant. The defendant may present acounterclaim provided it arises out of the same cause of action orsubject matter as the claim or defence.In principle it is possible to set-off claims under Brazilian law.


In general, the statement of defence has to be presented to the courtwithin 15 days of the deemed date of service. This non-extendabletime limit is doubled to 30 days if there are 2 or more defendantsrepresented by different attorneys.


Under Brazilian law, in cases of joint-liability, a defendant againstwhom a final order has been made may seek contribution from the

jointly liable third parties.The same also applies to cases where the defendant has a legal orcontractual right to indemnity from a third party (e.g., insurer). The defendant can, alternatively, during the course of theproceedings, demand the inclusion of the jointly-liable debtors asdefendants to the lawsuit (see the answer to question 5.1).


Brazilian law draws a distinction between rights which are deemedto be waivable (e.g. title to property, damages for breach ofcontract, etc.) and those which are non-waivable (e.g. right to life,health, liberty, etc.). When the issue before the courts relates towaivable rights, the failure by the defendant to file a defence withinthe specified time limit will lead to a presumption that the defendanthas admitted the facts alleged by the claimant. The court will thenmake a decision on that basis which normally results in a judgmentagainst the defendant. In the event of there being co-defendants, a defendant who fails tofile a defence may rely upon the defence filed by the others, thusavoiding judgment in default.


Where the court’s jurisdiction is based on the subject matter of theclaim (e.g. family proceedings) or the identity of one of the parties(e.g. an application filed against the Union), lack of jurisdictionmay be alleged at any stage of the proceedings or raised ex officioby the judge. Claims of lack of jurisdiction based on territorial criteria or theamount in issue must be raised within the time limit for filing thedefence, failing which the defendant will be deemed to have waivedthe right to challenge jurisdiction.



Under the CPC, there are 5 ways in which third parties may bejoined into ongoing proceedings:1. Assitência - a third party who has a legal interest in the outcomeof the proceedings may request to be joined so as to assist one of theparties. 2. Oposição - a third party who holds a legal interest which isthreatened by the proceedings may intervene so as to protect suchinterest against both plaintiff and defendant.3. Nomeação à autoria - if defendant is in possession of an assetwhich is the subject of the proceedings but which is in fact ownedby a third party, he (the defendant) may request that the third partyowner be joined as a defendant.4. Denunciação da lide (impleading) - when a party has a right ofindemnity against a third party, he may request that said third partybe joined so that the claim for indemnity be dealt with at the sametime as the claimant’s application (e.g. the defendant to a claimarising out of a car accident might join his insurer to theproceedings, so that any order made as to liability may also requirethe insurer to indemnify the defendant).5. Chamamento ao processo - applicable in cases of joint liability



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where the defendant requests that jointly liable debtors be joined inthe proceedings (e.g. joint tenants).


The CPC sets out two situations in which proceedings may beconsolidated: 1) when separate proceedings have similar causes ofaction or similar relief is sought arising out of the same facts; and2) when 2 or more proceedings involve the same parties and arebased on the same cause of action and the relief sought in one of theproceedings encompasses the relief sought in the other. The courts have been flexible in the application of these rules andclaims are consolidated whenever there is a risk that different courtsmight make contradictory judgments on the same set of facts.


Brazilian civil proceedings do not provide for any kind of split trialsor bifurcated proceedings on the merits, although in complex issues,there may be specific proceedings to liquidate the award made onfinal hearing.


6.1 Is there any particular case allocation system before thecivil courts in Brazil? How are cases allocated?

Within the civil court system, there are specialist courts or benchesassigned to deal with specific areas. Most court centres havespecialist courts dealing with, inter alia, family, bankruptcy,business and wills and trusts.Whenever there are several courts or benches before which the casemay be listed, very strict rules apply so as to ensure randomselection of the court/bench by court computer system.

6.2 Do the courts in Brazil have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

Having been commenced by the claimant, proceedings are managedby the court. The judge has a central role in the management of thesuit, and a wide range of powers, including deciding on theevidence he needs to make a decision and conducting theexamination of witnesses. The main principles that govern thejudge’s conduct of the case are: (i) the need to guarantee equaltreatment of the parties and due process; and (ii) the search for atimely solution of the dispute by means of settlement, wheneverpossible.There are several interim measures available to the parties under theCPC, such as search and seizure, exhibition of documents andfreezing of assets. Generally speaking, interim measures do not have any significanteffect on the court’s order as to costs.

6.3 What sanctions are the courts in Brazil empowered toimpose on a party that disobeys the court’s orders ordirections?

The judge may impose a financial penalty for failing to comply with

a court order, payable at a daily rate for each day of non-compliance. The offending party may also be deemed to have actedin bad faith if non-compliance disrupted or delayed theproceedings, and this may lead to the imposition of a financialpenalty of up to 1% of the amount in issue. Additionally, the partyacting in bad faith can be ordered to pay damages in respect of anyloss incurred by the other party. There is no provision enabling a judge to imprison a party forfailing to comply with the court order, other than that requiringpayment of alimony. Disobeying a court order is a criminal offencefor which the Criminal Code establishes a penalty of up to twoyears imprisonment as well as a possible fine, although in practicethis provision is rarely used. There are other penalties available under Brazilian law. Forinstance, failure to comply with a final court order may lead to theimposition of a penalty of 10% of the award.

6.4 Do the courts in Brazil have the power to strike out part ofa statement of case? If so, in what circumstances?

If the defendant believes the statement of case to be defective hemust raise this as a preliminary issue in his defence. If found to bedefective, the whole pleading will be struck out. There is noprovision for striking out part of the statement of case.

6.5 Can the civil courts in Brazil enter summary judgment?

Article 330 of the CPC provides for summary judgment when 1) theissues before the court raise only questions of law and there is noneed to hear evidence or make a finding on the facts or 2) thedefendant fails to file a defence within the specified time limit.

6.6 Do the courts in Brazil have any powers to discontinue orstay the proceedings? If so, in what circumstances?

The CPC sets out the circumstances in which the judge may stayproceedings. These are:

death or incapacity of a party, or his attorney-in-fact orcounsel;consent of the parties;when there is a challenge to the exclusive jurisdiction of thecourt;when the court’s order depends on the making of an order byanother court;when further evidence adduced in separate proceedings isnecessary for the making of a decision in the case before thecourt; and/orthe occurrence of force majeure.

Discontinuance by the claimant is subject to the defendant’s consentif notice of the commencement of proceedings has already beenserved.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Brazil? Are there any classes of documents that do notrequire disclosure?

There is no provision for automatic disclosure. A party must makea specific request for the exhibition of any item of evidence deemedto be relevant. Disclosure cannot be ordered where the information

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source is privileged, e.g., professional privilege or public interest.All client-lawyer communications are covered by professionalprivilege.

7.2 What are the rules on privilege in civil proceedings inBrazil?

A party is not required to disclose information or give oraltestimony about facts that are: (a) prejudicial to him, his spouse orclose relatives; or (b) covered by professional privilege.

7.3 What are the rules in Brazil with respect to disclosure bythird parties?

The judge may require a third party, within a period of 10 days, topresent a document to the court. If the party refuses to present thedocument or claims that it is not in his possession, a special hearingwill be scheduled and the judge will make a decision as to the needfor the disclosure of the document. A third party may, inaccordance with the terms of the CPC, justifiably refuse to discloseinformation covered inter alia by professional or personal privilege.

7.4 What is the court’s role in disclosure in civil proceedingsin Brazil?

The court determines the need for disclosure according toprocedural rules and it may order disclosure of documents uponrequest of a party. If a party unreasonably refuses to comply withan order for disclosure, the court may deem to be true the factssought to be proved by the evidence in question.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Brazil?

Certain proceedings are by their nature confidential e.g. thoserelating to family issues or where so required in the public interest,and only the parties may have access to the evidence disclosed.Otherwise, proceedings are deemed public and there is norestriction on the use of disclosed documents.

8 Evidence

8.1 What are the basic rules of evidence in Brazil?

The claimant and the defendant have a duty to set out in thepleadings the evidence they intend to adduce. The court has theauthority to decide whether such evidence is relevant as well as todetermine the production of such further other evidence as it deemsappropriate. A decision rejecting an application to file evidencemay be subject to challenge on the grounds of infringement of theconstitutional right of due process.


As a general rule, all evidence produced through legal and morallysound means is admissible subject to the following exceptions:

Documents: all documentary evidence is admissible. Whenthe law requires evidence by means of a given publicinstrument no other evidence is acceptable.Witness: it is the judge who examines the witness. Allquestions are addressed to the judge who puts them to the

witness, with any re-formulation he (the judge) deemsnecessary. The judge has powers to refuse questions towitnesses concerning facts which: (a) have already beenproven by documentary evidence or admitted by a party; or(b) which can only be proven by means of documentary orexpert evidence.Expert witness: the judge will reject a request for expertevidence if the fact in issue does not require specialisttechnical analysis, or when such evidence is unnecessary inthe light of other available evidence; or when it will not, inpractical terms, be possible to verify the evidence sought tobe adduced.


As a general rule, the judge, when setting the date for final hearing,will specify a date by which the parties must file a list of thewitnesses they intend to call (limited to a maximum of 10 witnessesfor each party). Should the judge not specify a date, the list is to befiled 10 days before the final hearing according to article 407 of theCPC.”

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Brazil?

The court plays a central role in deciding what evidence should beproduced.For example, if the party intends to produce expert evidence, it isthe court that approves, instructs and appoints the expert. Questionsto the expert are presented by the parties and may be rejected by thecourt, if deemed inappropriate or irrelevant.(See the answers to questions 7.4 and 8.3.)


9.1 What different types of judgments and orders are the civilcourts in Brazil empowered to issue and in whatcircumstances?

In terms of final orders in substantive proceedings the judgmentsmade are classified as ‘terminativas’ when they bring theproceedings to an end without analysing the merits and ‘definitivas’(definitive) when they address the substantive issue. ‘Definitive’orders are:

declaratory: when they acknowledge (declare) the existenceor non-existence of a legal relationship or whether adocument is false or not;condemnatory: when they order defendant to do, or refrainform doing something (e.g.: specific performance) or to paydamages; and/orconstitutive: when they create, modify or extinguish a legalrelation or state (e.g. an order for divorce).

Courts may also issue interim or preliminary orders, such asinjunctions, restraining and freezing orders.


The judge, in making his order, is limited to the specific requestsmade by the parties.Damages are meant to effectively restore a claimant to the position



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he would have been had the defendant (a) refrained from practicingthe acts that allegedly caused the damage, or (b) performed a certainact in accordance with obligations imposed by a contract or the law.A claimant may seek payment of material or moral damages.Material damages encompass actual loss (reduction in assets) andloss of earnings. Moral damages are designed to compensate painand suffering, including psychological distress caused by a tortiousact.Punitive damages are not generally awarded although there isgrowing support for their application particularly in consumer lawcases.An award for damages is subject to financial adjustment andinterest at the rate of 12% per annum, accrued as from the date ofthe tortious act or, in contractual disputes, from the date of serviceof notice of proceedings. Article 20 of the CPC sets out the general rule that the losing partywill be subject to an order for costs and attorneys’ fees.


In order to be enforced in Brazil, a foreign order must behomologated by the Superior court of Justice - the STJ. Thefollowing pre-requisites must be satisfied: I) the order must havebeen made by a competent (i.e. having jurisdiction) authority; II)the parties must have been duly served or a judgment in defaultmust have been made; III) the order must be final and binding (nopossibility of further appeal); and IV) it must have beenauthenticated by the Brazilian consulate in the country in which itwas made and be accompanied by an official sworn translation. Furthermore, the order may not run contrary to Braziliansovereignty or public interest. Following homologation by the STJ, the order is forwarded to alocal federal court for enforcement.

9.4 What are the rules of appeal against a judgment of a civilcourt of Brazil?

There are several appeals available to parties. They are thefollowing:

Interlocutory appeals may be filed within 10 days of themaking of decisions that address ancillary issues arisingduring the course of the proceedings (interlocutorydecisions).Appeals may be filed against a final order (‘terminative’ or‘definitive’- see question 9.1 above). The time limit forlodging an appeal is 15 days.Appeals for Clarification (Embargos de declaração) may belodged before the same court which made the order, on thebasis that said order is in some way obscure or contradictoryor contains an omission.Parties may present appeals against an order from anAppellate Court to the Supreme Court, if the order violatesthe Constitution, or to the Superior Court of Justice, if itviolates provisions of federal law or diverges from an orderissued by another Appellate Court (see the answer toquestion 1.2).


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Brazil?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a quick overview of each available method.)

The most widely used method of alternative dispute resolution isarbitration.Law nº 9.307/96, the Brazilian Arbitration Law (BAL), is widelyconsidered to have been a milestone in the history of arbitration inBrazil. Prior to its enactment, arbitration clauses were not consideredby the courts to be binding and enforceable. Since then, severalsignificant events have helped shape the development of arbitration inBrazil. The Supreme Court rejected a challenge to theconstitutionality of the BAL (AgRg SE nº 5206-7); the New YorkConvention on the Recognition and Enforcement of Foreign ArbitralAwards was finally introduced (Presidential Decree nº 4.311/2002); in2004, jurisdiction to recognise foreign arbitral awards was transferredfrom the overworked Supreme Court to the Superior Court of Justice(Constitutional Amendment nº 45/04) thus significantly speeding upthe recognition process; and a number of decisions by Brazilian Courtssettled issues that were crucial to the process of ensuring thatarbitration had a secure foothold within the legal system.Conciliation is mandatory in court proceedings, but it is poorly usedand, therefore, produces little effect in the settlement of disputes.Mediation is still incipient in Brazil.


There is no law governing mediation in Brazil but several localinstitutions provide a comprehensive set of rules governingmediation. As to arbitration, see the answer to question 1.1.

1.3 Are there any areas of law in Brazil that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Brazilian law allows capable parties to submit to arbitration anydispute related to freely negotiable property rights. There has beenconsiderable debate as to the extent to which the rights andobligations of state owned entities are freely negotiable and, thus,may be submitted to arbitration. Brazilian courts have alreadysettled this matter and there are some precedents of the SuperiorTribunal of Justice recognising that state owned companies cansubmit their disputes to arbitration.


2.1 What are the major dispute resolution institutions inBrazil?

The main arbitration institutions in Brazil are:Câmara de Conciliação e Arbitragem da Fundação GetúlioVargas (FGV) - Getulio Vargas Foundation Conciliation andArbitration Chamber;Centro Brasileiro de Mediação e Arbitragem (CBMA) -Brazilian Center of Mediation and Arbitration;

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Câmara de Comércio Brasil-Canadá (CCBC) - Brazil-Canada Chamber of Commerce;Câmara de Arbitragem Empresarial - Brasil (CAMARB) -Brazilian Chamber of Commercial Arbitration;Câmara de Arbitragem do Mercado (CAM) - FinancialMarket Arbitration Chamber;Câmara de Mediação e Arbitragem de São Paulo (CIESP) -São Paulo Chamber of Mediation and Arbitration;Câmara de Mediação e Arbitragem das Eurocânaras -Câmara de Comércio França-Brasil - French-BrazilianChamber of Commerce; andCâmara da Amcham/SP - American Chamber ofCommerce/SP.


The arbitral awards, unlike mediation and conciliation, are fullyenforceable by the courts in accordance with the provisions of theBAL. Arbitrators have no powers to enforce their awards.



Arbitration is expanding rapidly and this process is likely tocontinue. Mediation is developing at a slower rate, but hasnevertheless gained a strong foothold particularly in the maincommercial centres of Rio de Janeiro and São Paulo.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Brazil?

The Electric Energy Regulatory Agency (ANEEL) has approvedResolution n° 531 of 7th August, 2007, of the Electrical EnergyCommercialization Board (Câmara de Comercialização de EnergiaElétrica - CCEE), which requires all parties involved in thegeneration and sale of electricity to submit any disputes arisingtherefrom to arbitration. This covers public serviceconcessionaires, independent producers, distributors, exporters andimporters and final consumers. Litigation affecting the interests ofANEEL itself may not be submitted to arbitration (on the basis thatits rights are non-waivable, in the public interest). Neverthelessinnumerable contracts for the sale and supply of energy in thishighly significant economic sector will now contain an arbitrationclause.

AcknowledgmentThe authors would like to acknowledge the assistance of theircolleague Andre Chateaubriand Martins, a junior partner at SergioBermudes Advogados, for all his support in the preparation of thischapter. Andre was awarded an LL.M by Columbia Law School in2006 and has specialised in litigation and international arbitration atSergio Bermudes Advogados since 2003.



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Fabiano Robalinho Cavalcanti

Sergio Bermudes Law FirmPraça XV de Novembro, nº 20, 8th floorRio de JaneiroBrazil

Tel: +55 21 3221 9000Fax: +55 21 3221 9001Email: [email protected]: www.sbadv.com.br

FABIANO ROBALINHO is a partner at Sergio Bermudes Advogados.He graduated in Law from the Pontificate Catholic University of Riode Janeiro (PUC-RJ), where he currently lectures on InternationalArbitration. In 2001, he was awarded an LL.M from the Universityof Harvard and was admitted to the New York Bar. He worked atDebevoise and Plimpton, NY, from August 2000 through August2001. He is a professor of Conflict of Laws at the Getúlio VargasFoundation (FGV). Fabiano specialises in litigation and internationalarbitration on a wide range of commercial issues.

Marcio Vieira Souto Costa Ferreira

Sergio Bermudes Law FirmPraça XV de Novembro, nº 20, 8th floorRio de JaneiroBrazil

Tel: +55 21 3221 9000Fax: +55 21 3221 9001Email: [email protected]: www.sbadv.com.br

MARCIO VIEIRA SOUTO COSTA FERREIRA is a partner at SergioBermudes Advogados. He graduated in Law from the StateUniversity of Rio de Janeiro (UERJ) and, in 1998, was awarded anLL.M by the University of São Paulo. Since 1993 he has beenProfessor of Civil Procedure at the Pontificate Catholic University ofRio de Janeiro. He has also lectured on Arbitration on the Master’sDegree in Business Law run by the IAG (Institute of Managementand Administration - PUC-RJ). He was appointed to the Council ofthe Rio de Janeiro Section of the Brazilian Bar association, aposition he held form 2004-2006. He was also Vice-President ofthe Mediation and Arbitration Committee of the Rio de Janeiro BarAssociation. Marcio specialises in complex litigation andinternational arbitration on a wide range of commercial issues.

Sergio Bermudes founded the firm which takes his name in 1969. Sergio Bermudes Advogados is internationallyrecognised as the Brazilian leader in litigation, commercial arbitration and insolvency law (Chambers and Partners,Legal 500, Who’s Who Legal). Over the past 38 years, it has represented companies operating in a broad range ofcommercial activities including telecommunications and media, energy, oil & gas, banking and finance, insurance,airline services, rail, road and maritime transport systems and public service concessionaires, among others.

In addition to representing clients before national and international courts and tribunals, Sergio Bermudes Advogadoshas extensive experience of pro-active legal work, providing advice and assistance on a broad range of contentious andnon-contentious issues including strategic planning aimed at avoiding future litigation and cost-effective negotiatedsettlement of potential and existing disputes.

The firm has also represented clients in major domestic and international arbitration proceedings. Sergio Bermudeshimself has sat as chairman and co-arbitrator in several arbitrations both in Brazil and abroad.

Members of the firm are strongly encouraged to continue legal study post qualification and several have been awardedpostgraduate degrees from prestigious universities in Brazil, the United States and Europe. Some of our lawyers lecturepart-time at local universities at both graduate and postgraduate levels.




Chapter 7

Borislav Boyanov & Co.

Bulgaria

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Bulgaria got? Are there anyrules that govern civil procedure in Bulgaria?

Bulgaria has a continental law system. In adjudication of disputesthe Bulgarian courts apply written law. Judicial precedents are notrecognised as a source of law. Civil procedure in Bulgaria is governed by the Civil ProcedureCode (CPC), the Judiciary Act and some substantive laws (e.g.Anti-Discrimination Act, Consumer Protection Act, State LiabilityAct, etc.).

1.2 How is the civil court system in Bulgaria structured? Whatare the various levels of appeal and are there anyspecialist courts?

Civil and commercial matters are examined by the civil andcommercial departments of regional and district courts, courts ofappeal and the SCC. No special courts exist in Bulgaria.Regional courts act as first instance in all cases save for caseswhich, according to the express provision of the law, are under thejurisdiction of district courts as first instance (e.g. ownership andother rights-in-rem claims with value of the claim exceeding BGN50,000 (approximately 25,000); civil and commercial claimsexceeding EUR 12,500, etc.). Appeals against judgments ofregional courts shall be lodged with the respective district courts,whereas first-instance judgments of district courts can bechallenged before courts of appeal.The SCC carries out a review on points of law (cassation) oversecond instance decisions provided that admissibility requirementsfor cassation are met (see question 9.4 below).

1.3 What are the main stages in civil proceedings in Bulgaria?What is their underlying timeframe?

The main stages in civil proceedings before the Bulgarian first-instance courts are:

submission of a statement of claim;service of the statement of claim to the defendant;submission of a response to Statement of claim;examination by the court of the statement of claimconcerning its conformity with formal requirement of CPC

the admissibility of the actions brought as well as of the otherrequests and oppositions of the parties, at the end of whichthe court shall render a ruling on all preliminary issues andon admission of the evidence;listing the case for trial;trial (it could be one court hearing but it could be moredepending on the objections raised and evidence to begathered); andrendering the judgment and estimation of the costs.

The main stages at second instance are:submission of an appeal to the first-instance judgment;service of the appeal to the other party;submission of a response to the appeal and a cross-appeal;examination by the court of the appeal and the cross-appealconcerning its conformity with formal requirement of CPC;listing the case for trial;trial; andrendering the judgment and estimation of the costs.

The Bulgarian law provides strict time limits with respect to someof the stages of the proceedings. These will be discussed in therespective parts of this report.

1.4 What is Bulgaria’s local judiciary’s approach to exclusivejurisdiction clauses?

An exclusive jurisdiction clause in favour of foreign courts will berespected by the Bulgarian courts provided that the case is notcovered by their exclusive jurisdiction. The law definescircumstances in which Bulgarian courts have exclusivejurisdiction and, at present, these include, inter alia, disputes overrights in-rem for real property on the territory of the country,disputes on corporate issues of Bulgarian legal entities, etc. In caseof an exclusive jurisdiction clause, the respective Bulgarian courtwill relinquish jurisdiction in favour of the foreign court uponobjection raised by the defendant within the time limit forsubmission of the response to statement of claim.

1.5 What are the costs of civil court proceedings in Bulgaria?Who bears these costs?

Costs in civil proceedings in Bulgaria may include court fees,expenses for expert opinions and witness testimony, as well aslawyer fees. They may vary considerably depending on the interestat stake (the value of the claim or of the appeal), on the complexityof the case, as well as on the rates of the lawyer fees. The general rule is that the losing party has to cover the costs paid

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Borislav Boyanov & Co. Bulgaria

by the successful party (“costs follow the event” principle).However, the CPC puts a threshold on lawyer’s fees which can berecovered. Firstly, the winning party is entitled to thereimbursement of the fees of a single lawyer (regardless how manylawyers have actually worked on the case). Secondly, the feesagreed and paid by the party to the lawyer can be reimbursed in adiminished amount in case the court finds that the gees actually paidby the party are excessive. The defendant is entitled to require theplaintiff to recover the costs of the proceedings paid by him in theproportion of the rejected part of the claim. The same right thedefendant has in case of termination of the proceedings. Therecoverable amount of the costs and the party to bear them areassessed by the court in its judgment, respectively in its ruling ontermination.

1.6 Are there any particular rules about funding litigation inBulgaria? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

The Bulgarian legal system allows conditional fee arrangementsbetween a lawyer and a client, except for cases involving non-material interest. However, according to the established case-law ofthe Bulgarian courts, conditional fees are not recoverable as theydepend on the outcome of the case and, hence, have not been paidup by the end of the trial, e.g. by the end of the final court hearingbefore the issuance of the court decision.No special rules on security for costs exist in Bulgaria. However itis possible to require the court to order security measures (byimposing injunction against the defendant) in order to secure theenforcement of the future decision, including the costs - at leastthose already paid with by the claimant at the time the request forsecurity has been filed).


2.1 Are there any pre-action procedures in place in Bulgaria?What is their scope?

No pre-action procedures exist in Bulgaria.


Limitation periods under Bulgarian law are divided intoprescription periods which are considered to be a substantive lawissue and preclusion periods which are a procedural law issue. The general prescription period for all claims is 5 years, except if itis otherwise provided by law. Tort claims and claims for rescissionof contracts are subject to 5-year prescription period. Prescriptionperiod is 3 years for claims for damages and liquidated damagesfrom non-performed contracts and for claims for rent, interest andother periodic payments. Prescription periods start to run from thedate on which the obligation became executable, that is to say fromthe date on which the cause of action occurred. These terms areapplied by the court only upon objection raised by the defendant. Ifcertain events (expressly and exhaustively listed in the law) occur,such terms can stop running and, after the cause no longer exists,continue to run; such terms can be interrupted and a new limitationperiod shall start to run from the moment of interruption.There are preclusion periods for the lodging of certain claims (onlyin cases expressly provided by the law). Such terms are applied by

the court ex officio and if a claim is filed after the expiration of theterm it is considered inadmissible, and the case is terminatedwithout being heard on the merits.


3.1 How are civil proceedings commenced (issued and served)in Bulgaria? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Bulgaria? Is there a preferred method ofservice of foreign proceedings in Bulgaria?

Civil proceedings in Bulgaria are commenced by the lodging of thestatement of claim with the court. The statement of claim has to beserved to the defendant but no specific time limit for the service isset forth. Permissible means of service include:

service in person;by post or courier with a registered mail with a receipt ofdelivery; orby means of telephone, telex, telefax or by telegram or via e-mail.

The deemed date of service is:1. the date of handing the communication over to the party or to

its representative, or to another person on the same addresswho has given his/her consent to accept the communication;

2. the date on which the party appears to receive thecommunication in person from the court or the municipalityor a private enforcement agent, as the case may be, after anote has been left in/on his/her mail box or on the front doornotifying that a term of 2 weeks is given for thecommunication to be received;

3. in case the party does not appear as in p.2, the court shallrequire a certificate for the current and the permanent addressof the person, and in case it is different from the oneidentified in the court file, a new process of notification willstart as in p.2, which will end up either by the date when theparty will appear or by the date of expiration of the term of 2weeks notice;

4. if it is proved that the respondent does not have a registeredpermanent or current address in the country, and if it isconfirmed by a declaration that the plaintiff is not aware ofthe address of the respondent abroad, service shall beeffected through publication in the Unofficial Section of theState Gazette, performed at least 1 month before the hearing;and/or

5. the date on which the delivery is attested: by the addressee inthe receipt for delivery by post; by the server in writing ifservice is by telephone; or by telefax, respectively if it isservice by telegram - by an advice of delivery of the saidtelegram, and where service has been effected by means oftelex - the date of the written confirmation of delivery of themessage and service at an electronic address shall be attestedby a copy of the electronic record of the service.

If there are any non-conformities upon the service, the said serviceshall be presumed effected at the time at which the communicationactually reached the addressee.Service abroad is effected pursuant to the legislation of the statewhere service is sought. Applicable rule are also included in the1965 Hague Convention on the Service Abroad of Judicial andExtra-judicial Documents in Civil and Commercial Matters (theHague Convention) and the EU Service Regulation (Councilregulation (EC) No 1348/2000). The state bodies in charge for theservice under these acts are, respectively, the Ministry of Justice

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and the court before which the proceedings are pending. As far as we know the preferred method of service of foreignproceedings in Bulgaria is service in person.

3.2 Are any pre-action interim remedies available in Bulgaria?How do you apply for them? What are the main criteria forobtaining these?

The Bulgarian courts are empowered to impose various pre-actioninterim measures, including orders for freezing movable orimmovable assets or bank account of the defendant, as well as anyother appropriate measures as requested by the plaintiff. Theproceedings start by an application by the claimant. The court willorder the pre-action interim measures provided that the followingconditions are fulfilled:

the action is supported by convincing written evidence;and/orthe claimant has furnished the court with a guarantee in anamount determined by the court.

When the request for pre-action interim measures is granted, theplaintiff is given a term no longer than a month to lodge the claim.The interim measures are applied without notice to the other party. Interim remedies are also available in relation to proceedings whichare already pending, or will take place outside the jurisdiction.


Claimant’s pleadings (a statement of claim) must be written inBulgarian and signed by the plaintiff. The statement of claimshould clearly set out:

the names and addresses of the parties;the value of the claim;the facts giving rise to the dispute; andthe relief sought.


At any time before the statement of claim is served to the otherparty the plaintiff may amend either the cause of action (the factswhich ground the claim) or the relief sought. He/she could do thisduring the first trial hearing, as well, but amendment of the cause ofaction has to be permitted by the court if it does not hamper thedefence to the action. Also, prior to the end of the trial the plaintiffmay change the amount of the relief and pass from a declaratoryaction to an action for a judgment for performance.

4 Defending a Claim


Statement of defence (response to the statement of claim) muststate:

a defendant’s stand on both the admissibility and the meritsof the claim;a statement about the facts upon which the action is founded;andthe objections to the claim and the circumstances upon whichthe said objections are founded.

Within the deadline for the statement of defence, the defendant canbring a counterclaim if it is covered by the subject-matterjurisdiction of the same court and is connected with the initial claimor can be set-off against it. In addition, a defence of set-off isavailable to the defendant during the trail. Each of the parties may bring an additional action to establish theexistence of a disputable relationship that is decisive for the propersolution of the case at hand, the so called incidental declaratoryaction (incidenten ustanovitelen isk).


After the statement of claim is served to the defendant, the lattershall be given a term of one week to prepare and submit to the courtthe statement of defence.No specific time limit for the service of the statement of defence tothe plaintiff is then provided for. As a general rule, the statement ofdefence is served to the plaintiff together with the summons for thefirst hearing at least one week before the scheduled date of thehearing.


The defendant can pass on liability to a third party by bringing theso called “reverse action” against this person. The defendant isentitled to request the inclusion of the third party to the proceedings,if the latter has an interest in the final dismissal of the principleclaim and, simultaneously with the request for inclusion, thedefendant can bring the reverse claim against the third party forjointed examination with the principle claim. If the court refuses toallow the joinder of the claims, the reverse claim will be reviewedin separate proceedings in which the reasoning of the court in itsjudgment on the principle claim will be binding on the defendantand the third person.The defendant may bring a reverse action after the end of the trial,even if he/she has not requested the inclusion of the third party.However, in this case, the latter could avoid liability through thedefence of negligent conduct of the previous trial.


If the defendant fails to submit the response to the statement ofclaim, thus failing to give a written answer, to take a stand, to lodgeoppositions, to contest the truthfulness of a document presented, tocite evidence, to present written evidence or to file a counterclaim,or to file an incidental declaratory action or to require the inclusionof a third party and to file a reverse claim, that defendant shallforfeit the possibility to do so later, unless the omission is due tospecial unforeseen circumstances.If the defendant has not presented a statement of defence and hasnot appeared at the first hearing, the court may, at plaintiff’srequest, deliver a default judgment which is final and binding uponthe parties. There are specific remedies against a default judgment: within amonth from the service of the judgment the defendant may requestthe court to set it aside, if the defendant was unable to participate inthe trial because of undue service or reasons which are out ofhis/her control; the defendant may claim or challenge the rightresolved by the default judgment in case of new or newly



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discovered circumstances or new evidence. If the defendant expressly admits the claim, the court may uponrequest of the plaintiff hold a judgment based on the admission ofthe claim.


The court’s subjective jurisdiction can be challenged at any timeduring the proceeding before first and second instance courts. Theterritorial jurisdiction may be disputed by the defendant before thefirst-instance court within the time limit for submission of thestatement of defence, except for the territorial jurisdiction related tothe location of a real estate at dispute, which may be contested upto the end of the trial.


5.1 Is there a mechanism in your civil justice system whereby athird party can be joined into ongoing proceedings inappropriate circumstances? If so, what are thosecircumstances?

At any time during the trial a third party may join in an ongoing civilproceedings to support any of the parties if the third party is interestedthe court to render a judgment in favour of the supported party. As mentioned above, any of the parties to the proceedings may requestthe inclusion of a third party who has the right to join the proceedingaccording to the preceding sentence.

5.2 Does your civil justice system allow for the consolidation oftwo sets of proceedings in appropriate circumstances? If so,what are those circumstances?

It is possible to consolidate closely connected claims between thesame parties or between the plaintiff/defendant and a third party(objective consolidation). Consolidation is possible where the claimsaccommodate under the jurisdiction of the same court and must beexamined under the same procedure. It is also possible to consolidate claims brought by several plaintiffsand/or against several defendants (subjective consolidation) providedthat the subject matter of the dispute includes:

their common rights and obligations; orrights and obligations resting on one and the same grounds.


The Bulgarian courts have discretion to order split trials, meaningreviewing objectively or subjectively consolidated claims in separateproceeding, if joint examination of the claims would impedeexamination of the case. The courts may order the split trials either ontheir own motion or upon application by any of the parties.


6.1 Is there any particular case allocation system before the civilcourts in Bulgaria? How are cases allocated?

Generally, allocation of cases before the different court levels andthe courts of one and the same level is governed by the rules ofsubjective and territorial jurisdiction. Apart from this, there is noparticular system for allocation of cases before civil courts in

Bulgaria. In practice, cases are allocated to either a civil or acommercial department of competent court and then assigned to aparticular panel of the respective department.

6.2 Do the courts in Bulgaria have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The Bulgarian courts have broad management powers whichinclude performance ex officio of all necessary procedural steps andscrutinising the due performance of the necessary procedural stepsof the parties. Courts, inter alia, are authorised to:

summon parties and other participants and servecommunications and documents; administer and control the progress of the case by settingprocedural time limits and giving other appropriatedirections; prepare report on the case to identify the issues which requirefull investigation and the issues which do not;facilitate the parties to make use of mediation or otherdispute resolution procedures or to reach out-of-courtagreement; andappoint expert witnesses and prepare records of courthearings.

A broad variety of interim applications are available to the parties,including application for:

interim injunctions (see question 3.2 above);orders for appointment of an expert witness; andorders for disclosure of a document (see question 7.1 below).

Normally, the courts determine the related costs, if any, togetherwith ordering the respective action.

6.3 What sanctions are the courts in Bulgaria empowered toimpose on a party that disobeys the court’s orders ordirections?

The court can impose fines upon recalcitrant party. The courts alsoare allowed to draw adverse inference from party’s failure to take acertain action or to terminate the proceeding in appropriatecircumstances (see questions 6.4 to 6.6 below).

6.4 Do the courts in Bulgaria have the power to strike out partof a statement of case? If so, in what circumstances?

A civil case can be terminated in whole or in part:on admissibility grounds (lack of legal capacity; lack of legalstanding; lack of procedural right to bring a claim);where the claimant failed to fulfil the court instructions tocorrect the deficiencies of the statement of claim (fully orpartially); and/or upon waiver or withdrawal of the claim by the plaintiff.

6.5 Can the civil courts in Bulgaria enter summary judgment?

The Bulgarian law does not regulate issuance of a summaryjudgment within the meaning of common law. However, it providesfor a summary procedure to be applicable in commercial disputes.Courts may examine commercial cases in camera on the basis of thepapers presented by the parties either where it was so requested bythe parties or where all evidence has been presented by theexchange of papers and should the court hold that hearing of theparties in person is not necessary.

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6.6 Do the courts in Bulgaria have any powers to discontinueor stay the proceedings? If so, in what circumstances?

The courts can discontinue proceedings only in cases expresslylisted in the law: 1. In case of stay of proceedings based on mutual consent of the

parties and if within a term of 6 months none of the partiesmove for the resumption of the proceedings.

2. On request of the plaintiff who waives his/her claim. Afterthe termination the plaintiff shall no longer be entitled tobring the same action again.

3. On request of the plaintiff who withdraws the claim, in whichcase the plaintiff’s right to sue the defendant in a newproceedings in the future is preserved, and because of that insuch case the termination of the case depends on whether thedefendant gives consent for the termination of case.

4. In case a settlement of the dispute is reached by the partiesand the court approves of the settlement, the case isterminated in whole on in the part which has been settled.

The courts can stay proceedings, inter alia:by mutual consent of the parties;in the event of death of any of the parties;where it is necessary to institute tutorship or curatorship forany of the parties;where a case is examined in the same or in another court andthe judgment in the said case will be relevant to the properdetermination of the dispute - until that case is finally resolved;where criminal circumstances are discovered and theoutcome of the civil dispute depends on the establishment ofthe said circumstances;where the Constitutional Court has admitted to examinationon the merits a motion whereby the constitutionality of a lawapplicable to the case is contested; andin the cases expressly provided for in a law.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Bulgaria? Are there any classes of documents that donot require disclosure?

The Bulgarian procedural law does not recognise a general right todisclosure. The parties are not obliged to exchange a list of relevantdocumentation in their control. Neither are they obliged to revealor present all relevant documents to the opposing party. According to CPC, any of the party is entitled to request the courtto order the other party to present a specific document which is inthe latter’s possession and explaining the relevance of the documentto the dispute. The court is empowered to draw adverse inferencefrom the party’s failure to present the document and may assume inthe latter’s detriment that the respective fact has been proved.The court, on request of any of the parties, can order that a thirdparty present a document which is considered to be relevant to thedispute.

7.2 What are the rules on privilege in civil proceedings inBulgaria?

Under the Bar Act attorney-at-law papers, files, electronicdocuments, computer equipment and other carriers of informationshall be privileged and confidential. Correspondence between anattorney-at-law and his or her client, irrespective of the manner it ismaintained, including electronically, shall be as well privileged and

confidential. Conferences between an attorney-at-law and his orher client shall not be intercepted and recorded. Any recordings,where available, shall not be used as means of evidence and shall besubject to immediate destruction.Attorneys-at-law shall not be interrogated in their proceduralcapacity with regard to: their conferences and correspondence withclients; their conferences and correspondence with anotherattorney-at-law; the affairs of clients; or facts and circumstances, ofwhich they have become aware in relation to the provision ofprotection and assistanceThe CPC stipulates that any of the parties may refuse to present adocument if its contents concerns his/her private or family life orthe presentation would lead to defamation or self-incrimination ofthe party or his/her relatives.Disclosure of documents is also subject to the rules on protection ofclassified information.

7.3 What are the rules in Bulgaria with respect to disclosureby third parties?

Each party may ask the court to oblige a third person to present aspecific document which is in his/her possession. Failing to do so,the third person will face the risk of being fined by the court.He/she will also be liable for damages vis-a-vis the party requestingthe presentation of the document.

7.4 What is the court’s role in disclosure in civil proceedingsin Bulgaria?

The court plays a decisive role in disclosure of documents in thecontext of civil proceedings in Bulgaria. They are authorised toorder the disclosure of certain documents of relevance to the case.Furthermore, they may draw adverse inference from a party’sfailure to comply with their orders. The procedure explained inquestion 7.1 above is the only legal remedy available to a party toobtain a document which is in the opposing party’s possession.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Bulgaria?

As a matter of principle, any document obtained in the context ofcivil proceedings may not be used for any other purposes. The CPCdoes not contain any specific provisions in this regard. The use ofinformation and/or documents is governed by general rules ofinformation and personal data laws.

8 Evidence

8.1 What are the basic rules of evidence in Bulgaria?

The general rule of evidence in Bulgaria is that each party shouldprove his/her allegation. Both the plaintiff and the defendant shouldadduce their evidence and the facts they seek to prove and presentall written evidence together with, respectively, the statement ofclaim or statement of defence. Facts in respect of which a presumption established by law existsneed not be proved. Refutation of such presumptions shall begranted in all cases except where a law prohibits this. Any facts of common knowledge and any facts known to the courtex officio, of which the court shall be obligated to inform theparties, shall not have to be proved.



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The admissible type of evidence are: witnesses of fact;acknowledgments of facts by the parties;explanations by the parties which evidence factsunfavourable to the party who provides them;written evidence; andinspection and certification.

Expert witness is admissible where a certain matter, which isrelevant to the dispute, requires a special expertise. Experts areappointed by the court of its own motion or by request of the partiesand must be independent. The Bulgarian law does not considerexpert opinions gathered out-of-court and presented by the partiesas expert evidence but rather as party’s explanations.


Written witness statements are not admissible in civil proceedingsin Bulgaria. Witnesses of facts are cross-examined before the courtand their statements are put in the judicial records. Only parties canrequest witnesses of fact to be called by the court. A witness mayrefuse to testify in special circumstances which are expresslyprovided for by the CPC.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Bulgaria?

The Bulgarian courts play a decisive role in the admission ofevidence. Firstly, any written evidence should be admitted by thecourt in order to be considered in the examination of the case. Also,the court ex officio can appoint expert witnesses.


9.1 What different types of judgments and orders are the civilcourts in Bulgaria empowered to issue and in whatcircumstances?

Depending on the type of claims Bulgarian courts can issue:1. Declarative judgment - establishing the existence or non-

existence of a legal relation, a right, a fact or criminalcircumstances, truthfulness of a document;

2. Judgment for performance - such as performance ofmonetary obligation, or fulfilment of other type ofcontractual or non-contractual obligation; or performance ofrepetitative onligations, or the transfer of possession etc.; and

3. Constitutive judgments - which by entering into forceprovide the requested by the plaintiff legal change.

Depending on the type of proceedings which they resolve courtscan issue:1. Judgments on the merits of the case - these could be

judgments under the general procedure, judgments uponadmission, judgments by default

2. Rulings - on matters whereby the dispute is not resolved onthe merits - these could be rulings on interim measures,rulings on termination of proceedings, rulings on stay ofproceedings, etc; and

3. Orders - such as injunctive orders enforcing the securitymeasures granted, enforcement orders.


The Bulgarian courts are empowered to rule on the compensation ofany loss suffered (loss and loss of profits), including to award non-pecuniary damages. Damages must compensate the actual loss.Punitive damages are not allowed under Bulgarian law.Upon request of the parties, courts can award costs of theproceedings according to the “costs follow the event” principle (seequestion 1.5 above). The courts have the power to award interest on damages awardedupon application by the interested party. The interest rate awardedby the court can be the agreed by the parties but could not exceedthe statutory rate of default interest.


Enforcement of judgments in Bulgaria is carried out by virtue of awrit of execution. Writ of execution is issued only after a judgmenthas entered into force. However, appellate judgments forperformance also constitute enforcement title even they are subjectto appeal on points of law before the SCC. The enforcement iscarried out by enforcement agents, whereas the CPC sets forthspecific rules for enforcement of monetary and different types ofnon-monetary judgments. Bulgaria is a party to a number of bilateral agreements in the sphereof civil justice, which include special provision with respect to theenforcement of judgments. It is also bound by the EU CouncilRegulation 44/2001. Generally, a foreign judgment could beexecuted in Bulgaria if it is recognised by the Bulgarian courtsaccording to the procedure provided for in the CPC. Therecognition is not required if a judgment is given in a EU memberstate, as explicitly provided for by the Regulation 44/2001.

9.4 What are the rules of appeal against a judgment of a civilcourt of Bulgaria?

All first instance judgments are subject to appeal (see question 1.2above). In his/her application to the court the appellant must statethe alleged defects of the judgment. Cassation appeal on points of law is available only where anappellate judgment is (i) null and void, (ii) inadmissible or (iii)erroneous due to a violation of the substantive law, a materialbreach of the procedural rules or unfounded. The admissibilityrequirements for lodging an appeal on points of law are:

the appellate court has pronounced on a material substantiveor procedural legal issue in contradiction with the SCC”scase-law; or the issue has been resolved by Bulgarian courts in aconflicting manner; or it is relevant to the accurate application of the law, as well asto the progress of law.

No review on point of law is available in cases with amount in theclaim is under BGN 10,000 - approximately EUR 500.

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1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Bulgaria?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

The most frequently used method for dispute resolution in Bulgariais arbitration - either institutional or ad-hoc. The Bulgarian courtswill relinquish jurisdiction in case of arbitration clause between theparties. In the context of pending arbitration proceedings the courtscould provide assistance in collection of evidence or order interimmeasures. Bulgarian arbitral awards constitute enforcement titlesand writs of execution can be issued as soon as they enter into force.Enforcement of Bulgarian arbitral awards under foreign jurisdictionis possible by virtue of 1958 New York Convention on theRecognition and Enforcement of Foreign Arbitral Awards to whichBulgaria is a party. In case of dispute the parties may also have recourse to mediationas provided for by the Mediation Act, but this method is still quiteunderdeveloped in Bulgaria. No special tribunal exist in Bulgaria and as such are not permittedby the Constitution.The Ombudsman in Bulgaria (on national level) has beenintroduced in 2004. The Ombudsman has the power, among otherthings, to examine complaints for violation of citizens’ rights andfreedoms by state and municipal authorities. The responsibleauthority is obliged to inform the Ombudsman about the measurestaken to remedy the violation. In some municipalities there aremunicipal ombudsmen.


Arbitration in Bulgaria is governed by the InternationalCommercial Arbitration Act (adopted in 1988 as amended) whichapplies also to purely domestic disputes as well. In addition,depending on the agreement between the parties, variousinstitutional arbitration rules may apply. Mediation is governed by the Mediation Act (of 2004 as amended).The institution of the Ombudsman is governed by the OmbudsmanAct (adopted in 2003 as amended).

1.3 Are there any areas of law in Bulgaria that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Arbitration is applicable to all commercial disputes, except fordisputes determining rights in rem over immovable properties.Disputes involving criminal, family or labour law matters areconsidered non-arbitrable.Similar restrictions apply to mediation. The Ombudsman may act only in case of violation of citizens’rights by state and municipal authorities.


2.1 What are the major dispute resolution institutions inBulgaria?

The two major arbitration institutions in Bulgaria are the ArbitrationCourt at the Bulgarian Chamber of Commerce and Industry (BCCI)and the Arbitration Court at the Bulgarian Industrial Association(BIA).The major mediation institutions are the Mediation Centre at theArbitration Court at the BCCI and the Institute for DisputeResolution at the National Association of Mediators.


Arbitration awards after they enter into force are binding upon theparties and state institutions, including courts, and are enforceableaccording to the CPC and the New York Convention. Settlement agreements reached in mediation are binding on theparties and are enforceable according to the general rules ofcontract law.



In recent years there has been certain growth in the use ofinstitutional arbitration as method for dispute resolution incommercial matters. This is due to the fact that arbitrationproceedings are not so expensive; they are faster; give moreflexibility as to selection of arbitrators, choice of the applicablerules of procedure and admissibility of evidence; and they secureconfidentiality of proceedings. Mediation also experiences certain development in that it becomesmore popular and mediation centres have been established in therecent years. It is difficult to predict if it will be utilised more oftenin the future.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Bulgaria?

In March 2008 the new Bulgarian Civil Procedure Code enteredinto force. The CPC was drafted and passed by the Parliament forfew months to answer to the EU accession requirements rather thanto provide for better regulation of civil proceedings in Bulgaria.The introduction of many new rules and the lack of relevantinformation hamper the efficient application of the Code. We maythus expect that more civil proceedings will be referred toarbitration tribunals in the country for final resolution.



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Kina Chuturkova

Borislav Boyanov & Co.82 Patriarch Evtimii Blvd. Sofia 1463 Bulgaria

Tel: +359 28 055 055Fax: +359 28 055 000Email: [email protected]: www.boyanov.com

Kina is a partner and co-head of Litigation Department of the lawfirm. She joined the law firm in 2002 after more than 20 years ofpractice in the bench, starting from being a junior judge in Sofia CityCourt, judge with the Sofia Region Court, judge with the Sofia CityCourt, and after that, elected a judge in the Supreme Court of theRepublic nowadays the Supreme Court of Cassation, where sheended up as Chief of Commercial Department of that court. She isdealing with civil and commercial litigation, IP litigation, and judicialreview of administrative acts, including cases in front of theCommission for Protection of Competition. She has been workingon arbitration cases, including international arbitrations, both as anarbitrator with the Arbitration Court at the Bulgarian IndustrialAssociation, as well as representing parties to arbitrationproceedings. She is a member of the Editing Board of the lawmagazine “The Human Rights”, issued by the Foundation“Bulgarian Lawyers for Human Rights”.

Georgitsa Petkova

Borislav Boyanov & Co.82 Patriarch Evtimii Blvd. Sofia 1463 Bulgaria

Tel: +359 28 055 055Fax: +359 28 055 000Email: [email protected]: www.boyanov.com

Georgitsa is an associate at the Litigation Practice Group in BorislavBoyanov & Co. experienced in litigation, real estate and constructionlaw and human rights. She is a member of Sofia Bar and memberof the Executive Board of Bulgarian Lawyers for Human RightsFoundation. She is a graduate of New Bulgarian University - Sofia(2004 (LLM in law) and University of Construction and Architecture- Sofia (2000, LLM in Construction). She gained additional trainingin Strategic Litigation and Litigation in Public Interest (2003, BLHR,Bulgaria); Arbitration Proceedings (2005-2006, AC at BCCI); FairTrial in Criminal Cross-Border Proceedings (March, 2008, Universityof Notingham, the UK); and Execution of Judgments of the ECHR(September-November 2008, Council of Europe, Strasbourg,France).

Established in 1990, Borislav Boyanov & Co. has evolved into a leading law firm on the Bulgarian legal market. Bothclients and competitors recognise the firm as an outstanding one stop shop for legal services which is modern, dynamicand business oriented. In the past decade Borislav Boyanov & Co. has always been ranked as a top tier law firm byvarious reputable legal directories. Among the firm’s recognised strengths are extensive national legal expertise, strongregional know-how and contacts based on excellent professional reputation and integrity. The law firm has very strongexpertise in Corporate Law/M&A, International Transactions, Public Procurements, Concessions, Banking & ProjectFinance, and Litigation & Arbitration.

For more detailed information please visit www.boyanov.com.




Chapter 8

Stikeman Elliott LLP

Canada

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Canada got? Are there anyrules that govern civil procedure in Canada?

With the exception of the Province of Quebec, the Canadian legalsystem is based on the English common law tradition. In Quebec,the legal system is based on a Civil Code. Canadian courts are also bound by the principle of stare decisis.However, each province has its own set of rules governing civilprocedure.

1.2 How is the civil court system in Canada structured? Whatare the various levels of appeal and are there anyspecialist courts?

The Canadian legal system is comprised of both provincial andfederal courts. While the names of the courts may vary betweenprovinces, the court structure in each province is similar. Generally,each province has a Provincial Court, a Superior Court and a Courtof Appeal. The Province of Ontario also has an intermediateappellate court, the Divisional Court, between the Superior Courtand the Court of Appeal. In addition, appeals from all provincialCourts of Appeal may be heard by the Supreme Court of Canada(with leave of that court).The Federal Court only hears matters that are specifically within thejurisdiction of the federal government. In turn, the Federal Court ofAppeal hears appeals from the Federal Court.

1.3 What are the main stages in civil proceedings in Canada?What is their underlying timeframe?

The main stages in civil proceedings before Canadian courts are:issuance of a Statement of Claim;service of process on the defendant(s);service of Statement(s) of Defence;service of Reply (if any);disclosure of documents;oral discovery;exchange of expert reports;trial; andappeals (if any).

The rules of civil procedure for each province set out time periodsfor the completion of each stage. In addition to these stages, manyother motions may be brought within the context of a proceeding.Common bases for such motions include jurisdiction disputes,injunctions and issues relating to the pleadings of an opposing party.

1.4 What is Canada’s local judiciary’s approach to exclusivejurisdiction clauses?

Generally, Canadian courts will give effect to exclusive jurisdictionclauses. Where a contract contains a forum selection clause, theplaintiff must show “strong cause” for not granting a stay ofproceedings in favour of that clause (Z.I. Pompey Industrie v. ECU-Line N.V. (The “Canmar Fortune”), [2003] 1 S.C.R. 450). Notably,however, courts may not give effect to such clauses where thereexisted a substantial inequality of bargaining power or where itwould offend public policy.

1.5 What are the costs of civil court proceedings in Canada?Who bears these costs?

The cost of civil proceedings in Canada can vary significantly frommatter to matter depending on factors such as complexity of issuesand legal fees.Generally, Canadian courts adhere to the principle that costs followthe event, that is, the loser bears a portion of the victor’s litigationcosts. However, the percentage of costs recovered and the methodfor calculating costs vary between provinces and may be affectedby, for example, pre-trial offers to settle.

1.6 Are there any particular rules about funding litigation inCanada? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

Contingency fees arrangements are permitted in every province inCanada. However, each province typically imposes conditions onthe use of such arrangements, and there are certain situations inwhich they will not be permitted.While the applicable rules vary between provinces, courts generallyhave discretionary authority to require foreign or impecuniouscorporate plaintiffs to post security for costs in certaincircumstances.

Peter F. C. Howard

David R. Byers



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Stikeman Elliott LLP Canada


2.1 Are there any pre-action procedures in place in Canada?What is their scope?

While delivery of a demand letter to the opposing party is common,there are no required pre-action procedures in Canada.


The issue of limitation periods in Canada is complex. As eachprovince has its own limitations statute, there is no uniformity inrespect of limitation periods across the provinces. Rather, thelimitation period applicable to a particular cause of action isreferenced in the limitations statute of each province and may,therefore, vary markedly from one province to another.At common law, limitation periods are to be treated as substantivelaw (Tolofson v. Jensen, [1994] 3 S.C.R. 1022). However, thelimitations statute of a particular province may stipulate that,notwithstanding the common law, foreign limitation periods willnot be applied to proceedings commenced in that province.


3.1 How are civil proceedings commenced (issued and served)in Canada? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Canada? Is there a preferred method ofservice of foreign proceedings in Canada?

Civil proceedings are typically commenced by issuing a Statementof Claim. However, where the matter is urgent or there are nofactual contentions, other procedures are available. The time periodfor serving an originating process is specified in each province’srules of civil procedure but may be extended by the court in certaincircumstances. Canada is a party to the 1965 Hague Convention on the ServiceAbroad of Judicial and Extra-judicial Documents in Civil andCommercial Matters. As such, service of process must be effected inaccordance with this Convention in other party States. For non-partyStates, service will be effected in the manner provided for in the lawsof the province in which proceedings have been commenced.However, Canada is also bound by several bilateral treaties whichapply to service of process. Where the State in which service is to beeffected is party not only to the Hague Convention, but also to abilateral treaty with Canada, the plaintiff should choose the bestmethod of service (unless the Hague Convention terminates the earlierbilateral treaty pursuant to article 59 of the Vienna Convention).With regard to foreign proceedings, service will be effected inaccordance with the laws in force in the applicable province.

3.2 Are any pre-action interim remedies available in Canada?How do you apply for them? What are the main criteria forobtaining these?

Certain pre-trial, interim remedies are available in each province.Typically, these remedies are based on urgency or an alleged needto preserve evidence of a defendant’s assets within the jurisdiction.Under these interim injunctions, the courts are empowered to grant

orders effectively freezing a defendant’s assets and/or requiring adefendant to allow a search of its [premises] for the collection ofany documents relevant to the litigation. Given their urgent nature,such motions are often made without notice to the defendant.


In Canada, the main elements of the claimant’s pleadings are: a description of the parties;the nature of the claim; any factual contentions; the relief sought; and the value of any monetary claim(s).


Generally, without leave of the court, a plaintiff may amend itsStatement of Claim prior to service. Once the pleadings have beenexchanged, however, amendments can only be made:

on consent of the parties; orwith leave of the court.

The court will typically grant leave to amend the pleadings, exceptin situations where the amendment(s) would result in prejudice tothe opposing party for which adjournment or a higher costs awardwould not be adequate compensation.

4 Defending a Claim


While the applicable rules vary between provinces, a defendant istypically required to specify:

the allegations which it admits;the allegations which it denies;the allegations of which it has no knowledge; the reasons for its denial of any allegations; andthe factual assertions relating to its defence.

In addition to defending the plaintiff’s claim, a defendant can bringa Counterclaim against the plaintiff. The types of claims for whicha defendant may bring a Counterclaim are set out in each province’srules of civil procedure. Further, a defence of set-off is alsoavailable under Canadian law.Finally, a defendant may also bring third party proceedings againstother persons who may have contributed to the plaintiff’s lossand/or cross-claim against other defendants in the proceeding.


The time period for service of a Statement of Defence variesbetween the provinces. While there is no uniformity across Canada,several provinces, including Ontario, have accepted the followingtimeline for serving a Statement of Defence:

20 days following service of the Statement of Claim, wherethe defendant is served within the province;40 days following service of the Statement of Claim, where

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the defendant is served outside the province but withinCanada or the United States; and60 days following service of the Statement of Claim, wherethe defendant is served outside Canada and the United States.

Nonetheless, in complex cases, it is common for parties to negotiatea time extension for service of the Statement of Defence.


In each province, the rules of civil procedure allow defendants tobring claims against third parties for indemnity or contributionwithin the context of an existing proceeding. Again, the claims forwhich third party proceedings may be commenced are set out ineach province’s rules. Generally, any person added as a third partyis entitled to defend not only the third party proceeding, but also themain action.


Each province, in its own rules of civil procedure, specifies a timeperiod in which defendants must respond to a claim. If a defendantfails to defend the claim within the applicable period, a defaultjudgment may be entered against it. Further, depending on the typeof claim at issue, the court may issue judgment on the Statement ofClaim or require additional evidence in proof of damages.


A defendant can dispute the court’s jurisdiction in each province inCanada. However, to avoid a finding of attornment, the defendantmust indicate that it is appearing before the court for the solepurpose of disputing jurisdiction. Merely appearing before a courtto dispute its jurisdiction will not amount to attornment. However,a defendant who disputes the merits of the plaintiff’s claim, ratherthan merely the court’s jurisdiction, may be found to havesubmitted to the jurisdiction of the court.



The rules of civil procedure in each province provide for the joinderof claims where appropriate. As well, each province in Canada hasenacted legislation allowing litigation to proceed on a class, ratherthan merely an individual, basis. More specifically, the legislationpermits classes of plaintiffs and/or classes of defendants.


Generally, each province has rules providing for the consolidationof proceedings. In Canada, consolidation typically occurs wheremultiple proceedings share common issues of fact or law; or therelief claimed arises out of the same transaction or occurrence orseries of transactions or occurrences. However, the court also hasthe discretion to consolidate proceedings where it appears

appropriate in the circumstances. Wherever matters areconsolidated, the proceedings may be heard together or one afterthe other.


The courts of each province have the discretion to permitbifurcation of trials. Typically, such trials are bifurcated betweenliability and damages.


6.1 Is there any particular case allocation system before thecivil courts in Canada? How are cases allocated?

Each province in Canada has its own case allocation system. Insome provinces, case management is applicable to all cases fromthe outset. In other provinces, case management is only availableon a discretionary basis.

6.2 Do the courts in Canada have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

As noted above, the applicability of case management varies fromprovince to province. Nonetheless, wherever case management isapplicable, its objectives are generally the same: to foster efficiencyand encourage resolution or streamlining.

6.3 What sanctions are the courts in Canada empowered toimpose on a party that disobeys the court’s orders ordirections?

The most significant sanction for failing to comply with a courtorder is a contempt of court proceeding. The courts of eachprovince are also generally empowered by the applicable rules toimpose lesser sanctions, such as cost orders or orders striking outthe pleadings of the offending party.

6.4 Do the courts in Canada have the power to strike out partof a statement of case? If so, in what circumstances?

The rules of civil procedure in each province address the courts’power to strike out all or part of a statement of claim. Thecircumstances in which this power might be exercised includewhere all or part of a statement of claim: may prejudice or delay thefair trial of the action; is scandalous, frivolous or vexatious; or is anabuse of the process. Generally, a statement of claim may also bestruck out for failure to comply with procedural orders.

6.5 Can the civil courts in Canada enter summary judgment?

Pursuant to each province’s rules of civil procedure, courts areentitled to enter summary judgment. While the applicable test mayvary slightly between provinces, summary judgment is generallyavailable where there are no genuine issues for trial with respect ofa claim or defence. On a motion for summary judgment, a motionsjudge will generally not assess credibility, weigh evidence or makefindings of fact (if any facts are in dispute). A factual dispute isonly considered to be a genuine issue for trial if it concerns amaterial fact.



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6.6 Do the courts in Canada have any powers to discontinueor stay the proceedings? If so, in what circumstances?

The courts in every province have the power to stay proceedings.While the circumstances in which proceedings may be stayedgenerally vary between provinces, two situations are common.First, courts may stay proceedings for lack of jurisdiction or infavour of a more convenient forum for the dispute. Second, staysare also common where the plaintiff fails to comply with an interimprocedural order, such as an order for security for costs. Additionally, courts have inherent jurisdiction to stay proceedingsthat are considered to be an abuse of process.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Canada? Are there any classes of documents that do notrequire disclosure?

Disclosure (as opposed to production) must be made of everydocument relating to any matter in issue in an action that is or hasbeen in the possession, control or power of a party, whether or notprivileged is claimed in respect of the document. A documentincludes a sound recording, videotape, film, photograph, chart,graph, map, plan, survey, book of account, and data and informationin electronic format. Most jurisdictions are developing or havedeveloped protocols to assist in e-discovery obligations.

7.2 What are the rules on privilege in civil proceedings inCanada?

Where a claim for privilege is made, the grounds for the claim areto be stated, and the nature and date of the document and otherparticulars sufficient to identify it are to be given.Where a party has claimed privilege for a document, the party maynot use the document at trial, except to impeach a witness or withleave of the trial judge, unless he or she abandoned the privilege inwriting at least a set period before commencement of trial.A challenge of a claim for privilege can be made during thediscovery process and will be determined by a judge on a motion.

7.3 What are the rules in Canada with respect to disclosure bythird parties?

Rules differ in various jurisdictions but in general, production ofdocuments may be obtained from non-parties, but only where it isshown that the document is relevant and that it would be inequitableto require the party to proceed to trial without having discovered thedocument.

7.4 What is the court’s role in disclosure in civil proceedingsin Canada?

Again generally, where the court is satisfied by any evidence that arelevant document in a party’s possession, control or power may havebeen omitted from the party’s affidavit of documents, or that a claimof privilege may have been improperly made, the court may: (a) ordercross-examination on the affidavit of documents; (b) order service ofa further and better affidavit of documents; (c) order the disclosure orproduction for inspection of the document, or a part of the document,if it is not privileged; and (d) inspect the document for the purpose ofdetermining its relevance or the validity of a claim of privilege.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Canada?

There is, in most if not all jurisdictions, an express rule or deemedundertaking subject to specified exceptions. In Ontario, Rule30.1.01 states that except in certain circumstances, all parties andtheir lawyers are deemed to undertake not to use evidence orinformation obtained during disclosure for any purposes other thanthose of the proceeding in which the evidence was obtained.The exceptions include evidence filed with the court, given orreferred to during a hearing, use in a subsequent proceeding forimpeachment or where an order is obtained to allow its use.

8 Evidence

8.1 What are the basic rules of evidence in Canada?

The three basic elements are, of course, oral or testimonialevidence, real evidence and documents.The primary rule (subject to exceptions with leave) is that witnessesare to be examined orally in court by direct, cross- and re-examination.Affidavit or discovery evidence (of the party adducing it) may beused only with leave of the court obtained at or before trial.There is also scope for commission evidence or examinations debene esse in appropriate circumstances.


In order to be admissible at the trial of an action, evidence must be“relevant”. Relevance requires that there be a probative connectionbetween the fact which is offered and the fact at issue. The basicrule, subject to a few exceptions, is that witnesses are onlypermitted to proffer evidence of fact, not opinions or views, unlessqualified as an expert. There is a hearsay rule but subject to manyexceptions and discretion. If hearsay dangers are present, the rulestill has some force but the practice in non-jury cases is almostalways to hear the evidence and defer a ruling until later.If a party intends to call an expert witness at trial, that party must,not less than a set period before the commencement of the trial,serve the expert’s report on every other party to the action. In somejurisdictions, the recipient of an expert’s report must indicate withina set period whether all or portions of the report is disputed. Theexpert must be qualified in the sense of having a particularknowledge or expertise with respect to the question or questions onwhich his/her opinion is proffered. In addition, the area must be onein which expert evidence is proper and useful to the trier of fact.


These rules differ from province to province and with the type ofcase involved. As a general statement, if there is reciprocity, a partycan require or obtain as a matter of practice the names of proposedwitnesses and a short statement of the evidence or facts they areexpected to provide. The ability to examine witnesses for discoveryalso differs for provinces. In Ontario, a litigant is only entitled toexamine one representative of each party as of right and the abilityto obtain additional examinations is limited. In Alberta, there is abroader ability to do discovery of more than one person, closer but

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by no means as extensive as the U.S. deposition practice.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Canada?

As a basic and fundamental precept of the adversary system, thecourt does not, in almost all cases, play any role in the choices madeby the parties as to what evidence to adduce or not to adduce. Thecourt is cautioned not to “descend into the arena” and thecircumstances in which a court obtains separate assistance, usuallyfrom an expert, are both circumscribed and rare.


9.1 What different types of judgments and orders are the civilcourts in Canada empowered to issue and in whatcircumstances?

The superior courts in each province are courts of inherentjurisdiction and have all the jurisdiction, power and authorityhistorically exercised by courts of common law and equity inEngland and the particular province. In addition to moneyjudgments, they have the ability to make declaratory orders, vestingorders, orders for specific performance, grant interim, interlocutoryand permanent injunctions and numerous other matters.


The courts are provided with the power to order both pre and post-judgment interest (see for example sections 128 and 129 of theOntario Courts of Justice Act). The courts have the common lawpowers with respect to damages including the ability to assessexemplary and punitive damages.The usual rule is that costs follow the event, so “loser pays”. Thereare three basic levels: partial indemnity (formerly party and party);substantial indemnity (formerly solicitor and client) and fullindemnity which, although practices differ, will usually result inapproximately 50%, 75% and 100% recovery of actual costs.The court has complete discretion with respect to awards of costs ina proceeding and can also make no order as to costs or inexceptional cases order costs against the successful party, costsagainst a lawyer personally or for or against a non-party.


Once a judgment has been obtained, there are several proceduresavailable in order to enforce the judgment. Writs of seizure and saleare used to enforce a judgment for the payment of money. They aredirected to and filed with the sheriffs in the jurisdictions where thejudgment creditor believes that the judgment debtor has assets. Awrit of delivery can be used to enforce an order for the recover ofpossession of personal property other than money. A writ ofsequestration is authority to a sheriff to take possession of, andhold, the property of a person against whom an order has been madeand to collect and hold any income from the property until theperson complies with the order. A writ of possession is authority forthe sheriff to deliver possession of real property to a party. Anexamination in aid of execution is available to question thejudgment debtor about the whereabouts and particulars of all of hisassets, income, property, debts, dispositions of property that he hasmade, potential sources of income and any other questions that are

relevant to the enforcement of the creditor’s judgment. Agarnishment enables the judgment creditor to re-direct the debts thatare due or may come due to the judgment debtor or direct that aportion of his wages be paid to the sheriff instead.All provinces and territories except Quebec have a ReciprocalEnforcement of Judgments Act and some provinces haveagreements with foreign jurisdictions such as in Ontario theReciprocal Enforcement of Judgments (UK) Act. If reciprocalenforcement legislation exists between the province andjurisdiction of foreign judgment, an application can be made toregister the judgment. In these cases and with respect to otherjurisdictions, a new action can also be brought to enforce thejudgment and the common law tests apply, or a new action could bebrought on the merits of the original action.

9.4 What are the rules of appeal against a judgment of a civilcourt of Canada?

With respect to lower court decisions, each province has particularrules as to the ability to appeal as of right to a Court of Appealand/or whether leave is required.In all civil cases, in order to appeal a decision of a Court of Appealto the Supreme Court of Canada, leave must be sought from theSupreme Court. A successfully application for leave to appeal tothe Supreme Court of Canada must be made before the appeal itselfcan be heard. Applications for leave are in writing and usuallydecided by a panel of three judges of the Court.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Canada?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

The two methods of alternative dispute resolution which areprimarily used in Canada are mediation and arbitration.


Most if not all the provinces have both a domestic and internationalarbitration statutes. See for example the International CommercialArbitration Act (Ontario). Most if not all the provinces provide forsome sort of pre-trial conference or mediation prior to trial.

1.3 Are there any areas of law in Canada that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

As mediation is a consensual process, there aren’t any otherrestrictions. Courts in all the provinces and territories havedeveloped jurisprudence as to when an action will or will not bestayed in favour of arbitration. It must be said that the trend istowards enforcing arbitration clauses and staying court proceedingsbrought contrary to their terms.



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2.1 What are the major dispute resolution institutions inCanada?

The major domestic institutes are the ADR Institute of Canada Inc.and the ADR Chambers. While the majority of their work is ondomestic disputes, they have also handled international matters.The British Columbia International Arbitration Centre is also adomestic institution which specialises in international disputes. Inaddition, the International Chamber of Commerce, the LondonCourt of International Arbitration and the International Centre forDispute Resolution, the international arm of AAA, also administerarbitrations seated in Canada, though to a much lesser extent thanthe domestic institutions.


Settlements entered into as a result of a mediation are enforceablecontractually in the same manner as any other settlement.Arbitration awards are enforceable in accordance with the terms ofthe applicable statute. As an example, section 50 of the OntarioArbitration Act sets out the procedures and duties of the court toenforce and arbitral award.



No trends have been identified.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Canada?

There are no such issues or proceedings to report.

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David R. Byers

Stikeman Elliott LLP5300 Commerce Court West199 Bay StreetToronto, Ontario M5L 1B9Canada

Tel: +1 416 869 5697 Fax: +1 416 947 0866Email: [email protected]: www.stikeman.com

David Byers is head of Stikeman Elliott’s Litigation Group in Torontoand co-chair of the practice nationally. He maintains a general civillitigation practice, appearing before all levels of trial and appellatecourt in Ontario, and has particular expertise in corporatecommercial, insolvency, securities and insurance matters. He isrecognised in The Best Lawyers in Canada; Chambers Global TheWorld’s Leading Lawyers for Business; Lexpert/American LawyerGuide to the Leading 500 Lawyers in Canada; Lexpert Guide to theLeading US/Canada Cross-Border Litigation Lawyers in Canada;Canadian Legal Lexpert Directory; Legal Media Group’s ExpertGuides, and PLC Which Lawyer? He has appeared as a panelist orspeaker on a wide variety of litigation issues. He is a past directorof the Advocates’ Society and a member of the IIC. He is co-authorof the text Creditors’ Remedies in Ontario (Butterworths, 1994). Hewas called to the Ontario Bar in 1983.

Peter F. C. Howard

Stikeman Elliott LLP5300 Commerce Court West199 Bay StreetToronto, Ontario M5L 1B9Canada

Tel: +1 416 869 5613 Fax: +1 416 861 0445Email: [email protected] URL: www.stikeman.com

Peter Howard is a partner at Stikeman Elliott and practises inlitigation with an emphasis on securities; corporate commercial andwhite-collar criminal litigation, including commercial contracts;oppression and shareholder litigation; insolvency; take-over bids;defensive tactics hearings; banking; and auditors’ negligence.Experience in domestic and international arbitrations, mediation andalternate dispute resolution. Practises at trial and appellate levelsand in administrative tribunals, including experience before theOSC. Recognised in The Best Lawyers in Canada; Chambers Global:The World’s Leading Lawyers; Lexpert/ALM Guide to the Leading500 Lawyers in Canada; Lexpert Guide to the Leading U.S./CanadaCross-Border Litigation Lawyers; and The Canadian Legal LexpertDirectory. Member of CBA and author of papers on insolvency &securities matters. Assistant commission counsel into the EsteyCommission into the Collapse of CCB and Northland Banks andcommission counsel into the Violence at Queen’s Park (OntarioLegislature) in March 1996. Appeared in BC, Alberta, NewBrunswick and PEI.

Stikeman Elliott is recognised nationally and internationally for the sophistication of its business law practice. The firmis a Canadian leader in each of its core practice areas - corporate finance, M&A, business litigation, banking, corporate-commercial, real estate, tax, insolvency, structured finance, competition, intellectual property, employment, andadministrative law. The National Litigation Group at Stikeman Elliott has earned a reputation as a market leader inCanada’s largest business centres. Members of the group regularly act on a wide range of litigation relating tocommercial contracts, class actions, securities, tax, competition/antitrust, product liability, intellectual property,professional negligence, directors’ and officers’ liability - including breach of fiduciary duty, defamation, insurance, realestate, insolvency, fraud, construction, employment, human rights, environmental and constitutional matters. Locatedin Toronto, Montréal, Ottawa, Calgary and Vancouver, its Canadian offices are among the leading practices in theirrespective jurisdictions. Stikeman Elliott is also prominent internationally, with a longstanding presence in London, NewYork and Sydney.


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Chapter 9


Carey y Cía.

Chile

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Chile got? Are there anyrules that govern civil procedure in Chile?

The Chilean legal system is based on the continental law tradition,mainly influenced by the French and Spanish legal systems. Civilprocedure is essentially written and ruled by the Civil ProceduresCode (CPC), the Chilean Court Statutes (CCS) and complementarylaws. Exceptionally, certain general instructions given by theSupreme Court and Courts of Appeal, known as Auto Acordados,apply in addition to some matters.

1.2 How is the civil court system in Chile structured? Whatare the various levels of appeal and are there anyspecialist courts?

The first level comprises the first instance courts which havecompetence in a specific area that may include one or moredistricts. First instance courts are divided according to the matterthey know into civil courts, labour courts and family courts.Recently, the latter were reformed and, unlike any other courts, oralproceedings may be counted therein.The second level comprises the courts of appeals that act as secondinstance courts in a wider specific area (normally a region of thecountry or part of it).The Supreme Court is the last level and it has competence over thewhole national territory. The Supreme Court acts divided intoseveral court rooms specialised in a specific matter. The system is completed by special courts who know specificmatters such as, the antitrust court and the public hiring court.

1.3 What are the main stages in civil proceedings in Chile?What is their underlying timeframe?

The main stages in civil proceedings in Chile are:Issue of a claim. Service of process on the defendant.Answer to the complaint. Plaintiff’s rejoinder (“Replica”).Defendant’s rejoinder (“Duplica”).Settlement hearing.

Order to produce evidence.Time allotted for producing evidence.Observations to evidence presented.Judgment/Ruling.

Against the first instance judgment, the parties may file a remedy ofappeal and, in addition, a remedy requesting the nullity of thesentence due to defects of the form (recurso de casación en la forma). Against the second instance judgment, the parties may file a nullityremedy that is known and decided by the Supreme Court. In thiscase, the nullity remedy can be based on procedural defects as well aserrors in the application of the law (recurso de casación en el fondo). The first instance of a civil proceeding may take between 1 to 2years. The second instance may take between 2 and 4 years and theremedies before the Supreme Court between 1 and 2 years.Consequently, a civil proceeding, including all stages, may takebetween 5 and 8 years.


The Chilean judicial system widely accepts the exclusivejurisdiction clauses, except for those affecting public order matters.In consequence, the Chilean judicial system normally (i) recognisesthe validity of clauses under which the parties of a contract decideto be ruled by a foreign jurisdiction (unless the country involved hasnot been legally recognised as such by Chile), and (ii) allows theexecution in Chile of decisions made by foreign courts.

1.5 What are the costs of civil court proceedings in Chile?Who bears these costs?

Court proceedings in Chile are free of cost. The parties must onlypay the notices, the experts’ fees, and any act within the proceedingthat may require the presence of a public minister. Attorneys’ feesare paid by each party. In their sentences, Judges may order the party completely defeatedin the trial to pay the costs of the civil proceeding, provided that itlacked any actual reason for bringing such proceeding. However,in most of the cases the order to pay the costs will only cover aportion of the total costs incurred in the civil proceeding.

1.6 Are there any particular rules about funding litigation inChile? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

In Chile there are no particular rules about funding litigation, as

Eduardo Ugarte

Esteban Ovalle

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well as there are no contingency/conditional fee arrangements, norrules on security for costs.


2.1 Are there any pre-action procedures in place in Chile?What is their scope?

Unlike the common law, there are no pre-action procedures in theChilean legal system. Exceptionally, the law entitles the futureplaintiff to request before commencing the proceeding certain specificmeasures specified in the law either to prepare the proceedingcommencement or to ensure evidence that might disappear.To request this type of measure, the future plaintiff shall inform thecourt the action he intends to file with a brief explanation of theclaim grounds and also prove the need to request the measure. Themeasures the future plaintiff is entitled to request are set forth inarticle 273 and subsequent of the CPC as follows:

An affidavit of an event related to the capacity of thedefendant to appear in court, or his legal personality, or thename and address of his representative. The exhibition of the thing that will be the subject matter ofthe action the plaintiff wishes to bring. The exhibition of sentences, wills, inventories, appraisals,ownership titles, or any other instrument, public or private, thatbecause of their nature may be of interest to several people.The exhibition of accounting books.A sworn statement acknowledging the signature in a privateinstrument.Court’s personal inspection, experts’ reports appointed by thecourt, or a certificate prepared by a public minister. The deposition of the future defendant.The deposition of witnesses that might be absent during thecivil proceeding.

In addition, Chilean law allows the person who fears, on wellgrounded reasons, that an action may be brought against him torequest certain pre action evidence remedies, which may berequested by any person. The measures set forth in article 288 ofthe CPC are the following:

Sworn statement acknowledging the signature in a privateinstrument.Court’s personal inspection, experts’ reports appointed by thecourt, or a certificate prepared by a public minister.The deposition of the future plaintiff.The deposition of witnesses that might be absent during thecivil proceeding.


Several limitation periods apply in Chilean law depending on theclass of action. The limitation period that applies to civil contractclaims is 5 years counted from the date the obligation is callable.For commercial contract claims the limitation period is 4 years. Fortorts the limitation period is 4 years from the date the offenceoccurred. The limitation period for requesting an executoryproceeding is 3 years. Additionally, there are special short termlimitation periods for collecting taxes and certain fees. Under the Chilean law, the statute of limitation is a matter ofprocedural law and provides a peremptory defence to a claim.


3.1 How are civil proceedings commenced (issued and served)in Chile? What various means of service are there? Whatis the deemed date of service? How is service effectedoutside Chile? Is there a preferred method of service offoreign proceedings in Chile?

Chilean system civil proceedings commence with the issuance ofthe claim and service. Notices are served by court clerks called“Receptores”.A first notice must be served in person. As an exception, servicecan be made on the defendant’s home address, provided that thefollowing requirements are complied with: (i) the home address ofthe defendant must be confirmed; (ii) the “receptor” must havesought the defendant at his home address or work address on 2different days; and (iii) it must be confirmed that the defendant is inthe jurisdiction where the proceeding will take place.Exceptionally, in cases where the defendants’ addresses or identitiesare difficult to determine or service is difficult due to the number ofdefendants, Chilean law allows the service to be accomplished bypublishing adds. The Chilean legal system does not provide a period of time withinwhich a notice is to be served. The limitation to serve a notice issubject to the statute of limitations (see question 2.2 above). Service outside the jurisdiction must be made through a rogatoryletter. The service method is governed by the applicable rules in thecountry of the addressee, even if there are good grounds to affirmthat the first notice must be served in person to be valid in Chile. The Chilean legal system does not establish a particular form toserve foreign resolutions. The method of service is the same as theone used to serve Chilean courts’ resolutions, except that in thiscase and prior to the service, a foreign court must request so by arogatory letter delivered through the Supreme Court.

3.2 Are any pre-action interim remedies available in Chile?How do you apply for them? What are the main criteria forobtaining these?

Under the Chilean law the plaintiff can request pre-action interimremedies before submitting the claim. These remedies are knownas “precautionary pre-action remedies” and are specified, not in alimited manner, in article 290 and subsequent of the CPC. Theremedies are the following:

Preventive attachment over the thing that will be the subjectmatter of the proceeding.Appointment of one or more controllers.Attachment of certain assets.Prohibition to execute acts or contracts over certain assets.

In general, the plaintiff must submit a written request indicating theaction that he intends to bring and a brief explanation of the groundsof the future action, submitting evidence that constitutes a seriouspresumption of the right claimed and prove the urgency and need ofthe remedy, notwithstanding other special requirements. If therequested remedy is not expressly stated in the law, the court alsohas the authority to require a caution to the future plaintiff.


In Chile the main elements of the claim are set forth in the law(article 254 of the CPC) and are the following:

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The identification of the court where the claim is filed.The name, address and profession of the plaintiff and thepersons that represent him and the nature of therepresentation. The name, address and profession of the defendant.The facts and legal grounds of the claim. The petitions submitted to the court.


The claim can be amended by the plaintiff provided that thefollowing requirements are complied with:

Once the claim has been served to any of the defendants andbefore they answer the complaint, the plaintiff can enlarge andamend his claim, but, in such case, he will have to serve theenlarged and/or amended claim and the period to answer thecomplaint will only commence from the date of this service.Once the defendant has answered the complaint, the plaintiffcan only enlarge and/or amend his action in his rejoinder(called replica), but he is not entitled to substantially changeor modify the main cause of action of the trial.

4 Defending a Claim


The main elements of an answer to a complaint are set forth in thelaw (article 309 of the CPC) and are the following:

The identification of the court where the claim is filed.The name, address and profession of the defendant.The exceptions opposed to the claim and the facts and legalgrounds on which they are based.The petitions made to the court.

In addition, the defendant can submit a counterclaim together withhis answer to the complaint. For such purpose Chilean law requiresthat both actions (the action of the claim and the action of thecounterclaim) be ruled by the same kind of proceeding.


For proceedings served within the same jurisdiction, the statementof defence has to be filed at court within 15 working days countedfrom the service of the claim (that is to say, excluding Sundays andpublic holidays). For proceedings served outside the jurisdiction,the time limits vary depending on the country of service.


In our civil justice system there is not a general mechanism wherebya defendant can pass on liability by bringing an action against a thirdparty. Exceptionally, Chilean law establishes certain cases where thedefendant can force a third party to take part in a proceeding. Thosecases are: (i) the purchaser of real estate sued by a third party whoclaims rights over that real estate, may legally summon the seller todefend the real estate in the proceeding (article 1843 of the CivilCode), and (ii) the guarantor can request that the plaintiff has to sue

the main debtor in the first place (article 2357 of the Civil Code).


If the defendant does not defend the claim the proceeding shallcontinue in all the stages until a final decision is made by the court.The plaintiff has the burden to prove all the facts asserted in his claim.Chilean law does not provide for a summary proceeding in this case.


The defendant can dispute the court’s jurisdiction on grounds of thematter or the territory (stating that there is another court that hasjurisdiction to know the case), by means of a dilatory defence. Thisdilatory defence has to be filed at court within 15 working days ofservice of the claim and prior to any other step in the trial. Thisdilatory defence must be previously decided and has the effect ofsuspending the proceeding.



The CPC contains provisions for the joinder of any number ofclaimants, provided there is a cause of action by each plaintiffjoined, and a third party, as follows:

Article 21. If the claim is filed by one person and the actionsubmitted also corresponds to another person or persons, thedefendants can request to the court that the complaint beinformed to other plaintiffs that have not concurred to file it.Those claimants must decide within a short period of timewhether or not they will join the ongoing proceeding. In casenothing is informed within this short period of time, the courtdecision will affect them with no further notice.Article 22. It allows a third party whose rights areincompatible to those of the other parties over the object ofthe action, to join the proceeding admitting the current statusof the file.Article 23. It allows a third party to join the proceeding inorder to support any of the parties and it also allows theintervention of a third party that invokes an independentinterest than the one alleged by the other parties.


Article 92 of the CPC allows the joinder of proceedings, providedthat the following requirements are fulfilled: (i) there are closelyconnected claims based on identical legal actions, or when theproceedings arose from the same facts; (ii) there are closelyconnected claims based on a similar subject matter between the sameparties, notwithstanding the fact that the legal actions are notidentical; or (iii) in general, whenever the sentence that should bepronounced entitles the defence to res judicata in another proceeding.


The Chilean legal system does not contemplate split trials orbifurcations of proceedings.

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6.1 Is there any particular case allocation system before thecivil courts in Chile? How are cases allocated?

In the Chilean legal system, cases are allocated between the courts(as explained in question 1.2) exclusively on the basis of territoryand subject matter.As a general rule, courts hear all the claims filed within the scopeof their competence. However, the CPC contemplates simplifiedproceedings for civil claims worth no more than 500 UTM (US$34,000 approximately).

6.2 Do the courts in Chile have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

In general, a judge in civil proceedings has a passive role anddecides only upon the parties’ requests. The court is obliged tomanage cases actively only in three situations: (i) to summon theparties to a settlement hearing; (ii) enter the order to produceevidence; and (iii) final judgment summons.

6.3 What sanctions are the courts in Chile empowered toimpose on a party that disobeys the court’s orders ordirections?

According to article 238 of the CPC, for the fulfilment of theirdecisions, the courts have the power to impose fines or even the arrestfor up to two months, notwithstanding repeating those measures.

6.4 Do the courts in Chile have the power to strike out part ofa statement of case? If so, in what circumstances?

Under the Chilean legal system the courts do not have the power tostrike out part of a statement of case.

6.5 Can the civil courts in Chile enter summary judgment?

The civil courts in Chile cannot enter summary judgment.Notwithstanding article 680 of the CPC which establishes the caseswhere a summary proceeding must be applied.

6.6 Do the courts in Chile have any powers to discontinue orstay the proceedings? If so, in what circumstances?

Our civil courts do not have any powers to discontinue or stay theproceedings. They only have the power to declare the abandonmentof the proceeding if the parties fail to take any steps over a periodof six months (“neglect to prosecute”), and provided that thedefendant requests the court make such declaration. The courtscannot act ex officio in this matter.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Chile? Are there any classes of documents that do notrequire disclosure?

Under the Chilean law there is only one special case where theparties, or even a third party, can be forced to produce

documentation in trial, that is, when the documents whoseexhibition is requested are directly related to the case and they arenot secret or confidential (article 349 of the CPC).

7.2 What are the rules on privilege in civil proceedings inChile?


7.3 What are the rules in Chile with respect to disclosure bythird parties?


7.4 What is the court’s role in disclosure in civil proceedingsin Chile?

The court’s role is limited to ordering a party or a third party todisclose certain documents that have been previously required bythe other party, and imposing the sanctions set forth in the lawagainst the party that refuses to disclose such documents without alegitimate cause.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Chile?


8 Evidence

8.1 What are the basic rules of evidence in Chile?

The basic rules of evidence in Chile are, in summary, the following:(i) the law determines which forms of evidence the parties may use ina civil proceeding; (ii) the law establishes the forms to submit theevidence; (iii) the law establishes the value of each piece of evidence;and (iv) the law determines how to value the evidence among them.Under the non-inquisitorial principle that rules the civil proceedingsin Chile, the parties have the burden of proof, so they must provideall the evidence they deem appropriate. Exceptionally, judges canorder ex officio certain evidence.


The means of evidence allowed in court are the following: (i)documents; (ii) witness testimony; (iii) inspections by the court; (iv)expert report; (v) confession; and (vi) presumptions.According to the modern Chilean doctrine, under certaincircumstances other means of evidence such as, photographs,videos and audio records, are admissible and would be regarded, asa general rule, as “documents”. According to Law 19.799 electronicdocuments are also admissible as evidence provided the fulfilmentof certain requirements.Expert witness report can be mandatory or optional in a civilproceeding.Expert witness report will be mandatory, that is to say, the Chileancourts must accept a party’s request for calling an expert, where thelaw requires that an expert’s report is necessary to solve the case. As a general rule, the expert evidence is optional, that is to say,

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Chilean courts can order it or not in a civil proceeding whenever (i)this mean of evidence is requested to clarify a fact that requiresspecial knowledge of a certain science or art, or (ii) when thesubject matter of the expert report is referred to legal aspects of aforeign law.


The witness deposition must be requested within five working dayscounted from the beginning of the term allowed for producingevidence, through a list where the witnesses are duly individualised.As a general rule, only the witnesses included in the list can beexamined in a proceeding. In the event a party to an ongoingproceeding fails to provide a witness list within the abovementionedperiod of time, he will lose his right to submit witness testimonies.If a party submits his witness list within the period of time andconditions specified above, the courts will always accept suchevidence and they will fix the dates for depositions.As a general rule, under the Chilean legal system, any and allpersons must appear to the court as witnesses and make adeposition.Written witness statements and witness evidence via video link arenot admissible. Pre-trial depositions of witnesses are allowed bythe CPC through a pre-trial measure (please see question 2.1above).

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Chile?

As a general rule, the courts lack the power to order the provisionof evidence ex officio. The exception to this rule is the court’sauthority to order the production of evidence after the closing of theproceedings, known as “medidas para mejor resolver”.Accordingly, the role of the courts in the production of evidence islimited to ensuring that an evidence motion is requested andrendered according to the law. Once evidence has been provided,the court’s role is limited to valuing and weighing the same underthe method stated in the law.


9.1 What different types of judgments and orders are the civilcourts in Chile empowered to issue and in whatcircumstances?

The different types of judgments that Chilean courts can issue incivil proceedings depend of the type of proceeding. In general,these judgments can be as follows:

Judgments that declare the existence, scope and type of agiven situation or right. Judgments that order the defendant to fulfil a certainobligation and entitles the plaintiff to commence anexecutory proceeding through coercion measures (theattachment and auction of goods).


The powers of local courts to make rulings on damages and interestdepend on the substance law.

According to Chilean law, the concept of damage is broad-rangingand it has been understood as any loss, decrease, detriment orimpairment to the plaintiff’s assets (patrimonial damages) as well as“suffering, pain, or discomfort that the wrongful action causes to aperson’s physical sensitivity, feelings or emotions” (moraldamages) (Supreme Court, 7.1.2003, GJ 271, p. 96). Notwithstanding the sweeping nature of these damages, in Chilethere is no such thing as punitive damages. The only damages(whether patrimonial or moral) amenable to compensation aredirect damages (thereby excluding indirect damages), which reflectthe cause-and-effect bond that must exist between the tort and thedamage.Regarding the costs of the litigation, please see question 1.5 above.


The enforcement of a domestic judgment is governed by articles231 and subsequent of the CPC. The enforcement methods depend on the type of judgment andinclude, amongst others, the following:

If the judgment orders the defendant to grant a specific good,the assistance of the police can be enforced. If the judgment orders the defendant to pay a sum of money,an attachment and an auction of the defendant’s goods can beenforced.For the enforcement of resolutions in general, the applicationof fines and arrests can be enforced (see question 6.3 above).

The enforcement of foreign judgments (articles 242 and subsequentof the CPC), is subject to an exequatur by the Supreme Court. Theparty seeking enforcement must submit a certified copy of theaward with, if necessary, an official translation into Spanish of theaward. The award must be final. Once the exequatur is granted, the foreign judgment is asenforceable as any domestic award and, therefore, it can beenforced under the general rules. Enforcement must be soughtbefore the court that would have been competent to hear theproceeding if it would have been brought before Chilean courts.

9.4 What are the rules of appeal against a judgment of a civilcourt of Chile?

Under Chilean law, as a general rule, all final judgmentspronounced by first instance civil courts can be appealed.The appeal remedy suspends the proceeding. Exceptionally, anappeal remedy will not suspend the proceeding with respect tojudgments pronounced against the defendants in an executory orsummary proceeding.The appeal remedy against final judgments must be filed within theterm of 10 working days. The appeal remedy must be wellgrounded and it must contain the actual petitions submitted to thecourt of second instance. Otherwise the appeal remedy will bedeclared inadmissible.

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1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Chile?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Arbitration is the most commonly used method to settle majorbusiness disputes. The Chilean legal system does not provide forother settlement of dispute mechanisms like Tribunals orOmbudsman.


There are two arbitration regimes in Chile, one for domestic mattersgoverned by the CCS (article 222 and subsequent) and the CPC(article 628 and subsequent) and the other for international mattersruled by Law on International Commercial Arbitration (Law 19.971). The rules for domestic matters govern evidence, service andproceeding, objections and remedies against awards similar to thoseof ordinary court proceedings. Nonetheless, if the parties choose a less formal “legal” arbitration,the rules become more flexible.Law 19.971 contains the characteristics and principles of modernarbitration schemes, such as party autonomy, procedural flexibility,and limited court intervention.

1.3 Are there any areas of law in Chile that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

In general, arbitration can be used to decide all kind of matters,unless there is an express prohibition to do so. Arbitration isprohibited for the following matters:

Alimony rights.Right to demand separation of community property betweenhusband and wife.Criminal cases.Cases to be heard by the district attorney. Article 230 of theCCS. Article 357, in turn, indicates in which cases the districtattorney must be heard.Antitrust matters save for conflicts that arise from the resultsof antitrust litigation.


2.1 What are the major dispute resolution institutions in Chile?

Nowadays, the major dispute resolution institutions in Chile are theArbitration and Mediation Centre of the Santiago Chamber ofCommerce (www.camsantiago.cl) that also acts as an ICCrepresentative in Chile; the Arbitration and Mediation Centre of theChilean-American Chamber of Commerce (AmCham); and therecently created National Arbitration Centre (“Centro Nacional deArbitrajes”) (www.cna.cl).


Enforcement of awards issued by a domestic arbitration court isgoverned by the general rules applicable to the enforcement ofrulings issued by the ordinary courts of law. The enforcement canbe requested to the arbitrator (provided that he/she is not functusofficio, i.e., the arbitration term has not expired) or to the relevantordinary court of law, at the sole petitioner’s discretion. However,when enforcement requires means of pressure or other compulsorymeasures, or when the award affects third parties that are not a partyof the arbitration agreement, then the arbitrator must resort to theordinary courts. In this case, resorting to the courts of law will nolonger be a right but an obligation.The enforcement of foreign arbitration awards is subjected toexequatur by the Supreme Court. The party seeking theenforcement must submit a certified copy of the award with, ifnecessary, an official transcription into Spanish. The award must befinal. As Chile is a party of the New York Convention, exequaturmay only be denied for the reasons provided in article V therein.Once exequatur is granted, the foreign arbitration award becomes asenforceable as any domestic award and, therefore, it enforceableunder the general rules. Enforcement must be sought before thecourt that would have been competent to hear the proceedings if thecase would have been brought before Chilean courts.



The current trend in this matter aims to strengthen domestic andforeign arbitration as an alternative mechanism for settlingcommercial disputes (see question 3.2 below) and also, althoughmore recently, it aims to strengthen mediation.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Chile?

Currently there are no issues or proceedings that are significantlyaffecting arbitration as an alternative mechanism to settle disputes,on the contrary there is a strong trend to strengthen it.Moreover, the enforcement of Law on International CommercialArbitration (Law 19.971) that follows the UNCITRAL Model Lawshould encourage the development of international arbitration inChile.One of the objectives pursued by the Law is to promote Chile as anarbitration centre in the region. Both public and private sectors areworking in this sense. Signs from the very few internationalarbitration-related cases that have been heard are positive.

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Esteban Ovalle

Carey y Cía. Miraflores 222, piso 24 Santiago Chile

Tel: +562 365 7296Fax: +562 633 1980Email: [email protected]: www.carey.cl

Esteban Ovalle is one of the leading partners of Carey y Cía.’sLitigation Group. He practices in the areas of civil, commercial andlabour litigation, arbitrations and bankruptcy proceedings.Mr. Ovalle studied law at Pontificia Universidad Católica de Chileand was admitted to the Bar in 1994. During 1995-1996, Mr.Ovalle was an Assistant Professor of Public Finances Law at thePontificia Universidad Católica de Chile Law School. In 1996, Mr.Ovalle was Professor of Family Law at Pontificia UniversidadCatólica de Chile Law School Social Sciences School. Since 1999Mr. Ovalle has been Assistant Professor of the Civil Law Departmentat the Universidad de Chile Law School.Mr. Ovalle participated in the Academy of American andInternational Law of the Southwestern Legal Foundation, Dallas,Texas, USA in 2001. In 2003, he received a Master in TaxManagement from Universidad Adolfo Ibáñez Law School.He is fluent in Spanish and English.

Eduardo Ugarte

Carey y Cía. Miraflores 222, piso 24 Santiago Chile

Tel: +562 365 7296Fax: +562 633 1980Email: [email protected]: www.carey.cl

Eduardo Ugarte is a member of Carey y Cía.’s Litigation Group. Hepractices in the areas of civil, construction, commercial and labourlitigation, arbitrations and bankruptcy proceedings. Mr. Ugarte studied law at Universidad de Chile School of Law andwas admitted to the Bar in 2001. Between 1995 and 2000, he acted as an Assistant Professor of CivilLaw at Universidad de Chile School of Law and during 2006 he wasInvited Professor of Civil Law at the same university. He was aparticipant in the 45th Academy of American and International Lawin Dallas, Texas, USA.He is fluent in Spanish and English.

Carey y Cía. is Chile’s largest full-service law firm. It provides a complete range of financial and business legal servicesto many of the world’s most prestigious companies, as well as to international organisations, local public and privateenterprises and institutions, and to individuals.

Carey y Cía.’s litigation group has earned a national reputation for excellence in complex high-stakes, high-profilebusiness disputes. Our attorneys have extensive experience in a broad range of disciplines including civil, commercial,criminal, labour, antitrust, tax and bankruptcy cases involving major multinational clients. Our practice also includesnational and international arbitration cases under the auspices of the ICSID in Washington D.C. and the InternationalChamber of Commerce in Paris, as well as under the UNCITRAL Rules.

At Carey y Cía., we understand that disputes are often best resolved outside the courtroom, and we provide advice anddevise action plans that include arbitration, mediation and other forms of alternative dispute resolution.



Chapter 10

Lloreda Camacho & Co.

Colombia

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Colombia got? Are thereany rules that govern civil procedure in Colombia?

The Colombian legal system is based on Civil Law. This system,also called the European Continental Law recognises codificationor written law as the main legal source. The Colombian PoliticalConstitution establishes that legislation is enacted by the congressand that judges are subject to law in their decisions, however, theymay apply other subsidiary sources such as jurisprudence, custom,doctrine, general principles of law and equity.Civil procedure in Colombia is mainly governed by the Civilprocedure Code, hereinafter “CPC”, (Decrees No. 1400 and No.2019 of 1970). This Code has been amended several times andadditional regulation aside this code also governs certain civilprocedural matters.

1.2 How is the civil court system in Colombia structured?What are the various levels of appeal and are there anyspecialist courts?

Colombian civil court system has a hierarchical structure. The headof the Civil Jurisdiction is the Supreme Court of Justice. Below theSupreme Court, there are different Courts of appeals (TribunalesSuperiores del Distrito Judicial), which exert jurisdiction overspecific regions of the country. Each of these courts of appeals hasa civil chamber that concentrates on civil matters. Under the courtsof appeal, civil circuit courts have jurisdiction on the main cities ofthe country. Finally, the lowest courts are the civil municipal courtswith jurisdiction in cities and municipalities.The competence between civil lower courts (municipal and circuit)is allocated depending the amount of the claim. Appeals are raisedbefore the courts of appeals or circuit courts if the judgment wasissued by a municipal court. The Supreme Court of Justice onlyhears an exceptional recourse (casasion) against second instancejudgments handed down by courts of appeals. This recourse is notconsidered an appeal or third instance, but a legal review of thejudgment addressed to amend errors of the courts in applying thelaw and to unify the national jurisprudence.

1.3 What are the main stages in civil proceedings inColombia? What is their underlying timeframe?

The CPC provides different sorts of proceedings depending on thetype claim that is raised. Most of the controversies related tocontracts, torts, and, in general, civil proceedings for damages arehandled through “ordinary proceedings”. The main stages underthis procedure are as follows:

Filing of the complaint and commencement of the case. Oncethe plaintiff files the lawsuit, it is allocated to the judge that willhandle the case. If the lawsuit complies with formalrequirements, the judge will issue a writ ordering thecommencement of the proceedings. However, if the judge findsthat the lawsuit does not meet all formal requirements, theplaintiff will be allowed a five days term to amend thecomplaint. If the plaintiff does not amend the complaint his casewill be dismissed. This first step takes about 1 to 3 months. Service to the defendant of the writ admitting the lawsuit. Theplaintiff has the burden of serving on the defendant the writthat commenced the proceedings. This notification may take1 to 2 months. Answer to the complaint by the defendant. The defendant has20 business days to answer the complaint and to raise priordefences (similar to motions to dismiss on grounds such aslack of jurisdiction, lack of venue, disregard of an arbitrationclause, and lack of formal requirements of the complaint).Mediation hearing. Once the defendant has answered thecomplaint and the court has decided the motions to dismiss ifany, it summons the parties to a mediation hearing. If theparties do not reach an agreement, the parties have theopportunity to set the facts of the case, the judge will amendany procedural irregularity incurred so far or decide anypending motion and order the proceeding to continue. Collection of evidence. This stage begins with a writ orderingthe collection of the evidence requested by the parties that thecourt considers that is relevant. Depending on the amount andtype of evidence, this step can take from 1 to 4 years Closing arguments. Once the evidence is collected, the courtwill give to the parties the opportunity to file a brief of closingarguments. The parties have 10 working days to file theirbriefs.First instance judgment. As a general rule first instancejudgments may be subject to appeal. Courts usually takeapproximately 1 year after the closing arguments are filed toissue their ruling.

1.4 What is Colombia’s local judiciary’s approach to exclusivejurisdiction clauses?

Parties may not agree on jurisdiction clauses. Jurisdiction rules are

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considered public policy rules included in the CPC that individualsmay not disregard, and thus, they are not allowed to agree on anyjurisdiction arrangement except for arbitration. The CPC provides,as a general rule, that the judge sitting on the place where thedefendant is domiciled has jurisdiction to adjudicate disputesinvolving this party. However, if the dispute involves a contract,the court sitting on the place of performance thereof will also havejurisdiction to adjudicate the dispute.

1.5 What are the costs of civil court proceedings in Colombia?Who bears these costs?

There are no judicial fees or taxes to be paid in order to pursue a legalaction. However, the defeated party shall pay the costs of the case tothe other party. The costs include a portion related to legal fees andother comprising the amounts paid to judicial officers, travelexpenses incurred by witnesses, price of bonds, etc. However, onlypart of legal fees is recognised as per Regulation (Acuerdo No. 1887)issued by the national judicature Council in 2003.

1.6 Are there any particular rules about funding litigation inColombia? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

In Colombia, lawyers and their clients are free to agree uponattorney fees. Therefore, contingency or conditional feearrangements are allowed. On the other hand, legal fees are notfully reimbursed by the defeated party as explained above. There isno specific regulation about security for costs.


2.1 Are there any pre-action procedures in place in Colombia?What is their scope?

Pursuant to article 35 of Law 640 of 2001, as a general rule it isnecessary to carry out a mediation hearing before the filing of acivil complaint. However, certain summary actions are exemptedfrom this requirement, as well as if the plaintiff intends to requestprecautionary measures.


Statute of limitations in Colombia vary depending on the mattersubject to the dispute. The issue is considered substantive law. TheColombian Civil Code provides that ordinary proceedings must becommenced within 10 years, whereas collection of debtsproceedings must be initiated in 5 years. The term is counted fromthe day in which the obligation is due, the contract expired or thenon contract right arose (e.g. in torts).Some specific matters are governed by shorter statute of limitationssuch as insurance and transportation (2 years), commercial agencycontracts (5 years), collection of checks (6 months), collection ofpromissory notes (3 years).Finally, please note that courts may not dismiss a case on thegrounds of expiration, the defendant must raise this defence in hisanswer to the complaint.


3.1 How are civil proceedings commenced (issued and served)in Colombia? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Colombia? Is there a preferred method ofservice of foreign proceedings in Colombia?

Civil proceedings in Colombia commence with the filing of acomplaint before the judicial office that randomly assigns the file tothe court with jurisdiction. As explained above, if the lawsuitcomplies with formal requirements, the judge issues a writ orderingthe commencement of the proceedings. The plaintiff has the burdenof serving on the defendant the writ that commenced theproceedings. Service of the complaint is made as follows:The court issues a letter requesting the defendant to appear at thesecretary of the court to be served on the proceedings. The plaintiffsends this letter by courier to the defendant. The defendant hasfrom 5 to 30 days to appear in court depending on the location ofhis domicile. If the domicile is located on the same place of thecourt, the term is 5 days, if the place is different but insideColombia the term is 10 days, and finally, if the defendant is locatedabroad the term is 30 days.If the defendant does not appear in court within the term set forthby the court, the plaintiff may request a notice to be delivered to thedefendant along with copy of the complaint. These documents aresent by courier to the defendant, who will be considered as servedof the writ that commenced the proceedings the day after hereceives the notice. However, another type of notification takes place when: i) theplaintiff ignores the place where the defendants lives or works; ii)the plaintiffs states that the defendant is absent and ignores theplace where it could be located; and iii) the notice sent by courier tothe defendant as per the procedure above explained is returned bythe courier company arguing that the person does not lives or workat the place. In these events, the court affixes a notice to the boardof the secretary during 15 days and, in addition, orders the plaintiffto publish the notice in the Sunday edition of a national newspaperor to broadcast in a radio station. Upon completion of the 15 days,the court appoints a guardian ad-litem to represent the defendant ifhe has not appeared in court.On the other hand, Colombia has executed different internationaltreaties of cooperation in connection to services of process whichcan be used by the judges in order to notify lawsuits outsidenational territory. The main international treaties regarding thismatter are the Montevideo Inter American Convention on LettersRogatory of 1975 and the Additional Protocol to the Inter AmericanConvention on Letters Rogatory of 1979.

3.2 Are any pre-action interim remedies available in Colombia?How do you apply for them? What are the main criteria forobtaining these?

Plaintiffs are allowed to request different kinds of precautionarymeasures depending on the type of proceedings. In Colombia thereare mainly two kinds of proceedings (i) the ordinary proceedings,and (ii) the executory proceedings. Ordinary proceedings restrictthe possibility of practicing precautionary measures. As a generalrule, it is not possible to practice precautionary measures unless: (i)they are related to assets whose property is under dispute in theproceedings; (ii) they are over the vehicle that has caused damages;and (iii) they are over the assets of the defendant, provided that theplaintiff has previously obtained a first instance favourable award.

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In the execution proceedings it is possible to carry outprecautionary measures over most of the assets owned by thedefendant. In this case, the plaintiff must comply with tworequirements: (i) to state under oath that the assets that he intends toattach are the property of the defendant; and (ii) to post a bond inorder to guarantee the payment of any damage that the measurescould cause to the defendant that the measures could cause to thedefendant or to third parties.


Article 75 of the CPC provides that the complaint must include thefollowing information:

Designation of the court.Name, age and domicile of the plaintiff and the defendant.Name and domicile of the legal representative of the partiesin case they cannot appear in court by themselves (e.g.,minors, disabled).Name of the plaintiff’s attorney.The pretensions or causes of action, clearly and preciselyexpressed. The facts for the cause of action, clearly divided in numbers.Legal foundation of the claim.Amount of the claim if it is relevant to determinejurisdiction.Type of procedure to be followed by the court.Petition of the evidence to be collected.Address of the plaintiff, his or her attorney and address of thedefendant.

The pleading has to be filed along with the corresponding annexesrequired by law, such as the power of attorney, the certificate ofincorporation of a company if involved in the proceedings asplaintiff or defendant, certificates that prove family relationship,and the documents that the plaintiff has available and intends to beaccepted as evidence in the proceedings.


Our CPC provides that the complaint can be amended by the plaintiffto modify the facts, the parties, the pretensions and the petition ofevidence included therein. However, the plaintiff may only amendthe complaint a single time. The answer to the complaint cannot beamended by the defendant. The amendment to the complaint inordinary proceedings may be filed no later than the date when thecourt decides the motion to dismiss, if any, filed by the defendant. Ifno motion to dismiss is filed, the amendment must be filed no laterthan the date when the court summons to the parties to the mediationhearing. In collection or execution proceedings, the amendment mustbe filed no later than 3 days after the expiration of the term that thedefendant has to answer the complaint.

4 Defending a Claim


Article 92 of the CPC provides that the pleading of an answer to thecomplaint must include the following information:

Name and domicile of the defendant.Response to each of the facts and causes of action of the

claim. The defendant must specify whether he or sheaccepts, denies or is not aware of each one of the factsmentioned by the plaintiff in the complaint.The defence or affirmative defences against the causes ofaction, including set off, expiration of the statute oflimitations, lack of right to sue, etc.Request of evidence to be collected.Domicile of the defendant and his or her attorney.

The defendant shall file along with the answer of the complaint thepower of attorney and the available documents that intend to beconsidered as evidence by the court. The CPC allows the defendant to file a counter claim in ordinaryproceedings but the counter claim shall meet the same requirementsas the Complaint. The defendant may include any sort of defencein the answer such as set off, lack of right to sue, nullity, etc.


In ordinary proceedings the answer to the complaint has to be filedwithin the 20 working days following the date of notification of thewrit of commencement of the proceedings. Other types ofproceedings provide shorter terms such as execution proceedingsthat only grant a 10-working day term.


There are two events in which the defendant can pass on liability bybringing into the proceedings a claim against a third party. The firstpossibility corresponds to a defendant that may request the judge tojoin to the proceedings a third party that has a legal relationship thatcould be decided in the same proceedings (e.g. a third party thatmay have to respond such as an insurance company). The secondevent corresponds to the right of a purchaser of an asset, who hasbeen sued in connection with property rights, to call to theproceedings the seller of the asset to respond vis-à-vis the purchaserif the plaintiff succeeds on his claim and the property rights of thepurchaser are affected by the judgment. Pursuant to article 55 of the CPC, the party that calls to theproceedings a third party must comply with the following formalrequirements:

Name of the party or the person with authority to appear incourt on behalf of said party if required by law (e.g., minors,disabled).Domicile of the party.Facts and causes of action of the request to join the thirdparty to the proceedings.Domicile address of the defendant and his or her attorney.


In ordinary proceedings the absence of a statement of defence willbe considered as a conclusive presumption against the defendant.In addition, some legal defences must be raised in the answer of thecomplaint and courts are forbidden to be declared ex officio;therefore the defendant will lose the opportunity to argue thesedefences namely: set off; statute of limitations; and relative nullityof a contract. The defendant may also jeopardise its rights torequest evidence to the extent that the answer to the complaint is theopportunity to request evidence. A limited opportunity to requestevidence occurs after the mediation hearing, however some courts



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are reluctant to grant this right to a party that did not file an answerto the complaint.In execution proceedings, if the defendant does not answer thecomplaint, the judge must immediately issue a judgment and thedefendant will lose the right to file an appeal.


The defendant may raise a motion to dismiss on the grounds of lackof jurisdiction. In addition, the ruling deciding this motion issubject to appeal. The defendant may also file a motion to dismisson the grounds of existence of an arbitration clause, lack of venueof the court, the existence of exactly the same litigation on anotherongoing case (lis pendens), res judicata, among others. If the courtaccepts the motion the case will be dismissed. However, in some ofthe aforementioned cases this decision is subject to appeal.



In addition to the 2 events explained in question 4.3 there are otherevents in which third parties may participate in the proceedings asfollows:Coadyuvancia. A third party that has a legal relationship with eitherthe plaintiff or the defendant that could be affected by the outcomeof the proceedings is entitled to participate in the proceeding toassist any of the parties. He may intervene at any time, unless thecourt has issued a final judgment. Ad excudendum. Someone that claims rights over the disputed rightmay intervene before the date of the first instance judgment. Theclaim will be filed against the parties to the proceedings; however,if the claim is finally dismissed in the judgment, the third party willbe fined by the court.Ex officio. If the court deems necessary to join a third party to avoida potential fraud.Laudatio nominatio autoris. A defendant that is a mere tenant of anasset, who is sued in a property rights dispute in which thedefendant was allegedly sued as possessor, may call to theproceedings the third party that is the real possessor of the asset. Ifthe third party accepts that is the actual possessor the proceedingswill continue only with this new party as defendant.Necessary joinder. If the judgment to be rendered in theproceedings will necessarily affect an absent party, the court may exofficio or attending a request made by one party, decide to join tothe proceedings this third party (e.g. nullity of a contract enteredinto by 3 parties but only 2 are parties to the initial action).


Under Colombian civil procedural law it is possible to consolidatetwo or more sets of ordinary proceedings providing that thefollowing requirements are met:

The proceedings are of the same nature (e.g. ordinary orexecution).The proceedings are at the same procedural instance (e.g.

first or second instance).The pretensions or claims included in both complaints couldhave been filed in the same lawsuit from the outset.The defendant is the same and the defences included in theanswers to the complaints are based on the same facts.In execution proceedings when all creditors agree toconsolidate their cases or when several creditors areenforcing the same mortgage or pledge.


No. The CPC admits the consolidation of proceedings as explainedin the former question, but there is no specific regulation onbifurcation of proceedings.


6.1 Is there any particular case allocation system before thecivil courts in Colombia? How are cases allocated?

Cases are randomly allocated among first instance civil courts. Tothe extent that there are not civil specialised courts, cases are simplyassigned to a municipal or to a circuit court depending on the valueof the dispute. However, the plaintiff has to file the lawsuit in theplace where the defendant is domiciled or if the dispute refers to acontract, in the place of performance thereof.

6.2 Do the courts in Colombia have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

Judges in Colombia are empowered to manage the procedures, tosanction any fraud or conduct against justice, to use legal powers tocollect evidence, to set the dates for the hearings and to pronouncejudgments, among other powers stated in article 37 of the CPC.The parties can file precautionary measures as explained in question3.2. These measures may also be requested during the proceedings.However, there are no other interim measures available. The costof the measures shall be borne by the plaintiff.

6.3 What sanctions are the courts in Colombia empowered toimpose on a party that disobeys the court’s orders ordirections?

Pursuant to article 39 of the CPC, the judge can impose a fine from2 to 5 minimum wages to someone that disobeys his or her orders.The judge can also order the arrest for 1 to 5 days if the person actedin a disrespectful manner towards the judge.Other legal powers of the judge consist of the authority to return adisrespectful brief filed before the court, to expel a party from ahearing, and to fine the employers that impede their employees toattend court to give testimony.

6.4 Do the courts in Colombia have the power to strike outpart of a statement of case? If so, in what circumstances?

No. The CPC does not consider this special power. However, it isimportant to mention that if the complaint does not fulfil all formallegal requirements mentioned in question 3.3, the judge shall orderthe claimant to amend the pleading. If the plaintiff fails to amendthe pleading during the legal term of 5 days, the judge will dismissthe claim.

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6.5 Can the civil courts in Colombia enter summary judgment?

There are 2 events in which a court may enter a summary judgment.Pursuant to article 20 of law 446 of 1998 the parties may agree torequest the judge to enter summary judgment. However, the judgemay reject this request and continue the procedure. The secondevent relies on article 124 of the CPC, which provides that judgescan enter a summary judgment when the procedural law expresslyprovides that the omission of the defendant to answer the complaintentitles the judge to render a judgment. For instance, if a tenantfails to answer the complaint, the court will order the defendant tohand over the asset to the plaintiff. In execution proceedings if thedefendant does not answer the complaint the judge willimmediately issue a judgment.

6.6 Do the courts in Colombia have any powers to discontinueor stay the proceedings? If so, in what circumstances?

Article 170 of the CPC states that courts may stay proceedings if: i)there is a pending criminal proceeding that will affect the civilaction; ii) the outcome of other pending civil or administrativeaction is necessary to issue a judgment; or iii) the parties mutuallyagree to suspend the proceeding for a specific period of time.Law 896 of 2005 sets forth the power to judges to decree theimmediate suspension of any proceeding against an individual thatis kidnapped. Finally, the recently enacted Law 1194, 2008 providesthat the court may discontinue a case if the proceedings are stayedduring more than 6 months due to the lack of activity of theplaintiff.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Colombia? Are there any classes of documents that donot require disclosure?

There is not a pre-trial disclosure proceeding as there is under thecommon law system. However, the parties may request to a courtfor pre-trial collection of evidence to be used in future proceedings.

7.2 What are the rules on privilege in civil proceedings inColombia?

In Colombia, matters protected by the client-attorney privilege arenot subject to disclosure. In addition, information contained in a taxreturn is confidential and can only be disclosed in very limitedevents.

7.3 What are the rules in Colombia with respect to disclosureby third parties?

Courts may order a third party to disclose documents. Seequestions 7.1 and 7.4.

7.4 What is the court’s role in disclosure in civil proceedingsin Colombia?

As explained in question 7.1 above, there is no disclosure underColombian procedural law. However, evidence can be obtainedrequesting a court to issue an order to disclose documents, hearwitnesses, inspect places or things. This evidence can be used infuture litigation.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Colombia?

Documents and other evidence obtained as explained in question7.4 can be used without restriction.

8 Evidence

8.1 What are the basic rules of evidence in Colombia?

The burden of proof lies on the parties, who must prove theirallegations. Each party has to request the court to collect during thetrial the evidence that support their allegations. However, the judgecan request evidence ex officio that he deems necessary to renderthe judgment. As a general rule, courts order to collect anyevidence that is relevant, pertinent and adequate to prove thearguments of each party. The CPC establishes the opportunities to request evidence, the typeof evidence that may be requested, the rules of collecting theevidence, the rules to value documentary evidence, and thesanctions that may be imposed to the parties or third parties duringthe collection of the evidence.


The type of evidence that is admitted includes, public and privatedocuments, photographs, records, videos, inspections by the court,experts’ opinions, party declarations and witness testimonies. Theparties may also voluntarily and independently disclose certainevidence such as experts’ opinions produced by independentprofessionals or entities specialised in the corresponding field.(Artic1e 10, law 446 of 1998.) Other experts may be appointed bythe court or by mutual agreement of the parties (CPC article 9 and233).Inadmissible evidence includes: evidence filed out of theopportunity set forth in the CPC; documents that have beenamended; and declaration of incapable individuals such as minors(under 12 years old), deaf and mute, or mentally unsound.


The court will only hear a witness that has been timely and properlyrequested by the parties. The court may call a witness ex-officioonly if his or her name has been mentioned during the proceedings. The court issues a subpoena to the witness to appear in court andtestify. Colombian judges have the power to compel any person totestify before them; they may also fine him or her if they do notappear before the court (CPC. 225), because testifying is a legalduty under our legal system (CPC. 213). Fact witnesses should beimpartial and independent from the parties and his attorneys, theymust declare under oath about the facts that they know. The judgesrequest the witness to explain his or her knowledge of the case andto disclose any relationship with the parties. A witness cannot hearother witness statements nor read any documents unless the judgegives an authorisation. There is no limit on the number of questionsthat can be asked during direct and cross examination. However,the judge can dismiss irrelevant or unnecessary questions. Witness statements or depositions can be presented in theproceedings, however, they are not very common to the extent they



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have a relative value as this depositions are received withoutparticipation of the opposing party, so that said party usually exertshis right to request the witness to appear in court and judges alsoprefer to hear the person.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Colombia?

The court decides about the evidence that can be introduced into theproceedings, participates in the collection thereof during the trialand valuates the evidence in the judgment. In addition, asmentioned above, the court may order evidence ex officio.


9.1 What different types of judgments and orders are the civilcourts in Colombia empowered to issue and in whatcircumstances?

Pursuant to article 301 CPC the rulings of judges may be judgmentsor court orders (auto).(i) Judgments: Final decisions on the merits of a given case

addressing the claims and the defences and valuing theevidence. The judge must also include in the award the orderto pay legal fees and expenses.

(ii) Court Order (Auto): All the other court decisions that can beeither interlocutory or procedural rulings. The decision isinterlocutory if it is relevant to the final decision of thelawsuit, and it is merely procedural if it refers to the formaldevelopment of the case.


Pursuant to article 16 of Law 446, 1998 courts in Colombia shallaward damages that fully compensate the claimant. For thispurpose, courts are empowered to apply not only written law butalso a principle of full repair and equity as well as to updateamounts. Usually damages in contract disputes are limited to actualloss and loss of profit as provided by the Civil Code. There are notpunitive damages in Colombia. Courts also recognise interestaccrued over debts if requested by the claimant. Courts have todecide about the costs of the litigation in the award.


Domestic judgments that are final can be enforced throughexecution proceedings in which the plaintiff may obtain seizure ofthe assets belonging to the debtor. Foreign judgments should be first recognised by the Supreme Courtof Justice in order to be regarded as a local judgment prior to beingsubmitted to enforcement proceedings. Exequatur proceedingsshall be commenced before the Supreme Court of Justice for thispurpose, who will validate the foreign award if it complies with thefollowing requirements: (i) it does not contravene any laws deemedto be “public policy laws”; (ii) it was rendered without fraud andafter due service of process; (iii) the judgment does not relate to “inrem” rights vested in assets that were located in Colombia at thetime the proceedings was commenced; (iv) it is a final award notsubject to further challenges; (v) it does not refer to any matter uponwhich Colombian courts have exclusive jurisdiction; and (vi) itdoes not refer to a matter under pending litigation in Colombia oralready ruled upon in Colombia (Article 694, CPC). Once

exequatur is granted, the interested party shall commence executionproceedings before a lower court.

9.4 What are the rules of appeal against a judgment of a civilcourt of Colombia?

The affected party by a first instance judgment is entitled to file anappeal during the 3 business days following the service of thejudgment. Judgments rendered on equity or those that the partiesmutually agree to are bought directly to the Supreme Court todecide a recourse of casacion and cannot be appealed.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Colombia?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

The alternative dispute resolution methods available in Colombiaare arbitration, mediation, and appointment of a third party incharge of deciding the dispute, called a friendly mediator. Mediation has increased during the last years, particularly after theenactment of Law 640, 2001 that introduced a compulsorymediation to several proceedings as a previous requirement to file acomplaint. Arbitration is also increasing in contract disputes. Thelast aforementioned form of ADR is not very common in practice.It consists of the agreement of the parties to submit their dispute toa friendly mediator, who is in charge of deciding the dispute.


Dispute resolution methods are principally governed by thePolitical Constitution, the Civil Code, the CPC, law 446 of 1998and law 640 of 2001. However, the main rules governingalternative dispute are included in Decree 1818, 1998.

1.3 Are there any areas of law in Colombia that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Most of the areas of law in Colombia admit the use of disputeresolution methods. However, some subject matters may not besubject to arbitration such as criminal, tax, family rights, and certainState contract decisions (actos administrativos).


2.1 What are the major dispute resolution institutions inColombia?

Some of the mayor dispute resolution institutions in Colombia arethe Chamber of Comerce of Bogotá (Cámara de Comercio deBogotá), the Chamber of Commerce of Medellín (Cámara deComercio de Medellín) and the Chamber of Commerce of Cali(Cámara de Comercio de Cali).

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All of the methods described above are expressly recognised by lawas fully binding and enforceable. Arbitration awards are onlysubject to a limited recourse to set aside the award. This recourseis rarely granted.



The use of arbitration as a dispute resolution method is increasingin Colombia. Mediation has also grown not only as a result of thecompulsory requirement set forth by Law 640, 2001, but also as afast option to solve legal controversies. The delay of the justicesystem continues to be the main reason for many companies toagree on arbitration.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Colombia?

One of the current issues regarding alternative dispute resolutionmethods refers to the reduced scope of arbitration involving theColombian State or the State entities. The Council of State, the

highest administrative Colombian Court, has limited the scope ofState Contracts arbitration. According to the Council of State, it isnot possible to arbitrate certain legal decisions adopted by the Stateor the State entities within the contract relationship (known as“Contract Administrative Acts”). Said decisions may includeunilateral interpretation, amendments and the avoidance of StateContracts. According to the Council of State, it is not possible forindividual parties to decide about Contract Administrative Actsbecause they involve a matter of public policy that is out of thescope of settlements by individuals. Another important issue regarding arbitration consists of the billthat was recently introduced in congress. The bill, if approved, willconsolidate the legal provisions that govern national andinternational arbitration. The bill introduces several proceduralchanges, particularly regarding domestic arbitration involving Stateentities, including rules to appoint arbitrators, a mandatory reviewby the Administrative court of cases exceeding approx. US$ 80,000,and a prior authorisation given by The Ministry of Justice to agreeon international arbitration. Modifications also include 2 broadadditional grounds to set aside an award: i) violation of due processduring the arbitration proceeding; and (ii) that the award be contraryto public policy rules. Finally, the bill intends to introduce theprovisions of the United Nations Commission on InternationalTrade Law Model Law on International Arbitration, some of whichare already incorporated by Law 315, 1996 that allows the partiesto freely agree on procedural rules, substantive law, seat ofarbitration, etc.

Gustavo Tamayo Arango

Lloreda Camacho & Co.Calle 72 No 5- 83 5th FloorBogotá Colombia

Tel: +57 1 326 4270Fax: +57 1 606 9701 02Email: [email protected]: www.lloredacamacho.com

Gustavo Tamayo is a partner of LLOREDA CAMACHO & CO., one ofthe leading full service law firms in Colombia. His primary practiceareas are Litigation, Commercial Contracts, Insurance, UnfairCompetition, Telecommunications, and Energy Law. Mr. Tamayo isalso the legal advisor of multinational companies in the field oftelecommunications. He has been a speaker at several conferencesand seminars, including the 2002 and 2003 Global Symposium forRegulators of the International Telecommunication Union. GustavoTamayo is the author of “ITU Latin American Case Studies onConvergence and The Information Society” and is the editor of the“Legal Update” published by the Firm. He is a Member of theInternational Bar Association. He is a graduate of the Universidadde los Andes in Bogotá (1984) and has a Master Degree onProcedural Law from the Colegio Mayor Nuestra Señora del Rosarioin Bogotá Colombia (1987).



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Bernardo Salazar Parra

Lloreda Camacho & Co.Calle 72 No 5- 83 5th FloorBogotá Colombia

Tel: +57 1 326 4270Fax: +57 1 606 9701 02Email: [email protected]: www.lloredacamacho.com

Bernardo Salazar is an associate in LLOREDA CAMACHO & CO. andDirector of the Litigation Department. He specialises in the areas ofcomplex commercial and civil litigation and dispute resolution. Hehas represented high-profile clients in some of the most significantcivil and commercial litigation matters in Colombia. He is agraduate of the Universidad del Rosario, Bogotá, Colombia, fromwhich he received a law degree in 1997. He also has a MastersDegree L.L.M in International Legal Studies from GeorgetownUniversity and Graduate Studies (Specialist) in Civil Procedural Lawfrom Universidad Externado de Colombia, which he received in2003 and 2002, respectively. He is Professor of Civil Law at theUniversidad del Rosario, Bogotá, Colombia and member of theAmerican Bar Association. He is author of Attachment of Assets(Colombia), Juris Publishing, 2007.

LLOREDA CAMACHO & CO. was founded in 1941 by JOSE LLOREDA CAMACHO.

Today LLOREDA CAMACHO & CO. is a full-service Law Firm that provides legal counseling to foreign and multinationalclientele doing business in Colombia. The Firm emphasises on the preventive practice of law, and assists clients inplanning and projecting their businesses.

The Firm’s areas of practice include litigation, foreign investment and exchange control law, financial law, insurance,administrative and state contract law, aeronautic law, maritime law, corporate law, tax law, environmental law,contractual and tort law, labour and immigration law, civil law, commercial law, mining law, insurance law,telecommunications law, and intellectual property matters.

LLOREDA CAMACHO & CO. has correspondent Law Firms in all major cities in Colombia and around the world in orderto better serve its clients.




Chapter 11

Arias & Muñoz

Costa Rica

I. LITIGATION

1 Preliminaries

1.1 (a) What type of legal system has Costa Rica got? (b) Arethere any rules that govern civil procedure in Costa Rica?

(a) Costa Rica’s legal system is based on Civil Law “DerechoRomanístico and Common Law”.

(b) The rules that govern civil procedures are established in theCivil Procedures Code. The procedure must be written,begin with the claim and is developed by the activity of boththe parties (plaintiff and defendant) and also by the judge.

1.2 (a) How is the civil court system in Costa Rica structured?(b) What are the various levels of appeal and are there anyspecialist courts?

(a) The Costa Rican court system is structured as follows: CivilMinor Court, Civil Major Court, Superior Civil Court andFirst Chamber of the Supreme Court.

(b) All judgments can be appealed. Claims and appeals will goto different courts depending upon the value of the claim asfollows:

Court of Appeals: This court acts as a court of secondinstance and hears the appeals against Civil Major Courtjudgments.

Civil Major Court: This court acts as a court of bothfirst instance (for claims over $ 2,000,001) and second instanceand hears the appeals against Civil Minor Court judgments.

Civil Minor Court: This court acts as a court of firstinstance (for claims under $ 2,000,000) and the appealsagainst its decisions are resolved by the Civil Major Court.

Additionally, there exists an extraordinary and specialised courtcalled the First Chamber of the Supreme Court, which is thehighest civil court and hears special appeals claims of erroneousapplication of the law and erroneous appreciation of the evidence.

1.3 (a) What are the main stages in civil proceedings in CostaRica? (b) What is their underlying timeframe?

The main stages in civil proceedings are the following:First stage (Iniciativa): This stage began with the filling ofthe claim and also includes the claim response, preliminaryobjections and defences. This period lasts from 3 to 4months.

Second stage (Probatoria): In this stage the judge analysesthe evidence filed by the parties. This period lasts from 8 to12 months. Third stage (Conclusiva): In this stage the judge accumulatesthe evidence and both parties file their arguments to persuadethe judge. This period lasts from three to four months. Final Stage (Decisoria): In this stage the judge makes a finaldecision. This period lasts from five to six months.

The above mentioned time periods could be extended based on theparticular circumstances of each case.

1.4 What is Costa Rica’s local judiciary’s approach toexclusive jurisdiction clauses?

Jurisdiction was established in the Civil Procedures Code and isexclusive for claims according to articles 27 and 30 of the CivilProcedures Code (related with assets located in Costa Rica,bankruptcy or successors), in all the others claims the jurisdictioncan be waived by the judge if the defendant does not oppose to thejurisdiction.

1.5 (a) What are the costs of civil court proceedings in CostaRica? (b) Who bears these costs?

(a) There do not exist any administrative costs related to civilcourt proceedings. However, both parties have to pay theirlawyer fees and fees related to evidence examination.

(b) According to article 221 of the Civil Procedures Code, theCourt’s judgment can order the defeated party to reimbursefees paid by the victorious party. The judge can also decidethat each party will assume its fees.

1.6 (a) Are there any particular rules about funding litigationin Costa Rica? (b) Are there any contingency/conditionalfee arrangements? (c) Are there rules on security for costs?

(a) Not applicable.(b) Not applicable.(c) Not applicable.


2.1 (a) Are there any pre-action procedures in place in CostaRica? (b) What is their scope?

(a) Pre- actions procedures (Interim measures) in Costa Rica arevoluntary, can be established before filling a claim, and have

Roy de Jesús Herrera Muñoz

Melissa Ramírez Zamora



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Arias & Muñoz Costa Rica

to be related to the evidence or to assure some necessaryconditions for filling the claim.

(b) Their scope is the following: The appointment of curator aditem, liens, attachment of assets at the Public Registry, andexhibition of documents.

2.2 (a) What limitation periods apply to different classes ofclaim for the bringing of proceedings before your civilcourts? (b) How are they calculated? (c) Are time limitstreated as a substantive or procedural law issue?

(a) There are two limitations periods applying to civil claims:The statue of limitation (Prescripción) and the extinction ofthe claim (Caducidad).

(b) The statue of limitation period depends on the claim object andit could be from one to ten years. The abandonment of theclaim only applies to claims related to property possession andits limit period goes from one to three months.

(c) Time limits can be requested by a party with a preliminaryobjection.


3.1 (a) How are civil proceedings commenced (issued andserved) in Costa Rica? (b) What various means of serviceare there? (c) What is the deemed date of service? (d)How is service effected outside Costa Rica? (e) Is there apreferred method of service of foreign proceedings in CostaRica?

(a) Civil proceedings are commenced with the filing of theclaim. The Court immediately orders the service of the claimto the defendant upon the filing of plaintiff’s claim.

(b) The service of the claim has to be personal. Both partieshave to indicate their preferred method of services (fax,email, address).

(c) The deemed date of service is when the court served the claimto the defendant, and there is not a specific period to do this.

(d) The judge orders to the Costa Rican Consulate in the foreigncountry to serve the claim to the defendant and there is not aspecific term to do this.

(e) Not applicable.

3.2 (a) Are any pre-action interim remedies available in CostaRica? (b) How do you apply for them? (c) What are themain criteria for obtaining these?

(a) Interim remedies available in Costa Rica are used for assureboth defendant submission to the judicial proceeding andassets related with the claim object (“Arraigo”, lien andattachment of assets at the Public Registry).

(b) Plaintiff can request interim remedies before filing the claim.If the Court accepts the interim remedies the plaintiff has aperiod of one month to file the claim; if he doesn’t file theclaim in this period, the Court can order the clearance of theinterim remedies.

(c) The plaintiff must deposit a guarantee according to the sumof the claim.


The main elements of the claimant’s pleading are:identification of the object and the affected right; and the prayer for relief.

3.4 (a) Can the pleadings be amended? (b) If so, are there anyrestrictions?

According to article 313 CPC, the pleading can be amended untilthe reply of the defendant is received.

4 Defending a Claim

4.1 (a) What are the main elements of a statement of defence?(b) Can the defendant bring counterclaims/claim ordefence of set-off?

(a) Costa Rica does not have statements of defence. However,with the claim reply the defendant can bring preliminaryobjections and defences such as lack of standing, lack ofsubject matter jurisdiction, lack of “in personae” jurisdictionor incorrect venue (Art. 298 CPC).

(b) The defendant can file a counterclaim exclusively with theclaim reply. The object of the claim and any counterclaimsmust be related. (Art. 308 CPC.)


The time- limit will depend on the type of claim.Ordinary claim: The defendant must reply in the next tendays, counted from the next day after the defendant is served.“Abreviado” claim: The defendant must reply in the nextfive days, counted from the next day after the defendant isserved.Summary claim: The defendant must file the statements ofdefence with the claim reply. Collection claim: The defendant must file the statements ofdefence with the claim reply.


This is not applicable in Costa Rica.


If the defendant does not defend the claim in the legal term, he willbe declared rebel by the Court and the factual statements would beconfirmed as answered affirmative. (Art. 310 CPC),


Yes, according to article 34 of the Civil Procedures Code thedefendant can dispute the court’s jurisdiction within three days ofthe service of the claim. If the defendant does not dispute thecourt’s jurisdiction, this will be waived.


5.1 (a) Is there a mechanism in your civil justice systemwhereby a third party can be joined into ongoingproceedings in appropriate circumstances? (b) If so, whatare those circumstances?

(a) Yes, a third party can be joined into ongoing proceeding as

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co- defendant (Art. 106 CPC) and it is called “LitisconsorcioNecesario”.

(b) The court can order to the plaintiff to extend the claim whenit is necessary that an ongoing claim go against more people,according to the object of the claim. If the plaintiff does notextend the claim into the next eight days, the court closes theclaim.

5.2 (a) Does your civil justice system allow for theconsolidation of two sets of proceedings in appropriatecircumstances? (b) If so, what are those circumstances?

(a) Yes, it called “Acumulación de Procesos”. (b) The rules for the consolidation of claims are the following:

Existence of two or more pending claims with the same object and parties. The new claim is combined with the oldest. Can only proceed in first instance.The Court can order the consolidation (requested by the party or when judge has notice of two or more pending claims with connection of elements).Consolidation can only be ordered after the decision on preliminary objections and prior to the judgment.




6.1 (a) Is there any particular case allocation system beforethe civil courts in Costa Rica? (b) How are casesallocated?

(a) Not applicable.(b) The claims must be filed directly in the corresponding court,

depending on the jurisdiction.

6.2 (a) Do the courts in Costa Rica have any particular casemanagement powers? (b) What interim applications canthe parties make? (b) What are the cost consequences?

(a) The judges have the power to manage the case and order theservice of the claim.

(b) Parties have to fulfil the court requirements throughout theprocess and they can request the judge interim applicationsas detailed in question 3.2.

(c) Not applicable.

6.3 What sanctions are the courts in Costa Rica empowered toimpose on a party that disobeys the court’s orders ordirections?

According to the criminal code the court has the power to sanctiona party who disobeys any order, direction or judgment with fifteendays to one year of jail.

6.4 (a) Do the courts in Costa Rica have the power to strikeout part of a statement of case? (b) If so, in whatcircumstances?

(a) Yes, but only in the judgment.

(b) In the judgment, the judge must admit or reject the factualstatements.

6.5 Can the civil courts in Costa Rica enter summaryjudgment?

Summary proceedings are only for specific cases established inarticle 432 of the civil procedure code, for example:

Collection claims (Pledges, Mortgages and other kind ofcredits).Other claims regarding eviction, contracts resolution, andactions to protect the possession of assets.

6.6 (a) Do the courts in Costa Rica have any powers todiscontinue or stay the proceedings? (b) If so, in whatcircumstances?

(a) Yes, the courts have the power to discontinue a claim byinactivity of the plaintiff.

(b) Its necessary that the following circumstances are met: That the decision has not been dictated.That the plaintiff has left the claim for the term of three months.That the claim has caused damages to the defendant.

This cannot occur in the following cases:Successors and bankruptcies claims.Civil action to protect possession of assets “Interdictos”.Decision execution claims, whenever a lien has not made.Arbitration claims.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Costa Rica? Are there any classes of documents that donot require disclosure?


7.2 What are the rules on privilege in civil proceedings inCosta Rica?


7.3 What are the rules in Costa Rica with respect to disclosureby third parties?


7.4 What is the court’s role in disclosure in civil proceedingsin Costa Rica?


7.5 Are there any restrictions on the use of documentsobtained by disclosure in Costa Rica?


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8 Evidence

8.1 What are the basic rules of evidence in Costa Rica?

Basic rules regarding evidence are as follows:The evidence must be legal and if it is irrelevant the Courtcan declare it inadmissible.The plaintiff has to demonstrate its pleas.If the evidence is in a foreign country, plaintiff/ defendantmust inform the judge in the claim writing/ claim response.The evidence must be received in four months. If the evidence cannot be obtained within four months, thecourt can state that the evidence is excluded.

8.2 (a) What types of evidence are admissible, which ones arenot? (b) What about expert evidence in particular?

(a) According to article 318 of the Civil Procedures Code thefollowing are admissible evidence:

Documentary evidence.Testimonial evidence (No more than four witnesses for each fact).Court appointed expert witnesses (Expert evidence).Judicial inspection. Presumption (The person who alleges it will have to demonstrate the existence of the facts).

(b) Court only accepts expert evidence contributed by courtappointed expert witnesses.

8.3 (a) Are there any particular rules regarding the calling ofwitnesses of fact? (b) The making of witness statements ordepositions?

(a) Short, clear, and simple questions regarding the claim facts,like who?, how?, where?, when?, and why?

(b) The lawyer can oppose if the question suggests the answer, isconfusing or it does not have any relation with the facts.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Costa Rica?

In the provision of evidence the judge has power over the evidenceand he can accept or reject it. The judge can determine whether thequestions the parties ask witnesses are relevant or not to resolve thecase.


9.1 What different types of judgments and orders are the civilcourts in Costa Rica empowered to issue and in whatcircumstances?

Courts can order the following:Ministerial decision.Writ / Order.Decision.Judgment.First instance decision.Final decision / Res judicate decision.


The courts are empowered to order the payment of damages,interests and cost of the litigation, but only when the party requeststhem; damages can only be granted when the party proves that theyare directly and immediately related with the litigation. The costsof the litigation are both the lawyer fees and the expenses relatedwith the process like photocopies, stamps, and others of the winnerparty.


To comply with Costa Rican law under articles 705 and 706 of theCPC, the exequatur must fulfil the following requirements:

The exequatur must be properly legalised by the Costa RicanConsul in the corresponding jurisdiction.The party requesting the provisional measure must prove thatthe aggrieved party was duly served the original claim andhad the opportunity to defend itself.The provisional measures must not oppose the Costa RicanLegal System.

Please take note that, in any case, the First Chamber of the SupremeCourt will verify whether there is an ongoing claim in our countryon the same matter or whether the same matter has been resolved.Once the First Chamber deems the exequatur admissible it mustinform the judge in the asset’s corresponding jurisdiction to executethe order against the asset. There is a minimal possibility to contest,object, or reverse this process. In this case the aggrieved party mustprove that the exequatur did not fulfil all the requirementsmentioned above. However, if the First Chamber deems the petition inadmissible, thisdecision is final. No party has the option for contesting, objectingor reversing this decision.

9.4 What are the rules of appeal against a judgment of a civilcourt of Costa Rica?

According to article 559 of the Civil Procedures Code, the rules forappeal against a judgment of a civil court in Costa Rica are asfollows:

The appeal must be filed by the defeated party or any thirdparty that has an interest in the proceeding, within five dayscounted from the next day after the notification. The appeal must be filed against the court that issued thejudgment.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Costa Rica?Arbitration/mediation/tribunals/ombudsman? (Pleaseprovide a brief overview of each available method.)

Costa Rica has the following methods of dispute resolution:Conciliation: Two or more people try to achieve a solutionwith the assistance of a Judge or a third party.Mediation: Two or more people try to achieve a solutionwith the assistance of mediator.

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Arbitration: Parties involved in a controversy entrust itssolution to an arbitration court, to make an award.


The rules that governing dispute resolution methods are establishedin:

Alternative Dispute Resolution Law “Ley sobre resoluciónalterna de conflictos y promoción de la paz social”.Alternative Dispute Resolution Guideline “Reglamento alCapítulo IV de la Ley sobre resolución alterna de conflictosy promoción de la paz social”.Arbitration Guideline “Reglamento de Arbitraje”.

1.3 Are there any areas of law in Costa Rica that cannot usearbitration/mediation/tribunals/ombudsman as a means ofdispute resolution?

All people have the right to settlement, negotiation, mediation, andconciliation to solve claims even if there is an ongoing judicialproceeding. Conciliation is not allowed in the following areas:

Criminal matters when the victim is a minor. However, whenboth the victim and the criminal are minors, conciliation ispossible. Sexual crimes when the victim is a minor. Domestic violence.Drugs trafficking.

Arbitration only can be used when the parties established in acontract an arbitration clause to solve an economic conflict.


2.1 What are the major dispute resolution institutions in CostaRica?

International Centre for Conciliation and Arbitration “CentroInternacional de Conciliación y Arbitraje (CICA) de laCámara Costarricense Norteamericana de Comercio(AMCHAM)”.Costa Rica Commerce Chamber “Cámara de Comercio deCosta Rica”.Centre for Conciliation and Arbitration of the Engineers andArchitects Society “Centro de Resolución de Conflictos delColegio Federado de Ingenieros y Arquitectos (CFIA)”.Centre for Conciliation and Arbitration of the Ministry ofLabour and Social Welfare “Centro de Resolución

Alternativa de Conflictos del Ministerio de Trabajo ySeguridad Social”.“Centro de Mediación y Manejo de Conflictos, Enseñanza eInvestigación (CEMEDCO)”.“Instituto para la solución de Conflictos Familiares(INCOFAMI)”.“Centro de Resolución de Conflictos de Materia de laPropiedad de la Cámara de Corredores de Bienes Raíces”.“Comisión Nacional del Consumidor”.“Programa Casas de Justicia del Ministerio de Justicia yGracia “Grupo RAC Latinoamericano”.“Casa de Justicia ULACIT - Municipalidad de Puntarenas”.“Casa de Justicia de la Municipalidad de Mora”.


Yes, all of the above mentioned dispute resolution mechanismsprovide an award that is mandatory and must be executedimmediately.



Arbitration is the most frequently method used for disputeresolution. Actually, people often use arbitration clauses incontracts that specify the rules in case of breach.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Costa Rica?

Currently, the main problem in Costa Rica is the lack of culture andeducation in the use of the dispute resolution methods asconciliation, mediation and arbitration. Both lawyers and users donot believe in these mechanisms.Another disadvantage is that the administrative expenses andlawyer fees are highly expensive, for these reasons the users preferto solve its economic conflict at the Court, even if the process islonger. Nowadays, in Costa Rica there are around ten dispute resolutioncentres specialised in different areas, such as real estate, building,commerce, labour and family; and their awards have the samevalidity as a judgment but they are less well known.

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Costa Rica

Melissa Ramírez Zamora

Arias & Muñoz Guanacaste, Liberia, Villa Guanacaste, 2nd floorCentro Empresarial ForumEdificio C, Oficina 1C1.Santa Ana, San JoséCosta Rica, C.A.

Tel: +506 2204 7575Fax: +506 2204 7580Email: [email protected] URL: www.ariaslaw.com

Main areas of practiceCivil LawCriminal LawIntellectual Property Real EstateLitigation and ArbitrationExperienceMelissa belongs to the litigation department of the Costa Rica office,and she has developed it experience in several legal areas, withparticular emphasis in civil law. She has participated in manylitigation and arbitration procedures representing the interests ofrecognised national and international companies. Also, she isexperienced in Costa Rica’s criminal system. She was formerly ajudge at Civil Court and has worked as closer and counsel forStewart Title at Guanacaste Office and cooperated in the selling oftitle guarantees for many real estates projects. She also counselledin a project in association with the Costa Rica Law Society for thePublic Registry in the marks and patents department. CareerMelissa received her law degree from the Latin-American Universityof Science and Technology (ULACIT) Law School in 2006 and shewas admitted to the bar in the same year. She also received herPublic Notary degree from the Laureate International University(Universidad Interamericana) in 2008. LanguagesMelissa is fluent in Spanish, English, and Italian.

Roy de Jesús Herrera Muñoz

Arias & Muñoz Guanacaste, Liberia, Villa Guanacaste, 2nd floorCentro Empresarial Forum,Edificio C, Oficina 1C1.Santa Ana, San JoséCosta Rica, C.A.

Tel: +506 2204 7575Fax: +506 2204 7580Email: [email protected] URL: www.ariaslaw.com

Main areas of practiceBanking and Finance Law Civil, Commercial, and Public LawReal EstateLitigation and ArbitrationExperienceRoy Herrera Muñoz is partner at the Costa Rican office of Arias &Muñoz since November 28th, 2008. He joined the firm in 2005and leads the firm’s Litigation Department.His emphasis in law is in banking and finance. However, after 11years of a successful legal career, he has built up an extensiveexperience in litigation, complex commercial transactions, publiclaw, civil law, and real estate; involving insolvencies, bankruptcies,conciliations and arbitrations. He successfully provided legal services for the following Banks:Banco Interfín (Scotiabank de Costa Rica, currently), BancoCuscatlán (City Bank, currently), Banco Improsa, Banco BAC SanJosé, Banco Banex (Banco HSBC, currently), Banco Crédito Agrícolade Cartago, Banco Nacional de Costa Rica and Banco de CostaRica. He was actively involved in Costa Rica’s first securitisationsacting on behalf of Banco Interfin and Banco BAC San José. Currently, Roy is a “Curator ad litem” approved by the Costa RicanSupreme Court of Justice. He is also an Arbitrator in theInternational Center for Conciliation and Arbitration (CICA) of theCosta Rican - American Chamber of Commerce (AMCHAM) and anactive member in Costa Rica of the International ArbitrationCommission of the International Chamber of Commerce (ICC).CareerRoy received both, his Law Degree and his Notary Degree in 1995from the Law School at the University of Costa Rica (Universidad deCosta Rica, UCR) and he was admitted to the bar in the same year,where he also obtained his Specialist Degree in Public Law in 1996.LanguagesHe is fluent in Spanish and has a working knowledge of English.

Arias & Muñoz is unique in Central America, for it operates as a single firm rather than as an alliance of firms andcurrently has eight, fully-integrated offices in five countries: Guatemala, El Salvador, Honduras, Nicaragua and CostaRica. It has become, today, not only a solid, but also an innovative legal firm that continues to spread its influencethroughout the region.

For clients, choosing the right legal partner is key and Arias & Muñoz, with its core experience over a broad range ofpractice areas and industries, as well as its dedicated lawyers, unlocks the region’s intricacies and subtle differences inlaws for them. The firm is truly a one-step, one-stop law firm offering clients the benefits and demonstrated advantagesthat come from having all their regional businesses served from one, fully integrated base.

Arias & Muñoz



Chapter 12

Georgiades & Mylonas

Cyprus

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Cyprus got? Are there anyrules that govern civil procedure in Cyprus?

The island of Cyprus became a British colony when Turkeyoccupied and then ceded Cyprus to the English Government.Cyprus was under British rule from 1878 until 1960, when theisland acquired its independency.As a result of British rule, the English legal system was introducedin Cyprus and many laws were enacted in an effort to import thedoctrines of common law and equity into Cyprus. The adoption ofthe Criminal Code, the Contract Law and the Civil Wrongs Lawconstitute clear examples of this effort.In addition, practical and wide considerations advocated thepreservation of the English legal system after 1960, when Cyprusbecame independent. By virtue of the provisions of s. 29(l)(b) of theCourts of Justice Law (14/60), all Courts apply the Constitution of theRepublic, the laws which have been retained by virtue of Article 188of the Constitution, the principles of Common Law and Equity andthe English Laws which were applicable in Cyprus before 1960.It is thus clear that the Cyprus legal system is based on its Englishcounterpart. English case-law is closely followed and all statutesregulating business matters and procedure are based essentially onEnglish laws.Cyprus inherited many elements of its legal system from the UnitedKingdom, including the presumption of innocence, the right to dueprocess and the right to appeal. Throughout Cyprus, the right to afair public trial is provided for in law and generally accorded inpractice. Defendants have the right to be present at their trial, to berepresented by counsel at public expense for those who cannotafford this, to confront witnesses and to present evidence in theirown defence. Most laws are officially translated into English.Most criminal and civil cases begin in district courts, from whichappeals are made to the Supreme Court. No special courts exist forsecurity or political offences.One major difference between the English and the Cypriot legalsystem is that under the latter, there is a written Constitution, whichis the supreme law of the country.The human rights aspect of the Constitution is based on theEuropean Convention of Human Rights and its application is basedon US and European Constitutional Law Principles.The Supreme Court, which pronounces final judgment on

administrative law matters, follows the French Droit Administratifprinciples.Since 1 May 2004, Cyprus has been a full member of the EuropeanUnion and as a result European Law supersedes Cyprus Law in caseof any conflict.The Republic of Cyprus is also a signatory to many internationaltreaties and conventions.Civil procedure in Cyprus is governed by the Civil Procedure Rules.

1.2 How is the civil court system in Cyprus structured? Whatare the various levels of appeal and are there anyspecialist courts?

The civil court system in Cyprus includes first instance courts andthe Supreme Court. The Supreme Court is at the top of the pyramidof judicial power and all other courts of first instance aresubordinate to the Supreme Court. By virtue of the provisions ofArticle 146 of the Constitution, the Supreme Court of Cyprus hasexclusive jurisdiction to judicially review every administrative act,decision or omission. Such jurisdiction covers the whole realm ofgovernmental and administrative action in the public sphere, butexcludes acts, decisions or omissions by public authorities relatingto the private rights of individuals.The Supreme Court has jurisdiction to hear and determine allappeals from all inferior courts in civil and criminal matters. TheCourt can uphold, vary, set aside or order the retrial of a case as itsees fit. The Court can draw its own inferences from the factsoutlined by the trial Court and in certain exceptional cases, it mayreceive further evidence.First Instance Courts which deal with civil procedures include theDistrict Courts, the Rent Control Tribunal, the Industrial Tribunaland the Family Courts.Each of the 6 towns of Cyprus has its own District Court. TheFamagusta and Kyrenia District Courts are under Turkishoccupation so their jurisdictions have been taken over by theNicosia and Larnaca courts respectively.Each District Court has jurisdiction to hear and determine all civilactions, where the cause of action has arisen wholly or in part withinthe limits of the district where the Court is established, or where theDefendant, at the time when the action was filed, resides or conductshis business within the boundaries of the specific district.The Family Courts have jurisdiction to take up petitions concerningthe dissolution of marriage and matters relating to parental support,maintenance, adoption and property relations between spouses,provided that the parties reside in the Republic.With regard to the Rent Control Tribunals (there are now three Rent

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Control Tribunals), these are the tribunals which have jurisdiction totry any disputes arising from the application of the Rent Control Laws.Industrial Tribunals have jurisdiction to hear applications byemployees for unjustified dismissal and redundancy payments.A First Instance Court is also a Military Court which hasjurisdiction to try military offences under the Criminal Code andany other offence committed by members of the armed forces.

1.3 What are the main stages in civil proceedings in Cyprus?What is their underlying timeframe?

The main stages in civil proceedings are as follows:Filing a writ of summons, generally indorsed or specially indorsed,for service of a writ of summons to the Defendants.Filing of a Note of Appearance by the Defendant within 10 daysfrom the time of service. If the Defendant disputes the jurisdiction,he must apply for leave to file a conditional appearance. If theDefendant is outside the jurisdiction, the Plaintiff must first applyfor leave to seal the writ and then for leave to serve it outside thejurisdiction.If a generally indorsed statement of claim is filed, then a statementof claim must be filed within 10 days of an appearance.The Defendant must file his statement of defence within 14 daysafter filing an appearance if a specially indorsed writ of summons isfiled, or 14 days after the statement of claim if a generally indorsedwrit of summons is filed.The Plaintiff may file a reply within 7 days after receiving thedefence, but it is not compulsory.If the Defendant has a counterclaim, the Plaintiff will file a reply toand defence against the counterclaim within 14 days of thecounterclaim.Once the pleadings close, any party is entitled to apply to the courtfor a hearing date. The Registrar fixes the matter for directions andthe judge decides when to fix the matter for hearing. During the trial, both parties produce evidence and theirsubmissions so that a judgment may be issued.


Cyprus follows the English private international common lawprinciple regarding exclusive jurisdiction clauses.As a general rule, when the parties submit their disputes to theexclusive jurisdiction of a foreign court by including an exclusivejurisdiction clause,in their agreement, the Cyprus courts will expectthe parties to abide by their contract. Having said this though, thesecourts have the inherent discretion to disregard an exclusivejurisdiction clause.In cases where a Plaintiff files a legal action in Cyprus in breach ofan exclusive jurisdiction clause and the Defendant applies for a stay,the court is not bound to stay the proceedings. The court may refuseto stay the proceedings if the Plaintiff argues a strong case for notstaying the Cyprus proceedings. The criteria that the court will take into consideration in order todecide whether or not the procedure will be stayed are outlined inThe Eleftheria, (1969) 2All ER, The Fehram (1958) 1 All ER 233,Trendex Trading Corporation 641 and Another V Credit Suisse(1980) 3 All ER, and they have been adopted in various Cypriotcases, such as Jadranska Slobodna Plovidba v. Photiades and Co.(1965) 1 C.L.R. 58·, Cyprus Phassouri Plantations Co. Ltd. v.Adriatica (1985) 1 C.L.R. 290·, Demstar Limited v. Zim Israel

Navigation Co. Ltd (1991) I.C.L.R. 620. See also Dicey and Morrison the Conflict of Laws, 12th edition, volume 1 1993.According to Lord Denning in The Fehram (1958) 1 All ER 333, thejudge, when deciding upon whether or not to stay the proceedings,must ask himself whether the dispute is “… a matter which properlybelongs to the courts of this country”.The main principles which have been established by the authoritieshave been summarised by Brandon J. in The Eleftheria, p.65 asfollows:“(I) where Plaintiffs sue in England in breach of an agreement to referdisputes to a foreign court, and the Defendants apply for a stay, theEnglish court, assuming the claim to be otherwise within itsjurisdiction, is not bound to grant a stay but has a discretion whetherto do so or not. (II) The discretion should be exercised by granting astay unless strong cause for not doing so is shown. (III) The burdenof proving such strong cause is on the Plaintiffs. (IV) In exercisingits discretion, the court should take into account all the circumstancesof the particular case. (V) In particular, but without prejudice to (IV),the following matters, where they arise, may properly be regarded:(a) in what country the evidence on the issues of fact is situated, ormore readily available, and the effect of that on the relativeconvenience and expense of trials between the English and foreigncourts; (b) whether the law of the foreign court applies and, if so,whether it differs from English law in any material respects; (c) towhich country either party is connected, and how closely; (d) whetherthe Defendants genuinely desire trial in the foreign country, or areonly seeking procedural advantages; and (e) whether the Plaintiffswould be prejudiced by having to sue in the foreign court becausethey would (i) be deprived of security for that claim, (ii) be unable toenforce any judgment obtained, (iii) be faced with a time-bar notapplicable in England, or (iv) for political, racial, religious or otherreasons be unlikely to get a fair trial”.After the introduction of Council Regulation No. 44/2001, thecourts of the Member States must respect the jurisdiction clause ofan agreement where the parties, one or more of whom is domiciledin a Member State, have agreed that a court or the courts of aMember State are to have jurisdiction to settle any disputes whichhave arisen or which may arise in connection with a particular legalrelationship. The agreed jurisdiction is exclusive unless the partieshave agreed otherwise. However, according to Regulation 44/2001in cases where an agreement is concluded by parties, none of whomis domiciled in a Member State, the courts of other Member Statesdo not have jurisdiction over their disputes unless the court orcourts chosen have declined jurisdiction.In addition, where proceedings involving the same cause of actionand between the same parties are brought in the courts of differentMember States, any court other than the court first seized must on itsown motion stay its proceedings until the jurisdiction of the court firstseized is established and decline jurisdiction in favour of that court.

1.5 What are the costs of civil court proceedings in Cyprus?Who bears these costs?

The costs in legal proceedings generally depend on the complexity ofthe case and the time consumed and they vary according to thelawyers involved. There are general criteria in the Advocates Law,according to which lawyers may charge their clients. There are alsostatutory regulations according to which there are minimum chargesfor each stage of the litigation, depending on the scale of the claim.As a general rule, the costs follow the event. That is, the winningparty is allowed to claim his legal costs from his opponent. However,the costs which are taxed by the Registrar in favour of the winningparty do not always cover the fees that are paid to his lawyer.

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1.6 Are there any particular rules about funding litigation inCyprus? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

Legal Aid Law 2002 has been implemented in Cyprus Directive2002/8/EC to improve access to justice in cross-border disputes byestablishing minimum common rules relating to legal aid for suchdisputes and confers the right upon any individual to ask for LegalAid from the State if that individual is financially unable to payhis/her legal costs in a judicial process. The Legal Aid Procedure Rules of 2003 provide for costs regardinglegal aid cases. Under Legal Aid Law, legal aid is provided in the followingsituations:1 Criminal proceedings for crimes or offences for which the

law provides for imprisonment exceeding one year. 2 Civil and criminal proceedings for specified violations of

human rights. 3 Proceedings relating to Family and Matrimonial Law

disputes.4 Cross-border disputes. Order 60 of the Civil Procedure Rules provides that a Plaintiff (and,in respect of a counter-claim which is not merely in the nature of aset-off, a Defendant) ordinarily resident outside Cyprus or aMember State of the European Union may be ordered to givesecurity for costs, though he may be temporarily resident in Cyprusor in a European Union Member State. In actions brought by persons resident outside Cyprus or the EU,when the Plaintiff’s claim is based on a judgment or order ornegotiable instrument, it is up to the Court’s discretion to ask thePlaintiff to give security for costs. Where the Court orders securityfor costs to be given, the proceedings in the action are stayed untilsuch security is given. In the event of the security not being givenby the appointed time, the action may be dismissed.In Cyprus, it is against the rules of professional conduct to workwith a contingency fee arrangement.


2.1 Are there any pre-action procedures in place in Cyprus?What is their scope?

In Cyprus, there are no pre-action proceedings that a party isobliged to follow before he files his legal action but as a matter ofgeneral practice, a Plaintiff will send a legal notice to his opponentbefore he proceeds with any litigation.


The Limitation of Actions Law, Cap. 15, sets down variouslimitation periods depending on the nature of the claim. This Lawprovides a limitation period of 15 years with regard to claims inrespect of bonds and mortgages; 12 years with regard to claims toestate; 6 years for claims with regard to bank debts; and for anyother cause of action, a period 6 years.The Limitation of Actions Law was suspended by a series of lawsdue to political conflicts and the Turkish invasion of Cyprus in1974. Now the suspension period only applies to claims relating tomovable or immovable assets in the area of Northern Cyprus, which

is occupied by Turkish Troops [see the Limitation of Actions(Temporary provisions) Law 110(1)/2002].With regard to torts, the Civil Wrongs Law provides for a 3-yearlimitation period. Time limits are treated under Cypriot law as a procedural law issueand give the Defendant right to file a preliminary objectionrequesting the rejection of the action against him if the claim hasnot been filed within the specified time limit.


3.1 How are civil proceedings commenced (issued and served)in Cyprus? What various means of service are there? Whatis the deemed date of service? How is service effectedoutside Cyprus? Is there a preferred method of service offoreign proceedings in Cyprus?

In Cyprus, proceedings are commenced by filing a writ of summonswith the Registrar at the competent district court and they are servedthrough an authorised court server within 1 year of the date whenthe action was filed.Under certain circumstances, the Plaintiff may apply for an orderfor a substitute service. If the Defendants are outside the jurisdiction, the Plaintiff mustapply for leave to seal the writ of summons and for leave to serve itoutside the jurisdiction by post or by publishing the writ ofsummons in 1 or 2 newspapers in the country where the Defendantresides.Foreign proceedings in Cyprus may be served in the manner that ispermitted by the country where the proceedings are instituted.

3.2 Are any pre-action interim remedies available in Cyprus?How do you apply for them? What are the main criteria forobtaining these?

In Cyprus, any party may only apply for an interim remedy afterfiling the legal action. The conditions for granting an interiminjunction are set out in Courts of Justice Law 14/60 which conferspower upon the Court, while exercising its civil jurisdiction, togrant an injunction if there appears to be a probability that thePlaintiff is entitled to relief and if it will be difficult or impossibleto do complete justice at a later stage without granting aninterlocutory injunction. Section 9 of Civil Procedure Law (Cap 6) confers power upon theCourt, upon an application being made by any party, to issue aninjunction without notice to the other party (ex parte) upon proof ofurgency or other specific circumstances. The parties may file exparte applications in cases where the matter is very urgent, withoutserving notice to the other parties or by summons if the matter is notconsidered as being urgent.Interim orders may be issued against the Defendant for thesequestration, preservation, custody, sale, detention, or inspectionof any property in his name or to direct that the Defendant berestrained from parting with any immovable property registered inhis name. Among the interim remedies available are freezingorders (mareva injunctions), search orders or prohibitinginjunctions, such as an order forbidding a party from selling certaincounterfeit products in intellectual property cases.


According to the Civil Procedure Rules of Cyprus Order 19, r.4,



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every pleading shall only contain a statement in the form of asummary of the material facts upon which the claimant is basing hisclaim; it shall not contain the evidence by which the material factsare to be proven. It must also state and show grounds for theparticular kind of relief claimed. Where necessary, a pleading shallbe divided up into paragraphs and numbered consecutively. Withregard to dates, sums and numbers, these shall be expressed infigures, not words.It is therefore clear that the claimant’s pleadings should onlyinclude summarised material allegations of facts, not any law uponwhich the claimant seeks to rely or any legal conclusions.However, in some cases, it is necessary to include details in respectof specific matters. According to Order 19, r.5, if the claimant seeksrelief of a claim regarding misrepresentation or fraud or breach oftrust or wilful default or undue influence, then the claimant shouldgive details of those matters.Where the Plaintiff is seeking relief in respect of several distinctclaims or causes of complaint which are founded upon separate anddistinct grounds, they shall be stated separately and distinctly. Thefacts belonging to the respective claims or causes of complaintshould be stated separately, so as to show upon which facts eachcause of action is based, in respect of which facts each form or reliefis being claimed.


The issue of the amendment of pleadings is governed by Order 25of the Civil Procedure Rules, according to which the alteration oramendment of a pleading may be allowed by the Court at any stageof the proceedings within a time limit, in such manner and on suchterms as may be fair and necessary for the purpose of determiningthe issues between the parties.A party who has been granted an order for leave to amend hispleading must do so within the time limit provided in the order.Otherwise, he must amend his pleading within fifteen days of thedate of the order unless an extension of time is granted by the Court.The amended pleading must be delivered to the opposite party withan office copy of the order granting the leave for amendment withinthe allowed time limit.Where the Court finds that the applicant has unreasonably delayedfiling his application for amendment, then the Court may reject theamendment.

4 Defending a Claim


According to the Civil Procedure Rules of Cyprus, Order 19, r.4,every pleading must only contain a statement in the form of asummary of the material facts upon which the Defendant is relyingfor his defence; it must not contain the evidence through which thematerial facts are to be proven. Where necessary, a pleading shallbe divided up into paragraphs, numbered consecutively. Withregard to dates, sums and numbers, these shall be expressed infigures, not in words.Subject to the provisions of Order 19, a statement of defence mustnot only include a general denial of the grounds alleged by thestatement of claim, but must also deal specifically with eachallegation of fact, the truth of which is not admissible, except

damages. Thus the denial of an allegation in a statement of defencemust be accompanied with an answer to the point of substance.A Defendant in an action can bring a counter-claim against theclaims of the Plaintiff and any such claim has the same effect as across-action.


The time limit within which the statement of defence has to beserved according to Order 21 of the Civil Procedure Rules, in a casewhere a Defendant has filed an appearance, is fourteen days fromthe time fixed for appearance or from the delivery of the statementof claim, whichever is the latest, unless the Court allows anextension of the time limit or in the case of an action in which thewrit of summons has been specially indorsed under Order 2, r.6, asummons for judgment under Order 18 is served by the Plaintiff inthe meantime.


Under the Civil Procedure Rules (Order 10), where a defendant inaddition to defending an action, wishes to make a claim of his ownagainst any person not already a party to the action, he may do soprovided that:

he is entitled to a contribution or indemnity; he is entitled to any relief or remedy relating to or connectedwith the original subject matter of the action; orany question or issue relating to or connected with the saidsubject matter is the same as some issue arising between thePlaintiff and the Defendant and should be properlydetermined between the Plaintiff the Defendant and the thirdparty.

This procedure is called Third Party Procedure.A third party application must be filed within a month of the datewhen the statement of claim is filed.


If the Defendant does not file an appearance or defence within theprescribed limits, then the Plaintiff may file an application for ajudgment in default.Following the application, the matter is fixed for proof and on thatday, the Plaintiff may prove his case, either by filing an affidavit orby giving oral evidence.The judgment in default can be set aside by the judge if theDefendant has good reasons for not filing his defence and he showsthat he has a good defence.


The Defendant may dispute the jurisdiction by requesting leave tofile a conditional appearance and then he can file an application tostay the proceedings because of lack of jurisdiction. The mostcommon grounds for disputing jurisdiction are a lack of jurisdictionor the pending of the same case in a Court of another State or theexistence of an exclusive jurisdiction clause in the disputedagreement. If the Defendant omits to file a conditional appearance,as prescribed by the Civil Procedure Rules, he will not be entitledto dispute the jurisdiction. In particular, according to the Supreme

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Court’s decisions in A.L. Metal Trading Ltd v G.J. Magdon LtdCivil Appeal 10992, 19/12/2001 and Papakokkinou v LandbrokeGroup PLC and others (1995) 1 CLR 1090, a party may disputejurisdiction by obtaining leave from the Court giving directions forfiling an application of stay within a given time limit or by filing theapplication for a stay at the same time as entering a conditionalappearance.



According to the Civil Procedure Rules a person may be joined intoan ongoing action as a Plaintiff on condition that the right to reliefarises from same transaction. Where plaintiffs bring separateactions, actions may be joined where a common question of law orfact arises in these actions (see Order 9).In addition, Order 9 provides that a plaintiff has the right to join asco-defendant any person against whom he has the right to relief. The Civil Procedure Rules (Order 14) also provides that when twoor more actions are pending in the same Court, whether by the sameor different plaintiffs against the same or different defendants, andthe claims of these actions involve such a common question of lawor fact which renders it desirable that the actions should beconsolidated, the Court has the discretion to order the consolidationof these actions. Where a plaintiff or defendant is added, the writ of summons and/orthe pleadings must be amended accordingly. An interested party may also apply to the court for leave tointervene under common law principles.


Under the Civil Procedure Rules (Order 14), in actions brought bythe same persons against different Defendants in respect ofconnected causes of action by different Plaintiffs against the sameDefendant arising out of the same incident, the Court can exerciseits discretionary powers to order consolidation, and generallyspeaking, when the Plaintiffs could have joined in one action underthe provisions of Order 9 of our Civil Procedure Rules.Consolidation may be ordered by the Court provided that it appearsthat common questions of law or fact of sufficient importance inproportion to the rest of the matters at issue make it desirable thatthe actions be heard together.


Under the Civil Procedure Rules (Order 30 r.2 (g)), the CyprusCourts have the discretion to order split trials, either on their owninitiative or upon application by the parties in a case where this isin the interests of justice.


6.1 Is there any particular case allocation system before thecivil courts in Cyprus? How are cases allocated?

The Cyprus Courts apply a scale allocation system in which theactions before the Courts are allocated according to the value of theclaim. The scales are as follows:

up to CYP5;from CYP5 to CYP10;from CYP10 to CYP25;from CYP25 to CYP50;from CYP50 to CYP250;from CYP250 to CYP1,000;from CYP1,000 to CYP5,000;from CYP5,000 to CYP25,000;from CYP25,000 to CYP50,000;from CYP50,000 to CYP250,000;from CYP250,000 to CYP1,000,000; andfrom CYP1,000,000 and above.

The Courts of Justice Law 14/60 determines three ranks of DistrictCourt Judges; these are District Judges, Higher District Judges andPrecedents of District Courts. According to Law 14/60, DistrictJudges may judge issues, the value of which does not exceedCYP50,000; Higher District Judges have jurisdiction to try claimsnot exceeding CYP250,000; and, Precedents of District Courts areempowered to try any claim, irrespective of its value.

6.2 Do the courts in Cyprus have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The Cyprus Courts have inherent jurisdiction to control theirprocedure to ensure that their proceedings are not used to achieveinjustice. This discretionary power of the Courts to manage casesbefore them is called a Summons for Directions (Order 30 r.2)under which the Court may:

make such order with regard to admissions of facts and ofdocuments as may seem necessary or desirable with regard tothe issues raised in the pleadings;direct that any particular fact or facts may be proven by anaffidavit, or that the affidavit of any witness may be read atthe trial on such conditions as the Court or Judge may thinkreasonable, or that any witness whose attendance in Courtought for some sufficient ground to be dispensed with beexamined before a Commissioner or Examiner;record any consent of the parties, either wholly excludingtheir right of appeal or limiting it to questions of law only;direct either party to apply to the Registrar within a specifiedtime to fix the case for trial and/or direct the Registrar to fixit at short notice; ormake any other such order with respect to the proceeding, tobe taken in the action, and as to the costs thereof, as may seemnecessary or desirable with a view to saving time and expense.

The interim applications available to the parties are:security for costs;amendment of pleadings;striking out pleadings;discovery and inspection of documents;better and further particulars;interim injunctions; andan Anton Piller Order.



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6.3 What sanctions are the courts in Cyprus empowered toimpose on a party that disobeys the court’s orders ordirections?

Under the Civil Procedure Rules, the Cyprus Courts can award costorders against the party who disobeys its directions, or makes a strikeout order or draws adverse inferences in appropriate circumstances.In case a party breaches an injunction and is in contempt of court, thisis punishable by imprisonment or sequestration.

6.4 Do the courts in Cyprus have the power to strike out partof a statement of case? If so, in what circumstances?

Under the Civil Procedure Rules (Order 19 r.26 & Order 27 r.3) theCyprus Courts have the power to strike out part of a pleading, strikeout the whole pleading and enter a judgment or even dismiss an action.The grounds for striking out a statement of case are the following:

irrelevant, frivolous, vexatious, scandalous proceedings;no reasonable cause of action;tendency to prejudice, embarrass or delay the fair trial of theaction; orabuse of the process of the Court.

6.5 Can the civil courts in Cyprus enter summary judgment?

Under the Civil Procedure Rules (Order 18), the Cyprus Courts canenter a summary judgment in favour of the Plaintiff without theneed to prove his case at trial. This is possible where the Plaintiffcan show that there is no defence. The application should be madein due course. In case the Defendant can prove that he has a “bonafide” defence, then the Court may give him conditional orunconditional leave to defend. Otherwise, the Court may issue ajudgment for the Plaintiff or this might be subject to a stay ofexecution pending the trial of a counterclaim. Finally, the Courtmay dismiss the application.

6.6 Do the courts in Cyprus have any powers to discontinue orstay the proceedings? If so, in what circumstances?

Under the Civil Procedure Rules (Order 15), the Plaintiff may, atany time prior to the receipt of the Defendant’s defence, by givingnotice in writing, wholly discontinue his action against all or any ofthe Defendants or withdraw any part or parts of his alleged cause ofcomplaint, and thereupon, he shall pay the Defendant’s costs of theaction, or if the action is not wholly discontinued, the costsoccasioned by the matter so withdrawn.The Plaintiff can also discontinue his action following receipt of theDefendant’s pleaded defence, before taking any other proceedingsin the action, save any interlocutory application, he may discontinuewithout leave and may bring a second action. He must, however,pay the costs of the first action or the second action will be stayed.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Cyprus? Are there any classes of documents that do notrequire disclosure?

Under the Civil Procedure Rules (Order 28) a party to litigiousproceedings may apply to the Court for an order requiring the otherparty, within a period of time from that date, to make discovery onoath of the documents which are or have been in their possession or

power relating to the matters in question in the action and to inspectthe documents set out in the affidavit for discovery. This procedureis called “Discovery and Inspection” and subject to claims forprivilege and admissibility, each party may use these documents tosupport his case.If a party ordered to disclose documents fails to do so, he cannot useany document he failed to disclose or allow it to be inspected asevidence on his behalf in the action, unless the Court is satisfied thathe had sufficient excuse for failing to do so.Documents not material to the case need not be disclosed.

7.2 What are the rules on privilege in civil proceedings inCyprus?

In Cyprus, the categories of privilege with regard to civilproceedings are as follows:

Documents that are confidential information between lawyerand client for purposes of the litigation (litigation privilege).Confidential information between lawyer and client (legalprofessional privilege).Documents that tend to self-incriminate or subject someone toa penalty.Any “without prejudice” communications, either orally or inwriting.

These categories of documents, although they must be disclosed,are nevertheless privileged from inspection.

7.3 What are the rules in Cyprus with respect to disclosure bythird parties?

Under the Civil Procedure Rules (Order 32), a third party may besummoned to produce a document without being summoned to giveevidence. The third party summoned to produce such a documentshall be deemed to have complied with the summons if he causesthe document to be produced, instead of attending personally toproduce it.

7.4 What is the court’s role in disclosure in civil proceedingsin Cyprus?

Under the Civil Procedure Rules, the Court’s role in disclosure inCivil Procedure is to hear applications by the Parties for the“Discovery and Inspection” of documents and decide whether ornot discovery is necessary at that stage of the cause or matter, orissue such an order, either generally or limited to certain classes ofdocuments, at its discretion.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Cyprus?

With the exception of privileged documents, there are no restrictionswith regard to the use of documents obtained by disclosure in Cyprus.

8 Evidence

8.1 What are the basic rules of evidence in Cyprus?

Under Cyprus law, evidence consists of information by whichcertain facts are proven or disproven. These facts are subdividedinto three categories:

facts at issue;

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relevant facts. Evidence of such facts is also called“circumstantial evidence”; andcollateral facts;


Types of evidence include:oral evidence (witnesses on oath, expert witnesses, hearsayevidence);documentary evidence (“public” and “private” documents); andreal evidence (inspection of physical objects by the court).

With regard to expert evidence, in particular, the opinion of anexpert is generally admissible:

whenever an issue comprises a subject of which knowledgecan only be acquired by special training or experience;whenever the area concerned constitutes an established areaof expertise; and/orwhenever the expert witness has made a special study of thesubject, or acquired special evidence therein.


Witnesses normally give oral evidence usually on oath or affirmation.Following a recent amendment of Cyprus’ evidence law, a witnesscan now make a written witness statement. Witnesses givingevidence at trial are cross-examined before the court by the oppositeparty and re-examined by the party calling him, and after re-examination, they may be questioned by the Court.Witnesses are served with a witness summons in order to attend forexamination, or to produce any document. In case a witness hasbeen duly summoned but refuses to attend the Court, it may issue awarrant of arrest compelling him to appear before it.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Cyprus?

Under the Civil Procedure Rules (Order 36), the Cyprus courts mayorder that:

any particular fact or facts be proven by an affidavit;the affidavit of any witness may be read at the hearing or trial;any witness whose attendance in Court ought for somesufficient cause to be dispensed with be examined byinterrogators or otherwise before a commissioner orexaminer; andwhere any witness is in a country with which a Conventionin this regard has been or shall be extended to Cyprus, theCourt may order such a witness to be examined before thecompetent Court or authority of such country or before anyperson appointed by such a Court or authority.

The Cyprus Courts also have the power to make orders for thediscovery and inspection of documents (see question 7.4 above).


9.1 What different types of judgments and orders are the civilcourts in Cyprus empowered to issue and in whatcircumstances?

The Cyprus Courts have the power to issue Judgments in Defaultand Summary Judgments (see questions 6.5 and 4.4 above).A court judgment can be with regard to liquidated or unliquidateddemands or may be an order for one of the parties to perform itsoutstanding obligations under a contract or declaratory judgment(determining rights in the actual circumstances of which the courthas cognisance).A variety of orders are available in the Cyprus courts, such as:

Mareva injunctions (restraining a party from removing hisassets out of the jurisdiction), prohibitory injunctions(prohibiting a party from doing an act, mandatory injunctions(ordering a party to perform an act);Anton Piller orders (enabling the Plaintiff to secure thepreservation of relevant evidence which might otherwise bedestroyed by the Defendant); andMandamus orders (commanding the Defendant to fulfil anypublic duty in the fulfilment of which the Plaintiff ispersonally interested).


The Cyprus courts have the power to award damages for losssuffered, including financial loss. They are also empowered toaward punitive and exemplary damages under certaincircumstances. Further, in a monetary judgment involving acontract, the Court usually awards interest, as provided for in thecontract or from the date when the judgment is given, as providedby the relevant legislation.With regard to the costs, the principle is that the successful litigantis awarded an order against the unsuccessful litigant to pay the costsof the litigation (see question 1.5 above).


A domestic judgment may be enforced:by seizure and sale of movable property;by sale of immovable property;by attachment and sequestration;by attachment of debt or property;by writ of possession of the land ordered to be delivered tothe judgment creditor;by writ of delivery of the goods ordered to be delivered to thejudgment creditor;by committal for breach of an order or undertaking;by registration of a charging order over the immovableproperty of the judgment debtor (memo) or over his chattels;orby bankruptcy proceedings against the judgment debtor.

The enforcement of a foreign judgment is governed by bilateral ormultilateral treaties to which Cyprus is a party. With regard to theregistration of foreign judgments the Foreign Judgments,(Reciprocal Enforcement) Law, 1935, Cap. 10 is applicable.Further, Cyprus is party to Council Regulation (EC) no. 44/2001 onjurisdiction and the Recognition and Enforcement of Judgments in



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Civil and Commercial Matters which provides for the enforcementof judgments throughout the European Union. Cyprus is also partyto Council Regulation (EC) no. 805/2004 on creating a EuropeanEnforcement Order for uncontested claims, which provides thatwhen a judgment has been certified as a European EnforcementOrder by the Court of origin, it should, for enforcement purposes,be treated as if it had been delivered in the Member State in whichenforcement is sought.

9.4 What are the rules of appeal against a judgment of a civilcourt of Cyprus?

Under the Civil Procedure Rules (Order 35), an appeal arising fromany interlocutory order, or from an order, final or interlocutory, inany matter that is not an action, must be filed within 14 days of thedate of the judgment or decision and an appeal against a judgmenton the merits must be filed within 6 weeks of the date of thejudgment.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Cyprus?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

The only method of dispute resolution in Cyprus other thanlitigation is arbitration.In order for a dispute to be referred to arbitration, there must be anagreement between the parties, which must contain an arbitrationclause. In case the parties commence legal proceedings in anyCourt against the Arbitration Agreement, the Courts have the powerto stay these proceedings and refer the case to be tried by anarbitrator. However, this power is discretionary and if the Courtsare satisfied that there are good and sufficient reasons why thematter in dispute should not be referred to arbitration, then they willnot exercise their power.In case the dispute is referred to arbitration, then any arbitrationaward can be enforced by registration as a Court judgment. Theregistration may be effected by an application by summons beingfiled by the creditor which, however, can be opposed by the debtorby raising grounds of defence with regard to the validity of theaward.When the arbitration award is finally registered, then it isconsidered to be a Court judgment and can be executed by the samemethods as Court judgments (see question 9.3 above).


All matters relating to Arbitration proceedings in Cyprus aregoverned by the Arbitration Law, Cap. 4, which applies to domesticarbitration; the International Commercial Arbitration Law101/1987, which applies to international arbitration; and the LabourDispute Law, Cap. 187, which applies to labour arbitration.

1.3 Are there any areas of law in Cyprus that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

In Cyprus, all commercial matters, including competition law, arearbitrable where there is an arbitration agreement between theparties.Disputes concerning criminal and family matters are non-arbitrable.


2.1 What are the major dispute resolution institutions inCyprus?

There are no specific dispute resolution institutions in Cyprus. Thearbitration court is a private tribunal of the parties’ own choice.


Arbitration awards, after they are registered and enforced, are thenconsidered as Court judgments: they are binding and can beexecuted by the same methods as Court judgments (see question 1.1above).



The use of arbitration proceedings has increased in recent years andit is expected that these will take place increasingly frequently.Currently, the trend is to use arbitration in specialised cases,especially in building contract disputes.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Cyprus?

In recent years, judges in Cyprus have been more reluctant toproceed with the hearing of a case where specialised or technicalmatters or scientific issues, which require specialised and particularknowledge, are involved and as a result they usually recommendthat parties appoint an arbitrator in order to examine the disputedissue. The judge will usually follow the opinion and/or decision ofthe appointed arbitrator.

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Yiannos G. Georgiades

Georgiades & Mylonas2, Ayios Pavlos & Kadmos StreetWisdom Tower, 3rd Floor, 1105 NicosiaCyprus

Tel: +357 2281 9292Fax: +357 2277 8444Email: [email protected]: www.gmadvocates.com

Specialisation: Commercial law, international trade, privateinternational law, international tax planning, EU law, medicalnegligence, personal injury, trademarks as well as maritime andadmiralty law, litigation and arbitration, media law, IP and IT law.Professional Memberships: Bar of England and Wales (HonourableSociety of Gray’s Inn), Cyprus Bar Association, the International BarAssociation, the American Bar Association, the Society forComputers and Law and the International Technology LawAssociation.Career: Educated at Ealing College of Higher Education (LL.B.Hons.) 1989, Inns of Court School of Law, Honourable Society ofGray’s Inn, London (Barrister-at-Law) 1990. He gained hands-onexperience working at a City of London solicitor’s firm prior tomoving to Cyprus. In 1995, he also worked as a visiting attorney atCorboy & Demetrio in Chicago and at Baker & Hostetler inWashington, D.C. in the United States. He is the founder of the lawfirm Yiannos G. Georgiades & Co, established in 1992. The firmmerged with another firm in 2006 and he is now the ManagingPartner of the firm Georgiades & Mylonas.Publications: “Shipowners’ Liability and the Arrest of Vessels” -Cyprus Business Guide 1996, Chapter on Cyprus in “InternationalCharitable Giving: Laws & Taxation” - Kluwer Law International,“Aids and the Law” - Cyprus Law Review (1991), as well as variousother articles published in newspapers and law journals.Personal: Born in Nicosia, Cyprus in 1965.

Established in 1992, this law firm is now a thriving concern. It is essentially international in outlook with approximatelyhalf of its clientele being of international origin. It also has a firm foothold in the domestic market, providing anextensive range of legal consultancy services both to its Cypriot clients (civil and corporate litigation, companyformation, personal injury claims, contracts, trusts, divorce, medical negligence, EU law), including acting as a legaladviser to several local councils and charitable organisations, and to its multinational clients (formation andadministration of offshore companies, foreign investment, immigration, intellectual property law and trademarks,international trade and finance, international contracts, admiralty and maritime law, company law, conflict of laws).

The firm has established a network of legal contacts and associates in many countries around the world and is praisedby its clients for being ‘relaxed yet effective’ as well as pragmatic and commercial in its approach.

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Czech Republic

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has the Czech Republic got? Arethere any rules that govern civil procedure in the CzechRepublic?

The legal system of the Czech Republic is a classic example ofcontinental legal system based on codified (written) law. In somecases other sources of law such as commercial practices may be used,but merely as a subsidiary alternative where expressly stipulated bythe written law. Case-law itself does not constitute a binding sourceof law acting erga omnes; nevertheless, the decisions of courts ofhigher instance are commonly used as a very effective support forreasoning the claims or defences presented during the litigation.The basic principles for civil procedure can be found in theConstitutional Act No. 1/1993 Coll., Constitution of the CzechRepublic, as amended and in the Constitutional Act No. 2/1993Coll., Bill of Rights, as amended. The essential code governing thecivil procedure in the Czech Republic is Act No. 99/1963 Coll.,Civil Procedure Code, as amended (hereinafter referred to as the“CPC”). Some of the most important general principles governingthe Czech civil procedure implying from the legal enactmentsmentioned above are:

principle of just and fair trial;principle of unbiased judges;principle of equality of the litigants;disposition principle;principle of publicity; andprinciple of promptness and efficiency.

1.2 How is the civil court system in the Czech Republicstructured? What are the various levels of appeal and arethere any specialist courts?

The civil judiciary system in the Czech Republic is not specificallydiversified; simplified, it could be said that the Czech Republic hasa system of general courts dealing with all kinds of agenda exceptthe constitutional affairs. The civil judiciary system consists of different levels of courts:district courts, regional courts, higher courts and the Supreme Courtand the Supreme Administrative Court. Above and outside thesegeneral courts the Constitutional Court acts as the “guardian ofconstitutional principles”.

Most of the cases are heard in the first instance at the district courts.The regional courts act as courts of first instance only in specificcases, in particular for administrative, labour and more importantcommercial cases, and their second function is to review thedecisions of district courts in the appellate procedure. Highercourts are the courts of appeal for cases heard in the first instanceby the regional courts. The Supreme Court represents the highestcourt instance in the Czech Republic. Its basic aim is to ensureuniformity in execution of judicial powers by courts of all otherinstances (except for the Constitutional Court). The Supreme Courtdecides particularly on extraordinary appeals against decisionsissued by regional or higher courts. The decisions of the SupremeCourt, although not officially recognised as a source of law, havesignificant effect when used to support claims in front of a court. The administrative judiciary is at the highest instance representedby the Supreme Administrative Court, which is a relatively newbody established as of 1 January 2003. The SupremeAdministrative Court deals in particular with remedies filed againstthe decisions of the regional courts as courts of first instance inadministrative lawsuits (i.e. the lawsuits filed against the decisionsof administrative authorities), which decide by specialisedadministrative senates of judges.

1.3 What are the main stages in civil proceedings in the CzechRepublic? What is their underlying timeframe?

Civil proceedings in the Czech Republic basically consist of twostages: the discovery proceedings and the execution proceedings. The discovery proceedings can be divided into two stages. In thefirst stage, before commencing the proceedings, the court may e.g.authorize the conciliation between the litigants or issue apreliminary injunction. Later on, during the actual proceedings, thecourt hears evidence and in the end makes a decision.The last stage, the execution proceedings, is intended to enforce thedecision of the court in legal force in case the litigant fails to fulfilthe obligations imposed on him (her) by the decision of the court. There is no exact timeframe set for civil proceedings in the CzechRepublic; nevertheless, the basic principle governing the civilproceedings is that it should be settled quickly and efficientlywithout undue delay.

1.4 What is the Czech Republic’s local judiciary’s approach toexclusive jurisdiction clauses?

Czech entities are not allowed to choose foreign general courts forresolving their disputes; on the other hand, they can choose anydomestic or foreign arbitral tribunal to resolve their dispute in cases

Adam Cerný

Ondrej Kuchar

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where they are arbitrable. The situation is different in cases comprising international element,where the exclusive jurisdiction clauses may apply.

1.5 What are the costs of civil court proceedings in the CzechRepublic? Who bears these costs?

The costs of the civil court proceedings are composed of a court fee,legal fees and cash fees incurred by the litigants and their legalcounsellors. The remuneration for the legal counsellors is usually agreed uponhourly rates basis or as a success fee, both types are commonly usedin practice. Although, the Ethical Code of Czech Bar Associationsets a limit of 25% of the value of the subject matter of the disputefor the agreed success fee. In case the remuneration has not beenagreed, it shall be calculated according to applicable law namelyDecree No. 177/1996 Coll., the Attorneys’ Tariff.Regarding the issue of bearing the costs of the civil courtproceedings, the CPC contains an essential cost-allocation rule,according to which the litigant who looses the dispute shallreimburse the costs of the proceedings to the winning party (thecosts of legal representation are reimbursed only according toDecree No. 484/2000 Coll., so it does not necessarily cover all thereal expenses for legal representation).

1.6 Are there any particular rules about funding litigation inthe Czech Republic? Are there any contingency/conditionalfee arrangements? Are there rules on security for costs?

Legal counsellors may conclude agreements on their remunerationwith clients. The most used alternative is for the remuneration to bebased upon hourly rates, and the second frequently used way is toset the remuneration as a success fee i.e. in case the client issuccessful in the dispute the legal counsellor shall obtain certainamount, which shall not, according to the Ethical Code of CzechBar Association, exceed 25% of the value of the subject matter ofthe dispute. In case the remuneration has not been agreed, it shallbe calculated according to applicable law namely and Decree No.177/1996 Coll., the attorneys’ tariff.


2.1 Are there any pre-action procedures in place in the CzechRepublic? What is their scope?

The CPC does not impose any pre-action obligations on the litigantsalthough it could be recommended to summon the debtor tovoluntarily pay his (her) debt. Lack of such summons might resultin the claimant’s not obtaining the costs of the proceedings even ifthe court decides in the claimants’ favour.


At first, it is necessary to emphasise the fact that the period oflimitation applicable under the Czech law depends on the characterof the relationship, i.e. whether the relationship is subject to theCivil Code or to the Commercial Code (e.g. relationships betweenentrepreneurs). The general period of limitation for relationshipssubject to the Commercial Code is four years and, for those subject

to the Civil Code, three years. As the period of limitation in the Czech Republic is considered tobe an instrument of substantive law, the commencement differsdepending on the type of obligation the debtor should perform. Thegeneral day of commencement of the period of limitation is the daywhen the right could have been exercised for the first time. Besidethe general period of limitation, there are some specific periods oflimitation set for e.g. damages, undue enrichment, claims arisingfrom transportation etc. It is essential to emphasise that the court does not examine theperiod of limitation ex officio but only when objected by a litigant.


3.1 How are civil proceedings commenced (issued and served)in the Czech Republic? What various means of service arethere? What is the deemed date of service? How is serviceeffected outside the Czech Republic? Is there a preferredmethod of service of foreign proceedings in the CzechRepublic?

Civil proceedings are commenced by the day the filed action isdelivered to the court. The action can be filed in written form oreven orally at the court, although the oral form is not recommendedand is very rarely used. The written action can be deliveredpersonally or sent by mail. It can even be sent by fax or e-mail,although if the action was filed this way it is necessary to providethe court with original hardcopy within next three days. When theaction is filed via e-mail with secured electronic signature theoriginal hardcopy is not required. The service abroad is generally performed pursuant to the rules ofservice applicable under the specific jurisdiction. The EU ServiceRegulation (Council Regulation (EC) No. 1348/2000) providesfurther guidance concerning service in member states.

3.2 Are any pre-action interim remedies available in the CzechRepublic? How do you apply for them? What are the maincriteria for obtaining these?

Czech law permits applying for a preliminary injunction before theproceedings commence. A court may grant a preliminary injunctionif the relationships between the parties to the proceedings requireinterim adjustment or if it is likely that in the absence of preliminaryinjunction it may be difficult to enforce the judgment. To securedamages that may result from unjustified preliminary injunction,the applicant is obliged to pay the court a deposit in the amount ofCZK 100,000 in commercial issues and in the amount of CZK50,000 in all other cases. Regardless of this deposit, the applicantwill be obliged to pay the entire damages incurred to the other partyby the preliminary injunction.Safeguarding of the evidence may be also considered a pre-actionremedy as the court shall secure evidence upon petition filed by aconcerned party if there is a possibility that it will be impossible orextremely difficult to obtain the evidence later during the proceedings.


All pleadings must meet general requirements as well as furtherspecific conditions set for some submissions by the CPC. Each procedural submission must state to which court it is beingaddressed, who is making it, the matter involved and its aim thereof.It must be signed and dated.

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The action itself must further state:the name, last name and residential address (domicile) of theplaintiff and the defendant (name, registered office andidentification number for legal entities);description of decisive facts;identification of evidence requested by the plaintiff; andthe result claimed by the plaintiff.

There is no prescribed form required by the CPC for filing thepleadings and, in case there are any defects in the pleadings, thecourt shall demand correction.


The civil dispute proceedings in Czech Republic are in fulldisposition of the litigants who have control over the subject matterand the course of the proceedings and, therefore, the CPC does notprovide for any rules concerning amendments to pleadings. Duringthe proceedings a party may modify its previous statements. Theplaintiff may also change the action anytime during the proceedingssubject to court approval; however, the court may not approve of anyalteration if the hitherto results of the proceedings cannot be used forsuch change. The plaintiff can also completely withdraw the action,although this may in some cases result into the obligation of theplaintiff to bear the costs of the proceedings as spoken hereinabove.

4 Defending a Claim


The defendant shall provide the court with a statement of defenceafter receiving the wording of the action within a period set by thecourt. The statement of defence must fulfil the general formalrequirements set for all pleadings, and to be successful it shouldcontain all argumentation and reasoning necessary to negate theclaim of the plaintiff, including the supportive evidence. In case thedefendant fails to defend the claim see question 4.4. The CPC allows the defendant to bring a counterclaim and undersome circumstances the court may join these proceedings togetherto ensure efficiency and economisation. The defendant may also claim a set-off to his defence and it wouldbe considered either a counterclaim (in case the amount exceeds theamount claimed by the plaintiff) or solely a defence.


There is no general time-limit scheduled for serving the statementof defence under the Czech law. The limit is therefore usually setby the court and it varies from case to case, depending on thecomplexity of the case and many other factors. This time limit canalso be prolonged upon a request of the defendant.


The CPC does not know such mechanism. On the other hand, itentitles the court to allow a change of defendant upon a request ofthe plaintiff and with consent of the original defendant.


Even in case the defendant fails to serve a statement of defencewithin the set period and does not ask the court to prolong theperiod, it does not automatically result in winning the case by theplaintiff. The court usually hears the case and only if the defendantmisses the first hearing in the case without due reason, the courtmay issue a so-called judgment for default upon a request of theplaintiff present at the hearing. In the judgment for default, thecourt considers the claims stated in the action filed by the plaintiffas indisputable. On the other hand, the court may expressly stipulate in the requestfor statement of defence that if the defendant fails to defend theclaim (i.e. fails to file the statement of defence in set period, whichshould not be shorter than 30 days) the court will assume he/sheadmits the claim.


The jurisdiction of the court is one of the basic prerequisites to thecase, so the defendant is allowed to dispute its jurisdiction whereashe/she can claim the case should be subject to jurisdiction of foreigncourt, arbitrational tribunal or other general court. The defendanthas to provide reasoning and supportive argumentation for thisclaim and the court has to cope with his/her objections to itsjurisdiction.



A third party can join the proceedings as an intervener. Czech lawprovides for two different kinds of intervention: principalintervention and subsidiary intervention. A person who claims thething or right that is the subject of the dispute between third partiesmay file a claim for that thing or right against both parties to thedispute (principal intervention). A person who has a legal interestin the dispute being resolved in favour of a particular party to thedispute can join that party (subsidiary intervention) subject to thecourt approval.


Two or several sets of pending proceedings may be consolidated ifthey are examined by the same court and the proceedings areconnected, i.e. the subject matters of the disputes are related bymerit or they apply to the same parties. The decision onconsolidation of the proceedings is in the courts’ discretion.


Czech courts may bifurcate proceedings in case the subject mattersof the claimed by the plaintiff cannot be heard jointly or the reasonswhy the proceedings were joint dropped out.

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6.1 Is there any particular case allocation system before thecivil courts in the Czech Republic? How are casesallocated?

The cases are allocated according to competence rules as set by theCPC. The rules of subject matter competence point out districtcourts as general courts of first instance for most of the cases.Regional courts act as courts of first instance only in specific cases,in particular for administrative, labour and more importantcommercial cases. The rules of local competence set a general ruleaccording to which competent is the defendant’s general court, i.e.the court in the district where the defendant’s domicile is located or,in commercial issues, where the defendant’s registered office orplace of business is located.

6.2 Do the courts in the Czech Republic have any particularcase management powers? What interim applications canthe parties make? What are the cost consequences?

One of the principles of the civil procedure in Czech Republic is forthe disputes to be settled promptly, efficiently and without unduedelay and, therefore, the courts have the following powers to ensuresuch course of the proceedings:

From the beginning of the proceedings, the court attempts tomake the litigants settle the dispute amicably.The court also instructs and informs the litigants on theirprocedural rights and obligations (this is not the case if thelitigant is represented by an attorney at law) and demandscorrection of their pleadings in case they do not meet therequirements imposed by the law.In order to ensure prompt proceedings, the court can setdeadlines for certain actions to be made by the litigants.Finally, the court may award a fine if any of the litigantsgrosses violently the course of the proceedings or does notfulfil an obligation imposed by the court.

The basic interim measure available to the litigants is thepreliminary injunction as mentioned hereinabove.

6.3 What sanctions are the courts in the Czech Republicempowered to impose on a party that disobeys the court’sorders or directions?

The basic sanction applicable by the court is imposing a fine up tothe amount of CZK 50,000 on a party that fails to attend a courthearing without due reason or fails to obey a court order. The court may also expel from the courtroom anyone who violentlydisturbs the order of the proceedings.

6.4 Do the courts in the Czech Republic have the power tostrike out part of a statement of case? If so, in whatcircumstances?

When considering the legal implications of a case, courts only dealwith those parts of the claim which they consider relevant for theirdecision-making. Czech law does not recognise an institute likestrike out of part of a statement of the case typical for somecommon law systems. Any such process would inevitably result ina decision on the merits and will thus be normally dealt with alongwith all other claims.

6.5 Can the civil courts in the Czech Republic enter summaryjudgment?

A court may enter a summary judgment (payment order) without atrial and before the action is served on the defendant, merely on thebasis of facts and evidence cited by the claimant. This is possible(only on the claimant’s motion) in relation to pecuniary claims andif the residential address of the defendant is in the Czech Republicand is known to the court. By delivering the payment order to thedefendant, a 15-day period commences. During this period thedefendant shall either pay the receivable to the plaintiff or file anappeal against the payment order. The appeal automatically cancelsthe payment order and a standard hearing shall follow. If the appealis not filed, the payment order will have the effect of a judgment inlegal force. The Czech law also recognises a bill payment order,which is in general similar to the standard payment order.

6.6 Do the courts in the Czech Republic have any powers todiscontinue or stay the proceedings? If so, in whatcircumstances?

A court discontinues proceedings on the claimant’s motion if theaction is withdrawn or in case an obstacle prevents the court fromfurther decision-making in the matter, e.g. loss of legal capacity ofone of the litigants. Czech law provides for a number of situations in which the civilcourts are to stay the proceedings. One such case is upon theaddressing of a preliminary question to the European Court ofJustice. Another case is existence of an issue crucial for thedecision that the court is not authorised to deal with in theproceedings. In general, the court may also stay the proceedingsupon a pleading on stay filed mutually by all litigants.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin the Czech Republic? Are there any classes of documentsthat do not require disclosure?

Standard disclosure requires a party to disclose only the documentson which it is relying to make its case. On its own initiative or ona party’s motion, the court can order a party or anyone else todisclose a document that may serve as evidence.Whilst no party is required to produce all documents relevant to itscase, the court proceedings are governed by the adversarialprinciple, which implies that each party must be able to examine thedocuments relied upon by the other.Under the Czech law it is not necessary to prove commonly knownfacts or facts the court is familiar with from its function and thelegal enactments of the Czech Republic.

7.2 What are the rules on privilege in civil proceedings in theCzech Republic?

There are no specific rules on privilege set by the CPC;nevertheless, if the evidence contains a business secret or aprofessional secret, the court is obliged to make all necessaryprecautions to keep it confidential.In general, the Czech law imposes an obligation to testify ifsummoned by the court, but the testimony can be denied by thewitness or a litigant in case it may result in criminal prosecutionagainst such party or related persons.

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7.3 What are the rules in the Czech Republic with respect todisclosure by third parties?

As stated hereinabove, the court may order anyone (either a litigantor a third party) to disclose evidence except of those bound by aprofessional secret.

7.4 What is the court’s role in disclosure in civil proceedingsin the Czech Republic?

The state courts are the only bodies entitled to request disclosure ofevidence (arbitral tribunals are not empowered with such authority)by the litigants or any third party. The court can call upondisclosure upon a request of one of the litigants; nevertheless, thecourt is not obliged to approve with such request.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in the Czech Republic?

There are no such restrictions in the Czech Republic, although alldisclosed documents should stay with the court and should be keptin a file. All parties are allowed access to this file to make copiesor extracts.

8 Evidence

8.1 What are the basic rules of evidence in the CzechRepublic?

The litigant presenting a claim has to prove his/her claim bysufficient evidence. The court is usually not obliged to search forany evidence and the case is, in general, in full control of thelitigants. There are no specific rules on the standard of proofbeyond the court’s own appreciation of the evidence, but publicdocuments are considered to prove what is stated in them. All theevidence to be admissible has to be obtained and presented in a dueprocedural manner.


All types of evidence are admissible as long as they can help clarifythe case and support claims of the litigants in particularexaminations of the witnesses, expert opinions, notarial records andother documents. No type of evidence is considered inadmissiblefrom the beginning although evidence obtained contrary to the lawcannot be used. Expert evidence can be used if the decision depends on professionalknowledge. In this case the court appoints an expert to give expertopinion. This opinion can be reviewed by another expert. The litigants may also use expert opinions as evidence to supporttheir claims, but in this case it is considered only as standarddocumentary evidence.


The CPC imposes a witness duty on anyone except the litigants.The witnesses are examined orally and they have to tell the truthand conceal nothing; written testimony cannot substitute the oralexamination. The witness may refuse to testify in case the

testimony can result into criminal proceedings against him/her of arelated person.The course of the examination goes as follows: at first the courtasks the witness to give a coherent description of the subject-matterof the testimony and then the witness is questioned by the litigants.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in the Czech Republic?

In general, providing the evidence in a civil dispute is an obligationof the litigants; the court does not have to actively seek evidence.Nevertheless, the court may carry out other evidence in case itsneed came out during the proceedings.


9.1 What different types of judgments and orders are the civilcourts in the Czech Republic empowered to issue and inwhat circumstances?

In a Czech civil trial, the courts may issue decisions as to the merit(judgments) or as to the procedure (resolutions). although evenresolutions can, in specific cases, decide on the merit. Dependingon the relief sought by the plaintiff, judgments may award aperformance (e.g. damages or a specific performance under acontract); declare the existence or non-existence of a specific rightor legal relationship; form a relation (e.g. terminate a contract ordecrease a performance of one of the parties to a contract) or decideon personal status. All decisions of the court must include certain mandatoryparticulars such as the statement, justification and instruction onremedies available.Another specific form of court decision is represented by thepayment order and bill payment order as described hereinabove.


Czech courts may award damages for loss suffered and lost profits.Czech law does not allow the awarding of punitive damagesbecause, generally, the Czech legal system provides forcompensatory damages. In certain situations, it is possible to claim,in addition to damages, satisfaction for moral injury.Within the judgment, the court also decides on appurtenances of thereceivable (e.g. the default interests) and the costs of litigation.Although, in both cases, the court does so upon a request of alitigant.


If the obligation(s) imposed by the decision of a domestic court isnot fulfilled within the set period, the entitled person is allowed toask the court to enforce the decision in separate executionproceedings. Foreign judgments are enforced in accordance with the CPC, butCzech Republic is also a party to many bilateral agreements onreciprocity of enforcement of court judgments. In cases ofjudgments issued by EU member states, Council Regulation (EC)no. 44/2001 on jurisdiction and the recognition and enforcement ofjudgments in civil and commercial matters will apply.

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9.4 What are the rules of appeal against a judgment of a civilcourt of the Czech Republic?

In the Czech Republic, there are two different levels of appeal:At the first level, there is the general appeal. Judgments of thedistrict courts can be appealed to the regional courts, whereas firstinstance judgments of the regional courts can be appealed to thehigher courts. The grounds for a general appeal may either be thewrong application of procedural or substantive law by the lowercourt or the incorrectness or incompleteness of the lower court’sfactual findings. The appeal has to be filed within 15 days as of thedelivery of a written decision against which the appeal is aimed.The court has to inform the litigants on the possibility of appeal andthe proper time limits in the decision. Properly filed appeal hassuspensory effect, i.e. the challenged decision is not enforceablebefore the court of appeals decides on the appeal.On the second level, there is the extraordinary appeal which can befiled in some cases to the Supreme Court. In these cases thelitigants have to be represented by an attorney at law.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in the Czech Republic?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

As the economy is developing, the popularity of alternativemethods of solving disputes is rising significantly especially incommercial matters. The most frequently used alternative tostandard litigation is arbitration mainly due to its promptness,flexibility and efficiency. The parties may choose any (domestic orforeign) permanent or ad hoc tribunal for already existing or futuredisputes. Other alternative methods are also becoming more popular.Nevertheless, as the result of their activity is not enforceable by thelaw, arbitration still stays on the top.


The only alternative method of dispute resolution governed by lawis the arbitration. The Act No. 216/1994 Coll., on arbitrationproceedings, as amended forms legal framework for the arbitrationproceedings in Czech Republic. Specific rules of arbitration maybe also found in rules of permanent arbitrational courts. The Czech Republic is also a contracting state to New YorkConvention on the Recognition and Enforcement of ForeignArbitral Awards and to European Convention on InternationalCommercial Arbitration.

1.3 Are there any areas of law in the Czech Republic thatcannot use arbitration/mediation/tribunals/Ombudsman asa means of dispute resolution?

Only property disputes that may be subject to a court settlementmay be taken to arbitration.


2.1 What are the major dispute resolution institutions in theCzech Republic?

There are three permanent arbitration courts in Czech Republic:the Arbitration Court attached to the Economic Chamber ofthe Czech Republic and the Agrarian Chamber of the CzechRepublic;the Arbitration Court attached to the Stock Exchange Prague;andthe Arbitration Court attached to the Czech-MoravianCommodity Exchange Kladno.


The only alternative dispute resolution mechanism providingbinding and enforceable solutions is arbitration. Mediation and anyof the other alternatives act merely as an instrument to settle thedispute before the actual litigation or arbitration.



As mentioned hereinabove, arbitration is becoming a seriouscompetition to general litigation mainly in commercial matters, butnowadays also consumer disputes are beginning to be solved inarbitration. The promptness, efficiency and often the non-publicity areconsidered to be the most important pros of the arbitralproceedings, and even the cost of the proceedings is oftencomparable with the costs of general litigation.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in the Czech Republic?

The main current issue regarding arbitration nowadays wouldprobably be the question of arbitrability of consumer disputesmentioned hereinabove. Some initiatives protecting consumerrights are opposing the validity of arbitration clauses in consumercontracts.

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Ondrej Kuchar

Konecná & ŠafárŠiroká 36/5 110 00 PragueCzech Republic

Tel: +420 221 990 455Fax: +420 221 990 450Email: [email protected]: www.konecna-safar.com

Education: Faculty of Law, Charles University Prague, CzechRepublic (1996), University of West Bohemia, Faculty of Law(2005).Czech Bar Association: Member since 2000.Languages: Czech, Slovak, English.Specialisation: litigation and arbitration, bankruptcy law, family law.Ondrej Kuchar attorney at law at Konecná & Šafár, mainlyspecialises in the civil proceeding agenda providing legal assistancein representing clients before courts, arbitrators or arbitratorstribunals. He also deals with criminal proceedings and mainlyspecialises for the area of commercial and property crimes. Forseveral years he has been lecturing at a private university where healso held the position of Law Department Secretary.

Adam Cerný

Konecná & ŠafárŠiroká 36/5 110 00 PragueCzech Republic


Education: Faculty of Law, Charles University Prague, CzechRepublic (2003), University of Economics, Prague (2002), Facultyof Law, University of Passau (2005).Czech Bar Association: Member since 2007.Languages: Czech, German, English.Specialisation: litigation and arbitration, corporate law, M&A.Adam Cerný regularly prepares and handles acquisitiontransactions, provides legal counselling regarding problematiccorporate issues, restructuring and project financing, as well as legalcounselling especially in the field of litigation and arbitration.

Konecná & Šafár, Attorneys at Law, is a distinguished law firm operating in the Czech Republic, Slovakia, Romania andBulgaria. Since 2000 it has been providing top quality legal services to both international and local clients, specialisingin commercial law, especially in the field of real estate law, dispute resolutions, intellectual property, mergers andacquisitions, project financing and restructuring. Furthermore, the law firm also ensures qualified tax advisory servicesin all areas associated with the activities of its clients.

Konecná & Šafár is particular about its personal approach towards clients. We endeavor not only to bring solutions atthe highest professional level, but also solutions which can be used most efficiently and timely by our clients to developand push through their interests.

Our constantly expanding team consists of more than sixty top experts in the field of law and taxes who draw theirexperience and professional expertise from their participation in the most significant projects in their fields of activityas well as by regular attendance at local and international professional conferences organised by professionalassociations. Thanks to their specialisation our people are able to offer and implement unique tailor-made solutions tothe client.

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Chapter 14

Kromann Reumert

Denmark

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Denmark got? Are there anyrules that govern civil procedure in Denmark?

The Danish legal system is based on the civil law tradition. TheDanish civil procedure is governed by the Administration of JusticeAct (retsplejeloven).

1.2 How is the civil court system in Denmark structured?What are the various levels of appeal and are there anyspecialist courts?

Civil proceedings in Denmark are brought before the district courts.If the case involves matters of general public importance the districtcourt can refer the case to 1 of the 2 high courts. Decisions made by the district courts can be appealed to the highcourts. First instance decisions from the high courts can beappealed to the Supreme Court. When the high courts function as a court of appeal, decisions canonly be appealed to the Supreme Court with special permissionfrom the Appeals Permission Board. Only cases that may haveimplications for rulings in other cases or cases of general interest tothe public can be given such a third-tier grant.The Maritime and Commercial Court in Copenhagen hears casesconcerning international and commercial matters. Furthermore,cases under the Danish Trade Marks Act (varemærkeloven) and theMarketing Practices Act (markedsføringsloven) as well as mattersinvolving competition law fall within the jurisdiction of this Court.Decisions from the Copenhagen Maritime and Commercial Courtcan be appealed to the Supreme Court.

1.3 What are the main stages in civil proceedings in Denmark?What is their underlying timeframe?

The main stages of civil proceedings in Denmark are as follows:Proceedings are initiated by filing a claim form with therelevant court.The claim form is served on the defendant along with a finaldate for filing a statement of defence. Timeframe: approx. 1-2 month(s).After the defendant has handed in a statement of defence apreliminary meeting is held between the court and theparties, the purpose of which is to organise the course of the

trial and to clarify the positions of the parties. Timeframe:approx. 1 month.In many cases further preparations are made, e.g. gatheringof evidence, further preliminary meetings, appraisal, expertopinion, delivery of further pleadings, etc. Timeframe: from3 months to several years depending on the case.Oral proceedings. Timeframe: approx. 6 months from thedate of the trial was fixed.Judgment is delivered. Timeframe: 2 weeks in districtcourts; 2 months in the high courts and the Supreme Court.


Exclusive jurisdiction clauses will generally be respected by theDanish courts. However, in consumer cases clarification isrequired. If the parties have agreed that disputes can only bebrought before the courts in another country, the Danish courts willrefuse the case. Denmark is a party to the Brussels Convention. According to theBrussels Convention, exclusive jurisdiction clauses in casesinvolving at least one EU citizen will be respected if therequirements set out in the Convention are met.

1.5 What are the costs of civil court proceedings in Denmark?Who bears these costs?

The costs of civil court proceedings in Denmark vary considerablydepending on the size of the case and on the level of fees for thelegal advice sought by the parties. The claimant pays a court fee when filing the claim form andanother fee prior to the hearing of the case. The fee is calculated asa percentage of the value of the case.As part of the final decision, the court can choose to divide the costsbetween the parties or decide that one of the parties, usually thelosing party, must compensate the other for his or her expenses forthe proceedings. However, the compensation hardly ever measuresup to the costs of the legal fees borne.

1.6 Are there any particular rules about funding litigation inDenmark? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

If a party cannot afford to pay for the legal proceedings, it ispossible to apply for legal aid. Legal aid will be granted if the partyhas a reasonable cause for the proceedings and has an income belowa certain limit specified by the Ministry of Justice. When a party is

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granted legal aid, a lawyer will be assigned by the court. Thelawyer’s fees are paid by the authorities.It is possible to take out legal expense insurance. If the case iscovered by the insurance policy and the party is entitled to publiclegal aid, the insurance must cover the costs up until the suminsured before anything is paid by the authorities.It is illegal for lawyers to calculate their fee as a part/percentage ofthe result of the case. Whereas it is hardly ever seen, it is however legal to agree that thelawyer should only receive the regular fee if the trial is successful.Fees are normally charged on the basis of the complexity of thecase, the level of speciality and the time consumed.It is not unusual that clients are to pay in advance.


2.1 Are there any pre-action procedures in place in Denmark?What is their scope?

There are no formal pre-action procedures in place.


According to the Danish Statute of Limitations, the limitationperiod for contract and tort claims is 5 years. The period for acontract breach runs from the time the contract could be claimed tobe performed, and the period for tort claims generally runs from thetime of the wrongful act. The 5-year period can be extended if the claimant was unaware ofhis claim or of the whereabouts of the defendant. The period can besuspended or interrupted generally by obtaining the defendant’sacknowledgment of the claim or by taking a procedural step tosecure the claim. All claims have an absolute limitation period of 20 years fromwhich no suspension or interruption is possible. The Danish Statute of Limitation has recently been amended, thechanges took effect on January 1st 2008. Following this, thelimitation period for both breach of contract and tort will be 3 yearsinstead of 5. The absolute limitation period will be reduced to 10years except for claims relating to personal injury andenvironmental damage for which a 30-year absolute limitationperiod will apply.The Danish rules on time limits are a matter of substantial law.


3.1 How are civil proceedings commenced (issued and served)in Denmark? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Denmark? Is there a preferred method ofservice of foreign proceedings in Denmark?

Civil proceedings in Denmark are generally commenced by theclaimant preparing a claim form, and filing it with the competentcourt. The claim form must include the defendant’s name andaddress, claimant’s claim, a statement of facts, and documents andother evidence on which the claimant bases his claim.

The claim has to be served on the defendant. This is done by thecourt, which at the same time establishes a final date for thedefendant to file his statement of defence, usually 2 weeks fromservice. Service may take place either by letter, by postal service or,personally, by a bailiff. As for defendants living outside Denmark, service takes place in thesame manner. If service cannot be completed using the usual approaches, servicecan be executed by announcement in the Danish Official Gazette.Denmark is a party to the 1965 Hague Convention on the ServiceAbroad of Judicial and Extra-judicial Documents in Civil andCommercial Matters and has entered into a parallel agreementregarding the EU Service Regulation, both of which provide furtherguidance on the service abroad of judicial documents.

3.2 Are any pre-action interim remedies available in Denmark?How do you apply for them? What are the main criteria forobtaining these?

There are 2 pre-action remedies available in the Danish civil legalsystem: arrest of property; and injunctions. As both of these remedies are used before the justification of theclaimant’s claim has been determined, the claimant generally has toprovide security for a potential claim for damages caused by thepre-action remedy. Furthermore, both remedies must be followedby a confirmatory suit within a limited period of time, 7 days forarrest of property and 14 days for injunction. Arrest of property can only be used to secure a pecuniary claim, andonly when there is a specific reason for the use of an arrest, forexample a risk that the other party might otherwise try to concealhis finances. Injunctions are used to prohibit certain actions which were unlawfulalready before the injunction was issued. By issuing an injunction,the act will be subject to sanctions in the future. For an injunction to be issued, the claimant must render probablethat: i) the action he wishes to end is unlawful; ii) the defendantintends to make this action; and iii) the purpose of the injunctionwill be wasted if the claimant has to pursue his claim before thecourts. The authority to issue both pre-action remedies lies with theenforcement court, and the claimant must file his application to thiscourt.


To begin any civil proceeding, the claimant must file a claim formwith the relevant court. The claim form must include:

The name and address of the claimant and the opponent(s).A specification of the court where the proceedings will begin.A statement of claims.A description of the factual and legal circumstances that theclaimant relies on.A description of the documents and other evidence that theclaimant intends to rely on.


During the preliminary stages of the case, the parties are free toamend their claims, argumentation and evidence. When the

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preliminary proceedings have ended, a party must obtain theauthorisation of the court before pleadings can be amended.The court will generally allow an amendment of the pleadings if theopponent does not object. If the opponent does object, the courtmust have specific reasons to allow the amendment in spite of theobjection.

4 Defending a Claim


When the claimant has filed his claim form with the court, the courtwill set a final date for the defendant to file his statement ofdefence. The statement of defence must include:

The defence of the defendant.Submission of any counterclaims.A description of the factual and legal circumstances that thedefendant relies on.A description of the documents and other evidence that thedefendant wishes to rely on.


Usually within two weeks of service. However, an extension of thistime limit is usually granted by the court.


The defendant may implicate a third party (or several) by notice inthe proceedings. This is done by claiming indemnity orcontribution. The third party has the same rights as the original parties.Notice can be served all through the judicial preparation of theoriginal case.


If the defendant does not react to the service of the claim form, orif he does not show up at a hearing, the court will pronounce adefault judgment in favour of the claimant, if this decision isjustified by the statement of claims.


The defendant has the possibility to dispute the court’s jurisdiction,but the final decision on jurisdiction lies with the court.



Both the defendant and the claimant may implicate a third party in

the proceedings. When this is done, the implicated third party willhave the same status as the original parties. If the third party isimplicated as a defendant, he will risk losing the case, same as theoriginal defendant. To implicate a third party in the proceedings the court must havejurisdiction to process the claim against the third party, and the newclaim must be governed by the same procedural rules as the originalclaims. Furthermore, if one of the parties objects to theinvolvement of the new party, the court must rule that theconnection between the claims is such that the new claim should beinvolved in the proceedings in spite of objections. The losing party of a trial may always subsequently bring an actionagainst a third party claiming that he or she is in fact liable for thelegal claim.


The court may decide that 2 sets of proceedings or more, betweenthe same or different parties, are to be consolidated into 1 singleproceeding. The only requirement is that the court finds theconsolidation appropriate.


The court can, on its own motion or upon request from the parties,decide on a split trial.


6.1 Is there any particular case allocation system before thecivil courts in Denmark? How are cases allocated?

Please see the answer to question 1.2.

6.2 Do the courts in Denmark have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The courts are actively managing the case. Please see the answer toquestion 1.3.

6.3 What sanctions are the courts in Denmark empowered toimpose on a party that disobeys the court’s orders ordirections?

Each party has an obligation to supply the information the courtneeds to consider that party’s claim. If a party does not contributeto the disclosure of the case against the orders of the court, the courtcan choose instead to accept the opponent’s information as facts, orto decide a disputed matter in favour of the opponent.

6.4 Do the courts in Denmark have the power to strike outpart of a statement of case? If so, in what circumstances?

The court has the possibility to reject unnecessary argumentationand evidence, but otherwise it has no powers to strike out astatement of case.



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6.5 Can the civil courts in Denmark enter summary judgment?

If the defendant does not show up for a preliminary hearing he hasbeen summoned to, or does not deposit an adequate statement ofdefence in time, the court will usually enter a summary judgment infavour of the claimant. The same will be the case if the defendantdoes not show up for the main proceedings, if he has not yet set uphis claim. As of January 1st 2008, a new set of rules concerning small claimshas taken effect. Following this, claims of less than DKK 50,000will undergo a more simple procedure than larger claims which willreduce case costs.

6.6 Do the courts in Denmark have any powers to discontinueor stay the proceedings? If so, in what circumstances?

The court can discontinue the proceedings if the claimant does notshow up for a preliminary hearing. The same will be the case if theclaimant does not submit a pleading or a statement of claim in time.Also, if the claimant does not show up for the main proceedings andhas not yet submitted his claim, the court has the possibility todiscontinue the proceedings.Furthermore, the court can stay the proceedings if a part in thedispute is the subject of a trial at another court (pendente lite).

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Denmark? Are there any classes of documents that donot require disclosure?

As a general rule, the parties decide which evidence to put forwardto prove their point. The court will decide the case on the basis ofthe information provided, and will not on its own motion contributeto the disclosure of the case. However, the court can by motion from a party order another partyor a third party to produce specific documents. It must besubstantiated in the motion that the documents are relevant to thecase and that the other party/third party is in possession of thedocuments.If a party does not comply with the order, the only legal effect is thatthe court will take the non-compliance into consideration in favourof the other party when weighing the evidence. The same applies ifa party during the preparation of the case does not answer to thecourt’s satisfaction a request made by the other party or if a partyrefuses to answer questions during the examination.

7.2 What are the rules on privilege in civil proceedings inDenmark?

Public employees under a duty of confidentiality can never beforced to give evidence without the consent of the administration inquestion. Members of the Danish Parliament cannot be forced togive evidence without the assent of the chairman of the Parliamentand of the Minister responsible. As a general rule, lawyers, clerics and medical doctors and theirassistants cannot be forced to give evidence on matters that pertainto information that has been obtained in connection with their work.The next of kin to a party is never under an obligation to giveevidence, and neither is the party himself, if by doing so heincriminates himself or his next of kin or otherwise subjects himselfor his next of kin to considerable damage.

Finally, editors and journalists are exempt from the duty of givingevidence in certain situations to protect their informants. If a party is exempt from the duty to give evidence, that party islikewise exempt from providing documents including memos andcorrespondence of the same content.

7.3 What are the rules in Denmark with respect to disclosureby third parties?

A third party is obliged to give testimony or provide documents ifthe court so requests unless the conditions for exemption fromgiving testimony are met. Please see the answer to question 7.2 forfurther information.

7.4 What is the court’s role in disclosure in civil proceedingsin Denmark?

Please see the answer to question 7.1.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Denmark?

As a general rule, the documents disclosed during the proceedingsmay only be used in connection with the case. Anyone with a considerable interest in a concrete, legal matter canrequest access to documents used in civil proceedings, if suchdocuments are of importance to the matter. The right of access canbe denied on the basis of national security or to protect personalinformation about a party or trade secrets.

8 Evidence

8.1 What are the basic rules of evidence in Denmark?

It is up to the parties themselves to decide what evidence they wishto provide and what facts they wish to prove. The parties canprovide any evidence they find of importance to the case, althoughthe court always has the possibility to strike out evidence which isof no relevance to the case. The court decides the case on the basis of the evidence produced bythe parties. It is for the court alone to assess the significance of eachpiece of evidence, and there are no rules determining the weight ofcertain types of evidence.


There are no restrictions as to what evidence the parties mayprovide, as long as it is of importance to the case. However, theparties can only produce expert evidence obtained by one of theparties if it has been obtained before the trial and not for the purposeof the trial, or they can request that the court appoints an expertinvestigation. The court must approve of written witness statementsand the opponent has a right to pose questions to the witness.Approval is given if it would be most convenient for the witness,e.g. because of distance or health.

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Any person has an obligation to give testimony as a witness, if thecourt so requests. The only exemptions are those mentioned inquestion 7.2.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Denmark?

The court has no role in the provision of evidence. It is for the partiesthemselves to provide the evidence they wish to produce. The courtcan request that a party provides additional evidence to clarify apoint, but the court does not provide any evidence on its own.


9.1 What different types of judgments and orders are the civilcourts in Denmark empowered to issue and in whatcircumstances?

The Danish courts are empowered to use 3 kinds of judicialdecisions: judgments; decisions; and court orders. Judgments are used to finalise the proceedings of the case, and theyare the court’s final decision in the case.Decisions and court orders are used to settle disputes during theproceedings and make arrests, etc.


The Danish courts are empowered to award damages for losssuffered. The courts are likewise empowered to allocate the costs of theproceedings as they see fit. Usually this is done in respect of thegeneral principles on the matter, according to which the losing partywill pay the costs. The court is empowered to award litigation interests on bothdamages and costs awarded.


In Denmark, judgments are enforced by the bailiff, on request froma party. The bailiff sets the time and place for the enforcementproceedings. The enforcement can be executed if either the debtoror the asset to be seized is present. If the debtor does not show updespite having been summoned, the bailiff can ask the police to helpensure that the debtor is present. Enforcement of foreign judgments can only take place if thejudgment is covered by a convention or other mutual agreementbetween Denmark and the state in question. If this is not the case,the judgment will not be recognised in Denmark, and will thereforenot be enforceable. In such cases, it will be necessary to initiateproceedings to claim recognition and enforcement of the foreignjudgment in Denmark. If the foreign judgment is subject to a mutual agreement betweenDenmark and the state in question, the judgment will be enforceableunder the same conditions as national judgments. Denmark has adopted the New York Convention on cross-borderenforcement of arbitration awards.

9.4 What are the rules of appeal against a judgment of a civilcourt of Denmark?

Judgments from the district courts can be appealed to the HighCourts. If the claim has a financial value of no more than DKR10,000 (approx. £900), the judgment can only be appealed withpermission from the Appeals Permission Board. The appeal term is4 weeks from when the judgment was announced.The Appeals Permission Board will give permission to appeal if thecase is a matter of general interest or if there are other specificreasons for an appeal. First instance judgments from the High Courts or judgments from theMaritime and Commercial Court in Copenhagen can be appealed tothe Supreme Court. The appeal term is 8 weeks from judgment. Judgments from the High Court in appeal cases cannot be appealedto the Supreme Court, unless permission is given by the AppealsPermission board. The criteria for giving permission are the sameas listed above.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Denmark?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a quick overview of each available method.)

All four methods are available and used to a varying extent inDenmark.The parties to a dispute can enter into an arbitration agreement,thereby entrusting the final settlement of the dispute to a chosenperson or group of persons. Decisions from the arbitrator cannot beappealed. Arbitration is subject to the Danish Arbitration Act(voldgiftsloven). Mediation is not governed by Danish law, but is used more andmore to settle disputes. The basic principle is that the partiesthemselves control the proceedings and try to agree upon a solutionwhich is acceptable to both parties. A mediator will be involved inthe process to help the parties find an agreeable solution. Tribunals are often established by the Government to govern certainareas of public importance. The tribunals handle complaints fromthe public in their area of expertise. Often, the proceedings beforethe tribunals will be faster and smoother than before the courts, andthe complainant will not have to acquire expensive legal aid. It iscommon practice that the complainant will have to pay a small feein advance, which will then be repaid if the matter is settled infavour of the complainant. The Danish Ombudsman has authority to supervise Denmark’s civiland military administration. This basically means he has thepowers to monitor whether the public administration is committingany errors in the performance of their duties. The Ombudsmancannot deliver any legally binding decisions, but his decisions enjoya great amount of respect and are practically always followed. Another institution with no connection to the Ombudsman is theConsumer Ombudsman who governs the area of the DanishMarketing Practices Act. The Consumer Ombudsman monitorswhether private businesses or public authorities violate theMarketing Practices Act and he can issue guidelines andinstructions on the fair trading practice of certain areas. TheConsumer Ombudsman can bring injunctions before the courts, andhe himself can issue a preliminary injunction in specific cases.



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The Ombudsman is governed by the Danish Ombudsman Act, andthe Consumer Ombudsman is established as part of the DanishMarketing Practices Act.Arbitration is governed by the Arbitration Act, although a part of theAct can be derogated from by agreement. There are several different tribunals in Denmark, the listing ofwhich is too extensive to undertake here. Mediation is not governed by any specific laws or rules.

1.3 Are there any areas of law in Denmark that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

As a general rule all civil matters in Denmark can be settled by theuse of mediation or arbitration. Certain types of cases are notsuitable for arbitration, however, including paternity and maritalcases, and such cases, therefore, may not be settled by arbitration.


2.1 What are the major dispute resolution institutions inDenmark?

The most important dispute resolution institution in Denmark is thecourts. There are some permanent Arbitration Tribunals, but often theparties agree to establish their own tribunal specifically designedfor the case in question.


Decisions from Arbitration Tribunals are recognised as binding andare enforceable in accordance with the Danish Administration ofJustice Act. In the case of mediation, an out-of-court settlement is not generallyenforceable, unless the parties have so agreed. If the parties wishthe settlement to be enforceable, they must clearly state this in thesettlement. If the mediation has been initiated after legal proceedings have beeninitiated, the parties have the possibility to draft the settlement as acourt settlement which is enforceable.

Neither the Ombudsman nor the Consumer Ombudsman have theauthority to pronounce enforceable solutions, but decisions madeby them are generally respected. The rulings from the various tribunals are typically enforceable.



The use of mediators has increased during the past decade, and thecourts increasingly influence the parties towards mediation.However, it is still a relatively low number of disputes that areresolved by mediation.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Denmark?

New rules on class actions entered into force on January 1st 2008as a part of the Danish Administration of Justice Act.So far, Danish legislation has not allowed for class actions. It hasbeen possible for a third party with a similar claim to one alreadybeing processed to be implicated in the ongoing trial, but there hasnever been an option for a group of people to bring an actiontogether as one claimant. The new rules on class actions provide the possibility for a group ofpeople with similar claims to have their cases cumulated into onesingle trial.The rules on class action are based on an opt in-principle, i.e. theindividual claimant has to actively choose to be part of the classaction in order for the judgment to have effect. In case of claims that are too small to be afforded individualproceedings, and where the opt in-model is not appropriate, thecourt can decide to apply the opt out-model. This modelautomatically includes all persons who fit into the claimant’sdescription of the group in the class action. Persons who do notwish to be part of the class action then have to actively deregisterfrom the proceedings.Although there are no limitations on the nature of the claims that aresuitable for class action, it is expected that in the beginning it willfirst and foremost be consumer claims organised by the ConsumerOmbudsman that will use this new method of processing a claim.Possible claims could e.g. involve illegal fees or defective goods.

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Jens Rostock-Jensen

Kromann Reumert5, SundkrogsgadeDK-2100 CopenhagenDenmark

Tel: +45 70 12 12 11Fax: +45 70 12 13 11Email: [email protected]: www.kromannreumert.com

Practice areas:Insurance and tort law; Litigation and arbitration; and Aviation law.Education:Studies at the University of Oregon 1975-1976 and 1977-1978.Law degree from the University of Copenhagen 1983.Admission and right of audience:Admitted 1986. Right of audience before the Danish SupremeCourt 1991. Free legal aid cases assigned by the Danish SupremeCourt 1999.Books and publications:Produktansvar: Produktansvarsloven med kommentarer, ProductLiability, DJØF, 2004. Contributor to Karnovs LovsamlingCompendium of laws (aviation law). Enforcement of ForeignJudgments (Denmark), Kluwer, 1994. International Insurance Lawand Regulation (Denmark), Longman Law, Tax and Finance, 1998.The International Comparative Legal Guide to Product Liability2003, 2004 and 2005, Global Legal Group. Articles in Lovells,European Product Liability Review, 2004 and 2005.Profile:Jens Rostock-Jensen became a partner of the law firm KromannReumert in 1993. He specialises in insurance and tort law withspecial emphasis on product liability and coverage issues. Herepresents insurance companies and the insurance industry. Hehandles cases before the two Danish high courts and the DanishSupreme Court and assists in drafting policy terms. Jens Rostock-Jensen also handles reinsurance and has advised and handled caseson behalf of both ceding companies and reinsurers. Moreover, JensRostock-Jensen handles aviation law matters, including liability,insurance and concession matters. Jens Rostock-Jensen also takeson litigation matter on behalf of other clients, e.g. general businesslaw matters. He has acted as arbitration judge in disputesconcerning insurance and general business law. He has alsohandled cases before the European Court of Justice.Jens Rostock-Jensen has assisted in preparing a report for theEuropean Commission concerning the product liability directive(MARKT/2001/11/D). Jens Rostock-Jensen teaches at the DanishInsurance Academy and regularly gives lectures in variousconnections.

Kromann Reumert is a leading, full-service law firm that provides legal services of the highest professional quality withinall specialities required by the corporate sector. The best professional qualifications are supported by substantialexperience within all special areas.

We are an action and solution-oriented firm, and we pursue the commercial objective of the case and contribute to thedevelopment and success of our clients. Kromann Reumert brings together professional capability, knowledge andexperience and utilises the depth of our resources to provide the clients with professional services tailored to the clients’business methods and objectives. Kromann Reumert is always at the clients’ disposal whenever our assistance isrequired.

Kromann Reumert works equally well with Danish and international cases and we have close connections with severalprominent law firms in most of the world. In the Scandinavian law Alliance, we have forged in-depth partnerships withthe leading firms - Vinge KB in Sweden and Thommessen Krefting Greve Lund AS in Norway.

Kromann Reumert has offices in Copenhagen, Aarhus, London and Brussels. We are just under 500 employees, ofwhom approximately 250 are lawyers.

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Chapter 15


Coronel & Pérez, Abogados

Ecuador

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Ecuador got? Are there anyrules that govern civil procedure in Ecuador?

The Ecuadorian legal system is part of what is known as“continental law”, therefore it is basically a system of codified law,which means that it is a legal system based on written and publishedlaws. Judges resolve legal disputes applying the written law.The civil procedure is mainly ruled by the Civil Procedure Code,which, in general terms, is inspired in certain basic principles: theparties have the burden to push forward the process; the judge hasto be impartial and parties must be treated equally; and, the processmust be formal and in writing. Additionally the Cassation Law ishighly important, as it regulates the revision of final judgmentsissued by the Provincial Courts of Justice (appellate courts) inrelation with all sorts of violations to the content of the law or theway to interpret it.

1.2 How is the civil court system in Ecuador structured? Whatare the various levels of appeal and are there anyspecialist courts?

The civil court system is structured, in general terms, on proceedinginstances. At the first level we can find the Civil Courts, in whichonly one judge, with a cantonal jurisdiction, has the power to tryand resolve a case in first instance. At the second level we can findthe Provincial Courts of Justice, which are the appellate courts withprovincial jurisdiction. Finally, the National Court of Justice, withnational jurisdiction, is a cassation court, because it is onlycompetent to review the violations of the law’s content or the wayto interpret it produced or ratified on the second instance by theProvincial Courts of Justice. In the Provincial Courts of Justice andin the National Court of Justice there will be one or morespecialised chambers for civil matters, as determined by the law,that will have to be issued to develop the Constitutional dispositionsin force since October 2008.

1.3 What are the main stages in civil proceedings in Ecuador?What is their underlying timeframe?

In order to answer this question we need to distinguish thedifference between the different types of trials. There are certainspecial proceedings, but the most important ones and those through

which most disputes are resolved are: the ordinary trial, theexecutive trial, and the verbal summary trial. The main stages ofthese trials will be pointed out below.Ordinary Trial: is the proceeding in which the objective is toconstitute a right; to condemn a person to give, do, or not dosomething; or simply to declare a pre-existing right. It is the fulladversarial trial by excellence. It is the type of trial that must befollowed if the law has not expressly ordered that a specific type ofproceeding be followed to resolve a matter. It is structured in thefollowing manner:

Complaint: is the act in which the plaintiff files a petition orclaim.Reply to the complaint: the defendant has fifteen days toanswer the complaint. The reply must include dilatory andperemptory exceptions. The defendant can also file acounterclaim, in which case the plaintiff will be given fifteendays more to reply to the complaint.Conciliation: in this phase the judge attempts to have theparties reach a friendly agreement making mutualconcessions. If the agreement is licit, the judge must approveit by a judicial pronouncement and the trial ends.Evidence: if the parties do not reach an agreement in theconciliation, the judge opens an evidence period for ten days,so that the evidence requested by the parties is produced.Judgment: when the evidence period is concluded, the judgeissues the judgment in the following twelve days. In thejudgment, the judge resolves the principal issue of thecomplaint, referring specifically to the facts and theapplicable law. Second Instance: any of the parties can appeal the judgmentbefore the Provincial Court of Justice. The party has threedays to appeal and ten days to provide support for the appeal.Any of the parties can request to open a new evidence periodfor ten days. After the evidence period, the Court must issuea judgment confirming or rectifying the first instance judge’sdecision after examining the facts and applicable law.Cassation: The second instance judgment is subject tocassation recourse when there are violations to the law or tothe ways of interpreting it.Appeal: The parties can appeal the intermediate decisionsthat produce great harm to them.

Executive Trials: are those proceedings that seek the fulfillment ofa right. In order to initiate an executive trial the plaintiff must havean executive title (“título ejecutivo”). An executive title is adocument that represents the evidence of a right. Therefore, thejudge will not have to decide on the existence of the right but willonly have to enforce its fulfillment. This procedure begins with the complaint. When the complaint ispresented, the judge will issue an order for payment which will

Jorge Sicouret

César Coronel Jones

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instruct the debtor to fulfill or propose exceptions within three days.The plaintiff will also be able to request cautionary measures. If thedebtor does not pay nor propose exceptions within three days, thejudge will issue a decision ordering the debtor to complyimmediately with the obligation. If there are exceptions to beproved, an evidence period for six days will be opened, after whichthe parties will have four days to allege, and after which the judgemust issue a ruling.In this trial it is not possible for the defendant to file a counterclaimor for any of the parties to appeal intermediate decisions. It is alsonot possible to request cassation.Verbal Summary Trials: this channel is used to calculate damages,for disputes between merchants that are not subject to a special trial,for voluntary divorces, for intellectual property disputes (when theparties have agreed on it), and in some cases specificallydetermined by the law. It is an abbreviated adversarial trial.After the complaint is filed, the judge will have to call the parties toa conciliation hearing, which will take place after eight days. In thishearing the defendant must orally reply to the complaint. That iswhy this trial is called verbal summary. If there is no agreementbetween the parties in the conciliation hearing, the evidence periodwill be opened for six days. Once this term concludes, the judgewill rule in five days. This judgment can be subject to cassation.In this trial it is not possible for the defendant to file a counterclaimor for any of the parties to appeal intermediate decisions. It is alsonot possible to request cassation.According to the Civil Procedure Code, none of these proceedingsshould last more than a couple of months. However, given thenumber of trials and the judicial power’s poor infrastructure, in thefirst instance ordinary trials generally last between two to fouryears, executive trials between one and two years, and verbalsummary trials between one and two years.

1.4 What is Ecuador’s local judiciary’s approach to exclusivejurisdiction clauses?

According to Ecuadorian law, the parties can agree to be subject toa particular jurisdiction. In case the complaint is filed in a placedifferent to that convened in the contract, the defendant can allegelack of competence and request to be sued before a competentjudge. However, if the complaint refers to something that can onlybe resolved on the basis of local knowledge, the competent judgewill necessary be that of the corresponding place.

1.5 What are the costs of civil court proceedings in Ecuador?Who bears these costs?

According to the recently approved Constitution (in force sinceOctober 2008), the process is totally free.

1.6 Are there any particular rules about funding litigation inEcuador? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

In Ecuador, lawyers and clients are free to establish fees for theservices provided by the former. Arrangements of contingencyhonoraries are not foreseen in any law, but they are not prohibitedeither. In the absence of an agreement between a lawyer and hisclient, the fees must be set according to the Lawyers’ FederationLaw. In case a conflict about legal fees emerges, it must be resolvedthrough a verbal summary trial.


2.1 Are there any pre-action procedures in place in Ecuador?What is their scope?

In Ecuador, there are certain preliminary actions to the process,some are optional and others are obligatory.Among the optional procedures, the Civil Procedure Code statesthat before the complaint a person can request preparatory acts likea judicial confession, production of the res, production ofdocuments, and witnesses’ testimony in certain cases or judicialinspection. The purpose of these preparatory acts is to pre-constitute evidence or obtain information to adequately prepare thecomplaint.Other proceedings previous to the trial which are also optional arecautionary measures, like retentions, prohibitions to transferproperty, etc., which can be requested when there is sufficientevidence of the credit and of the poor state of the debtor’sbusinesses. The purpose of these proceedings is to ensure thepayment of the credit.Among the obligatory procedures is the necessity to have a criminaljudgment to begin a civil trial when the damages for whichcompensation is sought are the consequences of a crime.


According to the Ecuadorian Civil Procedure Code, ordinaryactions prescribe in ten years and the executive actions in five years.However, after five years, claims to be exercised through executiveactions can still be requested through the ordinary action for fivemore years. Additionally, there are actions to which the law hasassigned more reduced prescription periods. The term for theprescription is counted from the moment the obligation becomesdemandable. Prescription is treated as a fundamental matter.


3.1 How are civil proceedings commenced (issued and served)in Ecuador? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Ecuador? Is there a preferred method ofservice of foreign proceedings in Ecuador?

In Ecuador, proceedings are initiated with the presentation of thecomplaint. The judge must examine if the complaint is clear and ifit fulfills all of the legal requirements. If this is not so, he willrequest that the plaintiff complete the complaint.With the clear and complete complaint, the defendant must be givennotice. The serving of notice must be made in person and only ifthe defendant is not found will he be cited by three judicial noticesleft in his domicile. If it is impossible to determine or locate thedefendant, the law enables service by publication through threeannouncements published in a newspaper of wide circulation.The service date will be, according to the case, that on which thepersonal notification is delivered to the defendant, that of the thirdjudicial notice left in his domicile, or that of the third presspublication notice.



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3.2 Are any pre-action interim remedies available in Ecuador?How do you apply for them? What are the main criteria forobtaining these?

The Ecuadorian law enables the plaintiff to request severalcautionary measures, before the presentation of the complaint:prohibition against the transfer of property (real estate); deposit incourt or retention of assets; seizure of goods; and, prohibition toleave the country. To obtain these measures some requirements must be fulfilled:Deposit in court or retention of assets (“secuestro” o “retención”):applies to real property. The plaintiff must prove the existence of acredit and that the assets are in such a bad state that they will notcover the debt, or that they may disappear or be hidden, or that thedebtor is attempting or may attempt to sell them.Prohibition against the transfer of property: applies only for realproperty. The plaintiff must prove the existence of the credit andthat the defendant does not have other assets sufficient to cover thepayment.Prohibition to leave the country: the plaintiff must prove theexistence of the debt and that the debtor is a foreigner that does notown real property in the country.


A complaint must have the following elements:Designation of the judge.Plaintiff’s complete personal information and defendant’sfull name.Legal and factual grounds for the complaint.The object, quantity, or event demanded.Determination of the value of the claim (“cuantía”).The type of proceeding that must be followed (e.g.,executive, verbal summary, etc.).The place where the defendant must be served notice and theplace where the plaintiff will receive notifications.

A power of attorney for judicial matters must be attached to thecomplaint when the plaintiff acts through a lawyer. Similarly, proofof representation must be attached if the plaintiff is unfit to beginproceedings by him or herself. Also, all evidence that the plaintiffhas in his or her power and expects to present on trial must beattached.

3.4 Can the pleadings be amended? If so, ar e there anyrestrictions?

The plaintiff may complete or amend the complaint if the judgeorders it due to the complaint not fulfilling all of the legalrequirements or it being unclear.The plaintiff may also voluntarily amend the complaint before thediscovery period begins, except in verbal summary trials.

4 Defending a Claim


The Civil Procedure Code establishes that the reply to the complaintmust contain:

The defendant’s complete name, age, profession, andlocation to be notified.A clear pronouncement about the plaintiff’s pretension andthe documents annexed to the complaint, with a categoricalindication of what he accepts or denies.All exceptions alleged against the plaintiff’s pretensions.

The reply must be accompanied by the instrumental evidence thedefendant has in power.The defendant can file counterclaim, except in verbal summarytrials.Compensation (or setting-off of obligations) may be alleged as anexception.


The reply to the complaint must be filed within the fifteen workingdays in ordinary trials and within three working days in executivetrials. In verbal summary trials, the reply must be made in theconciliation hearing. (See answer to question 1.3 above.)


There is no such mechanism in Ecuador.


The defendant’s lack of defence has two effects: first, thedefendant’s bad faith is presumed, which will affect the payment ofcourt fees; and second, it supposes the pure and simple denial of theplaintiff’s pretensions. In the executive trial there is an exceptionto this last rule: if the defendant does not opportunely reply to thecomplaint, it is understood that he accepts the plaintiff’s pretension,and the judge must, without further proceedings, issue a judgmentordering the defendant to pay what is being requested by theplaintiff.


If a person is sued before a judge who lacks jurisdiction, they havetwo options to challenge his competence:

decline the competence, through a declinable exception; andPresent him or herself before the competent judge to requesthim to institute the competence, that is, request the otherjudge to refrain from hearing the case, and to announce tohim the competence if he doesn’t comply. This is donethrough the inhibitory action.


5.1 Is the re a mechanism in your civil justice system wherebya third party can be joined into ongoing proceedings inappropriate circumstances? If so, what are thosecircumstances?

Under Ecuadorian law, a third party affected by a judicial decisioncan always be heard by the judge. For the majority of these cases,the law establishes joinder proceedings.Joinders can take place when a debtor has several creditors. They

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can be regular joinders (tercerías coadyuvantes) or preferredjoinders (tercerías preferentes) when the third party is attempting toenforce a preferred right.There are also excluding joinders (tercerías excluyentes), whichtake place when a third party has a right over the object that is thesubject of the dispute. In ordinary trials, regular or preferred joinders are accepted at anymoment before the judgment is rendered. In executive trials (or during the execution of any judgment),excluding joinders can be proposed from the moment the seizure ofgoods is ordered until three days after the last publicationannouncing the auctioning of the debtor’s goods.Joinder requests are substantiated as any other procedural incidentand are resolved by the same judge that is handling the main trial.


According to the Civil Procedure Code, two proceedings can beconsolidated if any of the parties requests it in the following cases.

When the judgment that would be issued in one of theproceedings would produce in the other the exception of resjudicata.When there is an unsettled trial about the same objectpending before another court, and that was initiated at anearlier date.When there is a bankruptcy proceeding, to which the mattersto be consolidated are subject.When, if separate trials were followed, the resolution of thecase would be divided.

The resolution of the case would be divided when:the same people, things and actions are involved in separatelitigations;the same people and things are involved in separatelitigations, even when actions are diverse;the same people and actions are involved in separatelitigations, even when the things involved are diverse;the same actions and things are involved in separatelitigations, even when the people involved are diverse;separate actions originate from a same cause, even whenpeople and things are diverse; andthe object to which the litigation refers is contained in thematter that is the subject of another litigation.


The bifurcation of proceedings does not exist under Ecuadorianlaw.


6.1 Is there any particular case allocation system before thecivil courts in Ecuador? How are cases allocated?

In general, the competence of judges is determined by territory.Between the judges of a same territory, the designation is carriedout by random draw.

6.2 Do the courts in Ecuador have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

In Ecuador, judges lack of discretion regarding the procedure. Theyhave to strictly apply what is written in the law. During theproceedings the parties are also limited to requesting the actionsestablished by law.

6.3 What sanctions are the courts in Ecuador empowered toimpose on a party that disobeys the court’s orders ordirections?

The Civil Procedure Code also permits the judge, in certain cases,to impose fines or request that the public force compel thecompliance with his orders.

6.4 Do the courts in Ecuador have the power to strike out partof a statement of case? If so, in what circumstances?

The judges cannot eliminate any part of a parties’ allegations. Theymust consider all of their requests and accept or dismiss them,totally or partially, in their judgment.

6.5 Can the civil courts in Ecuador enter summary judgment?

The civil procedure is completely regulated. The law establishessummary judgments, in which sentences are issued without theneed for an evidence period, when the dispute doesn’t involve factsbut only matters of law.

6.6 Do the courts in Ecuador have any powers to discontinueor stay the proceedings? If so, in what circumstances?

The judges have the power to end a procedure only when theprocess is abandoned, this is, when a party stops promoting the trialduring the term established by the law. According to the time ofinaction this power can be exercised by the judge sua sponte or ifone of the parties requests it.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Ecuador? Are there any classes of documents that donot require disclosure?

The concept of disclosure does not exist in Ecuadorian civilprocedure. The parties are not obliged to reveal, in general, all ofthe relevant facts of the case. The Civil Procedure Code onlyestablishes the plaintiff’s obligation to attach all preparatorydocuments and evidence he has in his power and which he isattempting to make valid in the trial in order to support his claim.

7.2 What are the rules on privilege in civil proceedings inEcuador?

The laws that regulate the practice of different professions includethe obligation of maintaining professional confidentiality, andsanction the breach of this obligation. The Criminal Code considersthe breach of professional confidentiality as a crime, even whendeclaring on trial. Excluded from this are those cases when the lawsthat expressly stipulate the obligation to reveal a secret.



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7.3 What are the rules in Ecuador with respect to disclosureby third parties?

Not applicable. (See answer to question 7.1.)

7.4 What is the court’s role in disclosure in civil proceedingsin Ecuador?


7.5 Are there any restrictions on the use of documentsobtained by disclosure in Ecuador?


8 Evidence

8.1 What are the basic rules of evidence in Ecuador?

The basic rule is that the facts must be proved by those who allegethem, unless the facts are presumed by the law. Any of the litigantscan submit evidence against the facts proposed by their adversaries.Therefore, the plaintiff must prove the facts that form the basis forhis complaint, and the defendant is not obliged to produceevidences if his reply has been a simple and absolute negative. Thedefendant must only produce evidences when he has included in hisreply some affirmation of fact, law, or the quality of the object ofthe dispute.The judge must appreciate all evidence with reasonable judgmentand has the obligation to express, on his resolution, the weight thathe has given to all of the evidence presented.Only the evidence that has been requested, presented and practicedaccording to the law is valid on trial.The judges have the power to order, at any moment of the trial, thepresentation or performance of evidence that he deems necessary,with the exception of witness testimony.All evidence is public, and the parties can be present in itsproduction.


Under Ecuadorian civil procedure, evidences can basically consistof judicial confession, private written and certified document,witnesses’ testimony, judicial inspection and expert opinion.Recordings, x-rays, photographs, cinematographic tapes, anddocuments obtained through technical, electronic or newtechnological means, morphological, blood, or other examinationsof a scientific or technical nature, are also acceptable as evidence.The party which requests the rendering of a piece of evidence mustsubmit to the judge the equipment necessary to appreciate thesignificance of the recordings and to reproduce the sounds andfigures.In general, all evidence practiced beyond the discovery period (Seeanswer to question 1.3 above) and that fails to comply with therequisites established by law is inadmissible. There are also certaincases in which the law expressly points out the inadmissibility ofthe evidence, such as, for example, when a judicial confession iscarried out without the presence of the defendant’s attorney or whena document has alterations.Expert opinions apply to facts that require scientific, artistic or

particular craft knowledge in order to be appreciated. The judgewill appoint an expert from those registered as such in therespective Provincial Courts. The parties can also, by mutualagreement, choose an expert or request that more than one expert isbe appointed for the diligence. According to the Civil ProcedureCode, it is not an obligation for the judge to abide by an expert’sopinion.


The party that needs to render testimonial proof will present thewitness list to the judge, together with the questions that thewitnesses must answer.Up to six witnesses may be admitted to prove a fact.The counterparty can cross-examine the witnesses.Each question may only contain one fact. It is not permitted to askimpertinent, captious, or suggestive questions. The questions in anexamination or cross-examination may not number more thanthirty.All witnesses that the parties present must testify, and the judge mayeven compel them to appear in court through the public force.Testimony is rendered under sworn oath and must take into accountthat the Ecuadorian criminal laws consider it a crime to render falsetestimony.The witnesses may not read their answers nor consult with anyonewhile they are declaring.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Ecuador?

Before ordering the production of a piece of evidence, the judgemust justify its pertinence to the dispute.


9.1 What different types of judgments and orders are the civilcourts in Ecuador empowered to issue and in whatcircumstances?

Under the Ecuadorian law, judges may take three kinds ofdecisions:

Judgment: are the final judicial decisions regarding the mainmatter or matters of the trial.Ruling: are the judicial decisions about any incident of the trial.There are certain rulings that for procedural reasons can end theprocess, like the judge’s declaration of lack of competence.Decree: are the judicial decisions that the judges issue inorder to substantiate the cause or to practice any diligence.Decrees that are about important points of substantiation,such as payment or evidence, and those which affect theparties’ interests or have an effect on the outcome of the case,will be considered as rulings.


Civil proceedings themselves do not produce damages or interests.Only if one of the parties has acted in bad faith can a judge orderthat party to assume all judicial fees, which include the other party’slawyer’s honoraries.

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In order for a judgment to have irrevocable effects, there must be nofurther legal recourses available.Once the judgment is not subject to appeal, the judge will dictate the“writ of execution”, ordering the debtor to comply immediatelywith the obligation.If the trial has referred to the delivery of a particular good, thedebtor will be compelled to the delivery, and the bailiff, with theassistance of the Public Force if necessary, will deliver it to thecreditor. If the obligation referred to the performance of an act, andthe act can be performed, the judge will order that it is performedon the debtor’s account. If the particular good that is owed cannotbe delivered to the creditor, or the act cannot be performed, thejudge shall determine the compensation that must be paid for non-compliance and will order its collection via the attachment ofproperty. If the action consists on the granting or signing of adocument, the judge will carry it out in representation of the personwho should have done it.According to the Civil Procedure Code, foreign judgments can beexecuted only if they do not contradict Ecuadorian Public Law orany national law, and if they are in accordance with validinternational treaties. In absence of international treaties, they canbe fulfilled if, in addition to not contravening Public Law ornational laws, the respective letter rogatory certifies: (i) that thejudgment has constituted res judicata, according to the laws of thecountry in which it was issued; and (ii) that the judgment referredto a personal action.

9.4 What are the rules of appeal against a judgment of a civilcourt of Ecuador?

The Ecuadorian law establishes three recourses: appeal, cassation,and “fact recourse” (“recurso de hecho”), without prejudice of theability to request the nullity of a proceeding or judgment.An appeal is the request that any party can submit to the superiorauthority, for the revocation or reform of the judgment. The appealmay be filed within the term of three days from the issuing of thejudgment. If the superior denies the appeal, the party that appealedhas three days to propose the “fact recourse”, by which the processmust necessarily be delivered to the superior for its review. Theonly reasons for the rejection of the fact recourse are that the appealor fact recourse itself (i) are prohibited by the law, or (ii) have beenproposed after the determined period of time.Cassation applies against judgments or rulings that end fulladversarial proceedings and can only be grounded on the casesCassation Law establishes. These cases have to do, basically, withthe incorrect application, lack of application or erroneousinterpretation of legal dispositions.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Ecuador?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Besides the judicial proceeding, the Ecuadorian law recognisesalternative mechanisms to resolve disputes, which are frequentlyused for the disputes between merchants. These mechanisms are

arbitration and mediation.The “Arbitration and Mediation Law” was approved by Congress in1997. This law defines arbitration as an alternative method for theresolution of conflicts to which parties can submit, by mutualagreement, their controversies about rights susceptible oftransaction (that is, rights that are not inalienable under Ecuadorianlaw). According to this law, arbitral awards have the same poweras judgments issued in civil proceedings, although they cannot besubject to any recourses. Impugnation of an arbitral award mayonly be proposed through the nullity action for violation of publicorder.Mediation is defined as a proceeding for the resolution of conflictsresolution through which the parties, assisted by a neutral thirdparty, procure a voluntary agreement about a matter than can be thesubject of a transaction. The agreement must be of an extra-judicialand definitive character and end the conflict. In the area of consumer rights, the Public Defender (similar to thefigure of the Ombudsman) lacks jurisdictional powers. Hisdecisions are not binding; they only serve as reference for judicialactions.


The Arbitration and Mediation Law is the main law regulatingalternative dispute resolution methods. Mediation and arbitrationcenters also have internal regulations applicable to the alternativeconflict resolution proceedings. However, as proper to the nature ofarbitration, the parties are expected to regulate the procedure withinthe limits of the law.

1.3 Are there any areas of law in Ecuador that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Alternative dispute resolution methods may not be used to resolvecontroversies regarding inalienable rights, that is, those that are notsusceptible to transaction. This would be the case, for example, forcriminal matters.


2.1 What are the major dispute resolution institutions inEcuador?

Some of the most important institutions are:Arbitration and Mediation Centre of the Chamber ofCommerce of Guayaquil.Arbitration and Mediation Centre of the Chamber ofCommerce of Quito.Arbitration and Mediation Centre of the Chamber ofProduction of Azuay.Arbitration and Mediation Centre of the Ecuadorian-American Chamber of Commerce.


According to the Arbitration and Mediation Law, arbitral awardshave the same force as judgments issued by a judge and are notsubject to appeal.



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Agreements reached by the parties at the end of a mediation processare also not subject to appeal and have the force of law for theparties.



In comparison with ordinary justice, the alternative disputeresolution methods have had an important evolution in the last tenyears in Ecuador. Arbitrations and mediations offer quicker andmore efficient solutions than the usually long judicial proceedings.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Ecuador?

At the moment, the main issue that can affect the use of alternativedispute resolution methods, and specifically arbitration, is the entryinto force of the new Ecuadorian Constitution in October of 2008.The new Constitution establishes the right of defence, which is oneof the basic due process guarantees. Said right includes the abilityof a person to appeal a judgment on all proceedings where his or herrights are being decided. Due to the generality of the disposition,which refers to “proceedings”, without specifying that it refers onlyto judicial proceedings, its scope includes arbitration. This impliesthat the arbitral awards are subject to appeal, which will mean theinterference of the ordinary judicial system, which will be the onewho will adopt definitive resolutions.

César Coronel Jones

Coronel & Pérez, Abogados9 de Octubre 100 y Malecón Simón Bolívar Edificio “La Previsora”, GuayaquilEcuador

Tel: +593 4 251 9900Fax: +593 4 232 0657Email: [email protected]: www.coronelyperez.com

César Coronel is a founding partner of Coronel & Perez and hasinspired the development of the firm since its beginnings underprinciples of ethics, reliability and professionalism. Dr. Coronel hasbeen a Professor of Civil Law for more than twenty years and Deanof the Catholic University of Guayaquil from 1988 till 1991.Experimented litigator and arbitrator, he’s now a member of thearbitral court of International Chamber of Commerce (ICC) andPresident of the Arbitration Center of the Commerce Chamber ofGuayaquil. In corporative area he has advised for decadesmultinational corporations established in Ecuador. During the lastyears, Dr. Coronel has participated as co-counsel or legal expert ininvestment arbitrations and multi jurisdictional litigations involvingboth, private parties and public institutions.

Jorge Sicouret

Coronel & Pérez, Abogados9 de Octubre 100 y Malecón Simón Bolívar Edificio “La Previsora”, GuayaquilEcuador

Tel: +593 4 251 9900Fax: +593 4 232 0657Email: [email protected]: www.coronelyperez.com

Jorge Sicouret is a partner at Coronel & Pérez who has more thantwenty years of experience in commercial litigation and arbitrationand in privatisations and concessions of public services. Heobtained his law degree from the Catholic University of Guayaquil in1983.Mr. Sicouret has advised clients in a variety of complex corporatetransactions and negotiations involving both the private and publicsectors. In representing companies who hold concessions for theprovision of public services, Mr. Sicouret has helped them attaintheir business goals while at the same time ensure compliance withoften complicated regulatory frameworks.Mr. Sicouret has been Legal Advisor to the Construction Chamber ofGuayaquil. He has taught Civil Law at the Catholic University ofGuayaquil.He is currently Arbitrator for the Arbitration Center at the GuayaquilChamber of Commerce.

Coronel & Perez is a law firm with a very strong reputation and important national and international legal practice. Ithas offices in Guayaquil and Quito. The firm has counseled national and international corporations, financial institutionsand governmental agencies for many years, with a reputation of reliability and professionalism. Established in 1975by Cesar Coronel, the firm adopted its present name during the 90´s when Hernán Perez, the other senior partner,incorporated the firm. Since then, Coronel & Perez has substantially increased its legal practice in international areassuch as: arbitration and litigation, oil and gas, project finance, arbitration, tax and administrative law, banking andfinancial services, corporate, mining, telecommunications, electrification, intellectual property and labour law.



Chapter 16

Arias & Muñoz

El Salvador

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has El Salvador got? Are thereany rules that govern civil procedure in El Salvador?

The Salvadoran legal system is based on the “civil law” model,wherein the legislation is seen as the primary source of law. Bydefault, Courts thus base their judgments on the provisions of codesand written laws, from which solutions in particular cases are to bederived.In El Salvador the civil proceedings are regulated by the CivilProcedures Code (Pr.C.), enacted in 1881, which defines in itscontent the basic structure of civil proceedings, the different typesof proceedings, pre-action procedures, rules of evidence, courtorders, appeals, etc. It is important to mention that in 2010 will get in force the new Civiland Mercantile Procedures Code, which will replace the currentCivil Procedures Code and the Mercantile Procedures Law, fact thatwill result in a substantial transformation in the structure andadministration of civil and commercial proceedings, having as mainnovelty the institution of oral proceedings and the requirement ofmore active involvement from the Judges in every stages of theproceedings as an attempt to hasten proceedings and reduce thecurrent judicial delay.

1.2 How is the civil court system in El Salvador structured?What are the various levels of appeal and are there anyspecialist courts?

Our civil court system is organised as follows: first instance courts,appeals courts (second instance) and the Supreme Civil Court,which hears the cassations. In a civil trial against the Salvadoran Estate, the appeals courts actas first instance, the Supreme Civil Court hear the appeals and theentire Supreme Court hear the cassation, without the judges of theSupreme Civil Court (Art. 50 Pr.C.).There are no special courts, but the small claim courts, whosecompetency is for proceedings in which the claimed amount is lessthan $ 2,857.14.

1.3 What are the main stages in civil proceedings in ElSalvador? What is their underlying timeframe?

The main stages in civil proceedings are: the introduction of thedemand, the reply of the complaint, the discovery period, and thefinal decision.The length of these stages will depend on the proceeding’s nature,if it is ordinary or extraordinary. For example:Ordinary: After the introduction of the complaint, the defendantmust answer it within the next six days counted from next day afterthe defendant has received the notification. Subsequently, theprobationary term begins. This period lasts twenty days. Finally,within the next twelve days after the ending of the probationaryterm the Judge must issue the final judgment.Summary: After the introduction of the complaint, the defendantmust answer it within the next three days counted from next dayafter the defendant has received the notification. Subsequently, theprobationary term begins. This period lasts eight days. Finally,within the next three days after the ending of the probationary termthe Judge must issue the final judgment.Please be advised that the abovementioned terms are the onesestablished by our legislation, even though in the daily practice theproceeding and its stages could last longer.

1.4 What is El Salvador’s local judiciary’s approach toexclusive jurisdiction clauses?

The Salvadoran Courts accept and respect the existence ofcontractual exclusive jurisdiction clauses, when the parties havesigned the contract and have agreed to voluntarily submit thepotential controversy to the corresponding jurisdiction.

1.5 What are the costs of civil court proceedings in ElSalvador? Who bears these costs?

According to Article 181 of the Salvadoran Constitution, theadministration of justice is free for all.

1.6 Are there any particular rules about funding litigation in ElSalvador? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

See question 1.5.

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Arias & Muñoz El Salvador


2.1 Are there any pre-action procedures in place in ElSalvador? What is their scope?

The Civil Procedure Code has a chapter named “Pre-ActionProcedure”, which regulates the following: the appointment ofcurator ad litem, attachment of goods, the exhibition of documents,the jactitation, advanced production of evidence and theconciliation (Arts. 134-189 Pr.C.).


There are two kinds of limitations: the prescription and theexpiration of the suit. The term of the prescription for the summary actions is ten years andtwenty for the ordinary actions (Art. 2254 Salvadoran Civil Code).Regarding the expiration of the suit, the Courts may state theabandonment and expiration of the legal suit, if there is no motionof the lawsuit for six months in first instance and for three monthsin appeal instance (Art. 471-A Pr.C.).The above-mentioned terms will be counted from the next day of theservice of the last resolution issued or any proceeding concluded.The expiration stated in first instance does not extinguish the filedaction. Thus the interested party may file the action again, as hedecides, without the prejudice of the limitations that may occur.The expiration stated in the appeal instance confirms the appealedresolution (Art. 471-B Pr.C.).


3.1 How are civil proceedings commenced (issued and served)in El Salvador? What various means of service are there?What is the deemed date of service? How is serviceeffected outside El Salvador? Is there a preferred methodof service of foreign proceedings in El Salvador?

In El Salvador, the civil proceedings commence with theintroduction of the demand.The services are exclusive responsibility of the Court’s server, alsothrough rogatory letter in case the notification shall be effected outsidethe territorial competency of the court and outside El Salvador. For the process services that must be realised outside El Salvador,the term for his court appearance will be based on the distance. Atgreater distance, more time. This is the basic rule, unless it isotherwise established (Art. 211 Pr.C.).

3.2 Are any pre-action interim remedies available in ElSalvador? How do you apply for them? What are the maincriteria for obtaining these?

Interim remedies are not applicable in the Salvadoran civilprocedures.


The main elements are: i) The identification of the claimed objector service, the quantity, the affected right, the value of the object or

service if it could be determined; ii) The exact description of theevents and the invocation of the right; the proposition of evidence;iii) the precise petition; and iv) Any other requirement requested bythe legislation based on the nature of the claim (Art. 193 Pr.C.).


The pleading can be amended exclusively until the reply of thecomplaint made by the defendant. After the reply, it is prohibited toamend the pleadings (Art. 201 Pr.C.).

4 Defending a Claim


The main elements of a statement of defence are the exceptions,dilatory or peremptory (Art. 128-133 Pr.C.).The defendant can file a counterclaim (reconvención), but it mustbe done upon answering the claim (Art. 232 Pr.C.).Nevertheless, the parts preserve their right to file the counterclaimseparately before the competent Court.


It will depend on the type of judgment.If it is ordinary, the defendant must serve the defence statement inthe six following days of having been summoned by the Court.If it is extraordinary, the defendant must serve the defence statementin the three following days of having been summoned by the Court.


The defendant can plead for an exception of not being responsiblefor the facts alleged by the plaintiff, attributing such facts to a thirdparty.If the Court admits the exception, the defendant will be absolvedand the plaintiff must follow the lawsuit against the third party.


If the defendant does not file the statement of defence in the legalterm, he will be declared rebel by the Court, therefore the claimwould be declared as answered in negative sense and the proceedingshall continue without its intervention (Art. 528-535 Pr.C.).Nevertheless, he will be able to retake it in any state, but never toregress it, not even for probations if the legal term for it had alreadyconcluded.


The defendant can dispute the Court’s jurisdiction by means of ajurisdictional plea alleging lack of jurisdiction of the Court.This plea must be filed as an exception at the time of answering thelawsuit (Art. 130 Pr.C.).

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The Salvadoran legal system allows the intervention of a third party,as a co-plaintiff or co-defendant (coadyuvante), or independentlydefending its own interests (excluyente) (Art. 455-463 Pr.C.).The circumstances that enable the intervention of a third party intoongoing proceeding are that the right should be positive and certain,although its exercise depends on some time limit or condition thatshould be complied; and the third party will be obliged, uponrequest of any of the parts, guarantee the payment of costs anddamages, like the main parties, in case of not proving its interest, ornot succeeding with the corresponding pretensions.


The consolidation of legal actions can only proceed: (Arts. 544-563Pr.C.):1. when the judgment to be pronounced in one of the

proceedings can produce the exception of res judicata in theother proceeding;

2. when the Court is administering a pending lawsuit on thesame subject matter of the other proceeding;

3. in the proceeding promoted by the meeting of creditors,subject to the flow that has been deducted or set off againstany claims, except the right of the mortgagees to continue itsactions separately; and

4. when following separated lawsuits can divide the continence ofthe case (e.g. commonness of parties, actions, things or causes).


The Salvadoran law do not regulate split trials or bifurcation ofproceedings.


6.1 Is there any particular case allocation system before thecivil courts in El Salvador? How are cases allocated?

Primarily it is important to mention that the case must be followedbefore the Court of the defendant’s domicile; however, the partiescan previously agree on a conventional domicile (Art. 15 Pr.C.).In San Salvador, capital city of El Salvador, there is an officeresponsible for the reception and distribution of the cases to therespective Court. Out of San Salvador, the case must be followeddirectly in the corresponding Court, depending on the territorialjurisdiction.

6.2 Do the courts in El Salvador have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The cases must be administered according to the law, for thatreason, the Courts do not have any power to create, suspend ormodify the proceedings for each case, fact that applies equally to

the parties, whom neither can create a procedure nor make anyinterim applications (Art. 2 Pr.C.).

6.3 What sanctions are the courts in El Salvador empoweredto impose on a party that disobeys the court’s orders ordirections?

Any party that disobeys an order or direction from the Court can beprocessed for the crime of “disobedience of judicial authority”, inwhose case the Court will proceed to certify the correspondinginformation to the Attorney General’s Office (Art. 313 Pr.C.).

6.4 Do the courts in El Salvador have the power to strike outpart of a statement of case? If so, in what circumstances?

The Judge shall make a pronouncement on all the statements madeby the parties, even if it is to deny or to reject such statement.

6.5 Can the civil courts in El Salvador enter summaryjudgment?

The Salvadoran law regulates the summary proceeding for casesspecifically established, as the appointment of curators, partition ofgoods, liquidation of damages, etc. The Court will also proceed in summary judgment when the lawindicates to proceed in such means, even if the case is not regulatedwith a specific legal procedure (Art. 974 Pr.C.).

6.6 Do the courts in El Salvador have any powers todiscontinue or stay the proceedings? If so, in whatcircumstances?

The Court can only stay the proceedings in the following cases:1) Consolidation of legal actions of two different sets of

proceedings. In this case the Court will suspend the course ofthe judgment that is closer to its completion until theother/others reaches the same procedural stage (Art. 562 Pr.C.).

2) In case of opposition from the plaintiff to the devolution ofseized goods to a third party alleging ownership in an executionproceeding, the Court will suspend the course of the judgmentuntil the completion of a proceeding initiated to prove theownership of the disputed goods (Art. 650-652 Pr.C.).

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin El Salvador? Are there any classes of documents that donot require disclosure?

The Salvadoran civil system does not contain any rules fordisclosure, except in the case of interrogations.The interrogations must be filed sealed by the petitioner and shouldnot be open by the Court until the date of the interrogation (Art.376-391 Pr.C.).

7.2 What are the rules on privilege in civil proceedings in ElSalvador?

The causes of preference in El Salvador are the privilege and themortgage (Art. 2218 Pr.C.).The privileged credits are divided by classes. To first classcorresponds the credits derived from judicial costs, alimentary



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obligations, funeral expenses of the deceased debtor; and to thesecond, the credits secured by a pledge, etc. The credits will be paid in order of privilege, so that the creditsbelonging to the first class will be paid first and after that the creditsof the second class. The mortgage creditors will be able to proceed directly against themortgaged goods to satisfy their credits.

7.3 What are the rules in El Salvador with respect todisclosure by third parties?

See question 7.1.

7.4 What is the court’s role in disclosure in civil proceedingsin El Salvador?

See question 7.1.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in El Salvador?

There are not any restrictions, but the documents obtained in a civilproceeding can not be used in any other proceeding of differentnature, e.g. criminal proceedings.In case of causing any harm by using such documents orinformation, the offended can promote an action to obtain acompensation for the damages.

8 Evidence

8.1 What are the basic rules of evidence in El Salvador?

The evidence should be legal, pertinent and conducive; otherwise itwill not produce any effect into the process and the Court will haveto declare it inadmissible (Art. 235-414 Pr.C.).The obligation of producing evidence corresponds to the actor;nevertheless, if an exception is alleged by the defendant, suchexception must be proved.The law expressly establishes the grade of preference of the evidenceprovided by the parties, depending on its type (Art. 415 Pr.C.).


The evidence is admitted when it is made by instruments, witnesses,experts, eye exam or inspection of the things or places, by oath orconfession and presumptions (Art. 253 Pr.C.).As for the evidence produced by experts, the law admits it when ispracticed through experts in the matter on which the controversy isbased on, e.g. Medical, engineering, etc. (Arts. 343-365 Pr.C.).


In civil matters, witnesses are only admissible in the followingcases (Art. 292 Pr.C.):

for the obligations acquired as result of quasi-contracts orunintentional torts;for the obligations acquired from unforeseen accidents thathas been impossible to formulate in writing;

in case of losing the document that served as literal evidence,as a result of a fortuitous event or force majeure;in case of evidentiary falsehood or verification of deeds; orwhen is not prohibited by law.

Witnesses shall be under oath and will be examined and heardseparately by the Judge.Witnesses may be disqualified, among other grounds, as result ofparentage, inheritance, interest in the process, etc.To consider the witnesses deposition as conclusive evidence, atleast two of the witnesses’ statements must be in accordance withthe alleged facts (Art. 321 Pr.C.).

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in El Salvador?

The evidence must be produced before the Judge in theprobationary term, summoning the opposite party to appear.


9.1 What different types of judgments and orders are the civilcourts in El Salvador empowered to issue and in whatcircumstances?

The Court orders can be of three types (Art. 417-419 Pr.C.):Sentence or Judgment: a decision from the Judge on the case. It canbe interlocutory or final. Interlocutory resolutions are given on any item or incident. Final isthe one dictated by the judge to solve the case, condemning orabsolving the defendant. Decrees of conduct: they are judgments made by the Judge tocontinue with the development of the proceeding.


The Courts are empowered to order the payment of damages,interest and costs, when such ruling is requested by the parties.In addition, the Courts may decide officiously the costs of litigationwhen a party abandons the proceeding or not manage to prove thefacts alleged in it (Art. 439 Pr.C.).


The judgments that have been dictated in foreign countries willhave in El Salvador the validity established in the correspondingtreaties (Art. 451-454 Pr.C.).If there is not an applicable treaty for the execution of the judgment,it shall meet the following circumstances:

must have been dictated as a consequence of a personal action; must have not been dictated in rebelliousness; must be legal in El Salvador; must be authentic and duly legalised; andthe actor shall obtain authorisation from de Supreme Court ofJustice in order to execute the judgment.

9.4 What are the rules of appeal against a judgment of a civilcourt of El Salvador?

The appeal must be filed by the parties within three days counted

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from the next day after the notification (Art. 981 Pr.C.).It can also be interposed by any third that have interests in theproceeding, but it must be filed within three days next day after thereception of the notification. The admission of the appeal can be in two different effects:suspensive, when the effects are suspended until the resolution ofthe appeal; nonsuspensive, when the Judge can carry ahead theprovisional execution of the judgment. Primarily the law grants appeal in both effects against final orinterlocutory sentence.The appeal admission is also granted in both effects for the finalsentences pronounced in the summary judgments, and for anyresolution that can terminate in advance any class of proceeding,making impossible its continuation.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in El Salvador?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

A) Mediation: dispute resolution mechanism through which,two or more people, try to achieve for their selves thesolution of their differences with the assistance of a neutralthird named mediator.

B) Conciliation: dispute resolution mechanism through which,two or more people, try to achieve for their selves thesolution of their differences with the assistance of anarbitrator or Judge, acting as a neutral third that tries toreconcile the interests of the parties.

C) Arbitration: dispute resolution mechanism through which theparts involved in a controversy that can be settled, entrusts itssolution to an arbitration panel, empowered to pronounce anarbitration decision called award, which is equivalent to afinal judgment.


The “Ley de Mediación, Conciliación y Arbitraje” (Law onMediation, Conciliation and Arbitration, LMCA), enacted inAugust, 2002.

1.3 Are there any areas of law in El Salvador that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

The law only stipulates that the arbitration cannot be used in thefollowing cases (Art. 23 LMCA):a) the resolution of matters that are opposite to the public order

or related to the powers or functions of the State or publicentities;

b) criminal cases, except for liability arising from a crime;c) future aliments;d) property rights of incapable people, without prior judicial

authorisation;e) family status;f) labour controversies; andg) controversies that has been already resolved by a Court.

The above mentioned causes can also apply to the other disputeresolution mechanisms.


2.1 What are the major dispute resolution institutions in ElSalvador?

The major dispute resolution institution in El Salvador is theMediation and Arbitration Centre of the Chamber of Commerce andIndustry.


According to the Law on Mediation, Conciliation and Arbitrationthe award dictated in an arbitration procedure will have the samevalidity of a judicial final judgment (Art. 63 LMCA).The conciliation agreement can also be elevated to a category offinal judgment, as an arbitral award (Art. 47 num.3 LMCA).The mediation agreement will be considered as a settlementagreement and it can be enforced at the Court (Art. 13 LMCA).



Of the above mentioned dispute resolution mechanisms, the mostreliable and commonly used is the arbitration, mainly based on thetime factor, given that the procedure can not exceed three monthscounted from the instalment of the arbitration panel, also adding thefact that the arbitral award is unappealable.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in El Salvador?

Currently, the main problem in El Salvador is the lack of culture inthe use of the dispute resolution mechanisms and a non-effectivedisclosure. Therefore the people, most of the attorneys and users ofthe judicial system do not like these mechanisms, especially due totheir lack of knowledge and credibility in this mechanism.This may be caused by several factors, among them we find: 1) thepeople still believe those are manipulable; 2) their use is highlyexpensive; 3) there has not been any effective promotion in their useand thus their helpfulness is rarely known; 4) the legislation is new andit is developing slowly; 5) the authorised institutions have not made aneffect on the entrepreneur’s mentality, nor individuals; and 6) somejudicial authorities feel displaced by these kind of mechanisms.Nowadays, there is an amendment proposal for the Law onMediation, Conciliation and Arbitration, in which the President ofthe Supreme Court must appoint the arbitrator in the followingcases: a) in the arbitration proceedings with only one arbitrator; orb) in arbitration proceeding when there is no agreement between theparties to appoint the third arbitrator. This amendment willeliminate the faculty given to the Arbitration Centres to designatethe arbitrator, which cooperates with the increasing mistrust in theinstitutions and also generates a bigger bureaucratisation of thearbitration proceeding that will end with its denaturing.



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Josué Reyes

Arias & MuñozCalle La Mascota, No. 533 Colonia San Benito, San SalvadorEl Salvador

Tel: +503 2257 0900Fax: +503 2257 0901Email: [email protected]: www.ariaslaw.com

Main areas of practiceCommercial and Civil LawConstitutional LawAdministrative LawLitigation and ArbitrationExperienceJosué belongs to the litigation and arbitration department of theoffice located in El Salvador, he has developed its experience inseveral legal areas, with particular emphasis in arbitration, civil andmercantile law, civil and mercantile procedures. He hasparticipated in several litigation and arbitration proceduresrepresenting the interests of recognised national and internationalcompanies. His practice also includes the general advising ofcompanies which are involved in potential disputes procedures inseveral legal areas. Josué has an extensive experience in alternative means of conflictresolution and has participated in negotiations of several keys andrelevant cases in the country, either to prevent disputes or amicablyresolve the disputes that had already started.Career Josué obtained his Law Degree from the Universidad Dr. José MatíasDelgado in 2003. This same year, he was authorised as practicingAttorney by the Supreme Court of Justice. Currently, he has alsobeen authorised as a Notary Public. Josué attended the 2006 International Chamber of Commerce (ICC)PIDA Training in Paris, completing courses of study in InternationalCommercial Arbitration under de ICC Rules Arbitration.Languages He is fluent in Spanish and has a working knowledge of English.





Chapter 17

SJ Berwin LLP

England &Wales

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has England & Wales got? Arethere any rules that govern civil procedure in England &Wales?

The English legal system is based on the common law tradition.The English courts are bound by the principle of precedent (staredecisis). Civil procedure in England is governed by the CivilProcedure Rules (CPR) 1998 (SI 1998/3132), which are accessibleonline at www.dca.gov.uk.The English legal profession is split between solicitors and barristers.Whilst solicitors primarily have case management functions and dealwith the client on a day-to-day basis, barristers are normally instructedfor advocacy before the higher courts. Solicitor-advocates, however,also have rights of audience in the higher courts.

1.2 How is the civil court system in England & Walesstructured? What are the various levels of appeal and arethere any specialist courts?

Civil proceedings in England can be conducted in the county courtsor the High Court. More sizeable cases are exclusively dealt withby the High Court, which is divided into three divisions, theQueen’s Bench Division (QBD), the Chancery Division (ChD) andthe Family Division (FamD). The QBD deals with all commercialmatters and is the most appropriate forum for claims in contract andtort. The ChD deals, amongst others, with corporate matters andintellectual property.Appeals lie to the High Court, Court of Appeal and the House ofLords in the last instance.There are various specialist courts, some of them with their ownprocedural idiosyncracies, including the Technology andConstruction Court, the Commercial Court, the Admiralty Court,the Companies Court and the Patents Court. The Commercial Court forms part of the High Court, QBD in London,and is generally regarded as the most appropriate forum in England toresolve international commercial disputes. Its practice and proceduresare laid down in the CPR and the Commercial Court Guide.

1.3 What are the main stages in civil proceedings in England& Wales? What is their underlying timeframe?

The main stages in civil law proceedings before the English courts are:

issue of a claim form;service of process on the defendant (i.e. a claim form);service of the parties’ statements of case;allocation of the claim to a case management track;disclosure of documents;exchange of witness and expert evidence;listing for trial;trial; and assessment of costs.

The CPR lays down strict temporal and procedural requirements forthe various stages. These will be addressed where the individualstages are discussed in further detail in the following report. Theoverall average duration of civil proceedings before the English courts(excluding appeals) varies between one and two years and sometimesless. Appeal proceedings can take substantially longer (particularly iftaken to the highest and last instance, the House of Lords).


The English judiciary takes a favourable approach to exclusivejurisdiction clauses. It will usually (i) stay proceedings commencedbefore the English courts in breach of an exclusive jurisdictionclause prescribing a foreign dispute resolution forum or (ii) grant ananti-suit injunction against proceedings commenced outsideEngland in breach of an exclusive jurisdiction clause in favour ofthe English courts.However, in Case C-159/02 - Turner v Grovit, the Court of Justiceof the European Communities held that it would be contrary to theBrussels Convention for English courts to grant an anti-suitinjunction so as to restrain parallel court proceedings commencedby a defendant in another Convention country in breach of anexclusive jurisdiction clause in favour of the English courts.

1.5 What are the costs of civil court proceedings in England &Wales? Who bears these costs?

Costs in civil proceedings before the English courts varyconsiderably depending primarily upon the size and complexity ofthe case and the level of fees of the solicitors and counsel instructed.According to a long-established common law principle, “costsfollow the event”, it is generally the loser who bears the costs of theproceedings. Exceptions to this rule exist, depending on theconduct of the prevailing party over the course of the proceedings.Unless agreed by the paying party, costs will need to be assessed. A

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substantial proportion of the costs incurred will generally berecoverable after assessment, but this is unlikely to amount to a fullreimbursement.

1.6 Are there any particular rules about funding litigation inEngland & Wales? Are there any contingency/conditionalfee arrangements? Are there rules on security for costs?

The English legal system is open to conditional fee arrangementsbetween lawyers and their clients (“no win no fee”). However,these are limited to an uplift on the fees payable. No contingencyfees are permissible for contentious proceedings, meaning lawyerscannot share in the damages recovered. The maximum uplift on aconditional fee arrangement is 100 percent of the normal fee. Thereare no specific rules on funding by third parties, although there maybe costs consequences for doing so.Defendants may apply for security for costs against a corporateclaimant if there is reason to believe that it will be unable to pay thedefendant’s costs if ordered to do so. An application may also bemade if a claimant is resident outside the EU, but only for theadditional costs that would be incurred in enforcing the judgment inthe relevant jurisdiction. It has become increasingly difficult toobtain security for costs as requiring a party to provide funds that itis unable to raise may amount to a breach of its rights to a fair trialunder Article 6(1) of the European Convention of Human Rights(ECHR). The claimant may also be entitled to make an applicationfor security for costs where the defendant has brought acounterclaim.


2.1 Are there any pre-action procedures in place in England &Wales? What is their scope?

Before commencing proceedings, the parties have to comply withcertain pre-action procedures. Depending on the nature of the case,the requisite guidance will be set out in the relevant pre-actionprotocol and practice direction. Such protocols usually imposeupon the claimant a duty to send a letter of claim before action, tobe followed by a reasoned reply from the defendant as to why hedenies liability. Further, the parties will generally be required to:

exchange any essential documentation to prove theirrespective cases;consider whether their dispute could be settled by way ofmediation or any other alternative dispute resolution (ADR)mechanism;consider whether their dispute can be resolved by making aPart 36 offer (i.e. an offer to settle which - if rejected - canhave adverse cost consequences if not beaten at trial); and consider whether they could appoint a joint expert in caseexpert evidence is required.

A party’s non-compliance with the relevant pre-action procedurescan entail cost sanctions from the court.


Under English law, limitation is a matter of procedural law andprovides a complete defence to a claim.The various limitation periods are laid down by statute, the most

important of which is the Limitation Act 1980. The limitationperiod for contract and tort claims is six years, with the time startingto run respectively from the breach of contract, and generally fromthe date on which the cause of action occurred. In certain limitedcircumstances the limitation period may be extended, for example,in cases of fraud or concealment. As a general rule, limitationperiods are counted from the day the cause of action arose.To the extent that a foreign law has to be taken into account for theresolution of a dispute before the English courts pursuant to therules of private international law, the limitation period applicableunder that particular foreign law has to be respected.


3.1 How are civil proceedings commenced (issued and served)in England & Wales? What various means of service arethere? What is the deemed date of service? How is serviceeffected outside England & Wales? Is there a preferredmethod of service of foreign proceedings in England &Wales?

In England, civil proceedings are normally commenced by issuinga claim form, which is sealed by the competent court. As a general rule, the claim form has to be served on the defendantwithin four months from issuance. This period is extended to sixmonths for service outside the jurisdiction. If jurisdiction isgoverned by the Brussels Regulation (EC Regulation 44/2001), theEnglish court is seised at the time when the document instituting theproceedings or an equivalent document is lodged with the court,provided that the plaintiff has not subsequently failed to take thesteps he was required to take to have service effected on thedefendant. In other circumstances, the English court will generallybe deemed seised when proceedings are served. They must beserved effectively on the defendant by any method permitted by thelaw of the country in which service is effected (see Neste ChemicalsSA v DK Line SA [1994] 3AUER 180).The claim form sets out:

the names and addresses of the claimant and the defendant;the nature of the claim;the relief sought; andthe value of a money claim (if any).

Permissible methods of service under the CPR (with deemed datesof service) include:

personal service;first-class post;through document exchange (DX); andby fax or other means of electronic communications.

As a general rule, service abroad is effected pursuant to thecorresponding rules of service applicable in the country whereservice is sought. In practice, the 1965 Hague Convention on theService Abroad of Judicial and Extra-judicial Documents in Civiland Commercial Matters and the EU Service Regulation (CouncilRegulation (EC) No 1348/2000) provide further guidance onservice in the countries which are party to these instruments.Permission of the court is required to serve proceedings ondefendants outside the EU. Leave is not required for service ondefendants in the EU, but a form must be lodged at court with theclaim form indicating the grounds on which service outside thejurisdiction is permitted.The preferred method of service of foreign proceedings in Englandis by way of personal service by a solicitor.

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3.2 Are any pre-action interim remedies available in England &Wales? How do you apply for them? What are the maincriteria for obtaining these?

Under the CPR, the claimant can apply for pre-action interimremedies if:

there is a substantive case where the court has jurisdiction;the matter is urgent; orit is otherwise desirable to grant the interim remedy in theinterests of justice.

Under this heading, the English courts are empowered to grant awide variety of injunctions, including freezing and search orders. Afreezing order seeks to freeze a party’s assets, in particular bankaccounts, in England or on a worldwide basis in order to ensure thatshould judgment be entered against that party, the judgment can beenforced against those assets. Applications for such orders areoften made without notice to the other party when there is a needfor secrecy or in cases of overwhelming urgency.An application for an interim remedy can also be made in relationto proceedings that are taking place, or will take place, outside thejurisdiction.


In England, the claimant’s main pleadings are referred to as theparticulars of claim. The particulars of claim should clearly set out:

the names and addresses of the parties;the facts giving rise to the dispute;the claimant’s claims and the essential elements of theunderlying causes of action;sufficient reasoning for the defendant to know what case hehas to meet; andthe relief sought, including interest.


Generally speaking, amendments to a statement of case are allowedat any time before they have been served on the other party. If theparticulars of claim have been served, they can only be amended:

with the consent of the other party; orwith the permission of the court.

Late amendments can be disallowed. Amendments of causes ofaction following the expiry of the limitation period are onlypermissible where the new cause of action arises out ofsubstantially the same facts as underlie the original claim.

4 Defending a Claim


The defence must state:which allegations made in the particulars of claim thedefendant denies;which allegations the defendant admits;which allegations the defendant is unable to admit or deny,but on which he puts the claimant to proof;reasons for the denial of any of the allegations made in theparticulars of claim and the defendant’s defence against those

allegations; andany alternative versions of the facts underlying the dispute.

Any allegations not addressed in the defence will be taken asadmitted unless the defence on that allegation appears from otherpoints made in the statement of defence.The defendant can make a counterclaim provided he has a cause ofaction against the claimant and that the parties to the counterclaimcan be sued in the same capacity in which they appear in the initialclaim. In addition or in the alternative, a defence of set-off isavailable under English law.Where the defendant formulates a counterclaim, the claimant willalso have to file a defence to counterclaim.


For proceedings served within the jurisdiction, the statement ofdefence has to be filed at court and served upon the claimant within14 days of service of the particulars of claim, unless the defendanthas expressly acknowledged service of the particulars of claim, inwhich case the defence only falls due 28 days after service of theparticulars of claim. The parties may agree to extend this period byup to a further 28 days. For proceedings served outside thejurisdiction, time limits vary depending on the country of service.Deadlines differ for proceedings before the Commercial Court.


Under Part 20 of the CPR a defendant may bring a claim (a “Part 20claim”) against a third party for an indemnity or contribution withinthe context of the existing proceedings, rather than commencingseparate proceedings against that party. Once served with the Part20 claim form, the third party becomes a party to the original actionwith the same rights of defence as all the other defendants.Under the Civil Liability (Contribution) Act 1978, one of twopersons who are liable for having caused the same damage maybring separate proceedings for contribution against the other personliable within a two-year time limit after the original judgmentfinding only the first person liable.


If the defendant fails to defend the claim, a default judgment maybe entered against him. A default judgment is a judgment in favourof the claimant without a prior trial before the courts. Default judgment can be obtained if:

the defendant fails to acknowledge receipt of the claim formwithin the requisite timeframe; orthe defendant fails to file and serve a statement of defencewithin the requisite timeframe.

A default judgment does not constitute res judicata and can be setaside if the defendant can show a real prospect of defendinghimself.


The defendant can dispute the court’s jurisdiction by issuing anapplication notice with evidence in support within 14 days afterfiling an acknowledgment of service (excepting proceedings beforethe Commercial Court). If a defendant wishes to challenge

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jurisdiction, he should indicate this on the acknowledgment ofservice and take no further steps in the action (bar the application tochallenge jurisdiction). If any other steps are taken, the defendantmay be taken to have submitted to the jurisdiction of the Englishcourts.



The CPR contain provisions for the joinder of any number ofclaimants or defendants as parties to a claim, provided there is acause of action by or against each party joined.The court, however, preserves a discretionary power to orderseparate trials in order to ensure the swift and efficient conduct ofthe proceedings.


Under the CPR, it is possible to consolidate closely connectedclaims on a similar subject-matter between the same parties.Consolidation is only possible if there is a considerable overlapbetween the two claims, which are before the court at the sametime, and there is a real risk of irreconcilable judgments in theabsence of consolidation.Viable alternatives to consolidation are an order by the court to theeffect of sequential judgments on the two claims by the same judge orthe stay of one of the claims pending determination of the other claim.


Under the CPR, the English courts have a discretion to allow splittrials either of their own motion or upon application by the parties.


6.1 Is there any particular case allocation system before thecivil courts in England & Wales? How are cases allocated?

The English courts apply a track allocation system, according to whichcivil claims are allocated to one of three case management tracks, i.e.(i) small claims track, (ii) the fast track or (iii) the multi-track.The small claims track provides an efficient and inexpensiveprocedure for simple claims worth no more than £5,000. The fasttrack aims to provide an equally streamlined procedure forresolving disputes which are valued between £5,000 and £15,000.The multi-track caters for the resolution of disputes whose valueexceeds £15,000.Claims brought before the Commercial Court are automaticallyallocated to the multi-track.

6.2 Do the courts in England & Wales have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

Under the CPR, the English courts are obliged to manage cases

actively. Active judicial case management includes:encouraging the parties to co-operate in the conduct of theproceedings;identifying the issues that require full investigation and trialand deciding summarily on those that do not;encouraging the parties to resort to ADR if the courtconsiders this appropriate;facilitating the settlement of the dispute in whole or in part;controlling the process of the case in a cost-conscious andefficient manner by setting procedural timetables and givingother appropriate directions;keeping the parties’ need to attend court to a minimum; andmaking full use of technology.

A whole range of interim applications are available to the parties,including the following:

interim injunctions (such as freezing and search orders, seequestion 3.2 above);security for costs (see question 1.6 above);amendment of a statement of case; orders for specific disclosure (see question 7.4 below); andcosts sanctions and other coercive measures against a partythat does not comply with the court’s previous proceduraldirections.

In respect of hearings of one day or less, the court will usually makea summary assessment of the costs of the application the same dayas issuing the order applied for.

6.3 What sanctions are the courts in England & Walesempowered to impose on a party that disobeys the court’sorders or directions?

Under the CPR, the English courts have powers to compelrecalcitrant parties to comply with its orders and directions, themost widely used amongst which is the power to award cost orders.The courts are also empowered to make a strike-out order (seequestion 6.4 below) or draw adverse inferences in appropriatecircumstances. Continuous disobedience of the court’s orders canculminate in contempt of court proceedings.

6.4 Do the courts in England & Wales have the power to strikeout part of a statement of case? If so, in whatcircumstances?

Under the CPR, the courts are empowered to strike out the whole orany part of a statement of case of their own motion or uponapplication by one of the parties. More specifically, the court maystrike out a statement of case if it appears to the court that:

the statement discloses no reasonable grounds for bringing ordefending a claim;the statement constitutes an abuse of the court’s process or isotherwise likely to obstruct the just disposal of theproceedings; or there has been a failure to comply with a rule, practicedirection or court order.

6.5 Can the civil courts in England & Wales enter summaryjudgment?

Under the CPR, the English courts can enter summary judgment infavour of the claimant without holding a full trial. This is possiblewhere a claimant can show that the defence has no real prospect ofsuccess and there is no other reason why the case should go to trial.

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The summary judgment procedure can also be invoked by defendantsagainst weak or unfounded claims that lack any prospect of successand there is no other reason why the claim should be brought to trial.The courts can further enter summary judgment of their own motionin order to prevent weak or unfounded cases from proceeding.Subject to rare exceptions, this power is available to the benefit ofboth claimants and defendants.

6.6 Do the courts in England & Wales have any powers todiscontinue or stay the proceedings? If so, in whatcircumstances?

A claimant may discontinue:the whole or only part of the claim;against all or only some of the defendants;

by filing and serving a notice of discontinuance.Permission from the court is only required in exceptionalcircumstances, e.g. where an interim injunction has been granted inrelation to a claim that is sought to be discontinued. There will becosts consequences if proceedings are discontinued. The courts have case management powers to the effect of stayingthe whole or part of the proceedings on application of a party or oftheir own motion to ensure the efficient conduct of the proceedings.Proceedings are stayed on the acceptance by one of the parties of aPart 36 offer (see question 2.1 above).

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin England & Wales? Are there any classes of documentsthat do not require disclosure?

Under the CPR, the parties to litigious proceedings are under a dutyto give advance notice to each other of any material documentationin their respective control. This process is commonly referred to as“disclosure” and usually consists in exchanging a list of relevantdocuments (“standard disclosure”), which are or have been in eachparty’s control. Disclosure is followed by inspection, whereby parties can requestcopies of documents appearing on the other side’s list or physicallyinspect the material documents on the other side’s premises.Standard disclosure requires the parties to disclose the followingdocuments:

those on which a party relies for making its case;those which adversely affect its own case or another party’scase; and those which support another party’s case.

Documents that are not material to the case at hand do not requiredisclosure.

7.2 What are the rules on privilege in civil proceedings inEngland & Wales?

The three principal categories of privilege in civil proceedings are:legal advice privilege, covering any confidentialcommunications between a solicitor and his client for thepurposes of giving legal advice;litigation privilege covering communications between clientand a third party or a lawyer and a third party provided thatlitigation was contemplated or pending and the informationwas for the purposes of the litigation; and

the “without prejudice” privilege, according to which any“without prejudice” communications (see section II, question3.2 below) made orally or in writing with the intention ofsettlement are privileged and may not be disclosed to thecourt.

Documents that are classified as privileged must be “disclosed” bylisting the existence of such documents. Most often this is done ina generic fashion, rather than by specific reference to the particulardocuments. However, privileged documents do not need to be (andtypically are not) made available for inspection by the other side.Once they are, privilege will be waived.In addition, there is a privilege against self-incrimination, accordingto which a party can object to the inspection of a document whichmay expose it to a criminal charge not the object of the existingproceedings.

7.3 What are the rules in England & Wales with respect todisclosure by third parties?

The Supreme Court Act (SCA) 1981 makes provision for disclosureby non-parties. Accordingly, the court has the power to order athird party who appears to the court to be likely to have in itspossession any documents which are relevant to an issue arising outof a pending claim:

to disclose whether those documents are in the party’spossession; andto provide such of those documents as may be specified inthe order of the court and are relevant to the applicant’s case(as opposed to merely disclosable within the meaning of thestandard disclosure requirements, see question 7.1 above).

A court may also make an order for disclosure under the CPR,where:

the documents of which disclosure is sought are likely tosupport the applicant’s case; anddisclosure is necessary to dispose fairly of the claim or tosave costs.

7.4 What is the court’s role in disclosure in civil proceedingsin England & Wales?

The court’s main involvement is in supporting the disclosureprocess by making disclosure orders. These normally seek tocompel a party to perform its disclosure obligations (see question7.1 above). Under the CPR, the court may, upon application of aparty, make an order for specific disclosure or specific inspection.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in England & Wales?

Under the CPR, any documents disclosed in a particular set ofproceedings may only be used in these proceedings and for no otherpurpose. The CPR makes provision for a number of exceptionsincluding where:

the document has been referred to by the court in a publichearing, unless the court orders otherwise;the court gives permission for the subsequent use of thedisclosed documents for purposes other than those for whichthey were originally disclosed; orthe parties agree to the subsequent use of the discloseddocuments for other purposes.

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8 Evidence

8.1 What are the basic rules of evidence in England & Wales?

Under the CPR, the parties are required to make advance disclosure ofall material documents before trial (see question 7.1 above). Inaddition, court directions may require the parties to exchange expertreports and statements of witnesses of fact they seek to rely on at trial.Hearsay evidence is admissible at trial if adequate notice identifyingthe hearsay evidence is given to the other party in advance.


Types of admissible evidence include (i) expert evidence; (ii)witnesses of fact; and (iii) hearsay evidence (i.e. where the witnessgives evidence of facts he has not personally experienced for thepurpose of proving the truth of those facts), provided an appropriatenotice is served prior to the trial (see question 8.1 above).The admissibility of expert evidence is predicated on fourpreconditions:

the proof of a matter arising at trial must require a certainexpertise;the area concerned must constitute an established area ofexpertise; the expert witness himself must be suitably qualified; andleave of the competent court has been granted.


Written witness statements for each witness of fact are normallyexchanged by the parties before trial and stand as evidence-in-chiefof the witnesses to be called. Witnesses presenting evidence at trialare traditionally cross-examined before the court.Witness evidence via video link is admissible.Reluctant witnesses may be served with a witness summonscompelling them to appear before the court. Pre-trial depositions of witnesses are not available in England.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in England & Wales?

The English courts have the power to make various orders tosupport the disclosure process, either upon application of a party orof their own motion (see question 7.4 above).


9.1 What different types of judgments and orders are the civilcourts in England & Wales empowered to issue and inwhat circumstances?

The court has the power to make summary and default judgments(see questions 4.4 and 6.5 above). A court’s judgment can be for damages (for e.g. lost contractualprofits) and/or an order that one of the parties perform itsoutstanding obligations under a contract (i.e. specific performance)and/or any other form of declaratory relief.

The English courts are empowered to adopt a wide variety oforders, including the following:

injunction orders, prohibiting a party from doing a particularact (prohibitory) or compelling a party to perform aparticular act (mandatory);consent orders, evidencing a contractual agreement betweenthe parties;Tomlin orders, a consent order in the form of a stay ofproceedings on agreed terms recorded in a confidentialschedule; andprovisional damages orders, which are normally confined topersonal injury cases.


The English courts are empowered to award damages for losssuffered, including economic loss. Where the loss suffered isnegligible, damages awarded by the court will be nominal only.The English courts are not allowed to award punitive damages,although exemplary damages - albeit rare - are permitted.Traditionally, the English courts have the power to award costs ofthe litigation in accordance with the “costs follow the event”principle, whereby the loser usually pays the costs (see question 1.5above). Departure from this principle is justified where the winnerhas displayed unreasonable behaviour during the course of theproceedings. Cost orders are generally discretionary.The English courts are empowered to award interest on bothdamages and costs awarded. The interest rate used is the “judgmentrate”, or a rate set by statute or contract.


A domestic money-judgment can be enforced (i) by means of a writor warrant of execution granted by the court against the judgmentdebtor’s goods; (ii) by a third party debt order against the judgmentdebtor’s bank account; (iii) by attachment of earnings against thejudgment debtor’s salary; or (iv) by obtaining a charging order.Non-money judgments are enforced in accordance with their ownspecific enforcement procedures as laid down in the relevantlegislation.The direct enforcement of foreign judgments in the English courtsis governed by various bi- or multi-lateral conventions to which theUnited Kingdom is a party, which have been incorporated intoEnglish law. The relevant English law provisions include theAdministration of Justice Act 1920 and the Foreign Judgments(Reciprocal Enforcement) Act 1933. Most importantly, the UnitedKingdom is also party to Council Regulation (EC) no. 44/2001 onjurisdiction and the recognition and enforcement of judgments incivil and commercial matters (formerly the Brussels Convention),which provides for the enforcement of judgments throughout theEuropean Union.

9.4 What are the rules of appeal against a judgment of a civilcourt of England & Wales?

Under the CPR, an appellant is generally required to apply forpermission to appeal. Permission to appeal may only be given if:

the court considers that the appeal would have a real prospectof success; orthere is some other compelling reason for which the appealshould be heard.

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An appellant must file his notice for appeal within 21 days of thejudgment of the lower court.The grounds of appeal are limited to arguing that the judgment ofthe lower court was either:

wrong; orunjust due to a serious procedural or other irregularity in theproceedings before the lower court.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in England & Wales?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

The most frequently-used methods of dispute resolution in England(other than litigation) are arbitration and mediation. The New York Convention, to which England is a party, allows theenforcement of an English arbitration award across all theConvention countries. English courts are arbitration-friendly andtend to give way to the will of the parties as expressed in theiroriginal arbitration agreement. The English courts will grant anti-suit injunctions against a party that has commenced courtproceedings abroad in breach of an arbitration agreement (seeThrough Transport Mutual Insurance Association (Eurasia) Ltd vIndia Assurance Co Ltd [2004] EWCA Civ 1598). They furtherplay a supportive role in arbitral proceedings seated in England,lending their assistance in relation to the preservation of evidenceor assets, the granting of interim injunctions etc. especially in casesof urgency, and issue witness summons if necessary. Tribunalsseated in England are empowered to grant interim relief and makeorders for security for costs. Importantly, parties have an option toprovide for an appeal on the merits of the arbitral award providedthe appeal remains confined to English law issues only.Mediation has become a widely accepted alternative disputeresolution mechanism in England, which is recognised by the CPR(see section I above). Mediations generally require agreement bythe parties to mediate, although the court does have the power toorder the parties to attend a mediation (although it has no power toforce the parties to settle) as provided for under the casemanagement powers under the CPR. The mediation process isentirely confidential and benefits from the “without prejudice”privilege rule, according to which no communications made duringthe proceedings can be disclosed without the express agreement ofthe mediating parties in the event that no settlement is reached. Themediator is not empowered to adopt any interim measures or makeany type of orders. Most mediations are facilitative, in that themediator merely assists the parties in finding a creative andcommercially viable solution to their dispute, rather than evaluatingthe merit of the parties’ respective positions. If successful, amediation concludes with a settlement agreement, which isenforceable as a contract.Expert determination is often used for disputes relating to matterssuch as rent reviews, valuation of shares in private companies, priceadjustments on take-overs, construction contracts and informationtechnology. An expert’s determination is final and binding with noavailability of an appeal. As opposed to arbitrators, expertdeterminers render “non-speaking awards”, i.e. awards that do notset out (detailed) reasons for the final decision rendered. An expertdetermination can be challenged on the basis of a “manifest error”

or for breach of the principles of “natural justice” (or due process).The services of an Ombudsman are increasingly required in sector-specific industries, in particular within the context of the provisionof utilities. Most prominently, there is a telecommunicationsOmbudsman service created under the auspices of the Office ofCommunications (Ofcom) as well as The Water ServicesRegulation Authority (Ofwat). The Ombudsman’s powers areprovided by statute. He will usually be mandated to facilitate asettlement between the complainant and the relevant facilities (e.g.communications or water) provider or in the alternative, where asettlement fails, make a final and binding decision.


Arbitration proceedings in England are governed by the EnglishArbitration Act 1996, which applies to both domestic andinternational arbitration. Apart from the Arbitration Act anddepending on the parties’ arbitration agreement, variousinstitutional arbitration rules may find application, such as theRules of the London Court of International Arbitration and theChartered Institute of Arbitrators, both of international renown, orthose of various London-based trade associations (see question 2.1below).Mediation in England is not governed by any particular set of lawsor rules. However, the “CEDR model mediation procedure andagreement with guidance notes” are a helpful source of reference onhow to conduct a mediation.The Centre for Effective Dispute Resolution (CEDR) provides ‘a’framework which is available to parties if they choose it. Normallyparties simply agree the process contractually.The services of an Ombudsman are governed by the relevant statutethat gives rise to his mandate. His mandate and powers are morespecifically set out in Terms of Reference drawn up on a case-by-case basis against the background of the applicable statute.

1.3 Are there any areas of law in England & Wales that cannotuse arbitration/mediation/tribunals/Ombudsman as ameans of dispute resolution?

In England, virtually all commercial matters are arbitrable,including competition law (see most recently ET Plus SA v Welter[2005] EWHC 2115). Disputes involving criminal and family lawmatters are considered non-arbitrable.Similar considerations apply to mediation, except that mediationproceedings are often used to resolve family disputes.As mentioned previously (see question 1.1 above), theOmbudman’s services are usually sector-specific and provided forby statute.


2.1 What are the major dispute resolution institutions inEngland & Wales?

The two major arbitration institutions in England are the LondonCourt of International Arbitration and the Chartered Institute ofArbitrators. Other more specialised, industry-related arbitration institutions are:

the London Maritime Arbitrators’ Association;the Grain & Feed Trade Association;

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the Federation of Oils, Seeds & Fats Association;the Sugar Association of London and the Refined SugarAssociation; andthe London Metal Exchange.

The leading mediation institutions in England are the Centre forEffective Dispute Resolution (CEDR) and the Chartered Institute ofArbitrators, which provide mediation services. Further, the Panel ofIndependent Mediators (PIMs) unites the leading mediators acrossthe country.Expert determination services can be provided through the CEDR.


Arbitration awards are binding on the parties and enforceable underthe New York Convention (see question 1.1 above).Settlement agreements reached in mediation are binding on theparties and enforceable in accordance with ordinary contract lawprinciples in the English courts (see question 1.1 above).An expert determination is final and binding (see question 1.1above).Decisions rendered by an Ombudsman are usually final and bindingand depending on their form may be enforceable e.g. as an awardunder the New York Convention.



Over the past ten to fifteen years, there has been an increasing useof multi-tiered dispute resolution clauses, which combine variousmethods of dispute resolution to be used as part of one and the samedispute resolution mechanism. Such a dispute resolution clauseprovides for an escalation of dispute resolution methods, rangingfrom amicable settlement via mediation to arbitration. In thiscontext, a debate is developing as to whether a mediator could actas arbitrator and how far a med-arb or arb-med hybrid is feasibleand recommendable.Importantly also, the European Commission, the Brussels-basedEuropean antitrust regulator, has started to develop a systematicpractice of using arbitration mechanisms as a monitoring device incommitment packages within the framework of EC merger control.In this context, the Commission has frequently made use of theLCIA Rules as the governing procedural rules of the arbitrationproceedings (see e.g. Comp/M.3083 - GE/Instrumentarium, OJL109, 16.04.2004, p1).It is also interesting to note that the stronghold of barristers in theEnglish legal system is gradually being eroded with respect tointernational arbitration. This is because in arbitration proceedings,solicitors themselves increasingly provide a full range of legalservices, including advocacy before the arbitral tribunal (no higherrights of audience are required).Last, but not least, there has been a notable increase in mediation,in which advocacy is generally carried out by the solicitors.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in England & Wales?

As a follow up to Turner v Grovit (see question 1.4 above), the Houseof Lords has now made a preliminary reference to the European Courtof Justice in Luxembourg, asking whether it is inconsistent with theBrussels Regulation for a Member State, i.e. for an English court togrant an anti-suit injunction in restraint of judicial proceedingsbrought in breach of an arbitration clause in another Member State(West Tankers Inc v Ras Riunione Adriatica Di Sicurita Spa & ors[2007] UKHL 4). The English lower instance court opined that it was.Most recently, however, in her Opinion on the reference (Case C-185/07 - Allianz and Others v West Tankers Inc, delivered on 4September 2008), Advocate General Kokott has argued against theavailability of the anti-suit injunction. At the time of writing, thejudgment of the European Court of Justice, which will be conclusiveon this point and could go either way, is eagerly awaited. Further, in the recent case of Emmot v Michael Wilson & PartnersLtd. [2008] EWCA Civ 184, the English Court of Appeal affirmedthat both parties in an arbitration are under an obligation, impliedby law and arising out of the nature of arbitration, not to disclose oruse for any other purpose anything produced within the course ofthe arbitration proceedings.As regards mediation, in a recent case (Brown v Rice & Patel[2007] EWHC 625 (Ch)), the English High Court held that it wasnecessary to admit “without prejudice” evidence in relation to amediation in order to enable the court to determine whether asettlement had been reached. This confirms the long-establishedaxiom that mediation is a “without prejudice” process and that onlyin exceptional circumstances will the court lift the “withoutprejudice” privilege to examine the conduct of a mediation.In the future, the mediation landscape is further predicted to changethrough the coming into force of the EU Mediation Directive(Directive 2008/52/EC of the European Parliament and of theCouncil of 21 May 2008 on certain aspects of mediation in civil andcommercial matters, OJ (24.5.2008) L136/3), implementation ofwhich by the various EU Member States, including England &Wales, is required by 21 May 2011. More specifically, Article 7 ofthe Directive enshrines the sacrosanct principle of confidentiality inmediation proceedings, stipulating that a mediator could not becompelled to give evidence in court or arbitration proceedings, barstrictly defined exceptions of public policy of the Member Stateconcerned. The importance of this provision is further strengthenedby expressly allowing Member States to adopt even stricterstandards to protect the confidentiality of mediation. Further,pursuant to Article 6 of the Directive, Member States are obliged toset up a mechanism that ensures that mediation settlementagreements be enforceable before the Member State courts at theparties’ request. In England more specifically, this could beachieved by way of a so-called Tomlin Order and would obviate theneed to rely upon the settlement agreement in contract in apotentially foreign jurisdiction.At the time of writing, the Office of Fair Trading (OFT) has beenreported to investigate the use of the Ombudsman as a viablealternative dispute resolution mechanism in the exercise of its ownduties within the context of competition law investigations inEngland and Wales. More detailed information is expected tobecome available in an impending public consultation.

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England & WalesSJ Berwin LLP

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Gordon Blanke



Gordon Blanke is an associate with SJ Berwin’s InternationalArbitration Group with a specialism in European competition law.Gordon regularly advises clients and acts as AdministrativeSecretary in international arbitration proceedings. He is a memberof the Chartered Institute of Arbitrators in London, the GermanInstitution of Arbitration, the London Court of InternationalArbitration, the Swiss Arbitration Association, the ICC UK NationalCommittee and the ICC Commission on Competition.Gordon is the author of The Use and Utility of InternationalArbitration in EC Commission Merger Remedies, published withEuropa Law Publishing in July 2006, and is currently co-editing TheTreatment of US Antitrust and EC Competition Law in InternationalArbitration - A Handbook for Practitioners, which is scheduled forpublication with Kluwer Law International in 2009.Gordon is fluent in English, French, Spanish and German.

Craig Pollack



Craig is Head of Commercial Litigation at SJ Berwin LLP. He is rankedconsistently as a leader in the field of commercial litigation in all of themajor directories, including Legal 500, Chambers UK, ChambersGlobal, the Legal Experts Guide and the PLC directory, earningnumerous accolades, including for having “established an enviablereputation” and for being a “favourite of both peers and clients,impressing with his creativity, understanding and prompt attention”. Craig specialises in complex litigation, often with an internationalelement. He has represented banks, hedge funds, private equityhouses and major public companies in a wide variety of cases,covering contractual disputes, shareholder actions, regulatorydisputes, commercial fraud and asset tracing, and professionalnegligence claims. Craig has extensive experience of mediation and has appeared onmany platforms both in the UK and internationally as a speaker onalternative dispute resolution.

Established in 1982, SJ Berwin LLP is a leading corporate and commercial law firm. It was created and thrives as aleading-edge legal services business, focusing on the European and international market place. Our clients aresophisticated buyers of legal services, ranging from entrepreneurial companies and financial institutions to leadingmulti-national companies, whom we advise on a comprehensive range of services including Corporate Finance,Commercial, Real Estate, Banking, Reconstruction & Insolvency, Financial Services, Litigation, Intellectual Property,Employment & Pensions, EU & Competition and Tax.

The Litigation Department and International Arbitration Group have wide global and industry experience, anunderstanding of different national laws, and a broad range of technical and linguistic skills. We offer flexible solutionsto resolving disputes on neutral ground, under agreed rules and with qualified arbitrators. We also boast unrivalledmediation services in a European-wide context. We are proactive problem-solvers and pride ourselves on challengingorthodox and parochial thinking.

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Chapter 18


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Estonia

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Estonia got? Are there anyrules that govern civil procedure in Estonia?

Estonia belongs to the Continental-Europe legal system. Civilprocedure is regulated by the Code of Civil Procedure (CCP).Additionally, as an EU Member State, the Council regulation No44/2001, as well as certain other EU legislation applies. Estonia hasalso joined certain conventions regarding specific matters related tocivil procedure (e.g. regarding gathering of evidence, recognition ofarbitral awards).

1.2 How is the civil court system in Estonia structured? Whatare the various levels of appeal and are there anyspecialist courts?

The civil court system comprises county courts, circuit courts andthe Supreme Court. County courts, as courts of first instance, hearall civil matters. Circuit courts review the decisions of the countycourts on the basis of appeals. The Supreme Court reviewsdecisions of circuit courts in civil matters on the basis of appeals incassation and appeals against rulings filed against the decisions andrulings of the circuit courts. There are no specialist courts.

1.3 What are the main stages in civil proceedings in Estonia?What is their underlying timeframe?

1) Submission of the claim and commencement of matters. 2) Notifying participants on the proceeding of action.3) Defendant’s response to action.4) Plaintiff’s opinion on response to action. 5) Hearing of the matter in a court session.6) Judgment. The period between the date of service of the action on thedefendant and the date of the court session is at least 30 days. Thelength of the proceedings depends on each particular case.


Estonian courts apply exclusive jurisdiction clauses, except if such

clauses are contrary to the limited exclusive jurisdiction provisionsof the CCP (e.g. certain real estate claims shall be filed with thecourt of the location of the real estate).

1.5 What are the costs of civil court proceedings in Estonia?Who bears these costs?

Procedural expenses are the legal costs and extra-judicial costsincurred by a participant in a proceeding. Legal costs are the statefee, security (if applicable) and the costs essential to the proceeding.Extra-judicial costs are e.g. costs related to the representatives andadvisers of the participants in a proceeding; travel costs andunreceived wages.The costs of an action and the procedural expenses of a legalrepresentative of a party are borne by the party against whom thecourt decides. In cases where ordering payment of the opposingparty’s costs from the party against whom the court decides wouldbe extremely unfair or unreasonable, the court may decide that thecosts must be borne, in part or in full, by the party who incurred thecosts. Estonian government adopts limits to claiming costs of alegal representative from the other party in a proceeding. In contentious family and filiations matters both parties shall beartheir own procedural expenses. The court may divide theprocedural expenses differently, if such division of the expenseswould be unfair or excessively damage the essential needs of one ofthe spouses. In a proceeding on petition, the procedural expenses shall be borneby the person in whose interests the decision is made.

1.6 Are there any particular rules about funding litigation inEstonia? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

In some cases a participant in the proceeding may requestprocedural assistance from the state. A participant can be released,in part or in full, from payment of the state fee or security, or frombearing other legal costs. In an action, the court may require at the request of the defendantthat the plaintiff provide security for covering the proceduralexpenses expected to arise if: (a) the plaintiff is not a citizen/legalperson of the Republic of Estonia or any other Member State of theEuropean Union and has no residence/seat in Estonia or any otherMember State of the European Union; or (b) due to the plaintiff’seconomic status or for another reason, collection of the presumedprocedural expenses is clearly impracticable.The court has no right to require provision of security from theplaintiff if the plaintiff has enough assets in Estonia to cover for the

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procedural expenses or has claims in Estonia which are sufficientlysecured by real rights. The defendant may also demand a security from the plaintiff incertain cases.


2.1 Are there any pre-action procedures in place in Estonia?What is their scope?

Pre-trial taking of evidence may be organised by a court rulingduring court proceedings at the request of a party or also beforeproceedings are initiated. Inspections may be organised, witnessesmay be heard, and expert assessments and other procedural actsmay be conducted in the course of pre-trial taking of evidence.Before the beginning of proceedings, a person may request that thecourt order expert assessment in pre-trial taking of evidence. The court may also secure an action based on a petition before theaction is filed.


The general limitation period for different classes of claim is threeyears as of the claim falling due, for a claim arising from a contractfor services due to deficiencies in a structure is five years, and tenyears if the obligated person intentionally violated the person’sobligations and in cases the claim stems from law. The limitation period for a claim arising from causing death, abodily injury or damage to health or from deprivation of liberty isthree years as of the moment when the entitled person became orshould have become aware of the damage and of the personobligated to compensate for the damage, regardless of the legalbasis of the claim and for restitution claims arising from a right ofownership and for claims arising from family law or law ofsuccession is thirty years as of the moment when the claim falls dueunless otherwise provided by law. A restitution claim arising froma right of ownership against an arbitrary possessor does not expire.Time limits are treated as a substantive law issue.


3.1 How are civil proceedings commenced (issued and served)in Estonia? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Estonia? Is there a preferred method ofservice of foreign proceedings in Estonia?

After an action has been filed, the court decides on acceptance ofthat action. A procedural document may be served to the recipientin the court premises or through registered mail, and in certain casesalso by unregistered mail, email or fax, as well as through a bailiff,court security guard or other competent court official. Based on acourt ruling, a person may, if his/her address is not known, bepublicly served a procedural document. Service of procedural documents in a foreign state and on extra-territorial citizens of the Republic of Estonia is preferably doneaccording to the above-mentioned ways of service unless otherwiseprovided by Council Regulation 1348/2000/EC on the service in the

Member States of judicial and extrajudicial documents in civil orcommercial matters.

3.2 Are any pre-action interim remedies available in Estonia?How do you apply for them? What are the main criteria forobtaining these?

The court may secure an action at the request of the plaintiff if thereis reason to believe that failure to secure the action may rendercompliance with the judgment difficult or impossible. The court may also secure an action based on a petition before theaction is filed. The petition must set out the reasons for not filingthe action immediately. In this case the court also sets a term duringwhich the petitioner must file the action. If the action is not filedon time, the court cancels the measures for securing the action.Some of the measures for securing an action include the seizure ofthe defendant’s property which is in the possession of the defendantor another person, including making a notation in a propertyregister concerning a prohibition on disposal of property; aprohibition on the defendant from entering into certain transactionsor performing certain acts, including imposition of a restrainingorder; a prohibition on a defendant from departing from his or herresidence, taking the defendant into custody and imposition ofdetention on the defendant.A means for securing an action shall be chosen such that the means,when applied, would burden the defendant only in so far as this canbe considered reasonable taking account of the legitimate interestsof the plaintiff and the circumstances. The value of the action mustbe taken into account upon securing an action involving a monetaryclaim. A court may apply several measures concurrently to securean action.


In addition to other requisite information to be included inprocedural documents, a statement of claim shall set out:1) the clearly expressed claim of the plaintiff (object of action);2) the facts which constitute the basis of the action (cause of

action);3) the evidence in proof of the facts which are the cause of the

action, and a specific reference to the facts which the plaintiffwants to prove with each piece of evidence;

4) whether the plaintiff agrees to the conduct of writtenproceedings in the matter or wishes the matter to be heard ina court session;

5) the value of the action unless the action is directed atpayment of a certain sum of money; and

6) whether the plaintiff wishes the action to be heard indocumentary proceedings.

If the plaintiff is to be represented by a representative in theproceeding, the action must also set out the data of therepresentative. Filing of an action with a different court than thecourt of the defendant’s general jurisdiction must be justified tosuch court.


A plaintiff has the right to amend the cause or object of an action orto increase the amount of a claim before the summations in a courtof first instance or during the term prescribed for submission ofdocuments in written proceedings. Amending an action after the



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given time limit, including in appellate or cassation proceedings, ispermitted only with the consent of the defendant or the court. Thecourt agrees to amend the action only with good reason and aboveall if amendment of the action is based on facts which the courtmust also take into account in a higher instance of court.The provisions concerning a statement of claim apply to a petitionfor amendment of action. If in pre-trial proceedings, the plaintiffpresents new facts related to the action it is presumed that theplaintiff amends the cause of action thereby.Until the time the judgment made in a case enters into force, theplaintiff may (i) amend a claim concerning the interest penalty, a finefor delay or contractual penalty, or a claim for a natural or civil fruit,or (ii) decrease the principal claim or request compensation in moneyin substitution for an object specified in the original claim withoutfiling a petition in the format prescribed for a statement of claimincluding, by making such amendment orally in a court session.

4 Defending a Claim


The defendant provides the court with a written response to theaction. The defendant is required to set out the following in theresponse to an action:1) whether the defendant has any objections to the court’s

acceptance of the matter or there is reason to refuse to hearthe action or to terminate the proceeding in the matter;

2) whether the defendant admits the action by approving thecorrectness of the claims filed against the defendant in thestatement of claim;

3) all the defendant’s requests and allegations, and evidence inproof of each factual allegation;

4) whether the defendant wishes to file a counterclaim;5) the defendant’s opinion on how the court expenses should be

divided;6) whether the defendant agrees to the conduct of a written

proceeding or wishes the matter to be heard in a courtsession; and

7) whether the defendant considers it possible to settle thematter by compromise or by any other type of agreement.

If in the proceeding, the defendant is to be represented by arepresentative, the response also sets out the data of therepresentative. Filing a counterclaim against the plaintiff to be heard together withthe main action before the summations in a county court or duringthe term prescribed for submission of documents in writtenproceedings, is allowed if:1) the counterclaim is intended to be set off against the main

action;2) satisfaction of the counterclaim wholly or partially precludes

satisfaction of the main action; or 3) another type of connection exists between the counterclaim

and the main action and a joint hearing thereof would allowfor a just and more expeditious hearing of the matter.


The term for submitting a response to an action is at least fourteendays as of the date on which the action is served, and upon service

of the action in a foreign state, at least twenty eight days as of thedate on which the action is served. The court may also permit thedefendant to respond to the action orally in a court session if, in thecourt’s opinion, this is in the interests of the expeditiousadjudication of the matter.


There is no such mechanism, but under some conditions adefendant has a recourse action. In such instances it is advisable toengage the third party to the proceedings as a third party in supportof the defendant (please see question 5.1).


If the defendant who has been given a term for responding by thecourt has failed to do so on time, then, based on the request of theplaintiff or at the court’s initiative, the action may be satisfied bymaking a judgment by default to the extent specified by thestatement of claim and legally justified by facts. In such case thedefendant is deemed to have accepted the factual allegations madeby the plaintiff. The court shall not make a judgment by default onthe same ground in a matrimonial matter or a filiations matter.


Yes, a defendant can dispute the court’s jurisdiction.



If a third party files an independent claim concerning the object ofthe dispute between the plaintiff and defendant, the third party mayfile an action against both parties in the proceeding until the end ofthe hearing of the merits of the matter at a county court. A thirdparty with an independent claim has the rights and obligations ofthe plaintiff.A third party who does not have an independent claim concerningthe object of the proceeding but has legal interest in having thedispute resolved in favour of one of the parties may enter theproceeding in support of either the plaintiff or the defendant.A party who, upon adjudication of a court action against such party,has the right to file a claim against a third party arising fromcircumstances which the party considers to be a breach of contract,for compensation of damage or for release from the obligation topay damages, or who has reason to presume that such claim may befiled against the party, may file, before the entry into force of thedecision, a petition with the court conducting proceedings in thematter in order to involve the third party in the proceeding.


Yes, if several claims of the same type which involve the sameparties, or which are filed by one plaintiff against different

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defendants or by several plaintiffs against the same defendant aresubject to concurrent court proceedings, the court may join suchclaims in one proceeding if the claims are legally related or theclaims could have been filed by a single action and this allows fora more expeditious or facilitated hearing of the matter.


Yes, if the court finds that the separate hearing of claims filed in onestatement of claim, or of an action and a counterclaim would ensurea more expeditious or facilitated hearing of the matter, the courtmay sever the claims by a ruling and conduct independentproceedings. The court may also cancel the severance of claims orsever claims already joined if it becomes clear that severance wasnot justified.


6.1 Is there any particular case allocation system before thecivil courts in Estonia? How are cases allocated?

There is no particular case allocation system in Estonia. However,the claim shall be submitted in accordance with internal jurisdiction(in general, location of defendant).

6.2 Do the courts in Estonia have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

During proceedings, the court shall take all possible measures tosettle the case. For such purpose, the court may, i.a. present a draftof a contract of compromise to the parties or request that the partiesappear before the court in person, or propose that the parties settlethe dispute out of court or call upon the assistance of a conciliator. A plaintiff has the right to amend the cause or object of an action,increase or decrease a claim or discontinue an action, and adefendant has the right to admit a claim. A party has the right toappeal against a court judgment and other procedural rights. Partieshave the right to discontinue a matter by compromise. A party hasthe right to request compulsory execution of a court judgment. Aparticipant in a proceeding has the same right in a proceeding onpetition.The plaintiff bears the procedural expenses if the court refuses toaccept the petition and returns it or if an action is not heard or theproceeding is terminated by a ruling. In case of a compromise, theparties shall bear their own procedural expenses unless they haveagreed otherwise. If the plaintiff discontinues or withdraws anaction, the court may decide that the defendant’s proceduralexpenses must be paid by the plaintiff. If the plaintiff discontinuesor withdraws an action because the defendant has satisfied theplaintiff’s claim after the action was filed, the court may decide thatthe plaintiff’s procedural expenses must be paid by the defendant.If the defendant admits the action immediately, the plaintiff shallbear the procedural expenses unless the defendant has given reasonfor filing the action by his or her behaviour.Half of the paid state fee shall be refunded if the parties reach acompromise, the plaintiff discontinues the action and also whenprior to the pronouncement of a judgment of a court of first instancein full, the parties waive the right to file an appeal.

6.3 What sanctions are the courts in Estonia empowered toimpose on a party that disobeys the court’s orders ordirections?

Courts can impose a fine, detention and compelled attendance.Courts can also remove people from a court session.

6.4 Do the courts in Estonia have the power to strike out partof a statement of case? If so, in what circumstances?

Courts in Estonia do not have power to strike out part of a statementof case. However, the court may also refuse to hear an action if itbecomes evident that: (a) based on the facts presented as the causeof the action, violation of the plaintiff’s rights is not possible,presuming that the facts presented by the plaintiff are correct; or (b)the action has not been filed for protecting the plaintiff’s right orinterest protected by law, or with an aim subject to legal protectionby the state, or if such objective cannot be achieved by the action.

6.5 Can the civil courts in Estonia enter summary judgment?

Yes, in Estonia the descriptive part may be omitted from a judgmentby default or a judgment based on admittance of the claim by thedefendant unless there is reason to believe that the decision is subjectto recognition and execution also outside of the Republic of Estonia.The statement of reasons of the judgment shall only set out the legalreasoning. The descriptive part and statement of reasons of ajudgment may be omitted if, prior to the public pronouncement of thejudgment in its entirety, the parties inform the court that they waivetheir right to file an appeal against the judgment (minor exceptions).

6.6 Do the courts in Estonia have any powers to discontinueor stay the proceedings? If so, in what circumstances?

A court can terminate a proceeding without a decision if: (a) theperson who has taken recourse to the court fails to comply with themandatory procedure established by law for the prior extra-judicialadjudication of such matter, and such procedure can no longer beapplied; (b) the plaintiff has discontinued the action; (c) the partieshave settled the dispute by compromise and the court approves thecompromise; or (d) the legal relationship under dispute does notenable legal succession after the death of a natural person or thedissolution of a legal person who is a party in the matter. The court may suspend the proceedings due to a good reason arisingfrom a party until the time such reason ceases to exist. If the court fully or partially depends on the existence or absence ofa legal relationship which is the object of a court proceedingconducted in another matter or whose existence must be establishedby other court proceedings, the court may suspend the proceedinguntil the end of the other proceeding. The court shall also suspend aproceeding for divorce if there is reason to believe that the marriagecan be preserved. The court shall also stay proceedings if uponrequesting preliminary ruling from the European Court of Justice.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Estonia? Are there any classes of documents that do notrequire disclosure?

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division of the burden of proof different from that which is providedby law and agree on the nature of the evidence whereby a certainfact may be proved. Provision of evidence means a request made by a participant in aproceeding asking the court to evaluate an allegation of theparticipant in the proceeding based on the receipt and examinationof the evidence indicated in the request.A person in possession of a document has the obligation to submitthe document to the court at the court’s request within the term setby the court. A court may fine a person who fails to submit adocument without good reason.The parties have to submit all documents they seek to reply upon.

7.2 What are the rules on privilege in civil proceedings inEstonia?

A state or local government agency or a public servant employedthereby is not required to submit a document concerning the contentof which the public servant cannot be heard as a witness. Regardlessof the demand of the court, a document need not be submitted by anattorney who has received the document in connection with theprovision of a legal service or by a person who has the right to refuseto submit the document due to another reason arising from law. A minister of a religious association registered in Estonia or supportstaff thereof shall not be heard or questioned with regard tocircumstances confided to them in the context of spiritual care.The following shall not be heard as witnesses without thepermission of the person in whose interests the duty to maintainconfidentiality is imposed: (a) representatives in civil matters orcriminal defence counsel in criminal matters and notaries withregard to facts which have become known to them in theperformance of their professional duties; or (b) doctors, pharmacistsor other health care providers, with regard to facts which a patienthas confided to them, including facts related to the descent,artificial insemination, family or health of a person.

7.3 What are the rules in Estonia with respect to disclosure bythird parties?

If a person requests that the court require submission of a documentby another person, the person must describe such document and itscontent in the request and set out the reason why he or she believesthe document is in the possession of the other person.

7.4 What is the court’s role in disclosure in civil proceedingsin Estonia?

Please see question 8.4.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Estonia?

There are no restrictions on the use of documents obtained bydisclosure.

8 Evidence

8.1 What are the basic rules of evidence in Estonia?

In an action, each party shall prove the facts on which the claimsand objections of the party are based, unless otherwise provided by

law. The court may take evidence on its own initiative in amatrimonial matter, filiation matter, a dispute related to the interestsof a child or a proceeding on petition. In a maintenance matter, thecourt may require that a party provides data and documents on hisor her income and financial status.There is no need to prove a fact which the court deems to be amatter of common knowledge. An argument made by a party basedon a fact need not be proved if the opposing party admits the fact.In a matrimonial or filiation matter, the court evaluates admissiontogether with other evidence.The court evaluates all evidence pursuant to law from all perspectives,thoroughly and objectively and decides, according to the conscienceof the court, whether or not an argument presented by a participant ina proceeding is proved considering, i.a., any agreements between theparties concerning the provision of evidence.


Evidence may be the testimony of a witness, statements ofparticipants in a proceeding given under oath, documentaryevidence, physical evidence, observation or an expert opinion. TheCCP constitutes also, if pursuant to law or based on an agreementbetween the parties, a fact must be proved by evidence of a certaintype or form, the fact shall not be proved by evidence of anothertype or form. The court may refuse to accept evidence and returnthe evidence if the evidence has been obtained by a criminal offenceor unlawful violation of a fundamental right.Expert assessment is carried out by a forensic expert or otherqualified person employed by a state forensic institution, anofficially certified expert or another person with specific expertiseappointed by the court. In order to clarify issues relevant to a casewhich require specific expertise, the court has the right to obtain theopinion of experts. In appropriate circumstances the court maysubstitute ordering expert assessment with referral to an expertopinion which has been ordered by the court in another courtproceeding. A person shall tolerate expert assessment conductedfor the establishment of filiation. If a person refuses to undergoexpert assessment for establishment of filiation, the court has theright to order mandatory conduct of the expert assessment.


Every person who may be aware of the facts relevant to a mattermay be heard as a witness unless the person is a participant in theproceeding or a representative of a participant in the proceeding inthe matter. A participant in a proceeding has the right to submitwritten questions to a witness through the court. The court shalldetermine the questions for which an answer by a witness isrequested. If necessary, the court may summon a witness to a courtsession in order to give oral testimony. A person summoned as awitness is required to appear in court and give truthful testimonybefore the court with regard to the facts known to him or her.If a person is unable to appear in court due to an illness, old age, adisability or other good reason, or if it is necessary due to anotherreason, the court may go to the witness to hear the witness.Every witness shall be heard individually. Witnesses who have notbeen heard can not be present in the courtroom during the hearingof the matter. If a court has reason to believe that a witness is afraidor has other reason not to speak the truth before the court in thepresence of a participant in the proceeding or if a participant in a

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proceeding leads the testimony of a witness by interference or inany other manner, the court may remove such participant in theproceeding from the courtroom for the time the witness is heard.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Estonia?

If a participant in a proceeding wishes to provide evidence and isunable to do so, the participant may request the taking of theevidence by the court. Evidence shall be submitted by theparticipants in the proceedings. The court may propose the partiesto submit additional evidence. Unless otherwise provided by law,the court may take evidence on its own initiative in a matrimonialmatter, filiation matter, a dispute related to the interests of a child ora proceeding on petition. In a maintenance matter, the court mayrequire that a party provide data and documents on his or herincome and financial status or the court may demand relevantinformation on its own initiative from the employer of a party, fromthe Pension Board, insurance companies, the Tax and CustomsBoard and credit institutions.


9.1 What different types of judgments and orders are the civilcourts in Estonia empowered to issue and in whatcircumstances?

A court judgment is a decision on the merits of a matter. The courtshall adjudicate the procedural petitions of the participants in theproceeding and shall direct and organise the proceeding by way ofrulings. The different judgments include regular judgment, ajudgment for correction of mistakes, supplemental judgment,interim judgment, partial judgment (and certain specific judgmentsfor specific proceedings).


The court shall decide on the amount of damages according to theconscience of the court and taking into account all circumstances, ifdamages have been established in a proceeding but the exactamount of the damage cannot be established or establishmentthereof would involve major difficulties or unreasonably high costs,including if the damage is non-patrimonial. Upon a delay in the performance of a monetary obligation, the obligeemay require the obligor to pay interest on the delay (penalty for latepayment) for the period as of the time the obligation falls due untilconforming performance is rendered. If the penalty is unreasonablyhigh the court may reduce the penalty to a reasonable amount. The court adjudicating a matter sets out the division of theprocedural expenses between the participants in the proceeding inthe court decision or in the ruling on termination of the proceeding.


Unless otherwise provided by law or an international agreement, acourt decision of a foreign state is subject to enforcement in Estoniaonly after the decision has been declared to be subject to enforcementby the Estonian court. With respect to judgments of the courts of theEuropean Union, the Council regulation No 44/2001 applies. Estoniahas also executed five bilateral legal aid agreements i.a. simplifyingthe recognition and enforcement procedure.

9.4 What are the rules of appeal against a judgment of a civilcourt of Estonia?

A judgment of a court of first instance is subject to appeal by theparties, and by third parties with independent claims. Appealagainst a judgment of the circuit court may be filed with theSupreme Court if the circuit court has materially violated aprovision of procedural law or incorrectly applied a provision ofsubstantive law.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Estonia?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a quick overview of each available method.)

ArbitrationBy agreement of the parties, a civil matter may be referred toarbitration unless otherwise provided by law. MediationMediation and conciliation are still rarely used in Estonia.However, there exist various possibilities for extrajudicialsettlement of civil disputes in Estonia via different commissionstaking over court functions (for example in the field of individuallabour disputes, consumer disputes or residential lease disputesetc.). These administrative organs do not act as mediators orconciliators, but rather administer justice in civil matters.Tribunals/OmbudsmanNot practiced.


ArbitrationArbitration is governed by the parties’ agreement and the CCP.Estonia has also joined the New York Convention on theRecognition and Enforcement of Foreign Arbitral Awards. MediationNeither mediation nor conciliation has been regulated by law.Some legal acts do mention the term of mediation in one or anothercontext. The CCP constitutes the general principle for the court to try tosettle disputes peacefully. For such purpose, the court may, i.a.,present a draft of a contract of compromise to the parties or requestthat the parties appear before the court in person, or propose that theparties settle the dispute out of court or call upon the assistance ofa conciliator. Further, in family matters the court may summon,based on a petition by a parent, the parents before the court in orderto settle the conflict pertaining to the child by way of agreement incase of violation of ruling regulating access to child. In familymatters there are also several references in CCP that the court maydraw attention of the parties to the fact that they can use the help offamily adviser. The activity of family advisers is not regulated bylegal acts. It is also mentioned in the Bar Association Act that theadvocates may act as conciliators.



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1.3 Are there any areas of law in Estonia that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

No restrictions have been established with respect tomediation/conciliation. Regarding arbitration, the CCP stipulates that the object of anarbitral agreement may be a proprietary claim. An arbitralagreement concerning a non-proprietary claim is valid only if theparties are able to reach a compromise concerning the object of adispute. An arbitral agreement is void if its object is: (a) a disputeconcerning the validity or cancellation of a residential leasecontract, and vacating a dwelling located in Estonia; or (b) a disputeconcerning the termination of an employment contract. Aproprietary claim in public law may be the object of an arbitralagreement if the parties are able to enter into a contract under publiclaw concerning the object of dispute.


2.1 What are the major dispute resolution institutions inEstonia?

Apart from regular courts, there is one major dispute resolutioninstitution in Estonia - the Arbitration Court of the Estonian Chamberof Commerce and Industry. The arbitration court of the Tallinn StockExchange handles certain stock exchange related disputes. Further,as mentioned above, there exist various possibilities for extrajudicialsettlement of civil disputes in different commissions taking over courtfunctions (e.g. in the field of individual labour disputes, consumerdisputes or residential lease disputes).


The awards of permanent arbitration institutions are binding onparties and enforceable without further court recognition.



Businesses are more and more aware of the methods of ADR.However, apart from negotiation and arbitration, ADR is ratherrarely chosen. As the effective new CCP (since 2006) obligates courts to try tosettle the case or a part thereof by compromise or in another mannerby agreement of the parties, the courts often promote the alternativesettlement of a case.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Estonia?

It could be argued that main reason for not opting for mediation isthe probability of the following arbitration or court procedure, andthus the extra time and funds spent on it. Another factor may be thelack of knowledge of and experience in mediation.

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Pirkka-Marja Põldvere

Aivar Pilv Law OfficeVabaduse väljak 10 10146 Tallinn Estonia

Tel: +372 6 404 650Fax: +372 6 404 653Email: [email protected]: www.apilv.ee

Pirkka-Marja Põldvere is a graduate of the University of Tartu,Faculty of Law, and holds a degree of Master of Laws inInternational Commercial Arbitration Law (LL.M) from StockholmUniversity (2004). Before joining Aivar Pilv Law Office she workedfor 6 years for Law Office Raidla Leijins Norcous (RoschierRaidla).Since 2006 Pirkka-Marja has given lectures on arbitration andinternational civil procedure at the University of Tartu (as part of theprivate international law course). She is also a co-author of the 3rded of the book Rahvusvaheline eraõigus (Private International Law),2008 (Juura, Tallinn), contributing to the chapter on arbitration.Pirkka-Marja is a member of the Estonian Bar Association since2003.

Aivar Pilv

Aivar Pilv Law OfficeVabaduse väljak 10 10146 Tallinn Estonia

Tel: +372 6 404 650Fax: +372 6 404 653Email: [email protected]: www.apilv.ee

Born: 1961. Education: 1984 Graduated from the University of Tartu, Faculty ofLaw. Professional Career: 1984 August -1992 December Tallinn II LegalAdvisory Board (1991 renamed Vanalinna Law Office). 1993February Foundation of Law Office Aivar Pilv, Senior Partner andacting as Director until present time. 1994 March - 1995 MarchMember of the Qualifying Commission of the Estonian BarAssociation. 1995 March - 2001 May Member of the Board of theEstonian Bar Association. 2001 May - 2004 April Vice-chairman ofthe Board of the Estonian Bar Association. 2002 May acted as therepresentative of the Estonian Bar Association the member of theCouncil of Administrating the Courts. 2004 April Chairman of theEstonian Bar Association. March 2007 - reappointed as Chairmanof the Estonian Bar Association.Membership: 1984 Estonian Bar Association. Practice Areas: Corporate Law, Property Law, Bankruptcy andReorganisation, Media Law, Medical Law, Civil Law and CivilProcedural Law, Tax and Customs Law, Competition Law, Buildingand Planning Law, Public Procurement, Administrative Proceedingsand Administrative Law, Criminal Law and Criminal Proceedings. Languages: Estonian, Russian, English.

Aivar Pilv Law Office was founded in 1993. During the 15 years of activities we have thoroughly explored the wishesand needs of our clients. Our main aim is to render high quality legal assistance on an internationally recognised level,which can be characterised by flexible and client-orientated service. Aivar Pilv Law Office has rendered legal assistanceto Estonian and international business enterprises, as well as to public institutions. Our attorneys have diverseexperience in representing the interests of the clients in different fields of law, including:

civil law (contract law, property law (also real estate), corporate law, private international law, insurance law etc.);litigation and arbitration;bankruptcy and reorganisation;mergers and acquisitions;intellectual property and trademarks;tax and customs law;building and planning law;public procurement and competition law; andadministrative (court) proceedings.

Aivar Pilv Law Office is a member of the international law offices’ chain TAGLaw which guarantees the availability oflegal assistance to our clients through trustworthy partners in different parts of the world.

For more information please visit our website at www.apilv.ee


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Chapter 19


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Finland

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Finland got? Are there anyrules that govern civil procedure in Finland?

Finland has a civil law system and the Code of Judicial Procedureis the main statute that governs civil proceedings.

1.2 How is the civil court system in Finland structured? Whatare the various levels of appeal and are there anyspecialist courts?

The general civil and criminal court system, which is separate fromthe administrative court system, is structured in three levels. Thereare 54 district courts, six courts of appeal and the Supreme Court.Disputes regarding limited liability companies, maritime matters aswell as patent and trademark matters are settled by specialised courtdivisions within particular district courts. There are also three specialised courts that at least partly deal withmatters that are characterised as civil matters. The Labour Courthears collective bargaining related labour disputes; the MarketCourt hears cases regarding marketing, competition and publicprocurement matters; and the Insurance Court deals with mattersregarding certain particular social insurances as an appeal court.

1.3 What are the main stages in civil proceedings in Finland?What is their underlying timeframe?

Civil proceedings commence with a written stage, in which theclaimant first lodges his claim and the defendant subsequently filesa statement of defence. The court may, of its own motion or uponrequest, order further written submissions from the parties prior tothe preparatory hearing.After receiving the necessary written submissions, the court callsthe parties to a preparatory hearing, the aim of which is to clarifythe issues in dispute and the evidence to be presented at the mainhearing. During and after the preparatory hearing further writtensubmissions may be ordered by the court.At the main hearing, the parties present their evidence andarguments. In addition, all witnesses and experts are heard.Judgment is delivered thereafter. The length of proceedings and of the main stages varies for exampledue to the complexity of a case and there are no comprehensivestatistics.

1.4 What is Finland’s local judiciary’s approach to exclusivejurisdiction clauses?

Exclusive jurisdiction clauses are generally accepted as long as theydo not violate mandatory jurisdiction rules. Finland is a member ofthe EU wherefore EC law regarding jurisdiction clauses applies.

1.5 What are the costs of civil court proceedings in Finland?Who bears these costs?

Reasonable litigation costs, including attorney fees and party costs,are according to the main rule borne by the unsuccessful party. Incase some claims are decided in favour of one party and some infavour of the other, the court may order the parties to bear their owncosts. The court may also conclude the same, if the losing party hashad a justifiable reason for pursuing a matter that has been unclearunder the law. In addition, the liability for litigation costs may be reduced ifconsidered manifestly unreasonable. Further, if unnecessary costsarise due to negligent or deliberate behaviour of the other party, theparty is liable for the costs regardless of how liability for costswould otherwise be determined.

1.6 Are there any particular rules about funding litigation inFinland? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

There are no rules regarding funding of litigation or security ofcosts. Third party funding is not prohibited or restricted by law. Lawyers are not prohibited from acting on a contingency fee basis.However, the most common fee structure in Finland is based onhourly rates. For members of the Finnish Bar Association,contingency fee structures are allowed only on specific grounds.


2.1 Are there any pre-action procedures in place in Finland?What is their scope?

There are no particular pre-action procedures. See response toquestion 3.2 regarding interim measures.

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Time limits are treated as a matter of substantive law. The Act onLimitation of Actions on Debts provides a general limitation periodof three years from the due date, which applies to monetary debts. As regards to contract disputes, the purchaser shall, according to theSale of Goods Act, notify the seller of the avoidance or of theintention to claim damages within a reasonable time after he/shelearned of the delivery. Nevertheless, the general limitation periodis also applied to certain claims regarding contract disputes. If a claim is based on extra-contractual liability, the generallimitation period applies; commencing from the moment theclaimant became or should have become aware of the damage andthe party liable for it. In addition, an action for damages regardingprohibited restrictions of competition shall be instituted within fiveyears from the date when the undertaking was informed or shouldhave been informed of the occurrence of the damage.An ultimate limitation period of 10 years, which commences fromthe damaging event, applies to all damages except forenvironmental damage and personal injury.Generally, the running of a limitation period is interrupted andrestarts due to informal and formal actions of the claimant to notifythe defendant of the claim.


3.1 How are civil proceedings commenced (issued and served)in Finland? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Finland? Is there a preferred method ofservice of foreign proceedings in Finland?

Civil proceedings are commenced by filing a claim with a districtcourt. Service is usually carried out by the court; although, theclaimant can also on request be entrusted to effect service. If thecourt serves the claim, it is usually carried out by sending the claimby post with an acknowledgment of receipt to be returned. If thedefendant does not return the acknowledgment of receipt, personalservice on the defendant will be carried out by a bailiff. The date of service is the date when personal service was carriedout or the date noted on the returned acknowledgment slip.Service outside Finland or service of foreign proceedings in Finlandmay, where applicable, be effected according to international acts,e.g. the 1965 Hague Service Convention, the 1974 Nordicconvention on cross-border procedural assistance and the EUService Regulation (EC) No 1393/2007. In cases where none of theabove multilateral instruments are applicable the Ministry ofForeign Affairs should be approached.

3.2 Are any pre-action interim remedies available in Finland?How do you apply for them? What are the main criteriafor obtaining these?

Interim remedies can be granted during or before the full trial and,under certain circumstances, even ex parte. Upon application thecourt may:(1) order attachment of the real or movable property of the

opposing party; (2) prohibit the deed or action of the opposing party, under threat

of a fine;(3) order the opposing party to do something, under threat of a

fine;(4) empower the applicant to do something or to have something

done;(5) order that property of the opposing party be placed under the

administration and care of a trustee; or(6) order other measures to be undertaken that necessary for

securing the right of the applicant.Granting of above interim remedies requires that the applicant canestablish a probable right against the opposing party and that thereis a danger that the opposing party, by action or omission or in someother manner, hinders or undermines the realisation of the right ofthe applicant or decreases essentially its value or significance.When deciding on an application for an interim remedy referred toin 2-6 above, the court must balance the benefits to be secured withthe inconvenience the opposing party might suffer. The applicant has a strict liability for costs and damages caused tothe opposing party by an interim remedy that has subsequently beenfound to be unnecessary and unfounded. To enforce an interimremedy, the applicant must provide security for the possible costsand damages referred to above.


The main elements are: what is claimed, e.g. the relief sought;the facts and grounds on which the claim is based; and the evidence to be presented in support of the claim and anexplanation of the relevance of each piece of evidence.


If the claim is incomplete when it is filed, the court shall of its ownmotion request the claimant to supplement it. During theproceedings the pleadings cannot as a general rule be amended.The claimant nevertheless has the right to:

amend the relief sought based on a change in circumstancesduring the proceedings or based on a circumstance that theclaimant has only become aware of during the proceedings;claim the declaration of a legal relationship when it is aprerequisite for the resolution of the case; andclaim interest or make a new or subsidiary claim if it is basedon materially the same grounds as the original claim.

4 Defending a Claim


The main elements are:whether the claim is admitted or contested;the grounds for contesting (including any jurisdictional orother procedural objections regarding inadmissibility); andthe evidence to be presented in support of the defence and anexplanation of the relevance of each piece of evidence.

Counterclaims and the set-off defences are generally allowed.



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The court sets the deadline within which the statement of defencehas to be filed with the court.


If the outcome of a matter may lead to the defendant having aconsequential right against a third party, the defendant may present aclaim of recourse or damages against that third party in the pendingmatter to be dealt with in the same proceedings as the main claim.


If the defendant fails to defend a civil claim, the claimant is usuallyawarded judgment in default.


If the defendant wishes to object to the jurisdiction of the court, thedefendant must make such an objection the first time he responds inthe matter, e.g. commonly in the first statement of defence.



If the case concerns the rights of the third party, he may participatein the proceedings, supporting either party as an intervener. Inaddition, if a third party lodges a claim against either of the partiesregarding the object in dispute, the matter may on his request bejoined to the primary proceedings.


See responses to questions 4.3 and 5.1. In addition, the joinder oftwo (or more) sets of proceedings is obligatory if the claimantbrings several claims at the same time against the defendant and theclaims are based on essentially the same grounds. In addition, if adefendant brings an action against the claimant on a debt that isadmissible for set-off both actions shall be heard in the sameproceedings.Proceedings between the same or other parties may also be joinedif dealing with the matters together is beneficial for the court’sdealing with the matter.


Courts may deliver partial and intermediate judgments. A partialjudgment can be delivered regarding an independent claim inproceedings where several claims have been made. Anintermediate judgment can be delivered if a decision concerningone claim is dependent on the decision regarding another claimdealt with in the same proceedings. If the resolution of a certain

issue is prerequisite for the decision of claim, the court may alsorender an intermediate judgment that may rendered against the willof a party only for a particular reason.


6.1 Is there any particular case allocation system before thecivil courts in Finland? How are cases allocated?

Within the general courts there is no case allocation system.However, within the courts certain divisions may internally deal withcertain types of substantive cases. See response to question 1.2.

6.2 Do the courts in Finland have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

Courts have a duty of active case management. Courts shall assurethat cases are thoroughly and expediently dealt with and thatirrelevant matters and evidence are excluded. The duty of casemanagement is in particular actualised at the stage of thepreparatory hearing when the issues in dispute and evidence areclarified. The court shall actively make questions to clarify thecontentious issues, if the statements of the parties are unclear orincomplete. If the claim is amenable to settlement under substantialcivil law rules, the court shall, during the preparatory stage, activelyinvestigate whether it is possible to reach a settlement.In relation to interim measures see response to question 3.2.

6.3 What sanctions are the courts in Finland empowered toimpose on a party that disobeys the court’s orders ordirections?

If the court deems the personal appearance of a party necessary, itmay impose a conditional fine on that party. Further, if the partyfails to obey the fine, the court may order that he/she will bebrought to the hearing.

6.4 Do the courts in Finland have the power to strike out partof a statement of case? If so, in what circumstances?

A court may strike out a part of a statement of claim or the wholeclaim, refrain from serving a claim or discontinue preparation of theclaim if the claimant does not provide necessary supplementationupon request, if the claim is so incomplete that it cannot form thebasis for proceedings or if it is manifestly without a basis.

6.5 Can the civil courts in Finland enter summary judgment?

There is only judgment in default in case the defendant does notdefend a case or present grounds that substantively are relevant forthe case. In certain types of cases where the claim relates to a debtof a specific sum, restoration of possession, restoration of adisrupted circumstance or eviction as well as for claims under billsexchange of and promissory notes there are specific limitedrequirements for the claim.

6.6 Do the courts in Finland have any powers to discontinueor stay the proceedings? If so, in what circumstances?

The claims can be withdrawn by the parties at any stage of theproceedings, i.e. pursuant to a settlement reached by the parties.

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This usually leads to discontinuance of the proceedings. Inaddition, if the claimant or both parties do not appear in a matterthat can be settled, the court may discontinue the proceedings. Thecourt may however also resolve the case upon the request of thedefendant, if the claimant withdraws the action after the defendanthas responded to it.During the preparatory stage of proceedings, the court may rule theaction inadmissible if the claim is so incomplete that it is not fit tobe the basis for proceedings or if the court for another reason cannotadmit the case.In case of a failure to satisfy a procedural requirement, the court maydismiss a claim and, hence, discontinue the proceedings. The court’sdiscretion depends on the nature of the requirement, namely whetherit is absolute or discretionary. If it is an absolute requirement thecourt must dismiss the claim discontinue the proceedings.The court may stay proceedings at the stage of the main hearingonly on the following grounds:

if a party or other person does not appear;a new piece of evidence that can only be presented later hasbeen brought to the attention of the court; oran unforeseeable or important reason emerges that renders astay necessary.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Finland? Are there any classes of documents that do notrequire disclosure?

The Finnish legal system does not recognise discovery or disclosureas understood and applied in the common law system. There is nogeneral obligation of disclosure of all documents in the possessionof the party. In the Finnish court proceedings each party presentsand discloses the evidence that it is going to refer to in theproceedings in order to support the action or the defencerespectively. However, a court may, upon a request of a party to theproceedings, order the opposing party to disclose sufficientlyspecified documents, should the court consider the documents to berelevant as evidence. For the court to grant such an application therequested evidence must be sufficiently identifiable and itssignificance to the case must be established. If a party does notpresent the documents ordered by the court, the court may imposea threat of fine or order a bailiff to enforce production. On groundsof confidentiality or privilege a party may refuse to present certaindocuments. See response to question 7.2.

7.2 What are the rules on privilege in civil proceedings inFinland?

Generally the provisions of the right of a witness to refuse to divulgea fact or to answer a question apply correspondingly to the obligationto present a document. A business secret or a document that isintended for personal use shall not be presented in court unless veryimportant reasons require its presentation. Attorney-client privilegeis also respected. In addition, the following professions are generallynot obliged to provide witness evidence regarding information thatthey received in the practise of their profession:

civil servants;doctors, pharmacists and midwifes;journalists; andpriests.

Further, a person is entitled to refuse to reveal a fact if the disclosure

of information would be self-incriminatory or it would incriminatea person related to him/her.

7.3 What are the rules in Finland with respect to disclosure bythird parties?

The courts may upon request of a party order a third party todisclose specific and relevant documents in accordance with therules mentioned above. See response to questions 7.1 and 7.2.

7.4 What is the court’s role in disclosure in civil proceedingsin Finland?

See above response to question 7.1. In addition, a court may of itsown motion request that certain evidence shall be obtained.However, the parties’ mutual wishes overrule the court’s decision ifthe case is amenable to settlement.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Finland?

The right to use documents obtained by disclosure is not restrictedunless the court orders the documents to be confidential.

8 Evidence

8.1 What are the basic rules of evidence in Finland?

Evaluation of the evidence is based on the principle of freeevaluation of evidence. Consequently, the court is free to considerthe value of the presented evidence. All evidence, includingdocuments, witnesses and inspection, shall generally be presentedduring the main hearing. As a main rule, the claimant shall collectall the evidence that supports the action and the defendant shallprove the facts that he/she presents. Both parties may also commenton the evidence presented by the adversary. If the case is amenableto settlement and a party has admitted a fact, the admission isbinding without presentation of evidence thereof. Notorious factsand the contents of the law do not need to be proven.


The types of evidence are documents, witnesses and inspection. Inaddition, expert evidence is generally accepted. Both the court andthe parties may appoint expert witnesses. Written witnessstatements are generally inadmissible, and witnesses must be heardin person. However, expert evidence is generally accepted inwritten form. Parties and party representatives are not consideredto be witnesses but are heard for evidentiary purposes without oath.Evidence must be presented at the main hearing. If the case isamenable to settlement and if a party has not listed a piece ofevidence before or at the preparatory hearing he is precluded frompresenting it at the main hearing.


Anyone but a party to the case may be heard as a witness underoath. Written statements are generally not allowed. See responseto question 7.2.



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8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Finland?

The court may call expert witnesses, request the parties to clarifythe facts or order a third party to present evidence. The court canalso prohibit presenting of irrelevant evidence. See response toquestion 7.4.


9.1 What different types of judgments and orders are the civilcourts in Finland empowered to issue and in whatcircumstances?

Courts may issue three categories of judgments: judgments grantingaffirmative performance; declaratory judgments; and judgments thatchange a legal relationship. The courts may also give proceduralorders, if deemed necessary. See response to question 5.3.


The courts may award damages and reasonable litigation costs aswell as interest on a claimed performance and on litigation costs.Punitive damages are not allowed.


A domestic judgment can be enforced directly after it has gainedfinal legal force by applying to the local execution authority. Priorto gaining the final legal force, the judgments can be provisionallyenforced.The treatment of foreign judgment varies depending whether anyinternational rules are applicable. If for example judgment ishanded down within the member states of the European Union, theprocess for recognition and enforcement, not execution proper, issimplified in accordance with the rules set out in the so calledBrussels I Regulation (EC) No. 44/2001. If no international rulesapply the case may be retried on its merits, and the foreignjudgment only serves as evidence in the evaluation thereof.

9.4 What are the rules of appeal against a judgment of a civilcourt of Finland?

Over a district court judgment, appeal is made to a court of appeal.Notice of intention to appeal must be filed within seven days, andthe appeal itself must be filed within 30 days from judgment. Thecourts of appeal apply a preliminary screening procedure wherebythe clearly unmeritorious appeals can be summarily dismissed. Over an appeal court judgment, leave to appeal has to be soughtfrom the Supreme Court. The limited grounds for granting leave toappeal are that the case has value as a precedent; that a fault in theproceedings has occurred based on which the judgment should beannulled; or other weighty reason. The application for leave toappeal together with the substantive appeal must be filed within 60days.For judgments rendered by the specialised courts, the appealproceedings vary.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Finland?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

The most frequently used method of dispute resolution (other thanlitigation) for civil and commercial matters is arbitration.Arbitration is even considered the predominant dispute resolutionmethod for settling large commercial disputes. General and formal mediation procedures have more recentlygained further attention, albeit that informal negotiation andsettlement between the parties has traditionally been a main firstresort for resolution of disputes. A formal mediation procedure hasin recent years been developed under the auspices of the FinnishBar Association. In addition, the district courts provide since 2006a statutory mediation procedure that is voluntary for parties andseparate from the obligation of court to encourage the parties to tryto reach settlement during the preparatory stage of a pending claimor make a settlement proposal if deemed necessary.There are also various institutions that give non-binding decisionsin certain matters, for example the Consumer Disputes Board, theData Protection Ombudsman and the Insurance Board.


Arbitration is regulated by the Arbitration Act. For arbitrationproceedings that are conducted under the auspices of the ArbitrationInstitute of the Central Chamber of Commerce of Finland the rulesof the institute primarily apply.The mediation procedure provided by the courts is regulated by theAct on Mediation in Civil Matters by the Court and the Act onConciliation in Criminal and Certain Civil Cases. For mediationcarried out in accordance procedure developed by the Finnish BarAssociation, its mediation rules apply.

1.3 Are there any areas of law in Finland that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

As a main rule, rights and obligation under civil and commerciallaw can be settled between the parties and therefore arbitration andmediation are possible. However, there may be certain restrictions,for example in the fields of family, intellectual property and realproperty law, where the dispute under law for reasons of publicinterest can only be dealt with in court litigation.


2.1 What are the major dispute resolution institutions inFinland?

The main arbitration institute is the Arbitration Institute of the CentralChamber of Commerce of Finland. The major mediation institutionsare the Finnish Bar Association and the general district courts.

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Arbitral awards are immediately binding and enforceable. Asettlement reached through mediation is binding between the partiesand can be affirmed upon application by court whereafter it isenforceable.



Statistically the number of commercial arbitration cases conductedwithin the auspices of Arbitration Institute of the Central Chamberof Commerce of Finland has been increasing for the past years. Thegeneral impression in the market is that this trend will continue.There is also an increased awareness of the various mediationoptions available.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Finland?

At present there are no major reform proposals.

Jussi Lehtinen

Dittmar & IndreniusPohjoisesplanadi 25 AFI-00100 HelsinkiFinland

Tel: +358 9 681 700Fax: +358 9 652 406Email: [email protected]: www.dittmar.fi

Jussi Lehtinen is a member of the dispute resolution practice groupof Dittmar & Indrenius. He represents clients in a wide range ofdemanding commercial arbitration and litigation proceedings.Recently, he has, inter alia, defended a client in the Finnish MarketCourt against charges concerning abuse of a dominant marketposition as well as represented clients in complex trade markdisputes and disputes regarding on-first-demand bank guaranteesbefore the public courts at all levels in Finland. He has also beeninvolved in several minority share squeeze-out arbitrationproceedings in Finland. Prior to joining Dittmar & Indrenius, hegained valuable commercial and legal experience from working inthe legal departments of Nokia and the Helsinki Stock Exchange.

Eva Storskrubb

Dittmar & IndreniusPohjoisesplanadi 25 AFI-00100 HelsinkiFinland

Tel: +358 9 681 700Fax: +358 9 652 406Email: [email protected]: www.dittmar.fi

Eva Storskrubbis a member of the dispute resolution practice groupof Dittmar & Indrenius. After graduating from the University ofHelsinki in 2000 she gained practical experience with a niche firmof solicitors in London dealing with commercial litigation andinternational arbitration. She returned to Finland in 2006 andjoined Dittmar & Indrenius after a period of pursuing post graduateresearch. She is accustomed to working with international clientsand is fluent in Finnish, English and French, as well as her mothertongue Swedish. She has published various articles in the field ofdispute resolution and her doctoral thesis has recently beenpublished, Civil Procedure and EU Law - A Policy Area Uncovered(Oxford University Press, 2008).

Dittmar & Indrenius, established in 1899, is an independent Finnish law firm focused on the quality of its services andthe satisfaction of its clients. The firm is one of Finland’s leading international law firms focused on four practice areas:Mergers & Acquisitions, Finance & Capital Markets, Dispute Resolution and Corporate & Commercial. Our aim is toprovide the best legal services in complicated transactions and complex dispute resolution in our jurisdiction. We alsostrive to be the best long-term law firm partner in Finland for demanding corporate clients. The firm maintains closecontacts with leading law firms in the world, but is not tied to any formal network or association of law firms.

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France

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has France got? Are there anyrules that govern civil procedure in France?

France is a civil law jurisdiction. The rules governing civilprocedure in France are contained in the Code of Civil Procedure(“CPC”) adopted in 1975.

1.2 How is the civil court system in France structured? Whatare the various levels of appeal and are there anyspecialist courts?

The civil court system is structured as a three-tier pyramid. Therecent reform to the judicial chart in France which is beingintroduced in four stages ending in December 2010 does not alterthe main structure of the pyramid but reduces the number of courtsand rearranges their territorial jurisdictions within the French state.The first instance tier comprises four main courts:

The Tribunal de grand instance which, subject to a €10,000threshold, has jurisdiction over any dispute involving privateinterests unless the law has expressly conferred jurisdiction onanother court. The Tribunaux de grande instance are organisedgeographically at the level of the départements. The newjudicial chart will alter the basis on which the TGI areorganised taking into account demographic, economic andgeographical factors. There are today 181 throughout France.When the reform comes into effect for the TGI on 31 December2010, there will be 158 Tribunaux de grande instance.The Tribunal d’Instance which has jurisdiction over any civilmatter involving monetary claims up to €10,000 and overcertain specific matters such as landlord and tenant disputes;these courts sit at the geographical level of eacharrondissement and there are today approximately 473throughout the whole of France. The configuration of theTribunaux d’Instance will be based on demographic,economic and geographic factors once the reform comes intoeffect on 31 December 2009 with their number beingreduced to 302. The Tribunal de commerce, which is manned by non-professional judges elected from the professional communityand which has jurisdiction over commercial mattersincluding insolvency proceedings; there are today 239tribunaux de commerce throughout France. This numberwill be reduced to 190 following the reform which came intoeffect on 1st January 2009.

The Conseil de prud’hommes in which equal numbers ofemployers and employees elected by their peers sit in panelsof four and exercise exclusive jurisdiction over employmentdisputes. The 275 Conseils that exist today will be reducedto 214 once the reform came into effect on 31 December2008.

The second tier comprises the Courts of Appeal, of which there are35 throughout France organised on a regional basis. The reform ofthe judicial chart in France does not affect the manner in which theAppeal Courts are organised or their number. Appeal from any firstinstance decision is automatic except for judgments in an amountless than €4,000 from which no appeal lies to the Court of Appeal,but only on points of law directly to the Cour de Cassation.The third top tier of the civil court system is the Cour de Cassation.It is divided into three main sections: a civil section; a commercialand financial section; and an employment section. Appeal to theCour de Cassation lies only on points of law. The Cour does nothave the authority to review findings of fact. If an appeal isallowed, the case is sent back to another Court of Appeal for arehearing of both fact and law.

1.3 What are the main stages in civil proceedings in France?What is their underlying timeframe?

Under the NCPC, proceedings at first instance are initiated by theplaintiff having a summons known as an assignation served by abailiff (the huissier) directly on the defendant.The pre-hearing phase of the proceedings is particularly importantin France given that the submission of written pleadings(conclusions) is traditionally more significant than the oral phase.The hearing of witnesses is a rarity in French civil procedure and isconsidered to constitute proof inferior to written documentaryevidence.It is the court which manages the written phase of the case in whatis known as the instruction. The written phase begins with anorganisational hearing known as the audience de fixation fixed bythe court. The purpose of this organisation hearing is to fix aschedule of the case after discussion with counsel. The court hasthe option between (a) deciding that the case is already ripe forjudgment in light of the documents and proof before him it whichcase it will fix a date for final hearing (audience de jugement); (b)scheduling a new audience de fixation to give the parties time toexchange further written evidence and briefs; or (c) sending thematter to be dealt with by an individual judge acting as the juge dela mise en état to administer the preparation of the case - a processknown as the procédure de la mise en état.The juge de la mise en état has wide powers both to prepare the case

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for hearing and to persuade the parties to settle. The judge has thepower to set and extend deadlines for the submission of writtenbriefs and evidence. When satisfied that the case is properlyprepared and ready for hearing, he will declare the preparatoryphase to be at an end with an ordonnance de cloture. The case willthen be scheduled for hearing. In addition to organisation matters,the juge de la mise en état has the power to rule on certain importantincidental substantive matters such as jurisdictional challenges oralleged failures to state a claim.The next stage is the oral hearing on the merits (audience deplaidoirie) before the full court. It is at this stage that counselpresent their oral arguments. As noted above, it is exceedingly rarefor witnesses to be heard. At the close of the hearing, each counselsubmits a dossier de plaidoirie containing all formal proceduralpapers, from the summons to the last written submissions, thedocumentary evidence relied on, and often a written summary ofthe oral arguments (referred to as côtes de plaidoirie). Such dossieris not usually communicated to opposing counsel. At the end of thehearing (which often last little more than a matter of minutes), thecourt invites counsel to reappear at a fixed date when the judgmentwill be handed down.Judgments are pronounced in open court and take effect on the dateof pronouncement. Usually it is only the operative section of thejudgment (the dispositive) that is read out, the reasoning beingcommunicated to counsel at a later date.In order to enforce the judgment, the prevailing party must retrievean original of the judgment called a copie exécutoire or a grossefrom the court. It must then serve the judgment on the losing partyby way of signification. This is effected by a bailiff (huissier).Such notification of the judgment is the starting point for time limitssuch as those that apply to appeal. Default judgments must beserved within six months of retrieval of the copie exécutoireotherwise the judgment lapses. Judgments given in adversarialproceedings may be served during the 30 years following retrievalof the copie exécutoire.Proceedings on the merits may be accelerated if circumstances somerit by way of an assignation à jour fixe. In such cases, ratherthan serving a summons on the defendant, the plaintiff presentsunilaterally a requête to the court in order to be authorised to servea summons for a specific date (jour fixe) in the near future. Theurgency of the matter must be explained in such request and acomplete written brief with supporting documentary evidence mustbe filed. If leave is given, the plaintiff will serve a summons in thenormal manner indicating a specific hour and day for the hearing.The defendant must file its documents before the hearing date.Exceptionally, a plaintiff may be authorised to issue a summons onthe same day as the hearing (assignation d’heure à heure). If thedefendant does not appear via representation by counsel, the case istreated as a default proceedings and judgment is entered. If counselfor the defendant does appear but has not filed any documents, thecase is still heard provided that the judge is confident that there wasadequate time for the defence to be prepared. If it transpires that thecase is more complex than originally thought, the judge maytransfer the case to the ordinary docket where it will be subject tothe procedure de la mise en état.Proceedings before the other first instance courts (Tribunald’instance, Tribunal de Commerce and Conseil de Prud’hommes)follow similar rules as those applicable to the TGI although theytend to be less formal not least because of the absence of arequirement to be represented by counsel.If a party wishes to appeal a first instance judgment, notice ofappeal must be lodged with the relevant Court of Appeal within onemonth of notification (signification) of the judgment. This must be

done by one of the avoués at the Court of Appeal, special counselwho today and until January 2010 when, pursuant to measuresincluded in the judicial reforms introduced by the presentgovernment, the profession of the avoué will be merged into that ofthe avocat have a monopoly on representation before the Court ofAppeal. The notice of appeal is usually very succinct identifyingthe parties and the judgment under challenge. The registrar of theCourt of Appeal communicates the notice of appeal to therespondent. The matter is then assigned to a particular chamber ofthe Court of Appeal. Written submissions are then exchanged. Theinstruction of the appeal is similar to that at first instance bearing inmind that appeal is a re-hearing of the facts and law of the casealthough new claims are not in principle allowed.Decisions by a Court of Appeal (or judgments of lower courts of lastresort) may be challenged before the Cour de Cassation on thegrounds of error of law only. Recourse to the Cour de Cassation,know as a pourvoi, does not suspend enforcement of the judgment.The pourvoi is lodged by a notice submitted to the registrar of theCour de Cassation in a succinct form similar to that before the Courtof Appeal. This is done in most cases by an avocat aux conseils whichhas a monopoly on representation before the Cour de Cassation.Following notification of the pourvoi, the petitioner has five monthsto submit its written submissions. The respondent then has threemonths to answer.One of the judges of the chamber assigned to hear the case isdesignated as the conseiller rapporteur who prepares a writtenanalysis of the written submissions made by the parties. The reportis sent to the procureur, who represents the ministère public (agovernment body referred to also as le Parquet that, unknown tocommon law jurisdictions, represents the state’s interest in theproper functioning of the legal system) who is required to expresshis view in writing in all cases before the Cour de cassation.Depending upon the importance of the point of law at stake thepourvoi will be heard by a single chamber, a mixed chamber or aplenary chamber of the Cour de Cassation.If the Cour de Cassation rejects the pourvoi, such decision (arrêt derejet) constitutes a definitive resolution of the action. If the Cour deCassation allows the pourvoi in all or in part, the parties mustappear before the court to which the Cour de cassation remits thecase within four months of service of the decision (arrêt decassation). That court will then judge the case (or those parts of thecase affected by the decision) in the same manner as the courtwhose decision was annulled.As is the case in many countries, the French courts are overloadedwith work and under-resourced. The intellectual abilities of thejudges are ill complemented by their antiquated office equipment,understaffed secretarial services and overburdened schedules. Thismeans that in practice it is very difficult to predict the time requiredfor a case to reach the first instance hearing stage and thereafter thepronouncement of the judgment. A period of at least ten to twelvemonths if not considerably more is not uncommon. The time-scalefor the two levels of appeal proceedings is often longer witheighteen months not being uncommon for each stage of appeal. Thereforms introduced by the present government that will come intoeffect gradually until 2010 are intended to streamline the judiciaryand improve its efficiency. Time will tell whether the currentstrains on the system will be relieved by these contested reforms.


With the notable exception of disputes relating to real property thatmust be resolved by the appropriate court at the place where the



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property is located, French law allows parties considerable freedom inselecting the forum for their dispute. Jurisdiction clauses, whetherexclusive or non-exclusive, that are agreed upon before the dispute hasarisen, are however valid only for contracts between commerçants(usually businessmen and corporate entities). Generally, non-commerçants (including consumers) may not validly agree to a forumother than the one provided by law. After the dispute has arisen, non-commerçants may choose another forum including arbitration.

1.5 What are the costs of civil court proceedings in France?Who bears these costs?

Costs of civil court proceedings are of two types. The first, knownas dépens, consists of the formal costs and disbursements incurredby reason of the proceedings. These include the court fees, experts’fees and expenses, the fees of the huissier, and in proceedingsinvolving compulsory representation by a lawyer, the lawyer’s scalefees (which are frequently less than the amount actually invoiced).These costs are awarded against the losing party unless,exceptionally, the court otherwise orders in a reasoned decision.The second type of costs, not included in the dépens, include thelawyer’s fees (except the scale fees for compulsory representation)and other sums incurred by the party in connection with thelitigation. If it appears inequitable to the court that a party shouldbear costs of this type, the court has the power to order the otherparty to pay a sum in respect of these costs. In practice any suchorder is in a sum far less than the amount actually spent.

1.6 Are there any particular rules about funding litigation inFrance? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

Legal aid (aide jurisdictionnelle) is available for proceedings in theFrench courts to any person of any nationality who is resident inFrance and who has insufficient resources to enforce or protect hisrights. It is also available to non-residents when so provided byinternational treaty. It is not available to commercial companies.The process of obtaining legal aid usually takes several monthsalthough an expedited procedure is available for urgent cases. Toreceive full legal aid, the applicant must have an income of less thana certain amount fixed by decree (currently in the region of €1,000a month) and for partial legal aid, an income of less than currentlyapproximately €1,500 a month. The application is made first to thelocal authority for a certificate of means. It is then passed to thelegal aid bureau attached to the relevant court for consideration.The applicant has to show that he has prospects of success althoughin practice few applications are refused. When granted, theapplication is passed to the bâtonnier (the head of the local bar)who appoints counsel to act for the legally aided party (who can bea lawyer already chosen by the party). Legal aid covers the dépensand the costs of enforcement of any judgment. Counsel receives afixed scale fee from the state (usually far less than that invoiced toa privately paying client). If the legally aided party recovers anamount which could disentitle him to legal aid, counsel may, withthe consent of the bâtonnier, charge the client a supplementary fee.If the legally aided party loses, he is not by reason of impecuniosityprotected from an order to pay the winning party’s costs.Contingency or conditional fee arrangements are permitted underFrench law, but they must not cover the full amount of counsel’sfees. Disputes over fees are brought before the local bâtonnier whomust rule on the matter within three months. His decision may beappealed to the president of the relevant Court of Appeal within afurther month.Given the limited scope and effect of the rules on costs, there are no

specific provisions in French law regarding security for costs.Claimants domiciled outside France are no longer required to givesecurity for costs.


2.1 Are there any pre-action procedures in place in France?What is their scope?

No specific steps have to be taken by a plaintiff before commencingcourt proceedings, unless the parties have agreed first to pursue analternative dispute resolution process (which can be the case forcommerçants and non-commerçants alike) and this process fails.Parties may seek a mesure d’instruction (a court supervised enquiryinto the facts of a dispute) before the start of proceedings in orderto preserve or even establish proof (Article 145 NCPC). Suchprovisional fact-finding may be ordered by the courtsnotwithstanding the existence of an arbitration clause since suchaction by the courts is considered to be additional to the power todecide on the merits. The range of the mesures d’instructions iswide, including personal and site inspections, the ordering of partiesand non-parties to appear for questioning and the appointment ofcourt experts.


The limitation periods laid down in the Code Civil apply to allclaims, whether civil or commercial, except for commercial claimsspecifically provided for in the Commercial Code.In general, commercial claims (i.e., disputes between two businessentities or relating to a commercial transaction) are time-barredafter ten years.Non-commercial claims in tort are barred after ten years and claimsin contract after thirty years.The most common exceptions to these general rules are thefollowing:

An undefined short period (bref délai), the length of whichdepends upon the circumstances, applies to claims in respectof latent defects in goods.Six months applies to an action by an endorser of a bill ofexchange against another endorser or against the drawer.One year applies to actions by the holder of a bill ofexchange against an endorser or a drawer and to most actionson a contract for non-international carriage of goods.Two years applies to many actions on contracts of servicesby liberal professionals and to most actions on a contract forthe sale of goods to a consumer by a commerçant who hasnot manufactured them but has himself purchased them froma third party.Three years applies to actions against the acceptor of a bill ofexchange and to most claims made by a partie civile incriminal proceedings for damages.Five years applies to actions on debts payable by instalments,including salaries, interest payments, pensions and rents.

Statutes of limitation usually start running from the date of theevent giving rise to the cause of action although theircommencement may be postponed until the plaintiff has knowledgeof the facts establishing the cause of action, unless he shouldreasonably have had that knowledge earlier.

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3.1 How are civil proceedings commenced (issued and served)in France? What various means of service are there? Whatis the deemed date of service? How is service effectedoutside France? Is there a preferred method of service offoreign proceedings in France?

As noted above, civil proceedings are generally commenced by theservice by a huissier of a summons (assignation) (see question 1.3above). The summons must be served personally on the defendantalthough if this is not possible, it may be served on a member of hisfamily, an employee, a neighbour or caretaker at his domicile or ifthis is not known at his place of work. If there is no appropriateperson who is able or willing to accept service, the huissier deliversthe summons at the relevant town hall and sends a registered letterto the defendant at his last known address informing him of thisfact. If the domicile, residence or place of work of the defendant isunknown, the huissier records his attempts to effect service in aformal minute which is sent to the defendant’s last known addressby registered letter.Service on a foreign defendant who is present or resident in Franceor on the branch of a foreign company established in France iseffected as above. In the absence of any other provision in aninternational convention, or the EU Service Regulation 1384/2000,service on a defendant abroad is effected by the huissier deliveringthe summons to the ministère public (the representative of thestate). The summons is then transmitted to the defendant throughdiplomatic channels. Regardless of whether or when the summonsis actually received by the defendant, service is deemed to becomplete when the summons is delivered to the ministère public.

3.2 Are any pre-action interim remedies available in France?How do you apply for them? What are the main criteria forobtaining these?

The principal pre-action remedies available in France relate to theprotection or establishment of evidence (see above). Applicationsare made to the relevant court that would have jurisdiction over theproceedings on the merits by way of an ex-parte application(requête). A real and pressing risk of the loss of the evidence andthus the need for its preservation must be shown.


The plaintiff’s summons (assignation) must identify the courtbefore which the case is brought, the grounds for suit and the reliefrequested. It should in principle identify the documents underlyingthe claim (although failure to comply with this requirement is notpenalised).The submission of other written briefs (conclusions) follows thetime-schedule agreed upon with the juge de la mise en état. Suchbriefs should state the arguments of fact and law relied upon by theplaintiff and should be accompanied by the documentary proofsupporting the plaintiff’s case. There is however no general duty inFrench law to disclose all documents relating to the case. Partiesare required only to disclose the evidence on which they intend torely.It should be noted that proceedings before the Tribunal deCommerce are in theory oral and written pleadings are not required,although they are usually filed and exchanged as a matter ofpractice.


Pleadings may be amended or supplemented subject to thetimetable set by the juge de la mise en état which can always beextended by the juge upon an inter-partes application. Once thejuge de la mise en état has closed the preparatory phase with anordonnance de clôture and scheduled the case for final hearing, theparties are in principle barred from raising new grounds orsubmitting further proof.

4 Defending a Claim


The defendant’s written briefs (conclusions) must, as is the casewith the claimant’s, contain all of the arguments of fact and law andthe documentary evidence on which the defendant relies. TheDefendant is entitled to make any counterclaim (demandereconventionnelle) it wishes regardless of whether it is linked to theplaintiff’s claim or not. Defences such as set-off are also available.


With the exception of cases before the Tribunal de Commercewhere the first hearing date (audience de fixation) is fixed inadvance of the service of the summons and is referred to in thesummons, the court fixes the date for the first hearing of the caseupon receipt of a copy of the summons and informs the partiesthereof. Prior to such date there is no requirement for the defendantto file any defence papers. Thereafter, the timetable of the case willbe established by the juge de la mise en état.If the defendant or his counsel fails to appear at the first hearing(audience de fixation), the court may enter judgment against him.In practice, however, the court usually fixes a date for a furtherhearing at which the question of whether the plaintiff is entitled tojudgment by default will be considered.


The ability to pass on liability to a third party under French law ispermitted under French substantive law in certain circumstances(such as where a contractual guarantee exists or where liability isjoint and several). As a procedural matter it is governed by the rulesrelating to l’intervention forcé. This comprises the possibility of adefendant requiring a third person to become a party to theproceedings issued by the plaintiff as a co-defendant provided thatthe defendant has a principal cause of action against such third partyor can show that there is an interest in having the judgment bindingupon such third person. One particular example of this right iswhere a party to litigation before the French courts can require athird person that has guaranteed the litigious debt to become a partyto such litigation (appel en garantie) and thus be bound by anyjudgment issued by the courts.



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As noted above, if the defendant fails to appear at the first hearingor any postponement thereof, judgment may be entered against him.There are two types of “default” judgment that may be given in theabsence of the defendant. They both involve the court consideringthe substance of the claim and they may only be given if and to theextent that the claim is validly presented, entertainable by the courtand well-founded. Either type of judgment remains valid for sixmonths from the date of its pronouncement unless it has beenserved on the defendant with such six-month period.The first type of judgment is one deemed to have been given inadversarial proceedings. It may be given in the absence of thedefendant either if the judgment is susceptible to appeal (i.e., is in amonetary amount in excess of €4,000) or if the defendant has beenpersonally served. It may be overturned on appeal to the Court ofAppeal.The second type of “default” judgment is strictly a default judgmentand may only be given if, first, the judgment would not besusceptible to appeal as falling below the threshold of €4,000 andsecondly, the defendant has not been personally served. A defaultjudgment rendered against a party domiciled outside France mustexpressly record the efforts made to inform the defendant of thesummons. Such judgments may be set aside via a special procedureknown as opposition before the court which gave them.Application for opposition must be made within one month ofservice of the default judgment extended to three months fordefendants domiciled outside France.


Defendants may challenge the court’s jurisdiction. Challenges tojurisdiction must be made before any other defence is pleadedotherwise they are inadmissible and rejected. They must set forththe motives for the challenge and identify the court which thedefendant says has jurisdiction.



See the answer to question 4.3 regarding intervention forcée.A third party may voluntarily join pending proceedings either as aprincipal where his claims are unique to itself or as an accessorywhere its claims support those of a person who is already party tothe proceedings. In a case of voluntary intervention as a principal,if the court considers that the hearing of such claim may delay theoverall proceedings unnecessarily, it may rule first on the claims asinitially formed by the original parties to the proceedings ruling onthe intervening claims subsequently.


Proceedings may be consolidated provided that certain conditionsare met. Firstly the parties must be the same in both instances; thereshould be a close connection between the two sets of claims; andconsolidation must not violate a specific rule granting exclusive

subject matter or geographical jurisdiction to another particulargiven court.


Although not provided for by any specific text, there is no rule orprinciple preventing a civil or commercial court from rendering ajudgment on the merits separately from rendering a decision onquantum. This most typically happens before the Tribunaux deCommerce. Before the civil courts, it is not unknown for the jugede la mise en état to schedule the case in such a way.Challenges to a court’s jurisdiction, when properly made in liminelitis, are ruled upon separately by the court when it considers that itdoes not have jurisdiction. Otherwise, nothing prevents the courtfrom dealing with both the jurisdictional challenge and the merits inthe same judgment.


6.1 Is there any particular case allocation system before thecivil courts in France? How are cases allocated?

Two criteria must be considered when considering which particularFrench court has jurisdiction over a given claim. First, to determinesubject-matter jurisdiction (compétence d’attribution) one mustconsider whether the proceedings must, as a matter of law, bebrought before a specialist court. Second, one must look at the rulesof territoriality (compétence territorial), the content of which isbeing modified by the reform of the organisation of the judiciarythat is currently underway.Regarding subject-matter jurisdiction, the most important specialistjurisdictions or juridictions d’exception are the Tribunaux deCommerce for commercial disputes and the Conseil de Prud’hommesfor employment disputes. There are many other specialist courts suchas the Commission de la Sécurité sociale, the Tribunal de pensions, theTribunal des baux ruraux (farm leases) and the Commissiond’arbitrage des journalistes. Parties should also bear in mind theexistence of quasi-judicial bodies with authority over matters relatingto competition law (the Conseil de la concurrence), securities law (theAutorité des Marchés Financiers) and broadcasting law, etc.Within each court, cases are allocated by the president of the courtat his discretion.

6.2 Do the courts in France have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

Case management is the responsibility of the court.As noted above, before the TGI and the Court of Appeal, a judge isspecifically assigned to oversee the proceedings (the juge de la miseen état). He sets deadlines for exchanges of pleadings and evidenceand will decide when the preparatory phase is complete, the case isready to heard and will fix the final hearing date.There is no juge de la mise en état before the Tribunal deCommerce and the Conseil de Prud’hommes. The period betweenthe filing of the case and the hearing is not therefore supervised.As a general rule, the parties have no direct influence over casemanagement. Although parties may apply for extensions ofdeadlines and for leave to file additional briefs or evidence, the finaldecision lies with the court.French law provides a summary procedure by way of référé

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proceedings by which a party may obtain protective or other urgent orprovisional orders from the court. Such orders are always inter partesand in theory do not finally determine the dispute on the merits.Certain protective measures may be obtained on an ex parteapplication (sur requête) for the purpose of securing a defendant’sassets with a view to the eventual satisfaction of a judgment. Themost important of these protective measures is the protectiveattachment (saisie conservatoire). Applications must be made tocourt with subject-matter jurisdiction in the area where the defendantis domiciled or where the assets to be attached are situated. Theapplication must set out the grounds for seizure showing a primafacie case on the merits and must specify the amount for whichsecurity is claimed. It must also demonstrate some urgent threat tothe satisfaction of the claim and the assets over which security issought. If proceedings in respect of the claim have not already beenstarted the order of the court will set a time-limit within which theymust be commenced failing which the order will lapse.In addition to the saisie conservatoire, the courts have power todirect the provisional registration of a charge called a surêtéjudiciaire over the defendant’s business or property or on shares orstocks owned by him. Attachments on earning and other monetarydebts due to the defendant are also available.

6.3 What sanctions are the courts in France empowered toimpose on a party that disobeys the court’s orders ordirections?

Court orders or directions may be enforced by way of theimposition by the court of an astreinte or a daily fine fixed by thecourt and payable into court until the order or direction is obeyed.

6.4 Do the courts in France have the power to strike out partof a statement of case? If so, in what circumstances?

There is no specific power before any of the civil courts for part ofa statement of case to be struck out as such process is known incertain common law systems. Any such process would inevitablyresult in a decision on the merits and will thus normally be dealtwith along with all other claims.

6.5 Can the civil courts in France enter summary judgment?

There is no provision for summary judgment properly so-called inFrench civil procedure. In cases where the issues are clear and opento little contestation, however, the juge de la mise en l’état can bringthe preparatory phase to a rapid close and set the case down for ahearing in a manner akin to the procedure leading to a summaryjudgment in the common law systems.Orders made in référé proceedings are not final and should nottherefore be confused with rulings on the merits and thus do notconstitute summary judgments properly so-called.

6.6 Do the courts in France have any powers to discontinue orstay the proceedings? If so, in what circumstances?

French law provides for a number of situations in which the civilcourts are to stay the proceedings (sursis à statuer). One such case isupon the addressing of a preliminary question to the European Courtof Justice; another is when criminal proceedings are issued in respectof which the pending civil proceedings may have an influence.In addition to the situations expressly provided for by law, theNCPC provides for a general power of the civil courts to stay their

proceedings when this is determined by the court to be necessaryfor a proper and good administration of justice.A decision to stay proceedings may be appealed upon leave of thepresident of the relevant Court of Appeal lodged within one monthof service of the decision of stay.Proceedings cannot be discontinued at the instance of the courtwithout the pronouncement of a judgment on the merits or by wayof a default judgment or upon a joint application of the parties.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin France? Are there any classes of documents that do notrequire disclosure?

As is the case in other civil legal systems, French courts require theparties to prove the facts on which they intend to rely. A judge maybase his decision only on evidence produced during the proceedingsand not on his personal knowledge. Evidence may be introduced byone of two means: communications by the parties or enquiriessupervised by the court.Whilst no party is required to produce all documents relevant to itscase, court proceedings are governed by the adversarial principle,which implies that each party must be able to examine thedocuments relied upon by the other. The production of documentsmust be spontaneous and timely and should give the opposing partysufficient time to examine them.The judge may refuse to take account of documents produced late,although in practice there is no absolute deadline for production andthis power is rarely exercised.The parties are obliged to cooperate with the court in its enquiries. Asnoted above, the court is the master of the management of the casethrough the mesures d’instruction. The court may draw suchinferences as it sees fit from a failure by a party to cooperate. Further,at the request of a party the court may order the other party to produceevidence in its possession and refusal to do so may result in theimposition of an astreinte. The same may apply to third parties if thereis no legitimate reason for the documents to be withheld.There are no specific classes of document that do not requiredisclosure, subject to the rules on privilege (see below).

7.2 What are the rules on privilege in civil proceedings inFrance?

The main rule on privilege applies to correspondence between twoopposing counsel. According to ethical rules of the French bars,such correspondence is confidential to the lawyers in question andmay not even be disclosed to the lay client. This privilege may bewaived and in practice, when counsel wishes a particular piece ofcorrespondence to be capable of disclosure, it will be marked asbeing “official” or “not confidential”. Whilst confidentialcorrespondence between the parties themselves will normally notbe admissible in proceedings, this is not on the grounds of privilegebut simply upon the confidentiality agreement between the parties.

7.3 What are the rules in France with respect to disclosure bythird parties?

There are no specific rules regarding disclosure by third parties andindeed the mesures d’instruction available to the court extend toorders on third parties to disclose documents that are not privileged.



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7.4 What is the court’s role in disclosure in civil proceedingsin France?

As can be surmised from the foregoing, the court’s role indisclosure is essential given its case management role and thevarious mesures d’instruction it has at its disposal.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in France?

In general, documents obtained by disclosure in civil proceedingsmay not be used for any other purpose than as evidence in thoseproceedings.

8 Evidence

8.1 What are the basic rules of evidence in France?

As is the case in other legal systems, French law requires each partyto prove the facts on which it relies. Whilst there are no specific ruleson the standard of proof, beyond the court’s own appreciation of theevidence, there is a body of rules governing the admissibility ofevidence before the civil courts which is not in documentary form(although such rules are not as strict in commercial cases before theTribunal de Commerce as they are before the other courts).The taking of oral evidence is very rare in civil and commercialcases before the French courts. The normal way in which a witness’evidence is made available to the court is by means of a formalwritten statement (attestation) which is submitted as part of thedocumentary evidence.A party relying on documentary evidence must send a copy of it tothe other party to the proceedings spontaneously, or if required,upon an order of the court.Unlike in common law systems, the law of evidence is not designedto prevent the disclosure of documents that may be presumed to beunreliable. The inquisitorial approach of the mesures d’instructionmeans that virtually any document may be considered regardless ofthe weight that may be placed upon its evidential value (includinghearsay and other forms of evidence that may be inadmissiblebefore the courts in a common law system).


There are very few restrictions on the types of documentaryevidence that are admissible before the French courts although therules on the use of oral evidence are far stricter.Expert evidence is frequently used, either by party appointedexperts or more frequently by court appointed experts who areordered by the court to carry out investigations as part of theinstruction of the case. Such court appointed experts may holdmeetings with the parties and will complete their mission by thesubmission of an expert’s report on which the parties will have hadthe right to comment in writing (dires).


As noted above, the taking of oral evidence is very rare in civil andcommercial cases and indeed, before the civil courts, may beprohibited (for example, in ordinary civil cases, debts over €800 can

only be proved if they are evidenced in writing with there being norule that for documents to be admissible in evidence they must beauthenticated by a direct witness of fact).On its own initiative or at the request of a party, the court may ordera party to appear for questioning. Such questioning is done by thecourt alone. Cross-examination by opposing counsel is notunknown but extremely rare and only permitted with leave of thecourt. Parties are not considered to be witnesses and therefore donot answer the court’s questioning on oath. Refusal of a party toappear for questioning or to respond to a question is deemed toconstitute adverse evidence in favour of the opposing party.Third parties may provide proof in three forms: written statements(attestations) which are sworn; oral declarations in court; oranswers to an enquiry (often conducted by an expert appointed bythe court). Once again there is no cross-examination of witnessesalthough they answer the questions of the court on oath. Falsetestimony under oath is prohibited and penalised by up to fiveyears’ imprisonment and a fine of €75,000. The use or giving offalse attestations is punishable by up to one year’s imprisonmentand a fine of up to €15,000.If the court orders the taking of oral testimony, it will specify theissues upon which the witness is to be heard. The taking of the oraltestimony will be in private in the judge’s chamber in the presenceof counsel. The judge dictates the substance of the witness’ answersto his questions to the court clerk who records it in minutes ofevidence which forms part of the court record.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in France?

As noted above, the court’s role is primordial given its instructionof the case although the general rule remains that each party mustprove, principally by documentary evidence, the facts on which itrelies.


9.1 What different types of judgments and orders are the civilcourts in France empowered to issue and in whatcircumstances?

The courts have the power to issue a wide range of judgments andorders both of a provisional and final nature.A wide range of interim measures is available, often throughemergency or urgent proceedings (référé), provided that theevidence relied upon by the applicant is not seriously disputed.Such orders include freezing injunctions, conservatory or protectiveattachments, provisional charges, sequestration of goods and ordersfor the payment of deposits.In addition, compliance with orders of the court may be enforced bythe payment of daily fines (astreintes) imposed on the recalcitrantparty.French law authorises only compensatory damages (punitivedamages are not recognised). Compensatory damages arecalculated by reference to the extent of the loss actually incurredirrespective of the seriousness of the wrong. Material and morallosses may be compensated notwithstanding that their calculationmay be difficult to prove.French courts may also grant mandatory or preventive injunctionsalthough breaches of most contractual obligations will only soundin damages.

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Awards of damages are compensatory only - French law does notrecognise punitive damages.Interest on awards of damages starts running automatically at thelegal rate from the date of the pronouncement of the judgment.Interest on contractual debts is payable from the date of a formalnotice to pay (mise en demeure) or at the latest the date of serviceof the summons.As a general rule, the courts order that the dépens of a case followthe event. With respect to other costs, the courts may order thelosing party to pay costs where it would be inequitable to leave theother party to bear the costs, although such orders rarely cover thefull amount of costs incurred by a litigating party.


Judgments for the payment of a sum of money are, if not voluntarilysatisfied, usually enforced by the seizure of property. A final courtdecision (copie executoire) is good title to proceed to a seizure. Arange of different forms of attachment or seizure are available,including the seizure of and sale of personal goods, the charging ofland and the attachment of third party debts or earnings. If theproperty in question is money, it will be attributed to the judgmentcreditor. In other cases, the property will be sold and the proceedswill be attributed to the judgment creditor. Seizure of the propertyis carried out by a huissier on the instructions of the enforcing party.Where specific performance is ordered, daily fines (astreintes) maybe ordered in the event of non-compliance with the monies of thefine being paid into court.Companies may be placed into insolvency if they fail to satisfy ajudgment.Regarding the enforcement of foreign judgments, under CouncilRegulation 44/2001 of 22 December 2000, judgments of the courtsof member states of the European Union will be enforced in Franceprovided that the principle of due process was observed in theforeign proceedings and that the judgment complies with Frenchinternational public policy. The application is made ex parte onrequête. In the absence of an enforcement treaty, enforcement proceedingsare the exclusive jurisdiction of the TGI and will succeed if theTribunal is satisfied that the court that rendered the decision hadjurisdiction under French rules of jurisdiction, that it applied thecorrect law properly, that enforcement would not breach Frenchinternational public policy and that the judgment was not obtainedby fraud. The procedure is commenced by a summons(assignation) and is made inter partes.

9.4 What are the rules of appeal against a judgment of a civilcourt of France?

As a general rule, every first instance judgment may be appealed tothe Court of Appeal both on points of fact and law except in caseswhere the amount of the judgment is less than €4,000 in which caseappeal lies only to the Cour de Cassation on points of law.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in France?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Arbitration is a widely used form of alternative dispute resolution inFrance. The French international arbitration rules contained in theCPC predate the first UNCITRAL Model Law. They are consideredto be flexible and among the most liberal of all arbitration rules.Arbitration is the submission of a dispute by agreement forresolution by a panel of private decision makers (composed of anodd number of members - usually either one or three) who aremandated to apply either the substantive law of a given jurisdictionor to decide the case on the basis of equity. The proceedings maybe brought under the auspices of an institutional body such as theICC whose headquarters are based in Paris or the French ArbitrationAssociation or on an ad hoc basis where the arbitrators determineand supervise all aspects of the procedure to be followed. Typicallya written phase of the procedure is followed by a hearing of oralevidence and argument. The arbitral tribunal issues an award whichis enforced by way of a court decision granting an exequatur order.Mediation is being promoted in all fields of the French legal systemas an appropriate remedy to the overburdening of the courts and theconsequential delays that are commonly observed. Mediation is aprocess requiring particular skills of the mediator by which a thirdparty (the médiateur) is mandated to assist the litigants in finding acommon solution to their dispute without imposing or evensuggesting his own view of the merits of the case or an appropriateremedy.Conciliation is also promoted by the French courts as an alternativeform of dispute resolution. It differs from mediation in that the roleof the third party conciliator is to propose solutions to the parties onthe basis of the conciliator’s consideration and appreciation of thedispute. In some proceedings, a conciliation attempt is a necessarystep before reaching the judge as is the case before the Tribunauxd’instances and the Conseils de Prud’hommes. In cases where theparties have agreed to conciliation (or mediation) as a preliminarystep in the resolution of their disputes, the courts will treat anyclaim brought in violation of observation of such process asinadmissible until the process has been completed.As has been noted above, in certain specialist areas French lawprovides for specific tribunals, commissions or quasi-judicialorgans with jurisdiction (examples include matters of socialsecurity, competition, journalism and broadcasting). Proceedingsbefore such specialist tribunals or quasi-judicial bodies aregoverned by their own particular rules.


Arbitration. Only French law on international arbitration isconsidered here. The rules of French law on internationalarbitration apply provided that the interests of international tradeare at stake and that the case bears some connection with France(i.e., the chosen place of arbitration is France). The interests ofinternational trade will be concerned each time the dispute relates toan arrangement involving cross-border movement of goods,services, payments or involving the economies of two states.



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The rules are distinct and distant from the French national legalsystem. The parties and the tribunal are given the widest possiblefreedom to organise the procedural aspects of the arbitration.International arbitration agreements are not subject to any formalrequirement or content. Provided that they evidence the intentionof the parties to resort to arbitration, they are enforceable.If the parties encounter difficulties in constituting the arbitraltribunal, they may apply for assistance to the president of the TGIwho (acting as the juge d’appui) has authority to nominate themembers of the tribunal in place of the parties.French international arbitration law grants the parties and the arbitraltribunal wide freedom to organise the arbitration proceedings, theonly true limits being due process and respect of the principles ofFrench international public policy (since a failure to respect eitherwill constitute grounds for annulment of the award).The general principle is that French courts will interfere in arbitralproceedings only on an exceptional basis and even then only whenthe urgency of the circumstances so require.There is no requirement as to when and in what form the award is tobe issued (as opposed to domestic arbitration which imposes anextendable six-month period). No appeal lies against an internationalarbitration award (again as opposed to domestic arbitration whereawards are subject to appeal before the Court of Appeal). The onlyrecourse is for annulment on certain limited specific grounds namely(a) that the arbitrator decided the case in the absence of a validarbitration agreement or on the basis of an arbitration agreement thatwas void or had expired; (b) that the tribunal was irregularlyconstituted; (c) that the arbitrator exceeded his terms of reference; (d)that the principle of due process was breached; or (e) that recognitionor enforcement of the award would be contrary to Frenchinternational public policy. The courts will never review the meritsof the award or set it aside for a wrong application of the law.The arbitral tribunal will normally make an order for costs as partof its award. The general practice today is for the tribunal to orderat least part of the costs to follow the event.France has ratified the New York Convention on the Recognitionand Enforcement of Foreign Arbitral Awards of 10 June 1958. TheConvention came into effect in France on 24 September 1959. Theonly outstanding reservation made by France is the “reciprocityreservation” to recognise and enforce only awards that are made inthe territory of another Contracting State.Mediation and Conciliation. There are no specific rules applicableto mediation or conciliation proceedings not least because theoutcome is not binding upon the parties - each being free to acceptor reject the result of the procedure at will. The views of themediator or conciliator are not however binding upon the parties.

1.3 Are there any areas of law in France that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

The general rule as to the arbitrability of any given matter is setforth in Article 2059 of the Civil Code which provides that “allpersons may agree to arbitration in relation to rights which they arefree to dispose of”. Article 2061 of the Civil Code goes on toprovide that “unless provided otherwise in special statutoryprovisions, an arbitration clause is valid in contracts which areconcluded in relation to professional activities”.Certain types of dispute cannot however be submitted to arbitration:

matters of civil status and capacity of individuals;matters relating to divorce or judicial separation of spouses;disputes concerning public communities and public

establishments (i.e., municipalities);matters relating to domestic employment;bankruptcy proceedings (although arbitration is possiblewhere provided for by the underlying contract for claimsagainst the insolvent debtor); and/ormatters relating to the validity of compulsory licensing or thevalidity, nullity and infringement of patents (althougharbitration is possible where ownership or exploitation of thepatent is the main issue).

With respect to mediation and conciliation, once again, given thatthe process does not lead to a binding mandatory decision, there areno specific limitations on their scope other than those matters thatare as a matter of public policy reserved to the public authorities.However in certain circumstances, resort to such dispute resolutionprocesses may be considered and treated as an abuse of right,particularly in the consumer context.


2.1 What are the major dispute resolution institutions inFrance?

The major dispute resolution institution established in France is theCourt of International Arbitration of the International Chamber ofCommerce which has its headquarters in Paris. It should howeverbe noted that the Court is not a French body but an internationalorganisation and its links to France are purely geographical.A number of other arbitration institutions are based in France suchas the Paris Arbitration Chamber, Euroarbitrage and others.


Arbitration is the only form of dispute resolution mechanismmentioned above that provides binding and enforceable solutions.Mediation and conciliation may result in an agreement between theparties that is enforceable under the substantive rules applicable toany other contract.



Arbitration remains an important dispute resolution in France andmany international contracts continue to include arbitrationagreements. There is however a trend for parties to seek amicablesettlement of their disputes thereby avoiding the need to resort toarbitration particularly given the cost and time customarily involvedtoday in litigating disputes by arbitration. Institutional arbitrationremains arguably more prevalent than ad hoc arbitration, with theinstitutional process often being used as a guideline by arbitrators inad hoc proceedings both as regards procedural aspects and asregards costs including the arbitrators’ fees. A clear view of thearbitration playing field is however difficult to obtain given theconfidential nature of the proceedings.Judicial encouragement of mediation and conciliation continues toabound as a means of reducing the weight of the case-loadburdening the judicial system such that more and more frequentlyparties are confronted by the juge de la mise en état activelyencouraging them to make an attempt at mediation or conciliationof their dispute.

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3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in France?

One current issue that is exercising the minds of practitioners andlegal commentators alike is the proposition by a group of expertsappointed by the EU Commission in a report called the “HeidelbergReport” that the EU Regulation on the recognition and enforcementof judgments in civil and commercial matters be extended toinclude arbitral awards and judgments relating to arbitralproceedings (Regulation 44/2001). The Report’s propositions seemto conflict with the results of a study conducted by the authors ofthe Report themselves of academics and practitioners in Europe thathad concluded in support of the status quo. Criticism in France of the Report’s reasoning and conclusion hasfocused on various conflicts that could arise between the proposedinclusion of arbitration in Regulation 44/2001 and the 1958 NewYork Convention that could give rise to difficulties for States’ dutiesto comply with public international law. Yet more ardent, however,is the criticism that the proposition would snuff out the trend inFrance in favour of the so-called “de-nationalisation” ofinternational arbitral awards pursuant to which awards are notaffected by national decisions annulling or refusing to recognisetheir effects. Under the Heidelberg Report’s proposition, it wouldbe these national decisions that would have to be recognisedthroughout the Community rendering the enforcement ofinternational arbitral awards far more difficult throughout Europe.The Report’s authors adamantly maintain their position criticisingthe concept of the de-localisation of international arbitral awards asbeing a source of confusion arguing that the concept can result inthe possibility of any number of conflicting arbitral awards on thesame dispute and between the same parties circulating among theMember States with national courts not knowing which to recogniseand enforce.It must be said that whilst the de-nationalisation concept is notpeculiar to French law it has still not seen general application. Thefocus of the concept is on the process of arbitration as a“borderless” means of resolving disputes and attempts to iron out

the prejudices that continue to exist in some national laws andjudiciaries against arbitration. The focus of the Report is more ona private international law solution to a typical conflicts problemand as a result is perhaps not as sensitive to the independence thatarbitration practitioners aspire for the dispute resolution system inwhich they work.The interests are not purely ensconced in academic ivory towershowever. Arbitration is relatively big business and jurisdictionsthroughout Europe are keen to develop a name as being conduciveto arbitration and arbitral awards. Those critical of the HeidelbergReport see only negative economic effects emanating from itsproposition not on a national but on a European level with centressuch as the US and Asia gaining an upper hand. Exactly how theReport’s authors view the economic angle of the equation is notclear. What does seem evident, however, is that the debate is by nomeans over and one can expect further exchanges of views to come.

Tim Portwood

Cabinet Bredin Prat130, rue du Faubourg Saint-Honoré75008 ParisFrance

Tel: +33 1 4435 3535Fax: +33 1 4289 1073Email: [email protected]: www.bredinprat.com

Tim Portwood is a partner at Bredin Prat, and a French qualifiedEnglish barrister. He specialises in international arbitration andinternational litigation as well as practising cross-bordertransactional and insolvency work including mergers andacquisitions and private equity transactions. Born in the UnitedKingdom, Tim Portwood graduated from Cambridge University.Prior to joining Bredin Prat in 1996, Tim Portwood practised as aBarrister with Old Square Chambers in the U.K. He was the co-editor of European Human Rights Reports (1991-1994) as well asthe author of “Mergers in European Community Law” (AthlonePress, 1995), and of “Competition Law and the Environment”(Cameron May, 1995). Tim Portwood is a native English speakerand is also fluent in French, Italian and German.

Bredin Prat is one of the world’s leading independent law firms, committed to providing legal advice of the higheststandards. The firm is known for its outstanding quality of service, combining technical excellence with commercialawareness and innovative thought. In each of its practice areas (corporate, tax, competition and litigation andarbitration), Bredin Prat is widely recognised as a leading firm. Many of its partners, individually, are consistently citedby peers and clients as leaders in their respective areas of specialisation.

Bredin Prat has worked on the great majority of major public M&A transactions in France over the last 20 years,including high profile privatisations and landmark contested takeovers. Its litigation and arbitration practices are of thehighest quality with lawyers from both civil and common law legal systems and backgrounds representing French andforeign clients before domestic and international courts and tribunals of all levels.

In order to maintain the highest standards of service, Bredin Prat aims to operate with a partner/associate ratio of closeto 1:1. In the last years, the firm has experienced steady organic growth and currently has one of the largesttransactional corporate teams in the Paris legal market.

Bredin Prat’s international strategy is based upon its links with its “Best Friend” associated leading independent firmscomprising Slaughter and May (UK), Bonelli Erede Pappalardo (Italy), Hengeler Mueller (Germany) and Uria Menendez(Spain) enhancing its capacity to provide a seamless cross-border service to its clients of the highest quality of legaladvice and representation.

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Germany

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Germany got? Are there anyrules that govern civil procedure in Germany?

Germany is a civil law country based on the Roman law tradition.Statutes are the predominant source of law.Civil procedure is governed by the Code of Civil Procedure(Zivilprozessordnung, ZPO), containing, inter alia, the rulesgoverning civil and commercial court proceedings and the generalrules on the execution of judgments.

1.2 How is the civil court system in Germany structured?What are the various levels of appeal and are there anyspecialist courts?

There are four different levels of courts competent to hear cases incivil and commercial matters:

the local courts (Amtsgerichte);the regional courts (Landgerichte);the higher regional courts (Oberlandesgerichte); andthe Federal Court of Justice (Bundesgerichtshof).

Generally, first instance judgments of the local courts can beappealed to the regional courts, and first instance judgments of theregional courts to the higher regional courts and on to the FederalCourt of Justice.Special chambers exist for commercial matters (Kammer fürHandelssachen). In addition, larger regional courts have specialisedchambers for certain kinds of legal disputes, for example, unfaircompetition, intellectual property, maritime, and banking.

1.3 What are the main stages in civil proceedings in Germany?What is their underlying timeframe?

The main stages in civil proceedings are:filing a statement of claim with the court;service of the statement of claim on the defendant;filing of the statement of defence;exchange of further briefs;oral hearing and taking of evidence; andjudgment or settlement.

The average length of time of civil proceedings before the regional

courts (excluding appeals) is between eight and 12 months. Whilecomplex commercial cases may take longer, it is nonethelessrealistic to obtain a first instance judgment within one to two yearsafter commencing an action.


Both European law and German domestic law acknowledgeagreements on jurisdiction between the parties as to internationaljurisdiction (internationale Zuständigkeit) and local jurisdiction(örtliche Zuständigkeit). If the court determines that it lacksinternational jurisdiction due to an exclusive jurisdiction clauseprescribing a foreign forum, it will dismiss the action in Germanyas inadmissible. If the court lacks local jurisdiction but there isanother court in Germany which has local jurisdiction, the claimantmay motion to have the case transferred to the competent court. German courts do not grant anti-suit injunctions againstproceedings commenced outside Germany in breach of an exclusivejurisdiction clause. Similarly, German courts do not give effect toanti-suit injunctions rendered by foreign courts.

1.5 What are the costs of civil court proceedings in Germany?Who bears these costs?

Court and lawyers’ fees are regulated by statute. Under thesestatutes, fees are primarily calculated on the basis of the value of thematter in dispute. However, it is possible and common practice forGerman lawyers and their clients to enter into negotiated feearrangements (see Part I, question 1.6 below).As a general rule in German civil litigation, all fees and expensesarising from the lawsuit, including the opponent’s lawyers’ fees (tothe extent they do not exceed the statutory fees), have to be borneby the defeated party. If the claimant wins only part of its case, thefees and expenses will be divided between claimant and defendanton a pro rata basis. Each court decision will determine theallocation of fees and expenses among the parties.

1.6 Are there any particular rules about funding litigation inGermany? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

A party that cannot afford to pay court fees and lawyers’ fees canapply for legal aid (Prozesskostenhilfe) with the court. Legal aidwill generally only be granted if the claim has reasonable prospectsof success. Third party funding is possible. An increasing number of private

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companies offer third party funding (Prozessfinanzierung) inexchange for a share of the amount received in a successful claim. German lawyers and their clients are allowed to enter intonegotiated fee arrangements. However, a German lawyer isgenerally prohibited by law from working for less (but not formore) than the fees provided by the statutory lawyers’ fee scale orfrom agreeing on contingency fees or any other kind of “no win nofee” arrangement. However, as of July 2008 there is a rather narrowexception from this general ban of contingency fees for cases inwhich the financial situation of a potential claimant would deterhim from bringing an action. Claimants having their habitual residence outside a member state ofthe European Union or outside a state which is a party to theAgreement on the European Economic Area must deposit a securityfor the court and lawyers’ fees at the defendant’s request. This ruleis, however, subject to a number of exceptions.


2.1 Are there any pre-action procedures in place in Germany?What is their scope?

There are no specific pre-action protocols or similar rules governingpre-action conduct. On mandatory mediation see Part II, question3.1 below.


The general limitation period for bringing an action is three years.However, limitation periods can vary depending on the subjectmatter of the dispute, ranging from three months to 30 years. Thestandard three-year limitation period applies to all civil law claims,except those to which special statutory limitation periods apply. Itnotably applies to most contractual and tort claims.As a general rule, limitation periods start running at the end of theyear in which the claim arises and in which the claimant becomesaware, or but for its gross negligence should have become aware, ofboth the circumstances giving rise to the claim and the identity ofthe defendant.Limitation periods are considered to be part of the substantive law.


3.1 How are civil proceedings commenced (issued and served)in Germany? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Germany? Is there a preferred method ofservice of foreign proceedings in Germany?

Court proceedings are initiated by filing a statement of claim withthe court. The statement of claim will be served on the defendantby the court. The most common method of service is by registered mail withreturn receipt (Einschreiben mit Rückschein). Alternatively, thecourt may commission the postal service or a bailiff to deliver thedocuments to the defendant and to complete the form on return ofservice (Zustellungsurkunde). For a foreign defendant on which no domestic service can be

effected, the court will institute proceedings to serve the statementof claim in the jurisdiction where the defendant is domiciled or hasits residence. Service of process within the European Union islargely governed by the EU Service Regulation (CouncilRegulation (EC) No. 1348/2000). With regard to service to othercountries, the 1965 Hague Convention on the Service Abroad ofJudicial and Extra-judicial Documents in Civil and CommercialMatters or one of the bilateral treaties to which Germany is a partymay apply. In the absence of a treaty, service of process will bemade in accordance with the international principles relating toreciprocity in granting judicial assistance.Under the EU Service Regulation, the two common methods ofservice of foreign proceedings in Germany are service throughdesignated agencies (i.e. the local courts where the service is to beeffected) and service by registered mail with return receipt. Unlikeother member states of the European Union, Germany does notallow direct service through judicial officers, officials or othercompetent persons. Under the 1965 Hague Service Convention,service in Germany is generally effected through the centralauthority designated by the relevant German state.

3.2 Are any pre-action interim remedies available in Germany?How do you apply for them? What are the main criteria forobtaining these?

There are two types of pre-action interim or provisional remedies:The creditor of a monetary claim can apply for an attachmentorder (dinglicher Arrest) to preliminarily secure the futureenforcement of a judgment to be obtained in the mainproceedings. The application must contain the factsestablishing jurisdiction, an attachment claim, and anattachment reason. The claimant must provide the court withprima facie evidence of all three requirements. Thisevidence can be provided by sworn affidavits of the claimant. A preliminary injunction (einstweilige Verfügung) securesthe future enforcement of non-monetary claims ortemporarily regulates a legal relationship in order to avoidsubstantial disadvantages. In rare cases, the claimant canalso seek performance of a claim by way of injunction. Therequirements for obtaining a preliminary injunction aresimilar to those for obtaining an attachment order.

Attachment orders are usually issued ex parte without an oral hearing.In proceedings for a preliminary injunction, a decision without anoral hearing can only be issued in urgent cases. Attachment ordersand preliminary injunctions in urgent cases are usually issued withinone or two days, and sometimes even within a few hours.


The statement of claim must specify the competent court, theparties, and the relief sought.In terms of particulars, the statement of claim must, at a minimum,specify the subject matter and the grounds for the claim raised. Itshould also include a statement of the value of the matter in dispute.In practice, a statement of claim in large commercial disputes isusually a full brief offering or providing evidence and oftenaccompanied by exhibits.


Amendments of a claim are allowed without any restrictions beforethe claim has been served on the other party. An amendment in analready pending matter requires either the consent of the defendant



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or that the court deems such amendments to be appropriate.However, extending or restricting the original motions for relief orsupplementing or correcting the original statement of fact are notdeemed to be amendments.

4 Defending a Claim


In the statement of defence the defendant is required to deal withthe factual and legal contentions of the statement of claim. Thestatement of defence must name the court where the action ispending and the parties involved. It must further contain a specificmotion, usually to dismiss the action in full or in part.The defendant can file a counterclaim (Widerklage) against theclaimant provided the subject matter of the counterclaim issufficiently connected with the subject matter of the original action.In addition or in the alternative, a defence of set-off is available.


Upon receipt of the statement of claim, the court orders either anearly first hearing (früher erster Termin) or written preliminaryproceedings (schriftliches Vorverfahren). If the latter is the case, asfrequently in commercial proceedings, the court will set a time limitof two weeks from the service of the statement of claim, withinwhich the defendant must notify the court in writing whether thedefendant intends to defend against the claim. At the same time, atime limit of at least two further weeks will be set for filing a writtenstatement of defence. If the court chooses an early first hearing, itschedules a date for the hearing and usually fixes a time for thedefendant to file a written statement of defence. Upon motion ofthe defendant, the court can extend the filing periods.


German civil procedure does not allow a defendant who has a claimfor reimbursement, contribution or indemnity against a third partyto simply add the third party to the lawsuit. Rather, the defendantmust commence separate proceedings against the third party in theevent of an unfavourable outcome.A defendant in such a position can, however, file a third party notice(Streitverkündung), which will be served by the court, inviting thethird party to participate as a third party intervener. The third partymay then join the proceedings either on the side of the claimant oron the side of the defendant, or may refuse to join the proceedingsat all. The third party will be bound by the outcome of theproceedings and will, therefore, be precluded from asserting that thejudgment rendered against the party giving the notice is incorrect.A third party notice has this effect regardless of whether the thirdparty chooses to join the proceedings or not.


If the defendant fails to indicate its intention to defend itself againstthe claim within the time limit set by the court (see Part I, question4.2 above), a default judgment may be rendered prior to the oral

hearing upon motion by the claimant. A default judgment may alsobe rendered if the defendant “fails to appear” in the oral hearingeither in a physical sense or in a legal sense by choosing not to pleadbefore the court or by not being represented by an attorney admittedto the court when representation is mandatory.If the defendant does not object to the default judgment within twoweeks as of service of the judgment, the judgment becomes legallybinding.


The defendant may object to a court’s jurisdiction. If preliminarywritten proceedings are adopted (see Part I, question 4.2 above), thedefendant has to explicitly object to the court’s jurisdiction in itsfirst written submission, as otherwise a court can assumejurisdiction by (deemed) submission. Likewise, in an early firsthearing the defendant has to explicitly clarify that its appearance isonly made for the purpose of objecting to the court’s jurisdiction toavoid jurisdiction by submission.



It is possible for several claimants or defendants to join in one civilaction, provided that the asserted claims are legally or factuallyrelated. If the court considers the claims not to be sufficientlyrelated, it may order separate trials but will not dismiss the claims.


The court may on its own motion order the consolidation of severalpending proceedings involving the same or even different parties ifthe claims are closely connected in legal and not only factualrespects, or if the claims could have been asserted in one legalaction. Consolidation is only possible at the same jurisdictionallevel and if the same court is competent to hear all claims.


The court must split trials in cases where the prerequisites for aconsolidation are not met (see Part I, question 5.2 above). Inaddition, the court has discretion to order that factually and legallyseparate claims which were raised in one action be dealt with inseparate proceedings. The same applies if the defendant filed acounterclaim and the counterclaim has no legal connection with theclaim asserted in the action.


6.1 Is there any particular case allocation system before thecivil courts in Germany? How are cases allocated?

At first instance, all civil and commercial matters with a value indispute of up to EUR 5,000 are under the jurisdiction of the localcourts. The regional courts are competent for litigation exceedingthis threshold.

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Every court has an organisational chart to determine which judge orwhich chamber is competent to hear and decide the case. Theorganisational chart is set up on the basis of general characteristicsof the claim, such as date of receipt, subject matter, initial letter ofthe claimant’s surname, domicile of the claimant, etc.Organisational charts are essential in Germany and have to befollowed strictly as they implement the constitutional right to beheard by the statutorily determined judge.

6.2 Do the courts in Germany have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

In German civil litigation a court has the duty to conduct the case ina manner to reach a prompt, economical and just resolution of thedispute. Although the parties, by their submissions and actions,govern the proceedings according to the principle of partyautonomy, German judges are bound to manage the case actively. Furthermore, the court has the duty to provide indications andfeedback to the parties relating to factual as well as legal issues. Itmay also point out possible deficiencies of the statement of claim,such as lack of jurisdiction, inconclusiveness of the pleadings, etc.Interim applications by the parties include:

application for interim remedies (see Part I, question 3.2above);application for specific document production orders (see PartI, section 7 below);motion for security for the costs of the proceedings (see PartI, question 1.6 above).

With the exception of interim remedies, interim applications of theparties generally do not trigger additional court costs.

6.3 What sanctions are the courts in Germany empowered toimpose on a party that disobeys the court’s orders ordirections?

German civil courts have no power to impose coercive measures ona party that disobeys the court’s orders or directions. However, if oneof the parties disobeys the court order to appear in an oral hearing, theparty risks losing the case by default judgment upon motion by theother party (see also Part 1, question 4.4 above). Furthermore, if aparty fails to comply with a time limit set by the court and is not ableto excuse its failure sufficiently, the court is empowered inappropriate cases to reject and disregard late submissions.

6.4 Do the courts in Germany have the power to strike outpart of a statement of case? If so, in what circumstances?

There is no specific rule providing for the court’s power to strikeout a claim. However, if a claim is found to be clearly unfoundedbased on the facts alleged in the statement of claim, the court maydismiss the case on the merits after a short hearing and withouttaking evidence.

6.5 Can the civil courts in Germany enter summary judgment?

In order to expedite the proceedings, a claimant can bring an actionfor summary proceedings based on documentary evidence or on abill of exchange. In these proceedings, the parties are allowed torely only on documents and party testimony for evidence. Suchsummary proceedings only lead to a judgment subject to areservation. This judgment is enforceable, but can be overturned ata later stage at which all kinds of evidence are allowed.

6.6 Do the courts in Germany have any powers to discontinueor stay the proceedings? If so, in what circumstances?

A claimant may discontinue all or only part of a claim for anyreason at any time prior to the first oral hearing. Thereafter, theclaim may only be discontinued with the consent of the defendant.Permission of the court is not needed. If proceedings arediscontinued, the claimant is generally required to bear thedefendant’s costs as well as the court fees.The court may, at its discretion, stay the proceedings in certaincases. Commonly, the courts order a stay if the decision on thepending claim depends on the outcome of another pending lawsuitor on questions of fact or law which are the subject ofadministrative or criminal proceedings.Upon motion of the parties, the court may also at its discretion suspendthe proceedings, if, for example, an out-of-court settlement is likely.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Germany? Are there any classes of documents that donot require disclosure?

There is no disclosure process in German court proceedings. If aparty wishes to rely as evidence on a document in the possession ofthe other party, it must describe such document to the court withreasonable particularity and show why it is relevant to the outcomeof the dispute. The court may then order the production of suchspecific documents from the other party. Such requests fordocument production may be raised in the statement of claim orstatement of defence or at any of the further stages of theproceedings (see Part I, question 1.3 above).

7.2 What are the rules on privilege in civil proceedings inGermany?

Parties to civil proceedings as well as third parties are protected bya number of privileges, such as:

family privilege; professional privilege (e.g. lawyers, certified auditors, taxadvisers or notaries);privilege against self-incrimination; andtrade secrets.

Parties and third parties need not testify or provide documents onissues protected by such privilege.

7.3 What are the rules in Germany with respect to disclosureby third parties?

The court may order a third party to produce documents relevant tothe dispute, which are in its possession and to which one of theparties has referred, unless such a production order would beunreasonable or privileges apply.

7.4 What is the court’s role in disclosure in civil proceedingsin Germany?

Only the court may order production of documents from parties orthird parties. If a party refuses to produce documents upon a courtorder, the court may draw adverse inferences against that party. If athird party refuses to produce documents, the court may order fines or,in severe cases, detention to enforce its order against the third party.



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7.5 Are there any restrictions on the use of documentsobtained by disclosure in Germany?

Since there are no disclosure proceedings in German civilprocedure, there are no specific restrictions limiting the use ofproduced documents.

8 Evidence

8.1 What are the basic rules of evidence in Germany?

As a general rule, each party carries the burden of submitting andproving those facts upon which its claim or defence is based.Everything that remains uncontested by the other party isconsidered as proven, and only contested facts are subject to thetaking of evidence. If a fact is contested by the opponent, the otherparty must describe the evidence upon which it intends to rely toprove that fact. If necessary, the court will then render an order forthe taking of such evidence and evaluate the outcome.


Five forms of evidence are available: (i) witnesses; (ii) experts; (iii)documents; (iv) inspection by the court; and (v) party testimony.Experts are appointed by the court if the determination or the properassessment of specific facts requires special expertise. A court-appointed expert is required to be impartial and qualified. Writtenexpert opinions by party-appointed experts, which are ratherunusual in German court proceedings, are not treated as expertevidence, but as part of the respective party’s pleadings.


Witnesses domiciled or residing within the jurisdiction of the Germancourts have the duty to appear when summoned, to testify truthfully,and to give testimony under oath when required by the court. If awitness fails to appear, the court may order fines or even detention. Written witness statements are not common in Germany. Typically,witnesses testify orally in court in the presence of the parties andtheir attorneys.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Germany?

The offer of evidence is submitted by the party bearing the burdenof proof. It is then up to the court to decide whether the taking ofevidence is necessary and which measures to order (see Part I,question 8.1 above).


9.1 What different types of judgments and orders are the civilcourts in Germany empowered to issue and in whatcircumstances?

German courts are empowered to issue contested and uncontestedjudgments, such as default judgments, judgments by consent, andjudgments by waiver.

Corresponding to three different types of relief, there are threecategories of contested judgments:

judgments for affirmative relief, issued in claims for specificperformance, as well as for all kinds of monetary claims;declaratory judgments, aimed at the declaration of theexistence or non-existence of a legal relationship between theparties; andjudgments for altering a legal relationship or status.

The court may also order interim measures (see Part I, question 3.2above).


German courts have the power to award damages for any losssuffered. However, the concept of punitive damages is alien toGerman civil law. With regard to all monetary claims, interest ispayable at a rate fixed by statute. The debtor owes interest at leastfrom the date the litigation is legally pending. On costs see Part I,question 1.5 above.


For the enforcement of a domestic judgment, the party seekingexecution must apply to the competent local court or the bailiff atthe local court for execution measures. The enforcement of foreign judgments is governed by the law of theEuropean Union, multilateral and bilateral treaties, and domesticprocedural rules. In relation to the member states of the EuropeanUnion, under Council Regulation (EC) No. 44/2001, a judgmentrendered in a member state is declared enforceable in Germanyupon motion by the interested party, without a re-examination of thejudgment, unless for example German public policy is violated.In the absence of international treaties, domestic statutory lawapplies. Recognition of foreign judgments depends on a number ofrequirements, such as no violation of German public policy, properservice of process on the defendant, no incompatibility of thejudgment with an earlier judgment of a foreign or German court inthe same matter, the safeguarding of the principle of reciprocity, andof proper jurisdiction of the foreign court.

9.4 What are the rules of appeal against a judgment of a civilcourt of Germany?

Two levels of appeal exist:At the first level, there is the general appeal. Judgments of the localcourts can be appealed to the regional courts, whereas first instancejudgments of the regional courts can be appealed to the higherregional courts. The grounds for a general appeal may either be thewrong application of procedural or substantive law by the lowercourt or the incorrectness or incompleteness of the lower court’sfactual findings. An appellant is obliged to file the appeal withinone month as of service of the judgment of the lower court.Judgments delivered on a general appeal are subject to a secondappeal. A second appeal is only admissible if the matter is offundamental significance or if a decision is required in order tofurther develop or to maintain the consistency of the law. The scopeof re-examination is strictly limited to issues of law. The secondappeal has to be filed with the Federal Court of Justice within onemonth after service of the judgment of appeal.

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1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Germany?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

The most frequently used methods of dispute resolution in Germany(other than litigation) are arbitration and mediation. Germany is a party to the New York Convention on the Recognitionand Enforcement of Foreign Arbitral Awards, which facilitates theenforcement of awards. German courts are generally arbitration-friendly and tend to enforce arbitration agreements. German courtsmay order interim measures and assist with the taking of evidencein arbitral proceedings, regardless of whether the seat of the arbitraltribunal is in Germany or elsewhere. Challenges to an award arelimited to New York Convention grounds. Mediation is slowly becoming more popular for commercialdisputes in Germany. Mediation can take place out of court or becourt-annexed. In principle, procedural law requires the court to tryto reach an amicable settlement of the dispute at each stage of theproceedings, and courts use various types of mediation proceduresto achieve this goal. Where mediation is used in larger commercialdisputes, out-of-court mediation upon agreement of the parties ismore common.Other forms of dispute resolution include expert determination(Schiedsgutachten) and conciliation (Schlichtung).


Arbitration proceedings in Germany are governed by the GermanArbitration Act, which is part of the German Code of CivilProcedure. The German Arbitration Act is based on theUNCITRAL Model Law, with only few minor differences. There is no specific set of laws or rules governing mediation. Suchrules are generally agreed upon by the parties.

1.3 Are there any areas of law in Germany that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

In Germany, generally any claims involving an economic interestare arbitrable. Claims not involving an economic interest arearbitrable to the extent that parties are entitled to conclude asettlement on the issue in dispute. Examples of disputes which arenot arbitrable include questions involving criminal law and familylaw matters. Patent, competition and intra-company disputes arearbitrable. Similar considerations apply to mediation; however, mediation isalso used in family law matters.


2.1 What are the major dispute resolution institutions inGermany?

The major dispute resolution institution, providing rules forarbitration and mediation proceedings, is the German Institution ofArbitration (Deutsche Institution für Schiedsgerichtsbarkeit, DIS,www.dis-arb.de).


Arbitral awards are binding and enforceable under the New YorkConvention. Settlement agreements reached in mediation are binding on theparties and enforceable in accordance with ordinary contract lawprinciples in German courts. An expert determination is binding upon the parties. It may only bechallenged on the basis of a “manifest error”.



The importance of mediation in Germany continues to grow. In2008, discussions focussed on the Directive 2008/52/EC of theEuropean Parliament and of the Counsel of 21 May 2008 on certainaspects of mediation in civil and commercial matters (MediationDirective), which is to be transposed into national law of themember states within the next three years. The Mediation Directivedeals mainly with the effect of mediation on limitation andprescription periods, the enforceability of agreements resultingfrom mediation and the confidentiality of mediation. It is expectedthat the adoption of the measures provided for in the MediationDirective will promote the use of mediation in Germany as well asin cross-border disputes.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Germany?

In 2008, Germany celebrated the 10-year anniversary of theGerman Arbitration Act and of the DIS Arbitration Rules. Theconsensus in Germany is that both the German Arbitration Act andthe DIS Arbitration Rules have served the domestic andinternational arbitration community well and that Germany is wellpositioned as an attractive place for international arbitrations.



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Michael Christ

Gleiss LutzMendelssohnstrasse 8760325 Frankfurt/MainGermany

Tel: +49 699 5514 252Fax: +49 699 5514 198Email: [email protected]: www.gleisslutz.com

Dr. Michael Christ is an associated partner in the Gleiss Lutz DisputeResolution Practice Group. He advises and represents bothdomestic and foreign clients in a wide range of contentious matters,including corporate, finance and general commercial disputes.Michael also advises clients in arbitration proceedings and acts asadministrative secretary in international arbitration proceedings.Michael is the co-author of the chapter on “Legal Privilege andConfidentiality in Germany” in Koehnen/Russenberger/Cowling,Privilege and Confidentiality: An International Handbook, publishedby the International Bar Association (IBA).Michael studied law at the universities of Frankfurt, Paris X-Nanterre(licence en droit) and London (LL.M.) and obtained a doctorate inlaw (Dr. iur.). Michael has been with Gleiss Lutz’ Frankfurt officesince 2003.Michael is fluent in German, English and French.

Claudia Krapfl

Gleiss LutzMaybachstrasse 670469 StuttgartGermany

Tel: +49 711 8997 213Fax: +49 711 8550 96Email: [email protected]: www.gleisslutz.com

Dr. Claudia Krapfl is an associated partner in the Gleiss Lutz DisputeResolution Practice Group with a specialisation in internationalarbitration and cross-border litigation. Claudia regularly advisesclients in international arbitration proceedings. She has also actedas arbitrator and administrative secretary in various arbitrations. She is Member of the Chartered Institute of Arbitrators (MCIArb), aswell as a member of the German Institution of Arbitration (DIS), theGerman-American Lawyers’ Association (DAJV), the SwissArbitration Association (ASA), the London Court of InternationalArbitration (LCIA), and is coordinator of the DIS40 Stuttgart. Claudia regularly publishes on arbitration and is a co-author of thechapter on enforcement in Böckstiegel/Kröll/Nacimiento, Arbitrationin Germany (Kluwer Law International, 2007). Claudia is fluent in German and English.

Gleiss Lutz is one of the leading international law firms in Germany, offering comprehensive advice and representationin all areas of business law. With offices in Berlin, Frankfurt, Munich, Stuttgart and Brussels, Gleiss Lutz provides itsclients at home and abroad with legal advice of the highest quality. Gleiss Lutz enjoys a close alliance with the Englishlaw firm Herbert Smith and the Dutch/Belgian law firm Stibbe.

Gleiss Lutz’ dedication to advocacy of the utmost quality has made it the firm of choice for high-stakes andgroundbreaking disputes. The firm has successfully acted in litigation and arbitration relating to securities, corporate,product liability, general commercial, construction, IP/IT, labour, antitrust, professional liability, insolvency, and publiclaw matters.

The Dispute Resolution Practice Group can draw on a deep reservoir of expertise in all areas of business law and in allindustry sectors, and is committed to efficient case handling. The combination of quality and cost-effectiveperformance is the key to why our clients are highly satisfied with our services.

Gleiss Lutz



Chapter 22

F.A. Arias & Muñoz

Guatemala

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Guatemala got? Are thereany rules that govern civil procedure in Guatemala?

Guatemala has a civil law system.Yes, rules are governed by the civil and commercial procedure codeand the arbitration law.

1.2 How is the civil court system in Guatemala structured?What are the various levels of appeal and are there anyspecialist courts?

The civil court system consists of:minor courts;district civil courts;courts of appeals; andSupreme Court of Justice.

1.3 What are the main stages in civil proceedings inGuatemala? What is their underlying timeframe?

The main stages in civil proceedings are: claim; summons;defendant’s actions; demurrers; evidence period; reception ofevidence; hearing; ruling; and appeal.The time frame depends on the nature of the civil procedure(ordinary, summary, oral or enforced collection).

1.4 What is Guatemala’s local judiciary’s approach toexclusive jurisdiction clauses?

These clauses are accepted by the courts.

1.5 What are the costs of civil court proceedings inGuatemala? Who bears these costs?

Each party is responsible for the costs incurred for any legal actiontaken. In the event of a conviction of court fees, the owing partymust compensate the other party for all of the necessary expenses.The ruling judge should condemn the losing party for thereimbursement of the other party’s costs.

1.6 Are there any particular rules about funding litigation inGuatemala? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

No. Access to the Justice system is gratuitous, and there is nosecurity for costs, since these are derived from the final judgment.The contingency/conditional fee arrangements exist withinarbitration clauses but not in judicial litigation.


2.1 Are there any pre-action procedures in place inGuatemala? What is their scope?

Precautionary measures include: personal security, restrictions,attachments, sequestration, intervention, urgent measures,anticipated evidence, interrogatories, exhibition of documents,bonds, exhibition of commercial and accounting books, exhibitionof goods, judicial inspection, expert evidence and witnessinterrogation.


Obligations derived from contracts have a limitation period of fiveyears. The payment of professional fees, salaries and wages have alimitation period of two years; and mortgage and collaterals have alimitation period of 10 years. The limitation periods are calculatedas of the date they were due.


3.1 How are civil proceedings commenced (issued and served)in Guatemala? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Guatemala? Is there a preferred method ofservice of foreign proceedings in Guatemala?

Civil proceedings are commenced by presenting a claim, and it isserved through the centre for service of process. It may be alsoserved by a notary process server; and, out of the country, it isserved by a requisitorial letter to the judge.

Shajida Beatriz Espat Godoy

Luis Fernando Zelada López



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3.2 Are any pre-action interim remedies available inGuatemala? How do you apply for them? What are themain criteria for obtaining these?

No, pre-action interim remedies are not available.There is a conciliatory figure, as a phase before the in-court disputesbegin.


The basis of the claim, evidence that will be provided, legal groundsand the petition are the main elements of the claimant’s pleadings.


Yes, pleadings can be amended at any moment up until thedefendant has responded to the claim.

4 Defending a Claim


The statement of defence has the same elements as the plaintiff’spleading; and yes, the defendant can counterclaim, or presentdemurrals.


The time-limit depends on the type of process:ordinary: nine days; summary: three days; oral: three days minimum; orenforced collection: five days.


No, there is not.


The plaintiff may request that he be held in contempt and theprocedure continues without him, and his answer to the claim willbe considered negative. The defendant may present himself in anystage of the procedure and take from there on.


Yes, by presenting a conflict of jurisdiction action as a demurrer thedefendant can dispute the court’s jurisdiction.



Yes, a third party can be joined into ongoing proceedings as a thirdparty impleaded or a third party defendant.


By a joiner of claims: 1. when different claims proceed from thesame cause even if the parties and objects are different; 2. when theparties and objects are the same but the claim is different; 3. ingeneral, when a judgment made in one process, must produce “resjudicata”, or an adjudged thing in another process; and 4. it must berequested.


Guatemala has incidental procedures within the main claim.


6.1 Is there any particular case allocation system before thecivil courts in Guatemala? How are cases allocated?

The claim is presented before the Justice Administration’s auxiliaryservice centre that allocates claims randomly within the differentcourts.

6.2 Do the courts in Guatemala have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

No. The phases and terms are specifically limited within the law foreach procedure.

6.3 What sanctions are the courts in Guatemala empowered toimpose on a party that disobeys the court’s orders ordirections?

It will vary depending on the level of disobedience, from a penaltyor fine to certifying the disobedience and remitting it to a CriminalCourt.

6.4 Do the courts in Guatemala have the power to strike outpart of a statement of case? If so, in what circumstances?

Guatemalan courts do not have the power to strike out part of astatement of case.

6.5 Can the civil courts in Guatemala enter summaryjudgment?

No they cannot.

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6.6 Do the courts in Guatemala have any powers todiscontinue or stay the proceedings? If so, in whatcircumstances?

Yes, when a party requests a dismissal for want of prosecution or byway of extinction if actions. In District Court, the time frame oninaction is six months and in Appeals Court it is 13 months.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Guatemala? Are there any classes of documents that donot require disclosure?

Not applicable.

7.2 What are the rules on privilege in civil proceedings inGuatemala?

Not applicable.

7.3 What are the rules in Guatemala with respect to disclosureby third parties?

Not applicable.

7.4 What is the court’s role in disclosure in civil proceedingsin Guatemala?

Not applicable.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Guatemala?

Not applicable.

8 Evidence

8.1 What are the basic rules of evidence in Guatemala?

Each party must prove their respective arguments. Whoeverpretends a claim must provide the evidence on that which heconstitutes his pretension, and whoever contradicts the claim of hisopponent must prove the extinctive facts, or circumstance thatprevents the claim.


Admissible evidence includes: depositions; witness testimony;expert testimony; judicial inspection; documents; scientificevidence; presumptions; and expert evidence. Non Admissible evidence includes: those prohibited by law, thenotoriously dilatory; and those proposed to obstruct the process.Expert evidence does not compel the judge, who must form his ownconviction based on the facts that have been established during theprocess.


Only five witnesses of fact are allowed. The witness must be aminimum age of 16 years and not a blood or legal relative to any ofthe parties involved or their attorneys. Each question may onlyverse on one fact and must be concise. Questions of appreciation oropinions are not allowed. The witness is under oath.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Guatemala?

1. The Court may reject evidence that is prohibited by law, thenotoriously dilatory or that has been proposed to obstruct theprocedure.

2. The court will consider the merit of the presented evidenceby the rules of Reasonable Appreciation, and will dispose ofall evidence that does not pertain to the claim.


9.1 What different types of judgments and orders are the civilcourts in Guatemala empowered to issue and in whatcircumstances?

1. Decree: Issues procedural decisions. 2. Writs: Issues non procedural decisions, resolves incidental

procedures, resolves the main claim before the finalisation ofthe procedure.

3. Judgment: Resolves or decides the main claim after theprocedure has been concluded.


Damages and interests are only awarded when requested, and thecost of litigation is settled in the final sentence against the owingparty.


Domestic Judgments that are not obeyed may be enforced by wayof the Enforced Collection Procedure.Foreign Judgments may be enforced before the Guatemala Courtthat would have been competent to rule the case, if it had beenprocessed locally; and, to be enforced, it must meet the followingconditions: 1. it is the result of a personal, civil or commercialclaim; 2. it is not against a person “in absentia” or that resides inGuatemala; 3. the obligation to be enforced is if licit nature inGuatemala; 4. it is enforceable in accordance to the laws of thecountry it is from; and 5. it meets all the requirements to beconsidered authentic.

9.4 What are the rules of appeal against a judgment of a civilcourt of Guatemala?

Writs and Judgments are appealable when they contain resolutionsover preliminary duress, final judgments from a District Court, orconclude an incidental procedure. The term to appeal is three days.



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1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Guatemala?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Arbitration: An arbitration agreement is one by which parties decideto submit all or certain contractual or non-contractual controversiesbetween them to arbitration. The claim is then submitted within theagreed timeframe stating the facts on which it is based and thecounterparty must respond, submitting their means of evidence.The arbitrator, after a hearing, awards the claim. Arbitration can benational or international in all cases that parties have freedisposition according to law, or in cases that specific laws permit it. Mediation: Through which parties who have differences betweenthem, seek to overcome them with the collaboration of a thirdobjective and impartial person, whose function is to promoteformulas proposed by him, or the parties to solve the conflicts,avoiding an arbitration or court procedure.Tribunals: Justice is free and equal, and there is free access to thecourt system for anyone who needs to execute their actions andenforce their rights in accordance with the Law.Ombudsman: Protects individual, social, civil and political rights,fundamentally a person’s life, liberty, justice, peace, dignity andequality as well as the accepted and ratified international treaties orconventions.


Methods of dispute resolution are governed by:1. civil and commercial procedure code;2. arbitration law; and3. private arbitration centre rules.

1.3 Are there any areas of law in Guatemala that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

It depends on the nature of the contract or the legal transaction.


2.1 What are the major dispute resolution institutions inGuatemala?

Guatemala’s major dispute resolution institutions are: (i) The courtsystem; (ii) Arbitration centres (public and private); and (iii) theMediation and conciliation centres.


Binding and enforceable solutions are provided through a civilprocedure before the Court system.



There has been a trend in the frequent decision to use the arbitrationprocedure. Also, the mediation and conciliation procedures havebeen frequently used in other areas of the country outside of thecapital city.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Guatemala?

Guatemala is affected by the cultural patterns and attitudes of itscitizens, which have not been able to find identification within thejudicial system, basically because of corruption and the lack ofcredibility in the public institutions, as well as parties notcomplying with what has been agreed upon before or during theresolution of disputes. The underlying idea that the Ombudsman’soffice focuses on political and criminal matters also sends out amessage of distrust in this method.

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Luis Fernando Zelada López

Arias & MuñozAvenida La Reforma 7-62, zona 9 Edf. Aristos Reforma, nivel 10, Local 1001 E.Guatemala


Main Areas of PracticeCivil LawMercantile LawLabour LawConstitutional LawExperienceFernando has a Law degree from the Universidad de San Carlos deGuatemala (1990) and is also authorised as practicing Attorney andNotary Public. He attended the programme of legal aspects ofinternational business at the Instituto Centro Americano deAdministración de Empresas INCAE in Nicaragua (2003) recognisedby Georgetown, University Law Center. He received a master’sdegree in Civil Law from the Escuela de Estudios Superiores,Universidad de San Carlos de Guatemala (2006).CareerFernando has a Law degree from the Universidad de San Carlos deGuatemala (1990) and is also authorised as practicing Attorney andNotary Public. He attended the programme of legal aspects ofinternational business at the Instituto Centro Americano deAdministración de Empresas INCAE in Nicaragua (2003) recognisedby Georgetown, University Law Center. He received a Master’sdegree in Civil Law from the Escuela de Estudios Superiores,Universidad de San Carlos de Guatemala, 2006.LanguagesHe is fluent in Spanish.

Shajida Beatriz Espat Godoy

Arias & MuñozAvenida La Reforma 7-62, zona 9Edf. Aristos Reforma, nivel 10, Local 1001 E.Guatemala


Main areas of practice Administrative LawCivil LawFamily LawLabour LawOil & GasEnvironmental LawIntellectual PropertyLitigationExperienceBeatriz has experience in Legal Counsel, both within the privatesector as well in the public sector, with experience in civil, family,criminal and intellectual property litigation. She as also hasprofessional practice within the Hydrocarbon sub-sector includingupstream exploration, exploitation and production, and downstreamcommercialisation, administrative field disputes, governmentalcontracts, declaration of harmfulness of contracts, and generalaspects of environmentally protected areas.She has also provided counsel for social assistance projects such ascommunity homes, care centres, the establishment anddevelopment of contracts for programmes and has issued legalopinions about legislation projects.CareerBeatriz graduated from the University Francisco Marroquín LawSchool, in Guatemala in 1993 where she obtained a Bachelor ofLaw and Social Sciences, and the professional degrees of lawyer andnotary. She has a specialisation in criminal law, obtained at theUniversity of Salamanca, Spain in 1995, and has finished theacademic requirements in order to obtain a Master’s degree inSocial Sciences from the University Francisco Marroquín inGuatemala since 2005.LanguagesShe is fluent in Spanish, English, and basic French.




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Chapter 23


Arias & Muñoz

Honduras

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Honduras got? Are thereany rules that govern civil procedure in Honduras?

Honduras has the Civil law system which depends oncomprehensive legislative enactment called codes and aninquisitorial method of adjudication.

1.2 How is the civil court system in Honduras structured?What are the various levels of appeal and are there anyspecialist courts?

The civil court system in Honduras is structured primarily by thefirst instance courts integrated by two courts, which are the: (i) thecourt who knows cases from amounts of 1 Lempira to 50,000Lempiras; and (ii) the court who knows cases from 50,001Lempiras and above, and in second instance by the court of appeals,and in third instance by the Supreme Court who knows of appealsfor annulment of judgments.

1.3 What are the main stages in civil proceedings inHonduras? What is their underlying timeframe?

The main stages for an ordinary action are the following: The actor (plaintiff) files the petition, which is admitted.The defendant has six days to answer the petition.After the petition is answered, both parties have a 10-day commonperiod to propose evidence.After the proposition of evidence, both parties have a 20-daycommon period to evacuate the proposed evidence.After the evacuation of evidence period is closed, each party willhave a six-day period to argue conclusions of the case.Finally, the decision is awaited.

1.4 What is Honduran local judiciary’s approach to exclusivejurisdiction clauses?

Honduras accepts exclusive jurisdiction clauses when both partieshave previously agreed to it.

1.5 What are the costs of civil court proceedings in Honduras?Who bears these costs?

The costs of civil court proceedings in Honduras are free. TheHonduran government bears these costs.

1.6 Are there any particular rules about funding litigation inHonduras? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

No, the costs are free.


2.1 Are there any pre-action procedures in place in Honduras?What is their scope?

The pre-action procedures in place in Honduras are the following:1. The request to the defendant an affidavit.2. The request to the defendant the exhibition of the assets

which would be object of the claim.3. The request to the heir(s) the exhibition of the will.4. The request to the buyer or to the seller in case of eviction,

the exhibition of the property titles.5. The request to a share holder of exhibition of the

corporation’s charter, bylaws and debts.


The limitation periods are pre-established by law. Different claimshave different limitation periods. For instance, if you want to petition a claim over a movable assetthe time period is six years since the possession of the movableasset is lost.If the claim is over real property, the time period in which you canpetition the claim is 10 years.If your petition is over the payment of rent or any other annualpayments, the time period is two years.

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3.1 How are civil proceedings commenced (issued and served)in Honduras? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Honduras? Is there a preferred method ofservice of foreign proceedings in Honduras?

After the petition is filed, the court adopter, which is a judicialofficer, notifies the defendant that he has been sued. The defendanthas six days to answer the petition.If the defendant is not in Honduras the period to answer the petitionwill be established by the court.The applicable method to notify the defendant outside of Hondurasis by means of a notice issued by the Honduran Supreme Court ofJustice, which will be sent by the Ministry of Interior (Secretaria deGobernacion y Justicia) to the Secretary of Foreign Relations so thelatter can adopt it to the determined form by the applicable treaties.

3.2 Are any pre-action interim remedies available inHonduras? How do you apply for them? What are the maincriteria for obtaining these?

Yes, conciliation can be obtained outside the court. This isnegotiated between both parties.


The pleading should contain the following:1. Title.2. The name or representative’s personality of the plaintiff or

his solicitor.3. The name or representative’s personality of the defendant or

his solicitor.4. The facts and legal principles in which the claim is

supported.5. A clear petition of what is asked of the court to rule.


Yes, when the court rejects the pleading or a dilatory exception isdeclared, the plaintiff can amend the pleading.

4 Defending a Claim


If the defendant does not argue a dilatory exception he will havethree main elements to answer the pleading, which are:1. the acceptance of the pleading;2. the conditional acceptance of the pleading; and3. a counterclaim.


There is no time limit in which the defendant has to be served; it is

within the actor’s interest, so it is up to the plaintiff to pressure thecourt. However, once served, the defendant has six days to answerthe pleading.


Yes, when a surety pays the creditor upon the default of theprinciple debtor, the surety has the right of reimbursement againstthe principle debtor.


The proceeding will continue in default.


Yes, the incompetence of the tribunal where the claim is petitionedis a dilatory exception.



Yes. There is a mechanism of a third party intervention when it isbased either upon the ownership of the property in dispute or uponthe right of the third person to recover his credit before the plaintiff.


Yes. The consolidation of records of proceedings may be orderedwhen two or more proceedings that can constitute one same lawsuitand can de determined by one same decision, in the following cases:1. When the suits in one trial are the same as the suit petitioned

in another trial, or when the suit from one trial is theconsequence of the suit from another trial.

2. When the parties involved in one trial are the same involvedin another trial even if the suits are different.

3. When the decision in one trial could produce the exceptionof a thing adjudged in another trial.


The third party intervention is determined in a split trial.


6.1 Is there any particular case allocation system before thecivil courts in Honduras? How are cases allocated?

The cases are allocated in Honduras by the area of jurisdiction of eachcourt and by the actions of lesser or greater import. In Honduras,lesser import is from the amounts of 1 Lempira to 50,000 Lempiras;the greater import is from the amount of 50,001 Lempiras and above.



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6.2 Do the courts in Honduras have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The court administers the claims; however, it is based on theapplicable approved legal procedure. The courts do not have thepower to manage cases not within the legal procedure established.

6.3 What sanctions are the courts in Honduras empowered toimpose on a party that disobeys the court’s orders ordirections?

Whoever disobeys or denies an imposition, direction or order by thecourt will be fined with one to three years of seclusion.

6.4 Do the courts in Honduras have the power to strike outpart of a statement of case? If so, in what circumstances?

Yes, when the evidence or statement does not apply or are not usefulfor the case, and when the statement is not rendered within the legalperiod of time.

6.5 Can the civil courts in Honduras enter summary judgment?

There is a summary procedure in Honduras, by which the trialbecomes shorter.

6.6 Do the courts in Honduras have any powers to discontinueor stay the proceedings? If so, in what circumstances?

Yes, a proceeding will expire if, during a period of three years inFirst Instance, two years in Courts of Appeal, and one year in theSupreme Court, no action has been filed or entered by the parties.However, this does not extinguish the plaintiff’s right to petition theclaim again.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Honduras? Are there any classes of documents that donot require disclosure?

Not applicable in Honduras.

7.2 What are the rules on privilege in civil proceedings inHonduras?


7.3 What are the rules in Honduras with respect to disclosureby third parties?


7.4 What is the court’s role in disclosure in civil proceedingsin Honduras?


7.5 Are there any restrictions on the use of documentsobtained by disclosure in Honduras?


8 Evidence

8.1 What are the basic rules of evidence in Honduras?

The evidence in Honduras will be received when both sides motionfor it, and when it is necessary to the determination of a substantialand related fact of the claim.


The evidence should directly apply to the arguments motioned bythe parties before proposal of the evidence. The court can reject theevidence considered as useless which has been proposed in trial.However, evidence can be accepted within the proposal period, ifsuch evidence has recently become acknowledged by a party or ifan event has recently occurred.The following is the list of evidence admissible by HonduranCourts:1. Public documents.2. Private documents.3. Confession.4. Inspection by judge.5. Opinion of experts.6. Witness.7. Presumption.


The rules regarding the witnesses in Honduras are:The following cannot be witnesses:1. People under the age of 14.2. People with mental problems when the facts to state were

preformed, or when they are to sate their declaration.3. People who are blind or deaf when the facts to sate are those

perceived through the sense which they lack.4. Those who, in the same trial, have been bribed even when

not convicted yet.5. A vagrant person.6. Those who have been convicted for parricide, homicide,

bribery, false testimony, robbery, falsification, or fraudulentbankruptcy.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Honduras?

The court must first open the evidence term so both parties canpropose and eventually evacuate the proposed evidence before thejudge. The court can reject the proposed evidence when it is notdone according to the legal procedure.

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9.1 What different types of judgments and orders are the civilcourts in Honduras empowered to issue and in whatcircumstances?

Civil courts in Honduras can issue Definite Judgments, which putan end to a proceeding. They can also issue InterlocutoryJudgment, which is procedural.


When the sentence is issued, the court will determine which partywill pay the litigation costs and, in case of the payment of damagesand interests, the court will determine the amount.


A domestic judgment will be enforced by the court which made thedecision in first instance. The judgment will be enforced dependingon what the ruling is.If the judgment involves a liquid and determined amount to beconsigned, the court will proceed to the execution by theforeclosure proceedings.If the judgment involves an undetermined amount to be delivered,the court will proceed to liquidate the amount.If the judgment involves the obligation to do something, the courtwill affix a prudent period of time. The condemned party could befined if he does not finish on time.If the judgment involves the obligation of not doing something andthe condemned party does it, the court will proceed to thedemolition at expenses of the condemned party.A foreign judgment will be enforced in accordance to the treatiessigned between countries, and the execution will follow Honduranlaw. In the absence of a treaty, under the reciprocity rule, reciprocity willbe presumed, and a judgment given by a competent foreign court willbe admissible in the Honduran courts and will be enforceable therebyunder the same terms and conditions that such foreign court recognisesfor judgments issued in Honduras; if the foregoing is not applicable,such judgment may be enforced in Honduras, provided that:i. the judgment was issued as a consequence of exercising a

personal right of action;ii. such judgment is not a default judgment;iii. compliance of the obligation being pursued is lawful in

Honduras; andiv. such judgment complies with all the necessary legal

requirements imposed by the foreign court in order toconsider it authentic, as well as with the requirementsimposed by Honduran law for the purpose of admitting suchjudgment as evidence in Honduras. The enforcement of thejudgment issued by a foreign court must be petitioned to theSupreme Court, and the corresponding writ of petition is tobe notified to the opposite party and the Public Ministry andfollow the corresponding procedure set forth in the HonduranCivil Procedure Law.

9.4 What are the rules of appeal against a judgment of a civilcourt of Honduras?

If the appeal is against a ruling of the court of mere procedure, the

appeal must be argued in the act of the notice of the ruling or thenext available day.If the appeal is against a court decision, the appeal must be arguedwithin the three following days from the notice of the decision.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Honduras?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

(1) Conciliation: dispute resolution mechanism through which,two or more people, try to achieve for their selves thesolution of their differences with the assistance of a thirdneutral and qualified party which will be named conciliator.

(2) Arbitration: dispute resolution mechanism through which theinvolved parties in a controversy entrust its solution to anarbitration panel.

(3) Mediation: dispute resolution mechanism through which twoor more people try to achieve for their selves the solution oftheir differences with the assistance of a neutral third namedmediator which will not intervene in the difference.


The conciliation and arbitration law.

1.3 Are there any areas of law in Honduras that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

The law stipulates that conciliation will apply when there has notyet been a decision pronounced by a first instance court.The arbitration procedure stipulates it cannot be used for thefollowing:(1) criminal causes, except when in relation to civil

responsibilities derived from a crime;(2) future alimony;(3) conflicts derived from the civil status of people;(4) affairs which have had a judgment pronounced before;(5) affairs which need the justice department to intervene; or(6) in general, all conflicts which are not able to be settled.


2.1 What are the major dispute resolution institutions inHonduras?

The Conciliation and Arbitration Canter of Honduras.


Yes, the arbitration panel will issue an award that will have the samevalidity of a final judgment issued by a court.



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The arbitration dispute resolution is most commonly used inHonduras because of the reliability of the arbitrators, which must besigned in the Arbitration and Conciliation Canter of Honduras. It isthe fastest mean of solving conflicts.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Honduras?

Actually, in Honduras these procedures of alternate disputeresolution mechanism, specifically arbitration, have gained a lot ofcredibility during recent years. The foregoing has occurredconsidering the fact that these procedures offer parties a moretransparent, economic, impartial and confidential procedure. Theaward issued by an arbitration panel has the same validity as anactual judgment issued by a court. Arbitration in Honduras has gained force during recent years;nowadays, Arbitration centers have many registered qualifiedprofessionals, which offer a quicker solution mechanism resultingin a decongestion of the tribunals in our judicial system.

Fanny Rodríguez

Arias & MuñozColonia Palmira, Avenida República de Colombia No. 2302Honduras


Main areas of practiceCommercial LawContractual LawCorporate LawAdministrative LawCivil LawProcedural LawExperienceShe has advised national, as well as international, companies ofCommercial and Financial relevance. She coordinates the Litigationand Arbitration Department of Arias & Muñoz Honduras, and is amember of the staff of Attorneys that has counsel banks andfinancial institutions in the areas of credit structuring. She hasrepresented different financial institutions before the regulatoryentities, having vast administrative experience.CareerFanny has a Law Degree from the Universidad Nacional Autónomade Honduras (1999) with emphasis in Commercial Law. LanguagesShe is fluent in Spanish and English.

Raul Villars

Arias & MuñozColonia Palmira Avenida República de Colombia No. 2302Honduras


ExperienceRaul belongs to the litigation department of the Honduran office; hehas developed his experience in several legal areas, with particularemphasis in civil law, administrative, civil and mercantileprocedures. Additionally, he has participated in several litigationprocedures representing the interests of recognised national andinternational companies. His practice also includes the generaladvising of companies which are involved in potential disputesprocedures in several legal areas. CareerRaul obtained his Law Degree from the Universidad NacionalAutónoma de Honduras in 2008. Languages He is fluent in Spanish and English.





Chapter 24


India

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has India got? Are there anyrules that govern civil procedure in India?

The Constitution of India is supreme and it governs the legal systemin India. The Constitution is premised on separation of powersamong the Judiciary, the Executive and the Legislature andindependence of each arm; hence the Judiciary in India isindependent of the Executive and the Legislature. The Indian legalsystem is based on the common law tradition and governed by theprinciple of precedent (stare decisis). The Civil Procedure Code of 1908 (CPC) codifies the procedure forinitiation and conduct of civil actions, in India. It deals inter alia, with:

Procedure for institution of civil case.Rights of the parties to a case, viz. Plaintiff and Defendant.Jurisdiction and parameters within which the Courts canfunction and pass diverse orders.Specific rules for conduct of proceedings.Right of Review, Appeals, Revision and Reference.

1.2 How is the civil court system in India structured? Whatare the various levels of appeal and are there anyspecialist courts?

Being a federal setup, India is divided into 28 States (having StateLegislature) and seven Union Territories (directly administered bythe Federal Government) and the States are further subdivided intoDistricts (primarily on subdivision of revenue/administrativedistricts). Subordinate Courts have been set up in each district,primarily at three levels, bearing different nomenclatures indifferent States.

First level Courts are primarily Courts of facts for civildisputes. Second level Courts hold civil trials with higher pecuniaryjurisdiction and in certain States have appellate jurisdictionover First level Courts. The Third level Courts are the Courts of District Judge,which exercise appellate and revisional jurisdiction inrespect of first/second level Courts and in some specialenactments original jurisdiction. The District Judge holdsadministrative powers in relation to the Courts in the District.

Generally each State has a designated High Court (smaller Stateshaving a common High Court), which exercises superintendence

over Subordinate Courts within its jurisdiction. Appeals from theCourts of District Judges lie to the High Court and the decision ofHigh Court are binding on all District Courts within its jurisdiction. Appeals raising legal issues (from Orders passed by the HighCourts), lie to the Supreme Court, which is the Court of lastinstance. Per Article 141 of the Constitution of India, the decisionsof Supreme Court are binding on all Courts in India. Civil proceedings in India commence at the Subordinate Courtslevel and in some States (depending upon the pecuniaryjurisdiction) initiated in High Court. India has set up numerous specialised Courts/Tribunals over the yearsto try matters relating to a specific field viz., Company, Consumer,Taxation, Telecom, Banking, Capital Markets and Securities.

1.3 What are the main stages in civil proceedings in India?What is their underlying timeframe?

The following procedure is followed while initiating a civil actionin India:(i) initiation of proceedings by filing a plaint/application;(ii) issue of notice or summons by the Court to Defendant(s)/

respondent(s);(iii) appearance of Defendant(s) and filing of written statement/

response;(iv) framing of points of controversy called ‘issues’ between the

parties;(v) recording of evidence of petitioner(s), Defendant(s)/

respondent(s); (vi) hearing of oral arguments; and(vii) pronouncement of judgment/decree by the Court.Timeframes for the above stages are governed by the CPC with theLimitation Act 1963 governing timeframes for institution ofsuits/petitions etc. (Further see question 2.2 below.)

1.4 What is India’s local judiciary’s approach to exclusivejurisdiction clauses?

Exclusive Jurisdiction clauses have been upheld where partieschoose the jurisdiction of a Court out of two or more Courts, withinwhose territorial jurisdiction either cause of action wholly or partlyarises, or the Defendant is situated. Courts would consider thefollowing factors in upholding such exclusive jurisdiction clausesthat the choice has to be (i) clear and unambiguous; (ii) of bothparties; and (iii) binding on both parties. If more than one court hasjurisdiction over the matter, then, parties by agreement, can confinejurisdiction to one of the courts, however, jurisdiction cannot be

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conferred on a court, which otherwise does not have jurisdictionover that matter.The Supreme Court in “British India Steam Navigation Co. v.Shanmughavilas Cashew Industries”, (1990) 3 SCC 481 has upheld“choice of law” clauses in international contracts where the partieshave expressly chosen the law.

1.5 What are the costs of civil court proceedings in India?Who bears these costs?

The Court Fees Act of 1870 (“CFA”) and Suits Valuation Act, 1887(“SVA”) govern the costs for institution of civil proceedings inIndia. The Court Fee payable at the time of institution ofproceedings, being a State legislation, differs from State to State.Courts have the discretion (Section 35 of CPC) to award costs, todetermine as to who would pay costs, out of what property and theamount of such costs. Courts would consider various factors suchas the merits of the case, conduct of the parties etc. to determine theparty that would pay costs. Further Courts can award compensatory costs (Section 35A ofCPC) in respect of false or vexatious claims or defences and fordelaying the proceeding (Section 35B of CPC).

1.6 Are there any particular rules about funding litigation inIndia? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

Bar Council of India Rules (per Rule 20 of Chapter II, Part VI)prohibits Advocates to stipulate a fee contingent on the result oflitigation or agree to share the proceeds thereof. Further (per Rule32 of the said Rules), Advocates are not permitted to lend money totheir clients for initiating any legal proceedings in which they areengaged to represent. At any stage of the proceedings, Court can order the Plaintiff tofurnish security for payment incurred or likely to be incurred byDefendant(s) (per Order XXV of CPC). Further, in case, thePlaintiff(s) are not residents in India and they do not own sufficientimmovable property in India, the Court in its discretion can orderthe Plaintiff(s) to furnish security. In case security is not furnishedwithin the time fixed, the Court is empowered to dismiss the suit.


2.1 Are there any pre-action procedures in place in India?What is their scope?

There are no specific rules for pre-action procedures in India,except in case of suits against the Government or Public officers intheir official capacity in which case a two-month notice is requiredto be issued (Section 80(1) of CPC). On receipt of the statutorynotice the public authorities are expected to intimate within thestatutory period (or in any case before the Plaintiff embarks uponlitigation) their stand in relation to the grievances raised.However, in case urgent or immediate relief is required, civil actioncan be instituted without the issuance of the statutory notice, withthe permission of the Court (Section 80(2) of CPC).


The Schedule to Limitation Act, 1963 prescribes different limitationperiods for different civil actions. In case a specific statuteprescribes a period of limitation, such period of limitation wouldprevail over the general limitation prescribed in the Limitation Act. Generally, a time limit commences from the date on which cause ofaction (for suing) arose; however Part III of the Limitation Act,inter alia, allows for exclusion of time spent in prosecutingproceedings bona fide in Courts which otherwise suffer from defectin jurisdiction and extension of time in cases of fraud or mistake etc.In case of Appeal the time taken for obtaining copy of judgments,awards etc. are excluded. The law of limitation is considered as procedural law in India thatbars merely the remedy and not the right.


3.1 How are civil proceedings commenced (issued and served)in India? What various means of service are there? Whatis the deemed date of service? How is service effectedoutside India? Is there a preferred method of service offoreign proceedings in India?

Upon institution of a suit, summons is issued to the Defendant toappear and answer the claim by filing a defence, within 30 daysfrom the date of service of the summons.A summon may be served by delivering or transmitting a copythereof by:

registered/speed post; courier services as approved by the concerned High Court;andby any other means of transmission of documents includingfacsimile/electronic mail, as specified by the concerned HighCourt.

The summons shall be considered duly served on the Defendantwhen:

an acknowledgment or any other receipt signed by Defendantor his agent is received by the Court; orpostal article containing the summons is received back, withan endorsement that the Defendant or his agent refused toaccept it (presumption of service).

Order V Rule 25 of the CPC, provides for service to Defendantsresiding outside India, not having any agent empowered in India toaccept such service. Such service may be delivered by Airmail,courier service (as approved by the concerned High Court), e-mailor any other means as may be approved by the High Court. Specialrules for service of such summons have been made for service inBangladesh and Pakistan. The preferred mode of service of foreign proceedings in India is byway of Airmail. Unlike some countries, Indian law does not requireservice on foreign nationals/legal entities, through theirEmbassy/Foreign mission.

3.2 Are any pre-action interim remedies available in India?How do you apply for them? What are the main criteria forobtaining these?

The pre-action interim remedies available in India are termed as

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temporary injunctions and interlocutory orders (Order XXXIX ofCPC). The Court, in order to preserve the subject matter of civilaction/protect the interests of the Petitioner, can award ex parteorders at the first instance itself (for a limited period, generally untilthe next date of hearing) and thereafter issue notice of proceedings,to the Respondents.Temporary InjunctionA temporary injunction may be granted in a suit, if it is proved byan affidavit or otherwise, the following:

that any property in dispute in a suit is in danger of beingwasted or damaged or alienated by any party to the suit orwrongfully sold in execution of a decree; that the Defendant threatens, or intends, to remove or disposeof his property with a view to defrauding his creditors; orthat the Defendant threatens to dispossess the Plaintiff orotherwise cause injury to the Plaintiff in relation to anyproperty in dispute in the suit.

Interlocutory OrderInterlocutory order of various kinds may be passed under the CPC,and inter alia, include orders as to:

Interim Sale.Detention, Preservation, Inspection, etc of subject matter ofsuit. Deposit of Money.


Order VII of the CPC prescribes the elements of a plaint:Particulars of the Court, the Plaintiff and the Defendant.Where the Plaintiff or Defendant is a minor or a person ofunsound mind, a statement to that effect.The facts constituting cause of action and when it arose.The facts showing that the Court has jurisdiction.The relief, which the Plaintiff claims.Where the Plaintiff has allowed a set-off or relinquished aportion of his claim, the amount so allowed or relinquished.A statement of the value of subject matter of the suit for thepurposes of jurisdiction and of Court-fees, so far as thePlaintiff admits.


Pleadings can be amended under Order VI Rule 17 of CPC;however no amendment is allowed, once the trial has commenced,except where the Court is of the opinion that, in spite of duediligence the applicant could not have raised the matter beforecommencement of trial.

4 Defending a Claim


The elements of a statement of Defence (Written Statement) areprovided under Order VIII of CPC.

The entire defence has to be set out.The Defendant must specifically deal with each allegation offact and evasive denials are not permitted.

Every allegation in the plaint if not specifically denied or bynecessary implication, or stated not to be admitted, shall betaken to be admitted.New facts must be specifically pleaded.

Order VIII Rule 6-A of the CPC enables a Defendant to set up acounter-claim and the counter claim is to be filed not later than atthe time of filing a written statement. The Defendant may alsoclaim a set-off (Order VIII Rule 6 of the CPC), if the suit is forrecovery of money and if the amount claimed as set-off inter alia, isan ascertained sum that is legally recoverable.


Per Order VIII Rule 1 of CPC, the written statement has to be filedwithin 30 days from the date of service of summons, which can beextended by the Court up to 90 days, for sufficient reasons. The Supreme Court in the case of Kailash v. Nankhu, AIR 2005 SC2441 has however held that the time limit of 90 days, thoughnegatively worded, being procedural law and not containing anyspecified penal consequences, is directory in nature and notmandatory. The Court has further held that an extension may beallowed in circumstances which are exceptional, occasioned byreasons beyond the control of the Defendant and whereby graveinjustice would be occasioned if time was not extended. TheSupreme Court in the case of R.N. Jadi and Brothers and Ors. V.Subhashchandra, AIR 2007 SC 2571, has held that the 90-day limitcannot be extended indiscriminately and can only be extended forsufficient and good reasons. The Supreme Court, in the case ofSambhaji v. Gangabai, decided on 20.11.2008 has held that merelybecause a provision of law is couched in negative languageimplying mandatory character, the same is not without exceptions.The procedural law should not ordinarily be construed asmandatory. Provisions of the Code of Civil Procedure or any otherstatute ought not to be construed in manner which would leavecourt helpless to meet extraordinary situations in ends of justiceunless compelled by express and specific language of statute.


Order VIII A of the CPC (applicable only in select States in India)provides for a third party procedure which is applicable when aDefendant claims for contribution or indemnity. It is only theDefendant in the suit who can avail of the third party procedure.The Court must satisfy itself before issuing notice under this rulethat the suit is maintainable, that the Court has jurisdiction toentertain it, that a question of contribution and indemnity isinvolved and the claim is such as that can be tried in the suit withoutinjustice to any party.


Order IX Rule 6 of CPC provides that if Defendant does not appeareven on service, the Court may set down the Defendant ex parte andproceed to decide the case; however the Defendant on showingsufficient cause can seek recall of such order (Order IX Rule 7 ofthe CPC).Per Order IX Rule 11 of the CPC, if one of two or more Defendantsdoes not appear, the suit shall continue and the Court shall at thetime of pronouncing judgment make such order as it deems fit withrespect to the Defendant(s) who did not appear.



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Per Order IX Rule 13 of the CPC, the Defendant(s) against whoman ex parte decree is passed can apply for setting aside the decree,on the ground that summons was not duly served or that he wasprevented by sufficient cause from appearing when the suit wascalled for hearing.


Sections 15 to 21A of the CPC deal with jurisdiction of Courts andthe Defendant is entitled to dispute the Court’s jurisdiction, interalia on grounds that the Court lacks territorial or pecuniaryjurisdiction. Objections as to jurisdiction may be raised in the written statementand would be heard and tried as a preliminary issue. Additionally,the Defendant can file an application for rejection of a plaint ongrounds of territorial or pecuniary jurisdiction (Order VII Rule 11of the CPC), which would be taken up by the Court, beforeproceeding with the suit. Such objections as to jurisdiction shouldbe taken at the earliest possible opportunity in the Court of firstinstance.



Under Order I Rule 10 of the CPC a party can be added to a suit (a)when he ought to have been joined as Plaintiff or Defendant, and isnot joined so; or (b) when, without his presence, the questions in thesuit cannot be completely and effectually decided. However partiescannot be added so as to introduce a new cause of action or so as toalter the nature of the suit.


Order II Rule 3 of the CPC provides for joinder of causes of action.Where there is only one Plaintiff and one Defendant, the rule saysthat the ‘Plaintiff may unite in the same suit several causes of actionagainst the same Defendant’. However, if the other Defendant(s)are not concerned with the other claims, joinder of causes of action,is not permitted.


Order II Rule 6 of the CPC provides that the Court is empowered toseparate trials where the joinder of causes of action in one suit mayembarrass or delay the trial or is otherwise inconvenient.


6.1 Is there any particular case allocation system before thecivil courts in India? How are cases allocated?

The cases are allocated according to the pecuniary and territorialjurisdiction assigned to each Court within the district, based on thespecific rules framed, in each District/State.

6.2 Do the courts in India have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

No specific provision is provided in CPC, except under Section 151of CPC (inherent powers of Court), a Court may, inter alia, passorders to:

To consolidate suits and appeals.To postpone hearing of suits pending decision, of selectedaction.To stay cross suits on the ground of convenience.To order joint trial of suits.To inquire whether the proper parties are before it.

Numerous kinds of interim applications may be made by partieswhich inter alia, include:

Interim injunctions.Amendment of pleadings.Discovery of documents, discovery and interrogatories.

Depending on the nature of the interim application and the particularfactual matrix, the Courts will determine the Costs if, payable.

6.3 What sanctions are the courts in India empowered toimpose on a party that disobeys the court’s orders ordirections?

In case a temporary injunction is granted (Order XXXIX Rules 1 &2 of the CPC) in a suit and Defendant(s) breach such order ofinjunction, the Court is empowered (Order XXXIX Rule 2A of theCPC) to either attach the property of the Defendant(s) or detain theDefendant(s) in civil prison for a term not exceeding three months. Section 94 of the CPC provides that the Court is empowered toprevent the ends of justice from being defeated if so prescribed (inthe Rules to the CPC) by:

Issuing a warrant to arrest and if he fails to show cause whyhe should not give security for his appearance, if he fails tocomply with an order for security commit him to civil prison.Directing the Defendant to furnish property as security ororder attachment.Granting a temporary injunction and in case of disobediencecommit the person to civil prison and order attachment andsale of property.Appointing a receiver for any property and enforce theperformance of obligations by attaching and selling theproperty.Making such other interlocutory orders as may appear to theCourt to be just and convenient.

At the base of this Section, the rules to the CPC prescribe specificsituations where such powers are used to award sanctions if theOrders of the Court are disobeyed. Further, the Court also has thepower to award costs for disobedience of its Orders. Courts in India also have the power to strike out pleadings. Seequestion 6.4 below. In addition under the Contempt of Courts Act, 1971 (“CCA”), theCourts have the power to punish for its contempt; however suchpower is not available to subordinate Courts and it is only therespective High Courts which can be approached.

6.4 Do the courts in India have the power to strike out part ofa statement of case? If so, in what circumstances?

Under Order VI, Rule 16 of the CPC, the Court may at any stage ofthe proceedings order to be struck down or amended any matter in

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the pleading which:may be unnecessary, scandalous, frivolous or vexatious;may tend to prejudice, embarrass or delay the fair trial of thesuit; oris otherwise an abuse of the process of the Court.

6.5 Can the civil courts in India enter summary judgment?

Summary procedure (Order XXXVII of the CPC) is prescribed infollowing cases:

suits upon bills of exchange and promissory notes; orsuits for recovery of debts or liquidated demand in moneywhich is payable by the Defendant(s) based on a writtencontract/enactment/guarantee given in respect of a debt or aliquidated demand.

6.6 Do the courts in India have any powers to discontinue orstay the proceedings? If so, in what circumstances?

Under Section 10 of the CPC, the Courts have the power to stay theproceedings in the following circumstances:

The issue in the suit is directly and substantially the same asin a previously instituted suit between the same parties.The previously instituted suit is pending:(i) in the same Court in which the subsequent suit isbrought; (ii) in any other Court in India;(iii) in any Court beyond the limits of India established orcontinued by the Central Government; or continued by theCentral Government; or(iv) before the Supreme Court.Where the previously instituted suit is pending in any of theCourts mentioned in the above clauses, such Court is a Courtof jurisdiction, competent to grant the relief claimed in thesubsequent suit.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin India? Are there any classes of documents that do notrequire disclosure?

Disclosure of documents is dealt in Rules 12 and 14 of Order XI ofthe CPC.Any party to the suit can apply to the Court for discovery ofdocuments which is or has been in the possession or power of theother party, relating to any matter in question therein (Rule 12). Thedocuments sought to be discovered need not be admissible inevidence in the inquiry of the proceedings and it is sufficient if thedocuments would be relevant for the purpose of throwing light onthe matter in controversy.Before passing an order for discovery, the Court must consider:

the relevance of the document; andwhether the document is really required for effectivedisposal.

The Court has the power to suo moto order production ofdocuments (Rule 14).Documents that relate to any “matter in question” in the suit and thedisclosure of which is considered necessary by the Court may bedisclosed.

7.2 What are the rules on privilege in civil proceedings inIndia?

Production of documents can be resisted in India as a right on thefollowing three grounds of privilege:

exclusive evidence of the party which is required to producethe document;confidential communication between the party and it’s legaladvisor; andpublic official document the production of which would beinjurious to public interest.

7.3 What are the rules in India with respect to disclosure bythird parties?

Courts can issue summons to third parties to produce documentswhich are in their possession (Order XVI Rule 6 of the CPC),necessary to decide matters in question before Court.

7.4 What is the court’s role in disclosure in civil proceedingsin India?

The Court may on an application or suo moto order the disclosureof documents if it is satisfied that the production of such documentsis necessary to decide matters in question. Further see question 7.1above.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in India?

No specific restrictions have been provided for use of documentsobtained by disclosure.

8 Evidence

8.1 What are the basic rules of evidence in India?

The basic rules of evidence as per law of evidence are:Evidence must be confined to the matter in issue.Hearsay evidence is not admitted.Best evidence must be given in all cases.


Evidence of (i) facts in issue; and (ii) facts specifically consideredas relevant by the Indian Evidence Act, 1872 (“IEA”) areadmissible in Indian Courts. Relevant facts inter alia, include (i)facts which occasion, cause or effect facts in issue; (ii) admissionsand confessions of parties; (iii) statements made in certainsituations such as dying declaration etc.; (iv) judgments of Courtsof justice; and (v) expert evidence etc. Expert evidence is admissible (Sections 45 to 51 of the IEA) whichinter alia, provide that when a Court has to form an opinion onpoints of foreign law, science, art, handwriting or signatures etc.,the evidence of persons specially skilled in such fields would beadmissible.



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The provisions of the CPC and IEA govern the examination ofwitness. Witnesses are examined by Counsel for the party presentingevidence and cross-examination is conducted by other side.Witnesses may be re-examined after cross-examination, if required.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in India?

Please see questions 7.1 and 7.4 above. In addition, Section 165 ofthe IEA empowers the judge with extensive powers to pose anyquestion or order production of any document. The powers aregranted to arrive at the truth of the matter.


9.1 What different types of judgments and orders are the civilcourts in India empowered to issue and in whatcircumstances?

Indian Courts are empowered to pass, inter alia, the followingjudgments and orders:

judgment for declarations, specific performance, permanentinjunction and damages (actual/compensatory, exemplaryand punitive);summary judgments (See question 6.5 above);interlocutory orders and temporary injunction; andconsent orders.


Courts are empowered to award damages. There is no specificstatutory prescription of the types of damages. However, Courts inIndia may, inter alia, award damages towards (i) actual/indirectpecuniary loss sustained such as loss of profits etc; (ii) value of timeloss, etc.; and (iii) mental agony/suffering, bodily suffering etc. Inaddition, Courts in India may awards, nominal, exemplary andpunitive damages. Section 34 of the CPC, empowers the Courts to award interest incases of money decrees (judgment awarding money).For Costs see question 1.5 above.


Decrees and orders are enforced by means of execution, which aredealt with in Part II of CPC and Order XXI thereof. Section 51 of CPC provides for the modes of execution of a decree.Courts may, subject to the limitations and conditions contained inthe rules to the CPC, execute a decree by:

Delivery of any property specifically decreed.By attachment and sale or by the sale without attachment ofany property.By arrest and detention in prison, where specificallypermissible.By appointing a receiver.In such other manner as the nature of the relief granted mayrequire.

Only ‘conclusive’ foreign judgments can be enforced in India(Section 13 of CPC). Foreign judgments would not be treated asconclusive if the judgment:

is pronounced by a Court not having jurisdiction; has not been given on the merits of the case; appears prima facie to be founded on an incorrect view ofinternational law or a refusal to recognise the law of India inwhich cases such law is applicable; was obtained in violation of principles of natural justice; has been obtained by fraud; orsustains a claim founded on a breach of any law in force inIndia.

Conclusive foreign judgments may be enforced by (i) instituting asuit on such foreign judgment or (ii) Execution Proceedings interms of Section 44-A of the CPC. The said section provides thatwhere a certified copy of a decree if any of the superior Courts ofany reciprocating territory has been filed in a District Court, thedecree may be executed in India as if it had been passed by theDistrict Court. The Indian Government declares by way ofnotification the reciprocating territories and most of the countries inthe world, do not have reciprocating arrangement with India.

9.4 What are the rules of appeal against a judgment of a civilcourt of India?

The right of Appeal is prescribed by CPC and an Appeal can bepresented only by a:

party to the suit if he is aggrieved by the judgment; orperson who is not a party, but who is aggrieved by thejudgment if he seeks and gets leave of the Court to prefer anappeal against the judgment.

Section 96 of CPC provides for Appeals against any decree passedby any Court exercising original jurisdiction to the Court authorisedto hear Appeals from the decisions of such Courts. In general, noAppeals can be preferred against decrees obtained with the consentof parties. Section 100 of CPC provides for a Second Appeal to the concernedHigh Court against a decree passed in Appeal by a subordinateCourt, only if a question of law is raised. Special statutes conferring jurisdiction upon civil Courts to dealwith special matters would contain provisions dealing withAppeals, and such provisions would prevail over the generalprovisions contained in CPC.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in India?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Arbitration, Mediation and Conciliation are available in India. Inaddition, parties can frame their own hybrid forms of these methodssuch as Mediation-Arbitration etc., since these are voluntary formsof dispute resolution.Ombudsman have also been set up under special statutes to resolvedisputes, for e.g. under banking and insurance laws.The Legal Services Authorities Act, 1987 (“LSA”) has also evolvedthe mechanism of “Lok Adalats” in India. Lok Adalats (Hindi) in

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English literally means the ‘people’s Court’ and are generallymanned by serving or retired judicial officers. Such Courts aregeared towards effecting a compromise or settlement between theparties and may be approached by either or both of the parties to adispute. Lok Adalats have been extremely successful in India inresolving disputes.


Arbitration and Conciliation are governed by the Arbitration andConciliation Act 1996 (“ACA”). The ACA, which is based on theUNCITRAL Model Law, governs both domestic and internationalarbitration. Enforcement of foreign awards is also dealt with in theACA. Special statutes which provide for arbitration and/or mediation havealso been enacted in India for example the Industrial Disputes Act,1947, the Land Acquisition Act, 1984, and the Forward ContractsAct, 1956. By virtue of Order X Rule 1-A of CPC, Civil Courts at the firsthearing of the suit after recording the admissions and denials ofparties as made out in the pleadings, direct the parties to the suit toopt for either of the modes of settlement outside the Court asprovided for in Section 89 of CPC. Section 89 of CPC provides that where it appears to the Court thatthere exist elements of a settlement which may be acceptable to theparties, the Court shall formulate the terms of the settlement andgive them to the parties for their observations and after receivingsuch observations, the Court may reformulate the terms of apossible settlement and refer the same for:

arbitration; conciliation; judicial Settlement including settlement through Lok Adalat;ormediation (wherein the Court shall effect a compromisefollowing the procedure as may be prescribed).

1.3 Are there any areas of law in India that cannot usearbitration/ mediation/ tribunals/Ombudsman as a meansof dispute resolution?

Matters relating to administrative law, constitutional law andcriminal law etc. cannot be resolved by using arbitration, mediationetc.


2.1 What are the major dispute resolution institutions in India?

The Indian Council of Arbitration has been set up at the nationallevel to promote the settlement of commercial disputes througharbitration. In addition, the Federation of Indian Chambers ofCommerce and Industry (FICCI), the Bengal Chamber ofCommerce (BCCI), the East India Cotton Association Ltd. (EICA)and the Cotton Textiles Export Promotion Council etc., have set uptheir arbitration wings, to settle disputes. The Government of Indiais actively working on finalising the modalities for setting up theSouth Asian Regional Centre of the Permanent Court of Arbitration,Hague and the Chapter is likely to be set up soon.


The Arbitral award is final and binding on the parties and may beset aside only on limited grounds as prescribed in the ACA. Settlements arrived at, in conciliation and through Lok Adalats arealso final and binding on the parties.



The last decade has witnessed an increased usage of alternatedispute resolution methods in India. The advantages offered bysuch methods even led the legislature to make amendments in CPCto encourage the parties to opt for various alternate methods interms of Section 89 and Order X Rule 1A of CPC. (See question1.2 above.)The usage of dispute resolution clauses in both government andcommercial contracts is also increasingly common. States across India are also attempting to set up, necessaryinfrastructure to encourage the alternative dispute resolutionmethods, since Courts in India have a considerable backlog of caseswhich has led to delay in disposal of cases.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in India?

The Supreme Court in Salem Advocate Bar Association v. Union ofIndia, AIR 2005 SC 3353, while interpreting the amendments madein Section 89 and in Order X of the CPC directed the setting up ofa Committee to frame draft rules for mediation under S. 89(2) (d) ofthe CPC. (See question 1.2 above.) Consequently, the Committeepresided over by Mr Justice M. Jagannadha Rao, Chairman of theLaw Commission of India has prepared a comprehensive code forthe regulation of the ADR process initiated under S 89 of the CPC,which consists of two parts viz., Part I: the ADR Rules 2003consisting of “the procedure to be followed by the parties and theCourt in the matter of choosing the particular method of ADR” andPart II: Mediation Rules, 2003 consisting of “draft rules ofmediation under section 89(2)(d) of the Code of Civil Procedure”. A welcome feature of these Rules is that they provide a detailedscheme for conduct of training courses in ADR, and preparation ofa detailed manual of procedure for ADR. The manual will describevarious methods of ADR, the choice of a particular method, thesuitability of a method for any particular type of dispute etc. TheManual shall particularly deal with the role of conciliators andmediators in disputes which are commercial or domestic in nature.Part II of the Rules contains a carefully prepared scheme for thequalifications/disqualifications, proper selection, empanelment andappointment of mediators to suit a particular case. The Rules alsodeal with cases where the parties succeed in arriving at a solutionthrough the ADR processes only regarding some of the issues andnot all. Very importantly, the Rules also lay down a code of ethicsto be followed by the mediator in the proper conduct of theproceedings so as to arrive at a fair and just settlement in animpartial and dignified manner so as to instil confidence in theparties in himself and the credibility of the process in general.



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IndiaPremnath Rai Associates

Premnath Rai

Premnath Rai Associates, AdvocatesW-126 (Ground Floor) Greater Kailash - Part II New Delhi -110 048India

Tel: +91 11 4067 6701Fax: +91 11 4067 6768Email: [email protected]

Premnath Rai is a founder member of Premnath Rai Associates,which focuses its practice in the areas of corporate, commercial andbusiness laws. He has advised Indian and foreign clients on avariety of transactions involving mergers, acquisitions, takeovers,corporate restructuring, joint ventures and strategic alliances. Priorto moving to taking up private practice, he served as general counselof Indian subsidiary of a leading international IT major. He is agraduate in Commerce (University of Mysore), Law (University ofBangalore) and a Fellow Member of the Institute of CompanySecretaries of India. He has presented papers in national andinternational programmes and conferences and contributed articlesto leading international publications.

R. Jawahar Lal

Premnath Rai Associates, AdvocatesW-126 (Ground Floor) Greater Kailash- Part II New Delhi - 110 048India

Tel: +91 11 4067 6702Fax: +91 11 4067 6768Email: [email protected]

R. Jawahar Lal is a graduate in Economics and received hisBachelor’s degree in Law in 1992. He has extensive experience inhandling diverse disputes and litigation. He has handled a widevariety of matters, disputes and litigation involving products liability,consumer interest, business, trade, commercial, property,employment and service matters, antitrust, corporate, commercial,shareholders, arbitration and conciliation, taxation and intellectualproperty related disputes and litigation, at different Forums. Besides,he has handled a number of assignments involving corporatemergers and restructuring.

Premnath Rai Associates (PRA) is a corporate and commercial law firm that focuses its practice in providing qualityand solution oriented services. With the diverse knowledge, qualification and experience of members of PRA team,PRA constantly endeavours to implement the concept of solution oriented legal practice. PRA has a blend of Indian andinternational clients, commercial and not-for-profit organisations. As part of discharging its professional and societalresponsibility, PRA renders pro-bono services. With its offices in New Delhi and Bangalore, India, and a network ofprofessional associates in other major cities in India and abroad, PRA is well equipped to service its clientele and caterto their needs. Members of PRA team devote a part of their time and efforts to specific focused areas of practice andactively participate in professional, industry and academic activities.

PRA focuses its practice in its specialised domain of corporate and commercial laws including dispute resolution andlitigation. PRA serves a wide range of client needs in Practice Horizontals and Practice Verticals.

In Practice Horizontals, PRA has strong presence in the areas of in-bound and out-bound Investments, mergers andacquisitions, joint ventures and collaborations, corporate and business structuring, capital raising, legal due diligence,legal and regulatory audit, securities law, employment laws, corporate litigation and arbitration.

In Practice Verticals, PRA has strong presence in life and general insurance, information technology (IT) and IT EnabledServices, healthcare and hospitality, financial services, food and confectionery, biotech and pharmaceutical, in additionto advising clients in various other sectors and projects.

Delhi Office Bangalore OfficeW-126 (Ground Floor) 54/1, 2nd Main Greater Kailash- Part -II Vyalikaval New Delhi-110 048, India Bangalore-560 003 IndiaTel: (91-11) 4067 6767 Tel: (91-80) 2334 2414, 4113 7814Fax: (91-11) 4067 6768 Fax: (91-80) 2334 2415Email: [email protected] Email: [email protected]




Chapter 25

Ivor Fitzpatrick & Company

Ireland

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Ireland got? Are there anyrules that govern civil procedure in Ireland?

The Irish legal system is based upon the common law and the Courtsare thereby governed by the principle of precedent (“stare decisis”).Ireland also has a written Constitution that includes a Bill of Rightswhich was enacted by popular plebiscite held on 1 July 1937. Civil procedure is governed by Rules of the various Courts whichcomprise the Irish legal system. These are the Rules of the SuperiorCourts (“RSC”) which regulate proceedings before the High Courtand the Supreme Court, the Circuit Court Rules (“CCR”) and theDistrict Court Rules (“DCR”).

1.2 How is the civil court system in Ireland structured?

There are four jurisdictions in Ireland which deal with civil claims:-the Supreme Court; the High Court; the Circuit Court; and theDistrict Court. The Supreme Court is principally a court of appeal from judgmentsand orders of the High Court and specific case stated applicationson points of law from the Circuit Court. It also has originaljurisdiction in certain constitutional law matters. The High Court has unlimited jurisdiction to hear all mattersregardless of the amount of the claim and hears appeals fromdecisions of the Circuit Court and case stated applications from theDistrict Court. The High Court has a specialist Commercial Courtwhich commenced hearing cases in January 2004. Subject tocertain exceptions where there is no threshold (e.g. judicial reviewcases of a commercial nature and many intellectual propertyclaims), a claim must be for at least €1million to qualify for listingin the Commercial Court and must fall within the defined categoryof a “commercial dispute”. The Circuit Court has jurisdiction to hear claims in contract and tort toa monetary value of €38,092. The District Court has jurisdiction tohear only certain categories of cases to a monetary limit of €6,349.

1.3 What are the main stages in civil proceedings in Ireland?What is their underlying timeframe?

The main stages in civil law proceedings before the Irish Courts areas follows:

Issue of a Plenary/Personal Injury/Summary Summons

(High Court), Civil Bill (Circuit Court) or Civil Summons(District Court). Service of the initiating process upon the Defendant. ASummons or Civil Bill remains valid for service for a periodof 12 months from the date of issue. Leave from the Court isrequired to renew a Summons or Civil Bill if it cannot beserved within this period. Entry of an Appearance by the Defendant. This is normallyrequired within eight days in the High Court or 10 days in theCircuit Court. In High Court claims, delivery of the Plaintiff’s Statement ofClaim generally within 21 days from the date of Appearanceor as otherwise agreed between the parties. In liquidated(purely monetary) claims, a Motion is issued seekingSummary Judgment supported by an Affidavit.Delivery of a Notice for Particulars which normally requiresReplies within 21 days. Delivery of the Plaintiff’s Replies to any Notice forParticulars.Delivery of the Defence - 52 days in personal injury matters and28 days in all other civil proceedings is allowed for the serviceof a Defence from the delivery of the Statement of Claim.Delivery of a Reply (if considered appropriate) - normallydelivered within 14 days of receipt of the Defence.Filing and delivery of Affidavits of Discovery (whereappropriate).Filing and delivery of Interrogatories (where appropriate andwhere leave obtained from the Court).Filing and delivery of Replies to Interrogatories. Service of a Notice of Trial. Setting the action down for hearing, normally within 14 daysof the service of the Notice of Trial. Trial.Taxation/assessment of costs.

1.4 What are your local judiciary’s approach to exclusivejurisdiction clauses?

As the Lugano Convention enjoys the force of law in Ireland,exclusive jurisdiction clauses will usually be enforced by Irish Courtsin accordance with Article 17(1) of the Convention (see, for example,Stryker Corporation -v- Sulzer Metco AG (2006) IEHC 60).

1.5 What are the costs of civil court proceedings in Ireland?Who bares these costs?

Costs which are incurred in civil proceedings before Irish Courts

David Harris

Dympna Murphy



Irel

and

Ivor Fitzpatrick & Company Ireland

depend upon the time which is necessary to prepare the case for andto conduct the trial, the number of witnesses involved and thecomplexity of the legal issues which arise. The level of feescharged by solicitors and Counsel also vary significantly. Costs areat the discretion of the Judge and usually “follow the event” i.e. areawarded to the party which is successful at trial. Exceptions mayoccur when conduct of the successful party disentitles him/her fromrecovering some or all of the costs of the proceedings. If theamount of the costs to be paid cannot be agreed, an assessment ofcosts will take place before a Court Officer known as the TaxingMaster (High Court) or County Registrar (Circuit Court).

1.6 Are there any particular rules about funding litigation inIreland? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

Contingency fee arrangements are not permissible between lawyersand their clients in Ireland. Section 68(2) of the Solicitors’(Amendment) Act 1994 specifically prohibits such arrangements asdo the common law doctrines of maintenance and champerty. Feeson a “no win no fee” basis are permissible in Ireland and aredistinguished from contingency fees on the basis that the feespayable are not calculated by reference to the damages which maybe payable to a client. The High Court and Supreme Court each have a discretionarypower to make orders in certain circumstances requiring a Plaintiffto lodge funds as security for the Defendant’s costs and proceedingsare generally stayed until the funds are lodged.


2.1 Are there any pre-action procedures in place in Ireland?What is their scope?

It is advisable for litigants to serve a letter of claim prior to thecommencement of proceedings advising of the basis of the Plaintiff’sclaim and calling on the Defendant to admit liability. In personalinjuries actions, such pre-action notice is required by statute andproceedings can only be commenced in personal injury claims (notinvolving medical negligence) after the claim has been the subject ofan assessment by the Personal Injuries Assessment Board.

2.2 What limitation periods apply to different classes of claimfor the bringing of proceedings before the civil courts?How are they calculated? Are time limits treated assubstantive or procedural law issues?

Limitation periods applicable to civil claims are laid down bystatute. An action founded on a tort (other than an action based onnegligence, nuisance, or breach of duty which involves personalinjury or an action for slander) or a claim based on contract must bebrought within six years from the date upon which the cause ofaction accrued. The limitation period for libel claims is six yearswhilst it is three years for slander. In actions for personal injuriesbased on negligence, nuisance or breach of duty, claims must bebrought within two years from the date on which the cause of actionaccrued or from the date the Plaintiff first attained knowledge thathe had suffered a significant injury, whichever is the latter. In order to defeat a claim, a Defendant must plead that theproceedings have been issued out of time. In certain circumstances,for example where there has been fraud or where the Plaintiffsuffers from a disability, limitation periods may be suspended.


3.1 How are civil proceedings commenced (issued and served)in Ireland? What various means of service are there?What is the deemed date of service? How is serviceaffected outside Ireland? Is there a preferred method ofservice of foreign proceedings in Ireland?

Civil proceedings in Ireland are usually commenced by the issuingof a Summons (or Civil Bill in the case of Circuit Court) which isstamped or sealed by the issuing Court. The Summons or Civil Bill is generally required to be served within12 months from the date of issue. Service is usually effected bypersonal service in the case of an individual. A company is usuallyserved by post or by hand at its registered office. Where the courtis satisfied that a Plaintiff is unable to affect prompt service, anorder for substituted service can be made.Where a Defendant resides outside of Ireland, it is necessary to obtainleave from the High Court to issue a Summons for service outside thejurisdiction. Service is effected in accordance with the provisions ofCouncil Regulation 1348/2000 where Defendants reside within EUmember states or in accordance with the Hague Convention 1965 forDefendants outside the EU. Where a Defendant is not an Irishcitizen, they must be served with a notice of the proceedings ratherthan with the actual Summons commencing the action. The preferred method of service of foreign proceedings in Ireland ispersonal service.

3.2 Are any pre-action interim remedies available in Ireland?How do you apply for them? What are the main criteria forobtaining these?

The High Court and Circuit Court have powers to grant a wide rangeof interim and interlocutory (pending further order or trial) injunctiveorders where it is “just or convenient” to do so, on such terms as theCourt considers fit. In cases of urgency, interim injunctions can besought on an “ex parte” basis (i.e. not on notice to the Defendant) andare usually only in force for a short period pending the hearing of aninterlocutory application on notice to the Defendant. The three-stagetest for interim injunctive orders was established in Ireland by theSupreme Court in Campus Oil -v- The Minister for Energy (1983) 1IR 88 (applying the English decision of American CyanamidCompany -v- Ethicon Limited (1975) 1 All ER 504): (a) is there a serious/fair issue to be tried; (b) would damages be an inadequate remedy; and (c) does the balance of convenience lie in granting or refusing

the injunction. Additional criteria must be satisfied to justify the making ofparticular types of injunctive orders that have the potential to causesignificant harm to the other party or to infringe their usual rights.Mareva injunctions may be sought to restrain the dissipation orremoval of assets where it can be established there is a real risk thatthe other party will remove or dispose of its assets to frustrate anyjudgment which the Court may make. Anton Pillar Orders are madeto allow a Plaintiff to enter premises of another party to inspect andremove documents and other evidence prior to the trial of an actionwhere a strong likelihood has been established that material ofsubstantial importance will otherwise be removed or destroyed. In nearly all applications for interlocutory injunctions, the applicantwill be required to give an undertaking to compensate the affectedparty for any losses they may suffer by reason of the injunctiveorder if the applicant ultimately fails in their case at trial.

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3.3 What are the main elements of the Claimant’s pleadings?

A Statement of Claim will usually identify:The facts giving rise to the dispute. The elements of the Plaintiff’s cause of action or entitlementswhich are said to arise from the pleaded facts. Details of the relief sought including particulars of thedamages claimed.

3.4 Can the pleadings be amended, if so, are there anyrestrictions?

Amendments to pleadings are generally permitted once as of rightbefore the close of pleadings or subsequently with leave of theCourt. When leave is required, the Court generally proceeds uponthe basis that amendments should be allowed so as to enable the realquestions of controversy between the parties to be brought beforethe Court, provided this will not cause irredeemable prejudice to theother party. Where any prejudice is able to be addressed by othermeans, such as by an appropriate costs order, the amendments willgenerally be allowed and the prejudice dealt with in the alternativemanner (O’Leary -v- Minister for Transport, Energy &Communications (2001) 1 ILRM 132).

4 Defending a Claim

4.1 What are the main elements of a statement of defence?Can the defendant bring counterclaims or defence if setoff?

A Defence should contain “a statement in summary form of thematerial facts on which the party pleading relies forhis….Defence…but not the evidence by which they are to beproved…” (RSC Order 19, Rule 3). A Defence is expected toinclude “all matters which show the action…not to be maintainableor that the transaction is either void or voidable in a point of law,and all such grounds of Defence…, as if not raised would be likelyto take the opposite party by surprise, or would raise issues of factnot arising out of the proceeding pleadings…” (RSC Order 19,Rule 15). If a Defence does not deal with or address an allegationof fact made in the Statement of Claim, that allegation is deemed tobe admitted (RSC Order 19, Rule 13). A Defendant is able to bring a counterclaim or set off at the sametime as delivering his/her Defence. Such a counterclaim is able tobe brought against the Plaintiff or against a third party providedthere is a connection between the third party and the cause of action.It is open to the Plaintiff or any third party served with acounterclaim to apply to exclude the counterclaim from the actionso that it becomes the subject of separate proceedings (RSC Order21, Rule 14).

4.2 What is the time limit within which the statement ofDefence has to be served?

Under the RSC, a period of 28 days from delivery of the Statementof Claim is allowed for the service of a Defence in non-personalinjury actions (RSC Order 21, Rule 1). In personal injury claims, aperiod of eight weeks is allowed from the service of a personalinjury summons for the delivery of a Defence (RSC Order 1A, Rule8). In the Circuit Court, the Rules provide a time limit of 10 daysfrom the entry of an Appearance or delivery of Replies to a Noticefor Particulars (CCR Order 17, Rule 5). In practice, a Defence israrely served within these time limits as the parties usually agree

(and the Rules permit) reasonable extensions of time.

4.3 Is there a mechanism in your civil justice system wherebya Defendant can pass on liability by bringing an actionagainst a third party?

An independent action for contribution can be brought by aDefendant when he/she seeks to attribute liability in whole or inpart to a third party. Such a contribution action may be broughtwithin the limitation period of the principal action, or within twoyears of a finding of liability or the payment of damages to thePlaintiff, whichever is the greater (s.31 of the Civil Liability Act,1961). Alternatively, a Defendant can seek to join a third party as aDefendant to the existing proceedings in appropriate circumstances(see further discussion in question 5.1 hereof).


A judgment in default of pleading can be obtained against aDefendant who fails to enter an Appearance or to deliver a Defence.Where proceedings are served outside of Ireland under eitherCouncil Regulation 1348/2000 or the Hague Convention, judgmentin default of Appearance may be obtained if the Court is satisfiedthat the conditions contained in Article 19 of the Regulations orArticle 15 of the Convention have been met.

4.5 Can the Defendant dispute the court’s jurisdiction?

A Defendant may enter an Appearance solely for the purpose ofcontesting jurisdiction. A Defendant can also issue a Notice ofMotion under RSC Order 12, Rule 26 to set aside the service of theproceedings or to discharge the Order authorising such service. Aparty subject to a third party claim is able to apply by way of Noticeof Motion issued under RSC Order 16 Rule 8(3) to set aside thethird party proceedings.

5 Joinder and Consolidation


RSC Order 16, Rule 1 sets out the circumstances in which aDefendant may apply to join a third party, namely, where theDefendant claims:(a) to be entitled to a contribution or indemnity from some

person not already a party to the proceedings; (b) to be entitled against that third party to any relief or remedy

relating to or connected with the original subject matter ofthe action and which is substantially the same as the claim bythe Plaintiff against the Defendant; or

(c) any question or issue between the Defendant and theproposed third party is the same or substantially the same assome question or issue arising in the Plaintiff’s claim againstthe Defendant and that it should be properly tried not just asbetween the Plaintiff and Defendant but also as between thePlaintiff, the Defendant and the third party.

Even if the conditions in Order 16, Rule 1 are satisfied, the Courtretains a discretion to refuse to join a third party. The Court willgenerally consider whether it is in the interests of justice andreasonably practicable for all issues between all parties to be heardin the same trial.



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5.2 Does your civil justice system allow for the consolidationof two sets of proceedings in appropriate circumstances?If so, what are those circumstances?

RSC Order 49, Rule 6 empowers the Court to order the consolidationof proceedings. The Supreme Court identified the principles to beapplied to consolidation applications in Duffy -v- News GroupNewspapers Limited (1992) 2 IR 369 at 376 in the following terms:“1. Is there a common question of law or fact of sufficient

importance? 2. Is there a substantial saving of expense or inconvenience?3. Is there a likelihood of confusion or miscarriage of justice?”


Courts in Ireland have power to regulate the manner in whichproceedings are heard which includes the power to order split trialsand to direct preliminary hearings on discreet issues.

6 Duties and Powers of the Courts

6.1 Is there any particular court allocation system before thecivil courts in Ireland? How are cases allocated?

Proceedings in the High Court are allocated to various listsincluding a Personal Injuries list, a Chancery list, a Non-Jury list, aJudicial Review list, a Jury list and a Commercial list. Cases areallocated to such lists upon the basis of the subject matter of theclaims. The additional requirements for inclusion on theCommercial Court list are referred to in question 1.2 hereof.

6.2 Do the courts in Ireland have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

Formal case management presently operates in proceedings before theCommercial Court. An initial directions hearing before theCommercial Court determines the directions required to prepare theclaim for trial. A case management conference may fix timetables andto narrow the issues in dispute between the parties. Whilst there are no formal case management procedures in non-commercial list cases, individual Judges are taking a more active rolein the management of High Court cases generally and the Court haswide powers to make interim orders including for:

the provision of particulars of pleadings; the discovery of documents; the administering of interrogatories; andinterim injunctive orders.

The Court has power to penalise parties on costs for failing tocomply with directions and orders which it has made and, inextreme cases, may stay the proceedings until relevant orders havebeen complied with.

6.3 What sanctions are the courts in Ireland empowered to beimposed on a party that disobeys the court orders ordirections?

The most common power exercised to sanction a party’s failure tocomply with Court orders is the making of an adverse costs order.However, in appropriate cases, the Court may stay proceedingsuntil its orders are fully complied with and can either strike out theproceedings where the Plaintiff is in default or strike out the

Defence where default is by the Defendant. A party may also befound to be in contempt of Court and liable to imprisonment.

6.4 Do the courts in Ireland have the power to strike out partof the statement of case? If so, in what circumstances?

The RSC provide the Court may at any stage of the proceedingsstrike out or amend any pleading: (a) on the ground that it discloses no reasonable cause of action

or where the cause of action or defence is shown to befrivolous or vexatious; or

(b) where the pleading is unnecessary or scandalous or may tendto prejudice, embarrass or delay the fair trial of the action.

It is also well established that the Court possesses an inherentjurisdiction to strike out proceedings which are found to be an abuseof process.

6.5 Can the civil courts in Ireland enter summary judgment?

In High Court claims seeking pure monetary awards, summaryjudgment is sought after the entry of an Appearance by way ofMotion and Affidavit. In other civil claims, the Court possesses power to enter summaryjudgment without a full trial where the defence has no realprospects of success. Such jurisdiction “should be exercisedsparingly and only in clear cases”. The relevant test enunciated bythe Supreme Court in Aer Rianta Cpt -v- Ryanair Limited (2002) 1ILRM 381 is “whether, looking at the whole situation, theDefendant has satisfied the court that there is a fair and reasonableprobability that he has a real and bona fide defence”.

6.6 Do the courts in Ireland have any powers to discontinue orstay the proceedings? If so, in what circumstances?

A Plaintiff may discontinue proceedings at any stage prior tojudgment by filing a Notice of Discontinuance. If not otherwiseagreed, a Defendant is entitled to an Order for costs in respect ofproceedings which are so discontinued. Under its Rules and in the exercise of its inherent jurisdiction, theCourt has the power to stay proceedings which have no reasonableprospects of success or which are an abuse of process (see question6.4 above).

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Ireland? Are there any classes of documents that do notrequire disclosure?

Disclosure is more commonly known as discovery. RSC Order 31Rule 12 provides that a party may apply to the court for an orderdirecting any other party to make discovery on oath of thedocuments which are or have been in his/her possession or power,relating to any matter in question. Prior to applying to Court, voluntary discovery must first be requestedin writing. The applicant must specify the precise categories ofdocuments in respect of which discovery is sought and must also:

State the reasons why the documents required should bediscovered.Verify that such discovery is necessary for disposing fairly ofthe cause or matter or for saving costs.

An order for discovery shall not be made if the Court is of the

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opinion that it is not necessary either for disposing fairly of thecause or matter or for saving costs.

7.2 What are the rules on privilege in civil proceedings inIreland?

A claim of privilege does not exempt documents from discovery butmay protect relevant documents from inspection by the other party.Where a document is privileged, the party making discovery isobliged to identify the document and the nature of the privilegeclaimed. The most common forms of privilege include:

Legal Professional Privilege - confidential communicationsbetween a lawyer and his client or a third party may attracteither “legal advice privilege” and/or “litigation privilege”.In the case of Fyffes plc -v- DCC plc [2005] IEHC 477,Fennelly J held that where this type of privilege exists, there“is no discretion to displace it”. Without Prejudice Privilege - communications made in bonafide negotiations to resolve a dispute on the understandingthat they will not be disclosed if a settlement agreement isnot reached. Public Interest Privilege - claimed by or on behalf of theState where the disclosure of the documents would becontrary to the public interest.

7.3 What are the rules in Ireland with respect to disclosure bythird parties?

RSC Order 31 Rule 29 and CCR Order 32 Rule 9 allow discoveryagainst a non-party. The Court has discretion as to whether to grantsuch discovery and the burden of establishing the necessity of suchdiscovery is on the applicant. The criteria the court applies includewhether:

it is likely documents relevant to an issue in the action exist;it is likely such documents are in the possession, custody orpower of the non-party;the identity of the documents are clear;the documents are not otherwise available to the applicant;discovery is necessary for disposing fairly of the cause ormatter or for saving costs; andthe applicant will indemnify the non-party for all costsreasonably incurred by the non-party in providing discovery.

7.4 What is the court’s role in disclosure in civil proceedingsin Ireland?

The Court has expressly reserved to itself the right to decide whetherdocuments are relevant or not and, if appropriate, will examinedocuments to ascertain their relevance. It has the power to grant orrefuse orders for discovery and inspection of certain documents.The Court also deals with costs on discovery applications.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Ireland?

Where discovery and inspection of documents is provided, there isan implied undertaking that both the documents and the informationderived from them will be used only for the purposes of theproceedings and will not be used for a collateral purpose, withoutleave of the Court or consent of the party providing the discovery.Breach of this undertaking may constitute contempt of Court.

8 Evidence

8.1 What are the basic rules of evidence in Ireland?

The onus is on the party tendering the evidence to establish itsrelevance; evidence which does not satisfy this prerequisite isinadmissible. Admissibility of evidence is for the trial judge to decide.If the evidence falls foul of the exclusionary rules (see question 8.2)then it is inadmissible and the trial judge has no discretion to admit it.Apart from personal injury actions (where expert reports must bedisclosed) and the Commercial Court, statements of evidence are notexchanged. The Commercial Court Rules require that, unlessotherwise ordered, a party intending to rely on oral evidence of awitness or an expert at trial must serve signed and dated writtenstatements of such evidence on the other party before the trial.Unless otherwise agreed by the parties, documents must beformally proved.


Evidence must be relevant in order to be admitted; the corollary isthat all relevant evidence is admissible unless specifically excludedby one of the exclusionary rules. The exclusionary rules include:

The rule against hearsay.The rule against the admission of non-expert opinion.The Best Evidence rule.

Expert evidence is admissible in respect of matters that call forparticular expertise. Such expertise includes the fields of engineering,science, medicine, accountancy, insurance, actuary and the practiceand standards of competence of professionals. In Galvin -v- Murray[2001]2 I.L.R.M 23, it was stated that, in general terms, “an expertmay be defined as a person whose qualifications or expertise give anadded authority to opinions or statements given or made by him withinthe area of his expertise” and such evidence is admissible “whereverpeculiar skill and judgment, applied to a particular subject, arerequired to explain results, or trace them to their causes”.


There is no obligation to exchange witness statements, except in theCommercial Court (see question 8.1 above). A witness may besubpoenaed to give evidence by way of:

Subpoena ad testificandum - commands a witness to attendcourt and give evidence.Subpoena duces tecum - commands a witness to attend togive evidence and to produce certain documents specified inthe subpoena.

Every witness is liable to be cross-examined. Upon application to the Court, evidence may be given oncommission or via video-link in certain circumstances.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Ireland?

The Court has the power to rule on the admissibility of evidenceand may make any necessary orders, including imposing sanctions,on a witness who refuses to answer questions which the Courtdeems necessary. On 23rd October 2007, in a case concerning ajournalist and editor of a national newspaper who had refused to



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answer questions from a Tribunal of Inquiry regarding the source ofa newspaper article, the Irish High Court held that they wererequired to answer such questions, under threat of contempt. TheSupreme Court appeal was heard in December 2008 and a decisionis awaited.


9.1 What different types of judgments and orders are the civilcourts in Ireland empowered to issue and in whatcircumstances?

The Court has the power to grant a wide range of orders, both finaland interim, including:

Compensatory Orders - granted for both general (i.e. nonpecuniary loss) and special (pecuniary loss) damages.Injunction Orders - can be Prohibitory so as to restrain theparty affected from doing a particular thing, or Mandatory soas to require the party affected to do a particular thing.Summary judgments - for liquidated/monetary amounts.Orders for Security for costs - can be sought against aPlaintiff by a Defendant.Default judgments - in default of Defence, Appearance orcompliance with a court order.Costs Orders.


In respect of compensatory damages in a claim for breach ofcontract, the chief aim of the award is to put the Plaintiff in the sameposition he would have been in had the contract been performed. Ina negligence action, the aim is to restore the Plaintiff to the positionhe would have been in had the tort not been committed. Awards of exemplary/punitive damages are based on public policyand are awarded to punish a Defendant in a way that would deterthe Defendant from repeating particular behaviour and to deter thepublic at large. Aggravated damages may be awarded as additionalcompensation where there has been intangible injury to the interestsof the Plaintiff based on exceptional conduct of the Defendant.RSC Order 99 Rule 1 (1) provides that the costs of and incidental toevery proceeding in the Superior Courts shall be at the discretion ofthose Courts. Costs usually follow the event (see question 1.5). Interest on costs and damages can be claimed at a special statutoryrate and interest on damages accrued prior to judgment arediscretionary under the Courts Act 1981. Under the European Communities (Late Payment in CommercialTransactions) Regulations 2002, it shall be an implied term of everycontract that interest is payable if debts are not paid more than 30days after the “relevant payment date” which, unless otherwiseprovided in the contract, may be the date of receipt of the invoice orthe goods or services.


Domestic Judgments can be enforced a number of ways such as:Judgment Mortgage - can be registered against all legal andequitable interests of the judgment debtor in freehold andleasehold property. Power of Sale - following registration of judgment mortgage.Examination Orders - compel a debtor to attend before the

District Court to be examined as to their means.Instalment Orders - compel a debtor to pay a debt and costsin instalments.Sheriff - has the power to seize goods.Petition for bankruptcy - the petition is brought by a creditorafter the debtor has committed an act of bankruptcy.Petition to Liquidate - can be preceded by a Notice underSection 214a of the Companies Acts threatening winding upof debtor company in cases of insolvency.

Foreign Judgments can be enforced in Ireland. The Jurisdiction ofthe Courts and Enforcement of Judgments Act 1998 provides thatapplications under the Brussels and Lugano Conventions for therecognition or enforcement in the State of a judgment shall be madeto the Master of the High Court. The enforcement order must beserved on the Defendant personally or in such other manner as theMaster of the High Court may direct, or as required by the State ofresidence. The European Communities (European Enforcement Order)Regulations S.I. No. 648/2005 provide that where a judgment orcourt settlement on an uncontested claim has been certified as aEuropean Enforcement Order in a Member State of origin, thatjudgment or court settlement, as the case may be:(a) shall be of the same force and effect as a judgment of the

Irish High Court; and(b) may be enforced and proceedings taken on it, as if it were a

judgment of that Court.

9.4 What are the rules of appeal against a judgment of a civilcourt of Ireland?

An appeal from the High Court to the Supreme Court must belodged within 21 days of the date of signing (“perfection”) of theOrder. Such appeals are generally restricted to a point of law.Decisions of the Supreme Court are final and binding. An appeal from the Circuit Court to the High Court must be lodgedwithin 10 days of the Court Order being made in open court and isa full rehearing. The decision of the High Court is generally final(with some exceptions).An application may be made to extend time for appeal in certaincircumstances.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Ireland?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Arbitration, Mediation and Expert Adjudication are all available inIreland. Ombudsman schemes usually deal with privateindividuals.Arbitration is the preferred method of dispute resolution in anumber of sectors in Ireland, including the construction, insuranceindustries and sectors such as the software industry. The advantages of Arbitration include: privacy of proceedings;specialist knowledge of Arbitrator; parties have more control overcosts; certainty in that the award is binding on the parties.Mediation has become widely accepted in Ireland. It remainslargely a voluntary process of dispute resolution which enables

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parties to attempt to resolve disputes with the assistance of a neutraland independent mediator in a flexible and confidential processwhich facilitates communication and a mutually acceptable solution.Mediation is used particularly in proceedings before the CommercialCourt (see question 3.1). The Court has been given the power to directa mediation conference in personal injuries actions upon request ofone of the parties (Section 15, Civil Liability and Courts Act 2004).The advantages of Mediation are: it is a speedy and cost effectivealternative to Litigation; the process focuses on looking forward,not backwards; the parties themselves shape the resolution; theconfidentiality of the process.Expert Determination involves an independent “expert” hearingand determining a dispute. Such Adjudicators are not bound by therules of evidence or procedure applied in litigation or arbitration.Their decisions are often interim awards, which require furtheraction to become effective (e.g. arbitrator’s approval). Adjudicationdecisions are usually binding on both parties as a consequence of aprior agreement. Personal Injuries Assessment Board is an independent statutorybody which assesses the compensation payable in respect of a claimfor personal injury. Such an assessment is not binding unless it isaccepted by both parties.


Arbitration in Ireland in governed by the Arbitration Acts of 1954,1980 and the Arbitration (International Commercial) Act 1998.Section 5 of the Arbitration Act 1980 provides that an arbitrationagreement is enforceable in Irish Courts. If court proceedings areissued in defiance of the arbitration agreement, the Courts will onthe application of one of the parties stay the proceedings. Under s41 of the 1954 Act, an award on an arbitration agreement may, byleave of the High Court, be enforced in the same manner as ajudgment or order to the same effect. Certain kinds of disputes may, however, be governed by theprovisions of a particular statute which requires the dispute to beresolved in accordance with the provisions of an arbitration systemestablished by the statute (statutory arbitration) e.g. PropertyArbitrations arising from compulsory purchase acquisitions.

1.3 Are there any areas of law in Ireland that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Although Alternative Dispute Resolution is a suitable process forthe resolution of most types of dispute there are exceptions such as:

Disputes with third parties where injunctive relief isrequired.Disputes relating to the validity or accuracy of publicregisters such as patent or trademark registers. Criminal matters.Judicial Review.Regulatory and other proceedings with a public interestdimension.


2.1 What are the major dispute resolution institutions inIreland?

The Centre for Effective Dispute Resolution is an

independent non-profit organisation with a public missionand is supported by multinational business, law firms andpublic sector organisations. The Chartered Institute of Arbitrators, Irish Branch, is anauthority on the regulation, administration, training andpromotion of arbitration in Ireland.The Mediators’ Institute of Ireland (the MII) was establishedto promote the use of mediation as a process of disputeresolution in all areas.


Arbitration: the decision of the arbitrator is legally bindingand the process is governed by laws (Arbitration Acts 1954-1998). (See question 1.1.)Mediation: generally decisions made in mediation are notlegally binding until they are made the subject of a formalagreement.Expert Determination: subject to agreement, an expert’sdetermination may be binding. (See question 1.1.)



Alternative dispute resolution has gained popularity as analternative to, and a vehicle to resolve, litigation. Any party to adispute in the Commercial Court can bring a motion to adjourn theproceedings for up to 28 days to allow the dispute to be referred toa process of mediation, conciliation or arbitration (S.I. No. 2/2004- Rules of the Superior Courts (Commercial Proceedings), 2004).This procedure has been frequently used to resolve disputes withinthe Commercial Court.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Ireland?

The Court rarely interferes with Arbitration awards. Section 38 ofthe 1954 Act gives the High Court power to set aside an Arbitrationaward where (1) the Arbitrator has been guilty of misconduct (2) theArbitration or award has been improperly procured.This was demonstrated by a recent decision in the case of DeclanHogan -v- Thomas Byrne & Henry J. Curtin (2008) IEHC 287,where the Plaintiff sought an order setting aside the Arbitrator’saward or remitting it for reconsideration. The dispute arose out ofan agreement for the sale of an accountancy practice by theDefendants to the Plaintiff. The Plaintiff was to make payment inthree tranches, but paid less than the sum due as he claimed to beentitled to an adjustment of the consideration payable. Disputeresolution mechanisms were invoked and the Arbitrator made bothan interim and a final award. The Plaintiff sought to have theawards set aside, claiming a patent error in calculating the finalaward and that neither party had an opportunity to address themethodology used to calculate the award. In her Judgment, Laffoy J. noted that the Plaintiff had not disputedthe methodology used in the interim award, had participated in thehearing to determine the final award and therefore could not nowchallenge the methodology used in the final award. It was orderedthat the Plaintiff’s application be dismissed as there was no basis forsetting aside the order or remitting the final award.



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Dympna Murphy

Ivor Fitzpatrick & Company44-45 St. Stephen’s GreenDublin 2Ireland

Tel: +353 1 678 7000Fax: +353 1 678 7004Email: [email protected]: www.ivorfitzpatrick.ie

Dympna is a partner in the Commercial Litigation / DisputeResolution Department of Ivor Fitzpatrick & Company and hasextensive experience in complex and high profile cases at all courtlevels including the Commercial Court and the Supreme Court. Her clients include public bodies, property developers and nationaland international corporate entities. She advises on a wide range ofissues including contract litigation, injunctive relief, commercialdisputes, licensing, planning and landlord and tenant law.She has particular expertise in broadcasting law, regulatory law andjudicial review actions as recognised in the 2007 edition of theLegal 500, and leads the Administrative Law practice within thefirm.Dympna is admitted as a solicitor in Northern Ireland and is amember of the International Bar Association.

David Harris

Ivor Fitzpatrick & Company44-45 St. Stephen’s GreenDublin 2Ireland

Tel: +353 1 678 7000Fax: +353 1 678 7004Email: [email protected]: www.ivorfitzpatrick.ie

David Harris is a Senior Associate in the Litigation Department ofIvor Fitzpatrick & Company where he specialises in high valuemedical negligence and product liability proceedings.He also has an extensive background in professional disciplinaryproceedings and in public law litigation. David is a fully qualifiedsolicitor in three jurisdictions and extensively practiced in Australia(New South Wales) and in England and Wales before relocating toDublin.In Australia, his work was principally in the public law andregulatory fields. In England, David practised with the leadingLondon firm Hempsons (progressing to Partner in July 2002)maintaining a busy civil law and professional negligence practice.David has gained extensive experience in mediation in a variety ofsettings and in conducting appellant proceedings and judicial reviewproceedings in the higher Courts.

Since it’s foundation in 1981, Ivor Fitzpatrick & Company has developed rapidly to establish itself as one of Ireland’sleading law firms.

Our core strengths are in the areas of Commercial Litigation and Dispute Resolution, Property and Planning Law,Employment Law, Media and Broadcasting Law, Regulatory and EU Law, Administrative Law, Banking and SecuritiesLaw, Insolvency and Debt Recovery.

Our clients include leading financial institutions, multi-national and entrepreneurial companies in Ireland.

The firm has an energetic and dynamic litigation department, which serves both the business and private sectors. IvorFitzpatrick and Company has a specialist department for mass tort and product liability actions.

In addition to their proactive approach to protecting client’s interests in litigious disputes, the firm’s litigation lawyersare highly experienced in and actively promote alternative dispute resolution processes.


The Commercial Court has seen an increase of cases before it,which is not surprising in the current economic climate. Mediationis frequently used in Commercial Court proceedings and may beordered by the Court. Figures indicate that between 2005 and 2008,

where parties agreed to mediate their disputes after commencingproceedings in the Court, 63% of those cases settled followingMediation.



Chapter 26


Israel

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Israel got? Are there anyrules that govern civil procedure in Israel?

The origins of the Israeli legal system are based upon the commonlaw tradition. The conduct of the courts and the principles of civilprocedure and evidence follow to a large extent the Anglo-American tradition. The doctrine of legal precedent, acharacterising feature of the common law, plays an important rolein the Israeli legal system, as do other common law principles, suchas the adversary system and the availability of equitable rights. Atthe same time, the ongoing codification process of the civilsubstantive law in Israel is essentially a continental lawcodification, influenced by continental law ideas, such as thedoctrine of good faith. Civil procedure in Israel is mainly governed by the Courts Act(Consolidated Version), 5744-1984 (hereinafter: the “Courts Act”)and the Civil Law Procedure Regulations, 5744-1984 (hereinafter:the “Procedure Regulations”).

1.2 How is the civil court system in Israel structured? Whatare the various levels of appeal and are there anyspecialist courts?

The Israeli court system is a three-tiered structure, comprised of theMagistrate Courts, the District Courts, and the Supreme Court. TheMagistrate Courts serve as courts of first instance for most civilclaims. The District Courts serve in a double capacity: they sit ascourts of appeals for claims heard in the Magistrate Courts, and theyact as courts of first instance for larger civil claims, such as disputesover ownership of real property and monetary claims exceeding 2.5million NIS. The Supreme Court, the highest court in the country,hears appeals from the District Courts. In addition to its role as anappellate court, the Israeli Supreme Court also sits as a High Courtof Justice. In this capacity, the court rules as a court of firstinstance, primarily in actions challenging the acts of the State andits agencies in their governmental capacity. There are also numerous specialised courts in Israel, such as thelabour courts, administrative courts, military courts and religiouscourts, which have specific jurisdiction in relevant restricted areas.Judgments handed down by these courts are subject to limitedreview by the Supreme Court, usually sitting as a High Court ofJustice.

1.3 What are the main stages in civil proceedings in Israel?What is their underlying timeframe?

The main stages in civil proceedings brought before courts of firstinstance in Israel are as follows: First, a complaint is filed with theappropriate court. Next, the complaint is served upon thedefendant. The defendant then files an answer to the complaint,after which the plaintiff is entitled to respond to the defendant’sanswer. Once the parties complete the exchange of pleadings, theparties begin the discovery process (comprised mainly ofinterrogatories and document discovery and production) inpreparation for the upcoming trial. At the same time, the partiesmay engage in a motion practice, in which they may file motions,such as motions to dismiss, motions to amend pleadings, etc.Before the trial begins, the judge presiding over the case will holda pre-trial hearing or hearings in order to maximise the efficiency ofthe pre-trial process and the trial, and in order to ascertain whethera settlement can be reached amongst the parties. Once the case isready for trial, the judge will usually issue a schedule for thesubmission of the witness statements (in the form of affidavits), andthen the Court will set dates for trial. At the trial, the witnesses willbe crossed examined on their statements. At the end of the trial, theCourt will usually issue a schedule for the submission of post-trialbriefs (although the judge may require the parties to deliver oralsummations). The presiding judge will then render a judgment.There is a considerable backlog in the Israeli courts, and thus it maytake between three and five years for a civil case involvingsignificant factual issues to reach judgment in the first instance.The minimum underlying timeframe of civil proceedings in Israel isapproximately 24 months from the date a complaint is submitted toa first instance court until a decision is rendered by that instance.The process of appeal before a District Court or Supreme Courtmay last an additional 12 to 24 months each.

1.4 What is Israel’s local judiciary’s approach to exclusivejurisdiction clauses?

Israeli courts generally respect exclusive jurisdiction clauses.Israeli courts tend to interpret choice of jurisdiction clauses to benon-exclusive unless the language of the clause conveys a clearintention of the parties to be bound by an exclusive jurisdictionclause. Israeli courts will normally stay an action filed in violationof an exclusive jurisdiction clause (whether the exclusivejurisdiction lies with another court in Israel or with a foreign court).

Ron Peleg

Dr. Israel (Reli) Leshem



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Meitar Liquornik Geva & Leshem Brandwein Israel

1.5 What are the costs of civil court proceedings in Israel?Who bears these costs?

Court fees in Israel vary depending on the court before which anaction is brought and the types of the requested remedies. In general,claims for a defined amount of money are subject to a court fee of2.5% of the amount sought (1.25% is paid when the action is filed and1.25% is paid before the trial commences). Any action broughtbefore the District Courts for a sum exceeding approximately 20Million NIS is subject to a lower fee of 1% (rather than 2.5%) on theportion of the claimed amount which exceeds 20 Million NIS.The Court may award legal fees and reimbursement of other litigationexpenses in all cases brought before it. The courts in Israel generallyorder the losing party to cover the legal costs of the prevailing party.An award can be made at the conclusion of the action or at theconclusion of any interim proceedings. The Court has broaddiscretion in determining the amount of the legal costs to be paid;however, in determining the amount of attorneys’ fees, the courts areguided by the recommended minimum tariff for legal fees set in theRules of the Chamber of Advocates (Recommended MinimumTariff), 5760-2000. The legal fees ordered by the Court are usuallymuch smaller than the actual fees paid by the parties to their attorneysand do not usually reflect the actual costs expended by the prevailingparty. This is particularly true when awarding legal fees to adefendant who successfully defeated an action against him.

1.6 Are there any particular rules about funding litigation inIsrael? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

The Rules of Chamber of Advocates (Professional Ethics), 5726-1966 provides that payment for attorneys’ fees may only berendered in the form of money. The rules preclude an attorney fromfunding loaning any litigation costs.Contingency arrangements are permitted under Israeli law and arecommon in personal injury claims. Regulation 519(a) of the Procedure Regulations empowers the Courtto order the plaintiff to provide security to cover a potential award oflegal costs in favour of the defendant. The courts are generallyreluctant to implement this Regulation, as it clashes with the plaintiff’sright of access to the courts. The courts mainly exercise this authoritywhen the plaintiff is a foreign resident of a country which is not asignatory to the Hague Convention with no assets in Israel or when theplaintiff is a corporation (local or foreign) with no apparent means topay a potential award of legal costs in favour of the defendant.


2.1 Are there any pre-action procedures in place in Israel?What is their scope?

There are no formal pre-action procedures in place in Israel.However, before filing a complaint, it is customary, but notnecessary, for the prospective plaintiff to notify his adversary inwriting of his intention to file such complaint in order to give theprospective defendant an opportunity to cure the alleged wrong.


As a general rule, the statute of limitations for a civil claim not

based upon a right in land is seven years. However, certain specificlaws provide for shorter limitation periods. The statute oflimitations for a civil claim founded upon a right in land variesdepending upon the manner in which the land is registered with theIsraeli Land Registry. If the land is considered “MekarkainMusdarim” (land in which ownership and other rights are fullyrecorded in the official registry), then it is not subject to any statuteof limitations. However, if an individual’s claim is based upon aright to land that predates December 1969, the applicable statute oflimitations period is 25 years. If the land is considered “MekarkainLo Musdarim” (land in which ownership and other rights are notfully recorded in the official registry) or if the land is not registeredat all, the applicable statute of limitations period is 15 years. As a general rule, the statute of limitations clock begins to run on thedate the cause of action accrues. This rule is subject to a fewexceptions: (i) If the cause of action is based on fraud, the statute oflimitations begins to run on the date the fraud was discovered by theplaintiff; (ii) if the facts which together comprise the cause of actionwere unknown to the plaintiff and he could not have learned of themwith reasonable efforts, the statute of limitations will begin to run onthe date such facts were made known to the plaintiff; (iii) if thedefendant admits to the plaintiff’s alleged right in writing or before theCourt, the statute of limitations will begin to run from the date of suchadmission; (iv) where the cause of action is damage that was causedby an act or omission of the defendant, the statute of limitations willbegin to run from the date on which the damage occurred. However,if the damage was not discovered on the date it occurred, the statute oflimitations will begin to run on the day the damage was discovered,provided that the statute of limitations period will expire within 10years from the date the damage occurred; (v) if the plaintiff was aminor (under the age of 18) when the cause of action accrued, thestatue of limitation begins to run only when he reaches the age of 18;(vi) if an action was brought before a court and was dismissed in sucha manner that the plaintiff is not stopped from bringing a new actionbased upon the same cause of action, the period of time between thesubmission of the complaint and its dismissal will not be included inthe statute of limitations period; and (vii) if the defendant was locatedin a territory where the conditions or diplomatic relations with Israelprevent trying of the case, the time spent in such territory will not beincluded in the statute of limitations period. In Israel, time limits imposed by the statute of limitations are treatedas a procedural law issue, unless otherwise determined by a specificlaw.


3.1 How are civil proceedings commenced (issued and served)in Israel? What various means of service are there? Whatis the deemed date of service? How is service effectedoutside Israel? Is there a preferred method of service offoreign proceedings in Israel?

Civil proceedings are commenced by filing a complaint (statementof claim) in court. The complaint must include a form which detailsthe nature of the complaint and the relief requested. Regulation 475 of the Procedure Regulations lists possible means ofservice to a pro-se party: (i) the pleadings may be personallydelivered by a court clerk, an attorney or an agent of the attorney,or another person authorised in writing by the Court for this purposeor an agent of such person; (ii) the Court may deliver pleadings tocertain institutions specified in the Procedure Regulations (such asthe Prison Services in the case of a defendant who is a prisoner),and such institutions shall be responsible for delivering the

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pleadings to the appropriate party; and (iii) the pleadings may besent via registered mail with a receipt of delivery.Regulation 475a of the Procedure Regulations provides that if a partyis represented by an attorney, the pleadings shall be served in one ofthe following two ways: )i( by personal delivery, if so ordered by theCourt; or )ii( by registered mail with a receipt of delivery.The deemed date of service is the date upon which the pleadingswere received by the recipient. If a defendant is not present in person in Israel, the plaintiff has twoalternative routes of service: (a) to serve the statement of claim ona person or entity within the State of Israel, who is considered to bean “agent” or “representative” of the foreign defendant; or (b) ifthere is no such “agent” or “representative” - attempt to obtain leavefrom the Israeli court to serve the statement of claim outside theterritory of Israel (this is called “service out of the jurisdiction”). Regulation 482(a) allows an Israeli plaintiff to avoid the need toobtain leave for service out of the jurisdiction if there is anindividual or company located in Israel which is deemed an “agent”of the foreign defendant. The service on the Israeli “agent” will bedeemed valid if the degree of intensity of the relationship betweenthe Israeli “agent” and the foreign defendant is such that one mayreasonably assume, as a point of law, the “agent” would advise theforeign defendant of the proceedings instituted against him. Theanalysis in determining whether an Israeli entity qualifies as an“agent” of a foreign defendant for the purposes of service is madeon a ‘case by case’ basis.The Court may grant a motion for service out of the jurisdictiononly if the claim falls under one of the categories listed inRegulation 500 of the Procedure Regulations. These categoriesinclude, inter alia: (i) claims in which relief is sought in connectionwith an action or omission that occurred in Israel; (ii) claims forbreach of contract that was entered into in Israel, was to beperformed, in whole or in part, in Israel or is governed by Israelilaw; and (iii) claims in which there is at least one Israeli defendantand the foreign defendant is a necessary party thereto. Theapplication under Regulation 500 is made by the plaintiff ex parte.When a motion pursuant to Regulation 500 is granted, the Courtwill order to serve the foreign defendant in accordance to the HagueConvention on Civil Procedure.

3.2 Are any pre-action interim remedies available in Israel?How do you apply for them? What are the main criteria forobtaining these?

Numerous pre-action interim remedies are available. Suchremedies include restraining orders, attachment orders, stay of exitorders, and the appointment of a receiver for the defendant’sproperty. An application for an interim remedy must be made in writing. Theapplicant must attach to the application a written undertaking tocompensate the defendant for any damage suffered by him as aresult of the interim remedy, if the interim remedy is vacated or themain action is ultimately dismissed or discontinued. The Court maygrant a request for a temporary remedy before a complaint is filedif the Court is convinced that such an act is justified, and providedthat its validity is contingent upon the submission of a complaintwithin seven days from the date the order was granted or within adifferent time period determined by the Court. In deciding whetherto grant the request for temporary relief, the Court will weigh thefollowing considerations: (i) the damage that will be caused to theplaintiff if the temporary relief is not granted vs. the damage to becaused to the defendant or others if such relief is granted; (ii)whether the application was made in good faith and whether the

granting of the relief is just and appropriate under the circumstancesand does not inflict unreasonable harm; and (iii) the prima faciecause of action and the likelihood that it will be proved in trialaccording to the preponderance of evidence standard of proof in acivil action. The request for a pre-action interim remedy may be requested exparte or inter parte. The Court will grant a pre-action ex parterequest for interim remedy only if it is convinced that the balanceof convenience clearly tilts in the direction of the applicant and heshows a prima facie chance of success in the action.


Regulation 9 of the Procedure Regulations provides that acomplaint must contain the following:1. The name of the court before which the complaint is brought.2. The name, ID number, home address and mailing address of

the plaintiff.3. The name, ID number, and home address of the defendant.4. If the plaintiff or defendant is a corporation, this fact must be

noted together with the form of incorporation (i.e.,partnership, LLC, etc.).

5. If the plaintiff or defendant is an incompetent, this fact mustbe noted.

6. The main facts which constitute the cause of action and thedate on which the cause of action accrued.

7. The requested relief.8. The amount the plaintiff agreed to set-off or ceded.9. The value of the complaint, to the extent its value can be

quantified. In addition, pursuant to Regulation 71 of the ProcedureRegulations, a complaint may contain only facts and not evidence.The scope of an initial pleading (statement of complaint, statementof defence and answer to the defence) is limited and should state ina general (but not vague) manner the legal and factual arguments aparty intends to argue in the course of the trial. The initial pleadingsdefine the scope of the dispute, and have significance later on whendetermining relevancy issues for discovery purposes andsubmission of evidence.


Regulation 91(a) of the Procedure Regulations provides that theCourt may, at any time, order the deletion or correction of anyportion of a party’s pleadings that is unnecessary or likely tointerfere with, delay, or complicate a fair hearing of the action. Pursuant to Regulation 92 of the Procedure Regulations, the Courtmay, at any time, allow a party to change or correct his pleadings insuch a manner and under such conditions as seem just, in order toenable the Court to rule on the real disputes that arose between theparties. A correction or addition of a factual claim must besupported by a written affidavit which confirms the veracity of thenew fact. A request of amendment of pleadings will not be allowedif it deprives a party of a material right (e.g., the amendment adds acause of action that is already barred by statue of limitations at thetime of the addition), is made in bad faith, has been unduly delayed,or brings about an unfair or unjust result to a party. When a plaintiffis allowed to amend his complaint, the defendant will also beallowed to amend his defence without regard to the scope of theplaintiff’s amendment.



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4 Defending a Claim


In the defendant’s answer to the complaint, the defendant must denyeach factual statement alleged by the plaintiff which the defendantbelieves to be false. Any factual statement not denied by thedefendant will be deemed as admitted by him. The ProcedureRegulations provide that a broad denial of all factual allegations isnot sufficient; rather, the defendant must specifically refer to eachfactual claim whose accuracy he does not admit. The commonpractice, especially in commercial disputes, is that the defendantelaborates on his perspective of the factual and legal allegationscontained in the complaint, rather than just denying the plaintiff’sstatements and arguments. Pursuant to Regulation 52 of the Procedure Regulations, thedefendant may include a defence of set-off in his statement ofdefence. Additionally, the defendant may bring a counterclaimagainst the plaintiff at the time of filing of his statement of defence.The counter claim does not need to be limited to the subject matterof the complaint.


The summons served upon a defendant states that the defendantmust submit a statement of defence within 30 days of service of thesummons. The Court may, however, grant the defendant a longerperiod of time to submit his statement of defence. So long as adefault judgment is not issued, the statement of defence may still befiled even if the 30 days have elapsed.


A defendant may commence third party proceedings in an action inwhich he is sued in one of three situations:1. The defendant alleges that he is entitled to reimbursement

from the third party for any obligations that may be imposedupon him as a result of a negative ruling in the main action.

2. The defendant alleges that he is entitled to relief from thethird party, and such relief is intertwined with the mainaction, and the main element of that relief is the reliefrequested by the plaintiff.

3. A question or disagreement between the defendant and thirdparty which is intertwined with the main action is essentiallythe same issue disputed between the plaintiff and thedefendant, and it is proper that it be resolved between thedefendant and third party as well.

Third party proceedings are commenced by filing a third partynotice (which has substantially the same elements as a complaint)at the time of filing of the statement of defence or at such later timeas allowed by the Court.


Regulation 97(a) of the Procedure Regulations provides that in theevent that the defendant does not submit a statement of defence by thedesignated date for such submission, the Court will issue a judgmentbased upon the claimant’s pleadings alone. If the action is not for a

set amount of money, the Court may require from the plaintiff proofthat substantiates his claim before a judgment will be rendered. It should be noted that while the Israeli courts do not look favourablyupon a defendant who submits a statement of defence after thedeadline for its submission, the courts will not disregard a late-filedstatement of defence if submitted before a hearing held regarding theplaintiff’s request that the Court issue a default judgment.


A party interested in disputing the local jurisdiction of the Court tohear the case or the personal jurisdiction of the Court over him mustdo so at the first possible opportunity. Otherwise, he will bedeemed to have accepted the Court’s jurisdiction.A party may dispute the Court’s subject-matter jurisdiction (i.e.when the subject matter of the litigation is within the jurisdiction ofanother court or tribunal) at any stage of the proceedings. However,the rule, which was strictly applied in the past, has become morerelaxed in cases where the Court feels that the challenge to theCourt’s subject-matter jurisdiction was intentionally delayed inorder to obtain a tactical advantage. Also, it was held that once acourt of first instance has issued its judgment, the party may nolonger raise such a claim before a court of appeals.



Regulation 24 of the Procedure Regulations provides that at anystage of the proceedings, the Court may join an additional defendant(hereinafter: the “New Defendant”) in the following situations: )i(the New Defendant should have been included as a defendant in theoriginal complaint; or )ii) the presence of the New Defendant in thelitigation is necessary in order to enable the Court to render aneffective judgment on all questions connected to the action.


Regulation 520 of the Procedure Regulations provides that theCourt may consolidate two proceedings pending in the same courtprovided that the two proceedings deal with similar questions oflaw or fact.The president of the Supreme Court or the deputy president has thepower to transfer a case from one region to another in order to allowthe consolidation of cases that are pending before courts of the sameinstance in two or more regions.


The judge presiding over a case may order that the proceedings inthe case be split or bifurcate if he or she believes that suchprocedure will make the hearing of the case more efficient.Bifurcation of proceedings is especially common in personal injurycases, in which the trial will initially focus on the question ofliability, and only then (if liability is found to exist) the trial willcontinue to deal with the question of damages.

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6.1 Is there any particular case allocation system before thecivil courts in Israel? How are cases allocated?

The Minister of Justice, relying on the power granted to him by theCourts Act, established six judicial regions spread throughout thecountry. In each region, sits one District Court and severalMagistrate Courts. In determining the proper court in which a civilclaim can be filed, the plaintiff needs to determine (i) which court(i.e., the District Court, the Magistrate Court or perhaps aspecialised court such as the Labour Court) has subject-matterjurisdiction in the case, and (ii) in which region lies the localjurisdiction of the court that will hear the case. A court will havelocal jurisdiction to hear a case if any of several factors specified inthe Procedure Regulations is within the region of the Court.

6.2 Do the courts in Israel have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

Once an action is submitted to the appropriate court, the Court’scase routing department, headed by the president of the Court, willdetermine which judge will preside over the action. Complex,large-scale cases will be assigned by the president of the Court to apresiding judge. Please see the answer to question 3.2 regarding interimapplications.

6.3 What sanctions are the courts in Israel empowered toimpose on a party that disobeys the court’s orders ordirections?

If a party fails to abide by the order of the Court relating todiscovery or fails to appear at a scheduled hearing, the Court has thepower to strike out the pleadings of such party. If the plaintiff’spleadings are struck out, the claim is deemed dismissed. If thedefendant’s pleadings are struck out, the plaintiff can obtain adefault judgment. The Court will not normally use such sanctionsunless the party in question is warned that the Court will resort tosuch sanctions if he persists in his disobedience. Pursuant to the Israeli Contempt of Court Ordinance, 1929, Israelicourts have the power to fine or imprison a party who does not obeya court. Such sanctions can be issued only when the disobedientparty is present in court and after he is given an opportunity to argue. In addition, article 72 of the Courts Act provides that an individualthat acts in a violent manner or otherwise disturbs the courtproceedings may be punished by up to three months imprisonmentor fined, provided that the judge warned such party to cease fromacting in such manner. An order for the imprisonment of a party is quite rare and occursonly in very extreme circumstances.

6.4 Do the courts in Israel have the power to strike out part ofa statement of case? If so, in what circumstances?

The Court may strike out all or part of the pleadings of a party if: (i)the complaint or a part thereof fails to show a cause of action; (ii) thecomplaint or a part thereof is oppressive and vexatious; (iii) thecomplaint was brought before a court that lacks local or subject-matter jurisdiction; (iv) an insufficient court fee was paid and theplaintiff did not pay the required fee within the time allotted for such

payment; (v) the court lacks subject-matter jurisdiction over all orpart of the claim; (vi) that part of the action has already been triedand decided (res judicata) in an earlier legal process; (vi) all or partof the claim is barred by the statute of limitations; or (vii) there existsany other reason for which the Court concludes that the claim isbound to fail, irrespective of any additional proceedings in the claim.The Court will exercise its power to strike out an action or a partthereof sparingly and only when it is convinced that the claim or anypart thereof has no chance of succeeding and there is nothing that canbe done (including by way of amending the claim) to save it.

6.5 Can the civil courts in Israel enter summary judgment?

The courts in Israel do not have authority to enter a summaryjudgment as such term is known in the U.S. legal system. The courtdoes have authority to strike out or dismiss all or part of the claimat any stage of the proceedings if it determines that the claim isbound to fail and cannot be saved by way of amendment of thepleadings or otherwise. The Court also has authority to enter a fullor partial judgment for the plaintiff against one or more defendantsat any stage of the proceedings if it determines that the relevantdefendant has not presented any legally valid defence to a claim orto part thereof. When considering the striking out of a claim or theentering of judgment for the plaintiff before trial, the Court mustnormally assume that all the facts stated in the complaint andstatement of defence are true and correct and can be proven at trial.At this stage, the Court does not concern itself with the question ofwhether the parties can in fact prove such facts.

6.6 Do the courts in Israel have any powers to discontinue orstay the proceedings? If so, in what circumstances?

If the plaintiff requests that the Court discontinue his claim, theCourt may so order, pursuant to Regulation 154 of the ProcedureRegulations. If the parties fail to take action to move the claim forward, the Courtmay, after giving the parties an opportunity to show cause,discontinue the claim. There are several situations in which an Israeli court may stay theproceedings pending before it: (i) if another action between thesame parties and concerning the same issues is pending beforeanother court; (ii) if there is a foreign competent court where it shallbe far more convenient for the litigation to proceed; or (iii) if theparties are parties to a binding arbitration agreement regarding thesubject matter of the litigation.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Israel? Are there any classes of documents that do notrequire disclosure?

Pre-trial disclosure (discovery) in civil matters comprises of (i)document discovery and production; and (ii) answers tointerrogatories. A party to civil litigation in Israel is generally allowed to demandfrom the other parties discovery of all documents which are in thepossession or under the control of such parties and relevant to theissues in dispute. Relevant documents are both “helpful”documents and “damaging” documents, namely those documentsthat may help to prove the case of a party as well as thosedocuments that may help to disprove it. “Relevancy” in the context



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of document discovery in Israel is narrowly construed incomparison to the U.S. practice. Relevant documents are thosedocuments that are directly relevant to the issues in dispute and notthose that are only remotely relevant.Each party is allowed to submit interrogatories to the opposingparties. Answers to interrogatories must be in the form of anaffidavit. The Court may exempt a party from answering specificquestions contained in the interrogatories if they are not reasonablyrelevant to the issues in the litigation, are unnecessarily broad,require an unreasonable effort to answer, or are unduly long.If a party does not comply with his adversary’s request to answerinterrogatories, disclose documents or produce documents, theCourt may issue an order directing such non-complying party tocomply with the request. If a party fails to abide by the court order,the Court may strike out his pleadings.The classes of documents that are exempt from discovery arediscussed in the answer to question 7.2 below.

7.2 What are the rules on privilege in civil proceedings inIsrael?

Privileged documents (i.e., documents that a party to litigation or awitness cannot be required to disclose or present) fall into twocategories: those that benefit from absolute privilege (e.g.,communications between an attorney and his client) and those thatbenefit from relative privilege. The court has discretion to order thedisclosure of documents that enjoy relative privilege (e.g.,communications between a patient and his physician).Some of the statutory privileges recognised by Israeli law includethe attorney-client privilege, physician-patient privilege, clergyprivilege, and psychologist/social worker-client privilege. Inaddition, Israeli courts have recognised non-statutory privileges,such as documents that have been created in preparation for legalproceedings and a journalist’s privilege not to reveal his sources. Regulation 119 of the Procedure Regulations provides that if a partyis requested to produce a document which he claims is privileged,the Court may view such document in order to ascertain whether theclaim of privilege is proper.

7.3 What are the rules in Israel with respect to disclosure bythird parties?

A third party may not be compelled to disclose documents withinthe discovery process in an action to which he is not a party. Though a third party cannot be compelled to disclose documents inthe discovery process, such third party may be summoned as awitness for the purpose of testifying or bringing a particulardocument to court.

7.4 What is the court’s role in disclosure in civil proceedingsin Israel?

As mentioned above, the Court oversees the discovery ofdocuments and the response to interrogatories. The Court has thepower to order parties to disclose the existence of or producedocuments. The Court has discretion to limit or deny requests fordocuments and to limit or deny requests for answers tointerrogatories. The Court also has the power to decide whether aclaim of privilege is appropriate.The Court may strike out the pleadings of a party who refuses toobey a court order regarding disclosure of documents or answers tointerrogatories.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Israel?

There is no statutory or regulatory provision that restricts a partyfrom using a document received in discovery for other purposes.Except in respect of commercial secrets (see below), courts do nothave the power to issue, nor have they developed a practice ofissuing, protective or restrictive orders in respect of documentsdiscovered in the action. However, there is one Supreme Courtprecedent which states that parties who receive documents indiscovery may only use such documents for the sole purposes of thelitigation within which they were discovered. When a party is required to discover documents or information thatcontain commercial secrets, the Court has power to grant an orderto ensure that the commercial secret is not disclosed to any personwho is not involved in the litigation.

8 Evidence

8.1 What are the basic rules of evidence in Israel?

Generally, the rules of evidence in Israel are based on the Anglo-American principles. Cross-examination by opposing counsel isthe cornerstone of the evidentiary process. A party may call anyindividual to testify, provided that such person’s testimony isadmissible and relevant. Reluctant witnesses may be subpoenaedby the Court. Witnesses generally submit written affidavits in lieuof direct examination. With very few exceptions, a statement of aperson who is not available for cross-examination in court isinadmissible. A document can be introduced into evidence only byits author or recipient.


As a rule, any evidence that is relevant and does not fall into one ofthe exceptions below will be admissible. Such exceptions includehearsay evidence, opinions of non-expert witnesses and privilegeddocuments and communications.An expert opinion is submitted to the Court in written form inadvance of the trial. At the trial, the expert is subject to cross-examination by counsel for the opposing party. An expert does notneed to possess any special or formal qualifications. Foreign lawneeds to be proven by an expert on such foreign law. No expertopinion can be introduced on matters of Israeli law.


In civil claims, the testimony in chief of witnesses is usuallysubmitted in the form of affidavits in advance of the trial. At thetrial, the witnesses who submitted affidavits are cross-examined byopposing counsel. The Procedure Regulations provide that anyindividual who submitted an affidavit in an action must appear forcross-examination on the date of trial unless the opposing partywaived his right that such witness appear. If a party wishes to present at trial the testimony of a witness whois not willing to cooperate with such party for the purpose ofsubmitting ahead of trial his written testimony in chief, the partymay request from the Court to subpoena the witness for the purposeof testifying at trial.

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There are no dispositions in the Israeli civil litigation process.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Israel?

The Court decides all questions of relevancy as well as admissibilityof the evidence offered at the trial. The Court does not take an activerole in the introduction of evidence. The Court has the power to callwitnesses on its own behalf, but this power is very rarely used. TheCourt does not usually take an active part in the examination of thewitnesses and presents its own questions to the witnesses only for thepurpose of clarifying an issue during the examination of a witness.


9.1 What different types of judgments and orders are the civilcourts in Israel empowered to issue and in whatcircumstances?

Decisions in civil actions fall under two categories: (i) “judgments”or “partial judgments”, which are the final decisions in the case(“Judgments”) or a final decision in respect of a part of the case(“Partial Judgment”); and (ii) “decisions” that do not conclude thedispute between the parties “(“Decisions”). Judgments and PartialJudgments can be appealed to a higher court as of right while otherdecisions of a court can be appealed to a higher court only by leaveof the higher court. Judgments and other decisions do not need to be in a certain rigidform, and judges have broad discretion as to the form as well as thesubstance of their decisions. The remedies that are available in civilcases are generally broad and usually include payment of monetarycompensation, damages and restitution, specific performance, audit ofaccounts and declaratory judgment. The Court may issue injunctions,appoint a temporary or permanent receiver and attach property.


Israeli courts have the power to order the payment of damages. Incases where the precise amount of damages does not lend itself toeasy calculation, the Court has the power to assess the damagesbased on its best estimate. In some cases, the Court has power toaward “proportional damages” (i.e., when the precise cause ofinjury is unknown but one can determine on the basis of availablestatistical information the likelihood that the defendant’s actionscaused the injury). A judgment requiring a party to pay money will routinely include arequirement to also pay interest and linkage differences on suchmoney. The interest and linkage differences will normally becalculated from the time the cause of action accrued. Linkagedifferences mean the difference between the Israeli average cost ofliving index at the time the cause of action accrued and the averagecost of living index at the time the defendant satisfies the judgment.The interest rate is prescribed by the Awarding of Interest andLinkage Law, 5721-1961. For answer regarding courts’ powers to make rulings on costs of thelitigation, please see answer to question 1.5, supra.


Domestic judgments can be enforced by the Execution Officeestablished by the Execution Law, 5727-1967. The Execution

Office has broad powers to enforce judgments, including the abilityto issue an order of imprisonment against a judgment debtor thathas not paid his judgment debt.If a defendant fails to comply with an injunction or order forspecific performance, the plaintiff can request that the Court initiatecontempt proceedings against the defendant pursuant to theContempt of Court Ordinance. In contempt proceedings, the Courtmay impose sanctions on the defendant until he complies with thejudgment. Such sanctions include daily fines or imprisonment.The enforcement of foreign judgments is governed by the ForeignJudgments Enforcement Law, 5218-1958. The law provides that aforeign judgment may be declared enforceable by Israeli courts ifthe following conditions are met: (i) the laws of the country inwhich the judgment was rendered recognise that the judgment wasrendered by a court that had proper authority to render suchdecision; (ii) the judgment is no longer subject to appeal; (iii) theobligation in the judgment is enforceable according to the Israelilaws of enforcement of judgments; and (iv) the judgment isexecutable in the country in which it was rendered.Notwithstanding the above conditions, the law notes that a foreignjudgment will not be declared enforceable if it suffers from certainfundamental flaws, such as the fact that it was obtained throughfraud, for instance. Once a foreign judgment is declared by the Israeli court asenforceable, it shall be treated the same way as a court’s judgment.

9.4 What are the rules of appeal against a judgment of a civilcourt of Israel?

A final judgment of a Magistrate Court may be appealed before aDistrict Court. A final judgment of a District Court sitting as a courtof first instance may be appealed before the Supreme Court. Suchappeals are permitted by law as of right. In addition to those appeals permitted as of right, Israeli lawprovides that in some cases a judgment not entitled to appeal as ofright may be appealed provided that the appellant court grants leaveto appeal. For instance, a judgment issued by a District Courtsitting as a court of appeals may be appealed before the SupremeCourt if the Supreme Court agrees to hear such appeal. Indetermining whether an appeal is permitted by law as of right orwhether leave to appeal is necessary, an important distinction is tobe drawn between a Judgment and a Decision (for a description ofthese terms, please see the answer to question 9.1, supra). Whereasa Judgment is entitled to one appeal as of right, a Decision may onlybe appealed if leave to appeal is granted. A Decision rendered by aMagistrate Court is appealable before a District Court, and aDecision of a District Court is appealable before the SupremeCourt. The Procedure Regulations provide that only one judge shallpreside over such appeals. Israeli courts strictly enforce the rules regarding the deadlines forsubmitting appeals or motions to grant leave to appeal. The deadlinefor filing an appeal permitted as of right is 45 days from the date ofthe judgment being appealed. The deadline for filing a motion togrant leave to appeal is 30 days from the date of the judgment beingappealed, unless the law provides otherwise. The deadline for filingan appeal after leave to appeal was granted is 30 days from the datesuch leave was granted. The courts will agree to waive suchdeadlines in very rare circumstances and only for “special reasons”. Regarding appeals that require leave to appeal, Regulation 403(a)of the Procedure Regulations provides that a motion to grant leaveto appeal shall be submitted in writing and shall briefly detail theapplicant’s oppositions to the judgment rendered. With respect toappeals permitted as of right, Regulation 414 of the Procedure



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Regulations provides that the appellant’s pleadings shouldsummarily state the appellant’s opposition to the judgment beingappealed. During the course of the appeal, the appellant will bestopped from relying on an argument not mentioned in hispleadings unless the Court grants special permission to rely on suchargument. The Court will grant such permission only on rareoccasion. Once the initial concise motion papers have beensubmitted, the parties are permitted to submit lengthy briefsdetailing all the factual allegations arising out of the action.The Procedure Regulations provide that an appellant or a partysubmitting a motion to grant leave to appeal must provide securityto cover the costs of the defendant in the event that the appeal willbe denied. When an appeal is filed, the Court shall determine thesum of such security and the date on which it shall be deposited.Such security is usually given in the form of a bank cheque. Incases in which the Court decided to waive the applicable court feefor the appeal, the Court has discretion to waive the securityrequirement as well, but such authority is rarely exercised. As a general rule, the filing of an appeal does not stay execution of thejudgment on appeal. A party that wishes to request a stay of executionorder must file a motion for such order with the court that rendered theoriginal judgment. If such court refuses to grant a stay of executionorder, the appellant court has discretion to grant such order. Inconsidering whether to grant a stay of execution order, the courts willweigh the following considerations: (i) what is the likelihood that thejudgment on appeal will be reversed; and (ii) assuming the appellantprevails on the appeal, will he suffer irreversible damage by virtue ofthe fact that the reversed judgment was already executed. When thejudgment is one involving a monetary payment, the courts will usuallynot stay the execution of such payment. The appellate court has the authority to grant interim remediesduring the course of an appeal. For a discussion regarding possibleinterim remedies, please see the answer to question 3.2, supra.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Israel?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

In Israel there are two widely-used extra-judicial means of disputeresolution: arbitration and mediation. An action will be submitted to an arbitrator if the parties agreedprior to the conflict that should a dispute arise in their dealings, itwill be brought before an arbitrator. Even if no such agreementexists, the parties may decide, during the course of litigation, tosubmit the action to an arbitrator. In such a case, the Court will, atthe request of one of the parties, suspend the action until furthernotice from the parties. The decision of an arbitrator is bindingupon the parties. Alternatively, if no arbitration agreement exists between the parties,the Court may, at the request of both parties, submit the action to amediator. The mediator will attempt to resolve the conflict, thoughhis decision will not bind the parties. Once the Court transfers anaction to a mediator, all court proceedings will be suspended for aperiod to be determined by the Court.Aside from the above extra-judicial means of dispute resolution,article 79a of the Courts Act provides that the Court itself may rule

on an action in the form of a compromise. This authority is subjectto the parties’ consent. Courts commonly urge parties to allow theCourt to exercise its discretion under this regulation. It became acommon tool used by courts to end trials and it is used both beforeand in the course of the trial.


The Courts Act establishes the courts’ authority to refer an action toan arbitrator or a mediator or to issue a ruling in form of acompromise. The specific laws of arbitration in Israel are governedby the Israeli Arbitration Act, 5728-1968 (hereunder: the“Arbitration Act”) and the Arbitration Procedure Regulations,5729-1968. The laws of mediation in Israel are governed by theCourt Regulations (Mediation), 5753-1993.

1.3 Are there any areas of law in Israel that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Article 3 of the Arbitration Act provides that an agreement thatrefers to arbitration a matter that may not be the subject ofarbitration is invalid. Such matters include legal rights that cannotbe waived or compromised (e.g., certain employee rights), disputesinvolving criminal behaviour or resulting therefrom (e.g., thedistribution of stolen goods between two thieves), and matters inwhich arbitration would be against the public interest (e.g., childcustody and support).In addition, special restrictions apply when the State is a party toarbitration or mediation. Before transferring an action from thecourt system to an arbitrator, the State must receive an approvalfrom the Attorney General. Before referring an action to amediator, the State must receive an approval from the AttorneyGeneral or other applicable governmental body as noted in theinstructions of the Attorney General on this topic.


2.1 What are the major dispute resolution institutions inIsrael?

Anyone is eligible to serve as an arbitrator or mediator according toIsraeli law. Article 79b(b) of the Courts Act provides that the parties,with the Court’s approval, shall appoint an arbitrator for their dispute.Arbitrators chosen by the parties are often retired judges or attorneys.Alternatively, parties may choose an arbitrator from a list ofarbitrators provided by the Chamber of Advocates. If the parties failto reach an agreement regarding the identity of the arbitrator, theCourt may appoint one from a list provided by the parties, or in theabsence of such list, at his own discretion. In the case of mediation,if a mediator is not agreed upon by the parties, the Court may appointa mediator from a list of mediators provided by the court system.


Article 21 of the Arbitration Act provides that the judgment of anarbitrator is binding upon the parties. In addition, pursuant toarticle 23(a) of the Act, the Court may choose to approve thejudgment of the arbitrator, in which case the judgment will beconsidered for all purposes as a judgment of the Court. However,the Court may, upon the request of a party, choose to nullify,

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complete or correct the judgment of an arbitrator, or return it to thearbitrator, in the event that the judgment is legally deficient, asdefined in article 24 of the Act.



In order to reduce the heavy workload on the courts, judges areproactive in attempting to convince litigants to explore possibilitiesof alternate dispute resolution (“ADR”). Judges spend time andexert efforts to obtain the consent of litigants to refer disputes toarbitration or mediation. As the courts’ workload is constantlyincreasing, this trend is expected to continue and even intensifyover the next few years. New centres, both private and governmental, have been establishedfor the purpose of further developing the field of dispute resolution.The Israeli courts in particular are strong proponents of extra-judicial dispute resolution, mainly due to the overloaded courtsystem in Israel.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Israel?

The Procedure Regulations were recently amended to include aprovision obligating the parties to a court action to attend apreliminary session with a mediator prior to the first hearing in thecase. The purpose of such session is to explore the option of usingmediation as a means to resolve the conflict. The parties, however,are not obligated to agree to resolve the conflict through mediation. The importance of ADR has penetrated other areas of law as well.One such area of law that has witnessed an increase in the use ofextra-judicial means of conflict resolution is family law. Article26(a)(4) of the Family Court Act, 5755-1995 provides that theAttorney General may enact regulations dealing with theprocedures for referring a family court action to a mediator.



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Dr. Israel (Reli) Leshem

Meitar Liquornik Geva & Leshem Brandwein16 Aba Hillel St. Ramat Gan Israel

Tel: +972 3 610 3650Fax: +972 3 610 3631Email: [email protected]: www.meitar.com

Dr. Israel (Reli) Leshem leads Meitar’s Litigation group. Herepresents local and international companies in complex civillitigation in court and arbitration. Dr. Leshem also represents clientsin international arbitration and coordinates their cross-borderlitigation in foreign jurisdictions. He was selected by ChambersGlobal Guide as a leading litigation counsel and superior arbitrator.Dr. Leshem was educated at Tel-Aviv University (LL.B. 1973-1977)and Harvard Law School (S.J.D. 1982-1984). He is a member ofthe Israeli Bar (1978) and the New York Bar (1984). He worked inCravath Swaine & Moore in New York (1984-1986). From 1986 to1988 he was a partner at Zadok & Co. and from 1988 to 1994 hewas a senior partner at Lipa Meir, Leshem & Co. In 1994 Dr.Leshem established the law firm of Leshem Brandwein (that mergedin 2003 with Meitar, Liquornik, Geva & Co, in the largest legalmerger ever in Israel). Dr. Leshem is considered one of the leadingexperts on civil procedure in Israel. He is one of the five membersof the Minister of Justice’s Advisory Committee on Civil Procedure.He was a senior lecturer on Civil Procedure at Tel-Aviv UniversityLaw School and taught several courses on arbitration law. He is theChair of the Israel Bar Association Continuing Legal Education onCivil Procedure and Evidence.

Ron Peleg

Meitar Liquornik Geva & Leshem Brandwein16 Aba Hillel St. Ramat Gan Israel

Tel: +972 3 610 3811Fax: +972 3 610 3712Email: [email protected]: www.meitar.com

Ron Peleg, is a member of the firm’s litigation Group. Ronrepresents Israeli and international clients in civil and commercialdisputes in courts and arbitrations. Ron handles complexinternational litigation and gained vast experience representing andappearing before all judicial instances in cases involving corporatelaw, commercial law, environmental law, administrative law andproduct liability. Ron also specialises in the field of pharmaceuticallaw and represents multinational pharmaceutical companies inmatters involving product liability, regulation and class actions. Ronholds an LL.B (2000, Magna cum laude) from Tel Aviv Universityand was admitted to the Israeli Bar in 2001. Ron is the formerAssociate Editor of “Tel Aviv University Law Review”. Ron waschosen by Chambers Global Guide as an “up and coming” litigatorthat “…works on highly complex matters involving foreign clients”.Accolades poured in from impressed clients: “He goes the extra mileand fully investigates every case to gain maximum understanding.”Other commentators describe him as “a brilliant young lawyer withgreat analytical skills and plenty of energy”.

Meitar Liquornik Geva & Leshem Brandwein (Meitar) is Israel’s leading international law firm, one of the three largestlaw firms in Israel, comprised of 120 attorneys and over 30 articled clerks. The firm is ranked as one of the leadingcommercial and corporate law firms in Israel by Chambers Global and the European Legal 500. Meitar successfully,effectively and professionally handles complex and innovative legal matters in almost all areas of commercial andbusiness law as well as commercial and business litigation. The firm’s Litigation group, headed by Dr. Israel (“Reli”)Leshem, numbers seven partners and some 25 associates. It has earned a solid reputation for effectively handling, atthe highest professional levels, a broad variety of complex civil cases. Our practice ranges from securities class actionsto product liability crises, from alleged fixing of oil prices to biotechnology IP, and from FDA fraud to internationalcontract arbitration. Meitar’s litigation group represents a variety of clients: from multi-national industrial companies(chemicals, pharmaceuticals, infrastructure, telecommunications, electronics, software, oil and gas) to financialinstitutions, and from local industrial companies (food, oil & gas, irrigation and water treatment, high-tech, weapons,textile, cellular operators, cable TV and medical devices) to governmental institutions and large municipalities. Meitarregularly represents many companies in large and complex claims involving contracts, securities, antitrust, commercialtorts, misappropriation of IP, product liability and environmental issues.

Israel

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I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Italy got? Are there anyrules that govern civil procedure in Italy?

The Italian legal system is a civil law system and has its roots inRoman law. Civil law is based on a written and codified legalsystem consisting of abstract rules which judges must apply to theparticular cases brought before them. Case law precedents are notbinding and have just a persuasive importance. The main legal sources of civil procedure law in Italy are: theItalian Constitution; the Civil Procedure Code last extensivelyamended by L. 80/2005; the Italian international private law (L.218/1995); the European law, such as the EU Council RegulationNo. 44/2001 on “jurisdiction and the recognition and enforcementof judgments in civil and commercial matters”; and theinternational multi or bilateral conventions which Italy has enteredinto. Moreover, on January 1, 2004, the Legislative Decree No.5/2003 came into force introducing a special civil procedure forcompany related claims.

1.2 How is the civil court system in Italy structured? What arethe various levels of appeal and are there any specialistcourts?

In Italy civil jurisdiction is the responsibility of “ordinary” courts,so-called by article 102 of the Italian Constitution. Such provisionalso forbids the institution of “extraordinary or special” courts.However the creation of special divisions dealing with particularmatters inside the ordinary courts (e.g. for matters regardingcompanies, intellectual property, labour, family, etc.) is allowed.Ordinary court judges are selected by public examination and theyare career judges. There are, however, also so-called “honorary”judges, who are appointed without examination and are selectedfrom lawyers and civil servants. There are three different levels of jurisdiction: on the first instancethe claims are brought before the justice of the peace or before theTribunals (depending on the value and on the subject matter)composed by one judge or a panel of three judges (depending on thekind of claim). The court of second instance for the judgments ofthe Tribunal is the Court of Appeal, which sits in a panel composedof three career judges. The Tribunal is the court of second instancefor the judgments of the justices of the peace. At the top of thejudicial system is the Supreme Court of Cassation, which sits in

Rome and decides only regarding the correct application andinterpretation of law. The Constitutional Court is a separate body and is in charge for thejudicial review of legislation. This can be either direct or indirect,upon request of a certain number of citizens or of a lower court.

1.3 What are the main stages in civil proceedings in Italy?What is their underlying timeframe?

The main stages in proceedings before the Italian courts generallyare: the service of the summons of claim from the plaintiff to thedefendant (a minimum term of ninety days must be granted to thedefendant for its appearance at the first hearing); the reply brieffiled with the court by the defendant and the first hearing for thediscussion of the case in which the judge/parties may raisepreliminary issues (e.g. lack of jurisdiction or lack of locus standi)prior to examining the merits of the case. Upon the request of theparties, the judge grants three terms: the first one for the filing ofbriefs containing better particulars and/or clarifications of theoriginal statements and requests (thirty days from the first hearing);the second one for replying to the above briefs, for the formulationof evidentiary requests and the filing of additional documents(thirty days from the expiry of the first term); and the third one forreplies limited to counter-evidence (twenty days from the expiry ofthe second term). Then the evidentiary phase starts and thewitnesses -if requested by the parties and admitted by the judge- areexamined. If the judge deems it useful he can also appoint atechnical expert. When the evidentiary phase is completed -it canlast between a couple of months up to more than a year, dependingon the complexity of the case- the judge sets a final hearing inwhich the parties make their final statements. At that hearing thejudge grants the parties a term of sixty days for the filing of finalbriefs and a further term of twenty days to reply to the above briefs.Then the judge issues the final decision.

1.4 What is Italy’s local judiciary’s approach to exclusivejurisdiction clauses?

In Italian contracts it is quite common to insert clauses whereby theparties derogate the venue provided by civil procedure rules and/orthe jurisdiction. In contracts where one of the parties is not Italian,derogation to the Italian jurisdiction in favour of a foreign judge orarbitrator is very common, provided that the agreement is made inwriting and the claim does not relate to non-negotiable rights (seearticle 4 of the Italian International Private Law No. 218/1995 andarticle 23 of the EU Council Regulation No. 44/2001).

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1.5 What are the costs of civil court proceedings in Italy? Whobears these costs?

During the proceedings each party must pay its own costs. At theend of the proceedings, the general rule is that costs follow theevent. However, the costs awarded in the judgment are alwayslower than the ones borne by the winning party. If the case is won fifty-fifty, or if the case implied the examinationof complex matters or new law principles, or for “other goodreasons”, the judge can decide to “set-off” the costs and each partyshall bear its own costs.Upon specific request, the judge may also award compensation forthe damage suffered by the winning party in case of abuse ofprocess by the other one (for instance, the plaintiff knew beforestarting the claim that there was no good ground for commencinglitigation).

1.6 Are there any particular rules about funding litigation inItaly? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

A public funding system is available but it is very limited. In orderto benefit, the party to a process must show that it has a well-founded case and an annual income of less than €9,723.84. Legalaid is therefore seldom granted, in practice. After the last amendment of the Italian Bar rules (LegislativeDecree No. 233/2006), it is now allowed for the parties to negotiatecontingency/conditional fees relating to success in the case,provided that the relevant agreement between the lawyer and theclient is done in writing. In Italy the security for costs is not provided by law.


2.1 Are there any pre-action procedures in place in Italy?What is their scope?

Italian procedural law provides some pre-action procedures. Forexample, in employment matters, the plaintiff must try to find asettlement before taking action. Something similar to pre-actionprocedures are also the so-called ante causam proceedings aimed atobtaining interim measures which prevent the parties from sufferingdamages during the course of the ordinary proceedings (see alsoquestion 3.2). Before the start of the proceedings it is also possible to conduct apreventive witness examination if a party needs to hear a witnesswith urgency (i.e. if there is a risk that the witness will no longer beavailable in the country or be around because of his age or health)or to hear an expert witnessing to verify certain objective situations(e.g. places, goods etc.) if there is the risk that the situations can bemodified before the evidentiary phase starts.Finally, a sort of pre-action procedure is provided in case of“opposition to the enforcement” which is a proceedings forchallenging the enforcement of an executory title. In this case apreliminary phase starts, in which the court decides whether totemporarily suspend the enforcement until it reaches a decision onthe creditor’s right to enforce said title.


The limitation period for bringing actions is a matter of substantivelaw, regulated by the Italian Civil Code. Its statute depends on thekind of claim. For tort claims, the limitation period is five yearsfrom the time of the damages. For contract claims, the generallimitation period for contractual liability is ten years from thebreach of the contract. For certain kinds of contracts the limitationperiod can be shorter (e.g. for defects in the sale of goods thelimitation period is one year from the delivery; for defects inbuilding contracts it is two years from the conveyance; and forcorporate matters it is five years from the event, etc.).


3.1 How are civil proceedings commenced (issued and served)in Italy? What various means of service are there? What isthe deemed date of service? How is service effectedoutside Italy? Is there a preferred method of service offoreign proceedings in Italy?

Proceedings are commenced by a summons of claim from theplaintiff to the defendant served by a court bailiff. There are twodifferent forms of summons in relation with the nature of the claim.In the first one a summons is served to the defendant and theplaintiff sets the date of the first hearing. In the other one a petitionis filed with the court and the same gives notice to the defendant ofthe claim and of the first hearing, set by the court.The different means of service are mainly performed by a courtbailiff. Service is given wherever the person to be served residesand the service is considered performed also in case of a refusalfrom the recipient. The service at the recipient residence/domicileis done at the recipient’s home or office; also the doorkeeper, arelative, a live-in partner or a housekeeper can (but is not obligedto) take the service. The service for companies is made at theregistered office or at the residence of its legal representative.Specific means of service are set in case the recipient can’t betraced. In particular cases also service by mail is possible and insuch cases the involvement of a court bailiff is not necessary, as thelawyers are allowed to substitute them. Finally, Legislative DecreeNo. 5/2003 which has reformed the corporate litigation procedureprovided the possibility to serve a brief by fax. Outside Italian jurisdiction, service in the EU is regulated by EURegulation No. 1348/2000 which provides for the transmission andservice of judicial documents in civil and commercial matters fromone member state to another through Authorities specificallyappointed in each Member State. For people who have their domicile outside Italy, service can beperformed by post, informing the Department for Foreign Affairs,or through diplomatic channels. Service within the EU is now done preferably according to theRegulation No. 1348/2000, whereas from non-EU countries themost common method is the mail or the direct service trough a localcounsel.Finally, starting from 13 November 2008 the new Regulation No.1393/2007 will replace Regulation No. 1348/2000.

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3.2 Are any pre-action interim remedies available in Italy?How do you apply for them? What are the main criteria forobtaining these?

The judge can issue pre-action interim decisions in advance of ajudgment on the merits in the so-called ante causam procedures forobtaining conservatory measures, freezing orders, seizures, etc.The judge summarily examines the request and decides to grant theinterim reliefs if it can be shown that the claim brought is at a firstglance well grounded (“fumus boni iuris”) and that the requestingparty will suffer an irreparable damage because of the waiting forthe entire course of the ordinary proceedings (“periculum inmora”).


The summons of claim must include: the name of the court beforewhich the action is brought; the names and addresses of theclaimant and of the defendant; the object of the claim, the complaintand the allegation of facts; the relief sought; the evidencesrequested; the date of the first hearing and the warning to thedefendant to file its written response up to twenty days before thefirst hearing.


The parties cannot substantially amend their pleadings. However,at the first hearing, the plaintiff is allowed to raise new claims orexceptions which are a consequence of the defendant’s defences;moreover all parties at the first hearing may specify or amend theirpleadings and request the court a term for filing a brief (see alsoquestion 1.3) containing better particulars and/or clarifications ofthe original statements and requests.

4 Defending a Claim


The statement of defence must include: the defence upon the meritsof the claimant’s pleading; the evidentiary requests; the list ofdocuments he intends to file; the conclusions and final requests;eventual counterclaims (included defences of set-off) and motion tojoin third parties to the proceedings.


It has to be filed with the court within twenty days before the firsthearing, unless for particularly urgent matters where terms may bereduced by the court -upon request of the plaintiff- by up to half.


Each party may bring a claim against a third party in the context ofexisting proceedings, rather than commencing separate proceedingsagainst that party, so that the third party becomes a party to theoriginal action with the same rights of defence as all the otherdefendants.


If the defendant fails to defend the claim without taking part inaction, the proceedings continue in its absence. However, theabsent-defendant is allowed to appear at any time before the finalhearing, with defence powers limited to the stage of process inwhich it appears, unless it proves that it is not responsible for itsfailure to appear timely before the court.


The defendant can raise the court’s lack of jurisdiction at any timeduring the proceedings, as can the judge. As far as the lack of venue is concerned, the defendant mustgenerally raise it in the first defence brief. If the parties have agreedto derogate the venue provided by the law, the defendant and thejudge can raise it not later than the first hearing.



Italian Civil Procedure Code contains provisions for the joinder ofthird parties as defendants to a claim. The third party may be joinedby each party, if the cause of action is the same for the third partyor the guarantor, or the judge, if the cause of action is the same forthe third party and the judge deems it necessary. A third party mayalso join ongoing proceedings voluntarily if it wants to bring itsown claim related to existing proceedings.


The Italian civil justice system allows the consolidation (either bythe judge’s own decision or upon application by the parties) toavoid the risk of irreconcilable judgments where two differentproceedings relate to the same or closely connected claims, or thesame parties.


In the Italian civil proceedings, the split of trials is allowed only inthe particular case in which two or more claims are brought in thesame proceedings and are connected as to the object and/or the titleof action. In such case the judge can decide to split the proceedingsupon application of the parties or “ex officio” when thecontinuation of the consolidated proceedings may delay theduration of the same proceedings.


6.1 Is there any particular case allocation system before thecivil courts in Italy? How are cases allocated?

The Italian judiciary system applies the following case allocationsystem in relation to the value and/or nature of the claim. Claims brought before the justice of peace: claims on movables



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worth no more than €2,582.28; the claims for damages caused bycirculation of vehicles worth no more than €15,493.71; the claimsrelated to the setting of land boundaries; and other very specifickinds of claims without limits as to the value.All other claims are brought before Tribunals and allocated, if thecase may be, to specialised chambers depending on the kind ofclaim (e.g. family matters, employment, company matters, etc.).

6.2 Do the courts in Italy have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The Italian courts are not expressly obliged by law to manage casesactively. The judge has the power to issue (upon a party’s application) interimmeasures. In the course of the evidentiary phase a temporaryinjunction for payment of the sums of money not contested by thedebtor or an order to deliver a specific good can be issued. Before orduring the proceedings the parties can also request the courtconservative/interim measures which prevent the requesting partyfrom suffering an irreparable damage because of the waiting for theentire course of the ordinary proceedings (see above question 3.2).The judge usually decides on the costs of those applications at theend of the entire proceedings unless he had already decided before.

6.3 What sanctions are the courts in Italy empowered toimpose on a party that disobeys the court’s orders ordirections?

In Italy there are no specific provisions with respect to this; it isimpossible, in fact, to force someone to do something against hiswill. However, article 388 of the Code of Criminal Law considersas a crime the failure to observe a court’s order or direction andprovides specific sanctions for each case.

6.4 Do the courts in Italy have the power to strike out part ofa statement of case? If so, in what circumstances?

Italian courts do not have the power to strike out part of a statementof case. The statement of case is generally entirely evaluated by thejudge at the end of the case, and he usually declares theinadmissibility of the entire claim or of a part of it only in the finaljudgment. In limited cases preliminary objections may be raised bythe judge at the very start of the case and, if grounded, they usuallylead to the immediate dismissal of the claim.

6.5 Can the civil courts in Italy enter summary judgment?

The Civil Procedure Code allows an expedited route for relief tocreditors holding qualified evidence of monetary claims (typically,invoices and registration in the creditor’s accounts). The paymentinjunction (“decreto ingiuntivo”) is issued without the appearance ofthe debtor after the judge has summarily examined the request. Itbecomes enforceable in the absence of formal opposition by the debtorwithin forty days. If the debtor files a formal opposition within thedeadline, the injunction may be suspended and the parties commenceordinary court proceedings for the resolution of the dispute.

6.6 Do the courts in Italy have any powers to discontinue orstay the proceedings? If so, in what circumstances?

The judge may order the stay of proceedings whenever another

claim related to the first one has to be resolved (for instance, in thecourse of a criminal or administrative proceedings, or in case a lawis submitted to a plea of unconstitutionality). The judge may decidefor the stay of proceedings also on the parties’ application, for atime not longer than four months.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Italy? Are there any classes of documents that do notrequire disclosure?

The basic principle is that the claimant must prove its claims bysubmitting to the judge all relevant evidence it possesses(documents, request for witnesses, etc.). The same applies to thedefendant in proving statements made in its defence. Only the following types of evidence provided by law can be used:documents; testimony; and oath. The judge, on the request of theother party, can order their exhibition or deposit even though in theItalian system there is no real obligation on the parties to an actionto disclose. Other types of evidence are for example the inspection and therequest of information from the Public Administration; these typesof evidence can be ordered by the court also on its own initiative.

7.2 What are the rules on privilege in civil proceedings inItaly?

The Italian procedural system treats a document as benefiting fromthis privilege only in limited cases, namely: lawyers, in relation tofacts learnt in the management of a file and correspondenceexchanged with the lawyer of a counterpart marked as “privilegedand confidential”; court appointed experts; accountants, save inrelation to the activity of balance sheet certification; public notariesand certain public authorities (e.g. the Bank of Italy); healthprofessionals, priests and any other professional expressly indicatedunder the law. Thus, if one party is in possession of documents notcovered by any of these categories, the other party cannot preventtheir production by the first party for its own benefit. Moreover, allprivate or internal documents of a party and correspondence mustbe considered confidential, according to the Criminal law and toarticle 15 of the Italian Constitution which affords secrecy tocorrespondence and communications in general.

7.3 What are the rules in Italy with respect to disclosure bythird parties?

If a party external to the proceedings refuses disclosure withoutgood grounds, the judge can only impose a fine.

7.4 What is the court’s role in disclosure in civil proceedingsin Italy?

The judge does not have a relevant role because he usually checksjust the relevance of the produced evidence and evaluates it. Thejudge, upon request of the party, can also order the exhibition ofsome documents, but this seldom happens.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Italy?

In Italy there is no obligation of disclosure. All documents,

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generally filed with the court at the parties’ discretion, oncedisclosed, can be used without restrictions.

8 Evidence

8.1 What are the basic rules of evidence in Italy?

The main rule of evidence is the burden of proof rule stated atarticle 2697 of the Italian Civil Code according to which the partywho wants to bring a case (or the defendant who wants the claimrejected or to file a cross-claim) must prove the facts upon whichthe claim is based.


In Italy factual evidence is the only one admissible. Evidence oncontracts is admissible with limitations, since their existence cannotbe proved by means of factual witnesses. A judge can also appoint technical experts to assist him in technicalactivities. The results achieved can be purely evaluated by thejudge and they do not represent a piece of evidence, but in mostcases they become the basis of the judgment.


The witnesses are called by a court bailiff or by the party’s counselhimself, with a witness summons compelling them to appear beforethe court. Reluctant witnesses may be called with a new witnesssummons or may be asked to be accompanied by the police to thenext hearing. The judge can impose a fine. When witnesses doappear, the judge may report them to a public prosecutor eitherwhen they refuse to make depositions without any good grounds orwhen they do not tell the truth.A party wishing to depose a factual witness in a civil proceedingwill file the relevant request in the introductory brief or in thestatement of defence, listing the questions in separate chapters onthe factual circumstances of the case that it wishes the judge to askthe witness. The counterpart has the right to list questions in orderto cross-examine the witness.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Italy?

The judge has the power to admit or dismiss any witness and toallow or strike off the suggested questions. Only the judge can askquestions to the witnesses, while the parties’ counsels may examinethem only through the judge.


9.1 What different types of judgments and orders are the civilcourts in Italy empowered to issue and in whatcircumstances?

The judge may conclude the proceedings by: “performancejudgments”, in which the court condemns the losing party to delivergoods or to specific performance or non-performance; “declaratoryjudgments”, in which the court orders not to contest the assets of

someone else or not to assert certain alleged rights; “constitutivejudgments”, in which, in cases specified by law, the courtestablishes a legal situation of new content (for instance, voiding adefective contract). He may also pronounce “temporary injunctionsfor payment or for delivery of goods”; provisional judgments ordecrees in advance of a judgment on the merits, to guarantee thatthe subsequent judgment will have effect.


The courts pronounce the judgment with exclusive regard to whatthe claimant asks for; they cannot state on those aspects which arenot included in the claim (so-called ultra-petitum).As regards the costs of litigation, see above question 1.5.


The Italian legal system provides the enforcement proceedings,aiming at satisfying the creditor’s right to enforce a judgment in itsfavour, should the defendant not voluntarily comply it. Theseproceedings presuppose the existence of an “enforceable title”which usually consists of a condemnation judgment. In the case offoreign judgments, the EU Council Regulation No. 44/2001provides that a judgment given in a Member State shall berecognised in the other Member States without any specialprocedure being required and […] shall be enforced in anotherMember State when, on the application of any interested party, ithas been declared enforceable. A judgment issued outside theEuropean Union, according to Italian law, has effect in the Italiansystem provided that it meets the basic conditions required in Italyfor a judgment (i.e. the right to defence for the defendant and therequirements of public order).

9.4 What are the rules of appeal against a judgment of a civilcourt of Italy?

The losing party to a partial or final judgment can challenge thedecision before the Court of Appeal, formed by a panel of threejudges. The appeal must be filed within thirty days from service ofthe first instance judgment; failing service, the term to appeal is oneyear from the date when the judgment is filed with the court. Allclaims raised in the first instance can be referred to the Court ofAppeal and any error the appellant asserts has been made by thefirst instance court can be grounds for an appeal. At the appealstage, no new objections can be raised and the parties may notproduce new evidence. The appellate court issues a new judgmentwhich replaces that of the first instance court.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Italy?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

The most frequently-used method of dispute resolution in Italy isrepresented by the process before the Ordinary Courts (Tribunals);however, some further methods are available as alternatives to theprocess. Arbitration allows parties to derogate the State Courts



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jurisdiction by substituting it with one or three arbitrators (generallychosen by parties themselves), who issue an enforceable arbitrationaward. A number of institutions that provide for administeredarbitration also exist. Mediation is a wholly non-judicial process.A third party seeks to facilitate the reaching of an agreementbetween the parties. The first non-judicial mediations by privateorganisations are currently taking place in Italy, although they arenot very common in Italy apart from in those cases where lawrequires mediation as compulsory (for instance, with respect toclaims related to communication matters). Ombudsman wasintroduced in the private relations of commercial enterprises, as aservice to customers. Particularly important is the BankingOmbudsman, instituted in 1993 by the Italian Banking Association.This is a board of professionals to which a dissatisfied customer ofa bank can seek recourse, provided that there are no pending courtor arbitration proceedings. The Ombudsman issues judgmentswhich are binding on the bank but not the client, who may still bringcourt proceedings. Preventive expert witnessing has been recentlyintroduced as a new way to resolve disputes without a trial court-action: the experts are assistants of the judge and their reports mayhelp the parties to settle disputes relating to technical matters.


Arbitration is regulated by articles 806-840 of the civil procedurecode, recently reformed by Legislative Decree No. 40/2006.Mediation and Ombudsman are not governed by any particular setof rules; generally they are administered by private or public bodieswhich have their own regulation. However, mediation has receivedan express recognition by the Legislative Decree No. 5, January 17,2003 on corporate litigation which introduced, among other rules,the mediation for corporate matters.

1.3 Are there any areas of law in Italy that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

An arbitral tribunal cannot issue either payment injunctions ororders and measures for urgent relief, which are a prerogative ofstate courts. Moreover disputes involving public matters such ascriminal and family law matters or claims on inalienable rights areconsidered non-arbitrable nor can the parties use mediation.Special mediation proceedings are provided to resolve certainfamily disputes.


2.1 What are the major dispute resolution institutions in Italy?

There are public dispute resolution institutions such as theChambers of Commerce and private ones, which provide arbitrationand mediation services. The major arbitration institutions in Italyare the Italian Association for Arbitration, the Milan ArbitrationChamber instituted by the Milan Chamber of Commerce, the RomeArbitration Chamber instituted by the Rome Chamber ofCommerce that now also provide mediation services as well as allItalian sportive federations.


Arbitration awards are binding on the parties and enforceable. Article824-bis of the civil procedure code, last emended by LegislativeDecree No. 40/2006, provides that arbitral awards have “the sameeffects of a judgment rendered by a national court”. Although thisprovision resolved the much-debated issue on whether arbitralawards have the effectiveness of a contractual agreement or the sameone of judgments, it is to be noted that arbitral awards still need to bedeclared enforceable by a court decree.Settlement agreements reached in mediation are binding on theparties and enforceable in accordance with ordinary contract lawprinciples; however, in certain cases expressly provided by law,they are binding like an enforceable judgment.



Apart from arbitration, that is now widely used, alternative disputeresolutions are not frequently used because of widespread doubts oftheir effectiveness. However, in the last few years, arbitration and,to a limited extent, mediation - especially that one administered bythe Chambers of Commerce - have been taken into a considerableaccount in the attempt to resolve the problems of the Italianjudiciary system (particularly the unreasonable duration of theproceedings) in the field of commercial and corporate law.Arbitration and mediation systems are very common in sportmatters. Nonetheless mediation is still not deemed by parties, andalso by counsels, as a real alternative to the court-process.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Italy?

As to the latest reforms, on civil proceedings, with a view toreducing the timing of litigation and decrease the amount of civilproceedings pending before Italian courts, during the last year somebills aimed at increasing the use of alternative dispute resolutionmethods have been adopted, although none of them has beenapproved by the Parliament. As of today a new project ofreformation of the civil proceedings is again on the agenda andprovides the following major changes: a) service shall be performedby means of electronic devices (e.g. e-mail); b) in order to stimulatethe parties to the proceedings to reach a settlement agreement, theone who rejects without justified reason to reach a conciliation isordered to pay the whole court costs; c) a new easier proceedingsaimed at obtaining a judicial order which becomes enforceable inlack of counterparty’s appeal is provided. Furthermore the 2007 budget law, by reforming the ConsumerCode, has introduced for the first time in the Italian legal system asort of class action. Consumers (through their associations) areentitled to sue corporations collectively for tort liability, unfair tradepractice, and anti-competitive behaviour. The mentioned provisionincludes also a conciliation procedure to be applied when the partiesdo not reach an agreement over the amount to be paid incompensation for damages. The mentioned collective action, if notfurther amended, shall enter into force on 1 January 2009.

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Francesco Minà

LovellsPiazza Venezia, 11Rome 00187Italy

Tel: +39 066 758 231Fax: +39 066 582 323Email: [email protected]: www.lovells.com

Francesco Minà is based in Lovells’ Rome office. Francesco is asenior litigation lawyer with wide experience in domestic and cross-border litigation including commercial litigation and arbitration,insolvency, and product liability. He has experience in defendingpharmaceutical, fashion, oil and construction industries as well asinsurance companies, banks and airline operators in all types andphases of commercial disputes. He has litigation experience in Italy,France and Germany and speaks English, French and Germanfluently. Francesco also lectures on Italian and EU civil andcommercial proceedings and Product Liability and Product Safety atseminars and conferences.

Daniele La Cognata

LovellsPiazza Venezia, 11Rome 00187Italy

Tel: +39 066 758 231Fax: +39 066 582 323Email: [email protected]: www.lovells.com

Daniele La Cognata is based in Lovells’ Rome office and is alitigation lawyer with experience in domestic and cross-borderlitigation including commercial, corporate, and product liability. Hehas experience in the defence of claims against companies in thepharmaceutical, banking, insurance, fashion and entertainmentsectors. He also has experience in commercial, corporate and sportnational and international arbitrations. Daniele speaks Englishfluently and lectures on Product Liability and Product Safety atseminars and conferences.

With over three thousand people operating from 26 offices in Europe, Asia and the United States, Lovells is one of asmall number of truly international law firms. Lovells has an outstanding international dispute resolution practicecovering all forms of dispute resolution, including litigation, arbitration and ADR. The practice operates in all keyjurisdictions and has outstanding international capabilities with extensive coverage in Europe, the United States andAsia. Lovells’ lawyers are experienced in handling complex multi-jurisdictional cases, reflecting the international natureof the firm’s clients.

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Japan

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Japan got? Are there anyrules that govern civil procedure in Japan?

The Japanese legal system is based on the civil law tradition. TheJapanese courts are bound by statutes. Although court precedentshave no legal binding effect, Japanese courts, as a matter ofpractice, generally respect precedents, especially the decisions ofthe Supreme Court. The Code of Civil Procedure (1996 Law No.109) (“CCP”) governs civil actions filed in Japanese courts.

1.2 How is the civil court system in Japan structured? Whatare the various levels of appeal and are there anyspecialist courts?

Japan’s civil court system has three major strata. The “SupremeCourt” (saiko saibansho) of Japan is the country’s premier court,and it hears appeals from intermediate appellate courts, which arereferred to as “high courts” (koto saibansho). The high courtsreview appeals from courts located within the high courts’geographic ambit, with the exception of “intellectual property highcourts” (chitekizaisan koto saibansho) which hear all intellectualproperty appeals. Lower courts in Japan are called “district courts”(chiho saibansho), which are primarily the courts of first instance.However, district courts may sit in an appellate capacity whenreviewing appeals filed in “summary courts” (kani saibansho),which deal mainly with small claims (JPY 1,400,000 or less).Japan has two types of specialised courts. As mentioned above,“intellectual property high courts” are the intermediate appellatecourts for cases involving patent rights. “Family courts” (kateisaibansho) have jurisdiction over domestic matters such asdivorces.

1.3 What are the main stages in civil proceedings in Japan?What is their underlying timeframe?

The main stages in civil procedures before the first instance courtsin Japan are:

the filing of a complaint;the service of the complaint on the defendant;the filing of an answer;

several court hearings, which are conducted on roughlymonthly intervals. The parties will exchange theirallegations and written evidence;examination of witnesses; andthe final judgment.

The court may recommend a settlement to the parties at any timeduring the court hearings, which may be an indication of how thecourt is inclined to rule on the matter. The overall average duration of civil proceedings for courts of thefirst instance varies from one to two years, but occasionally morethan two years is necessary depending on the complexity of a case.


If, by prior written consent, the parties agree that a certain foreigncountry’s court has exclusive international jurisdiction over adispute between them and if one party files a lawsuit in Japan incontravention to such agreement, then the Japanese court will, inprinciple, dismiss the case on the basis that it has no internationaljurisdiction over such dispute.

1.5 What are the costs of civil court proceedings in Japan?Who bears these costs?

In principle, the non-prevailing party shall bear all costs, such as therevenue stamp payable at the filing of the complaint. If a partyprevails on less than all claims, then the court will allocate the costsbetween the parties. Attorneys’ fees are not categorised as costs inthis context, and, in principle, the prevailing party is not entitled toclaim for a refund of any part of his attorneys’ fees from the non-prevailing party, except for certain categories of cases, such aspersonal injury caused by car accidents, medical malpractice, andintellectual property infringement cases.

1.6 Are there any particular rules about funding litigation inJapan? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

“No win, no fee” arrangements are not specifically prohibited.However, it is generally considered that such arrangements are notdesirable in light of lawyers’ ethics. In practice, they are uncommon.Security for costs is available where the plaintiff does not have anoffice address or a residence in Japan, unless otherwise stipulatedby an applicable treaty.

Nobuhito Sawasaki

Kenichi Sadaka

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2.1 Are there any pre-action procedures in place in Japan?What is their scope?

The CCR introduced the advance notice system in 2004, whichenables exchanges of allegations and evidence between prospectivelitigants in advance of the actual initiation of a lawsuit. However,it is optional for a prospective plaintiff to use this system and, as amatter of practice, it is rarely used.


The Civil Code (1896 Law No. 89), the Commercial Code (1899Law No. 48) and other relevant laws prescribe various limitationperiods depending on the type of claims. In principle, the limitationperiod is 10 years. However, it is shortened to 5 years if claims arerelated to commercial activities. It should be further noted thatthere are many other exceptions to the length of applicablelimitation periods, such as 3 years for tort claims and 2 years foraccounts receivable related to movable assets.Limitations periods commence when a right becomes exercisable.Limitation periods are basically characterised as a matter ofsubstantive law. Although the right in question is deemed to expireat the conclusion of the relevant limitation period, a party is notprevented from filing suit, and the court will not inquire into thelimitation period unless it is raised by the opposing party as adefence.


3.1 How are civil proceedings commenced (issued and served)in Japan? What various means of service are there? Whatis the deemed date of service? How is service effectedoutside Japan? Is there a preferred method of service offoreign proceedings in Japan?

A civil action is commenced when a plaintiff files a complaint. Ifthe court determines that the complaint meets the formalityrequirements, then the clerk of court serves it on the defendant. The clerk of court usually uses the post office’s staff to serve thecomplaint to the defendant at the defendant’s residential or workaddress. Such service is completed usually one to two weeks afterthe filing of the complaint. If the clerk of court cannot serve the defendant due to thedefendant’s lack of an obvious address, then the clerk of court mayeffectuate service by publication, which consists of posting a noticeat the courthouse. If the defendant has no residential or work address in Japan, thenthe court will request a foreign country where the defendant islocated to serve the complaint on such defendant, through formaldiplomatic channels and in accordance with applicable treaties suchas the Hague Convention on the Service Abroad of Judicial andExtrajudicial Documents in Civil or Commercial Matters. Thisprocess may take several months to complete.With respect to the service of process of foreign proceedings on adefendant in Japan, service of process need not occur in the samemanner as domestic proceedings in Japan since it is primarily amatter of the civil procedure of the foreign country. However, if the

plaintiff intends to enforce a judgment against any of thedefendant’s assets which are located in Japan, then it would beadvisable to serve the complaint through a formal diplomaticchannel in accordance with applicable treaty. See question 9.3. Insuch case, the Japanese court will take charge of the service on thedefendant in Japan.

3.2 Are any pre-action interim remedies available in Japan?How do you apply for them? What are the main criteria forobtaining these?

In Japan, there are 2 types of interim remedies available in advanceof initiation of the lawsuit under the Code of Civil ProvisionalRemedies (1989 Law No. 91): provisional attachment (karisashiosae); and provisional disposition (kari shobun). Provisionalattachment may be issued to prohibit a prospective defendant fromdisposing of specified assets for the purpose of preserving theplaintiff’s monetary claim. In contrast, provisional disposition maybe issued to prohibit a prospective defendant from disposing of ormoving disputed assets for the purpose of preserving the plaintiff’smonetary or non-monetary claim. To obtain such provisional orders which freeze the status quo of thetarget assets, a party must first file a petition in court and convincea judge that the petitioner has the alleged claim, and that urgency isneeded. If the judge is convinced during this ex parte procedure,then an order granting provisional relief is rendered. Usually, thecourt requires the petitioner to post a bond as collateral to be usedfor possible future loss to be incurred by the opposite party. Theamount of the bond is determined by the judge, taking severalfactors into account such as the value of the assets.


A complaint must contain the following:names and addresses of parties;relief sought, including the amount to be paid by thedefendant;claims for relief with supporting facts; andlegal grounds to establish the claim.

The plaintiff must set forth the relevant facts and evidence whichare material to prove the complaint so that the court may understandthe nature of the dispute and claims in dispute at an early stage.


The plaintiff may change and/or add a claim if the followingconditions are satisfied:

the change and/or addition of a claim will not result inexcessive delay of court proceedings;the common nucleus of operative facts is the same;the change and/or adding of the claim occurs before theconclusion of a series of court hearings; and the claim sought to be added must not fall within theexclusive jurisdiction of another court.

The court is entitled to disallow changes or additions if it concludesthey are inappropriate.



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4 Defending a Claim


In the answer to the complaint, the defendant is required to statewhich parts of allegations of the complaint he admits, denies or iswithout knowledge. The defendant may also allege facts thatcontrovert the plaintiff’s allegations.The defendant may include the defence of set-off in the answer. Counterclaims are permissive so long as they are related to theplaintiff’s original claim and/or the defendant’s defence thereto.Counterclaims may be filed at any time prior to the conclusion of aseries of the court hearings. If bringing a counterclaim will resultin excessive delay of court proceedings, however, then thecounterclaim will not be permitted and the defendant must initiatea separate action. If the defendant validly files a counterclaim, then the plaintiff isrequired to file a defence thereto.


Generally speaking, the court conducts a first hearing within one totwo months after the filing of the complaint. The court will directthe defendant to file his statement of defence, together with relevantevidence about one week before the first hearing.In case the complaint is served on the defendant outside of Japan,then the first hearing date will be several months after the filing ofthe complaint.


There is no mechanism whereby the defendant can force a thirdparty, who, the defendant believes, should be solely liable or jointlyliable with the defendant, to become an additional defendant in theongoing lawsuit. However, the defendant is entitled to have a formal court notice sentto such third party through the ongoing lawsuit procedures. If thethird party receives such formal court notice which formallyinforms the third party of the ongoing lawsuit, then such third partyis entitled to voluntarily intervene in the lawsuit by way of“Intervention to Assist Parties” (see question 5.1). If the third partyso intervenes, then the judgment rendered will be binding not onlyon the defendant but also on such third party. Even if such thirdparty does not intervene in the ongoing lawsuit despite formalnotice, such third party would be, in principle, regarded to haveimplemented so in the ongoing lawsuit and would be subject to theeffect of the judgment to be rendered.


If a defendant, upon whom the complaint has been properly served,does not file a defence prior to the first hearing and does not attendthe first hearing, then the defendant is deemed to have admitted theplaintiff’s allegations. Accordingly, the court will grant a defaultjudgment for the plaintiff.


It is possible for a defendant to dispute the court’s jurisdiction. Inthe case of the international jurisdiction, the defendant simply asksfor dismissal of the lawsuit. In the case of the domestic jurisdictionwithin Japan, the defendant seeks to transfer the case to a court ofcompetent jurisdiction. However, the defendant must raise lack ofsubject matter jurisdiction at the outset of the case and before goinginto the arguments on the merits, otherwise he will be regarded tobe subject to the jurisdiction of the pending court.



Joinder of third parties into ongoing proceedings may occur, forexample, in the following cases: 1) Intervention as an Independent Party (dokuritsu tojisha

sanka).A third party may intervene in pending litigation as an independentparty when he has an independently legally cognizable interest in theoutcome of the litigation that is not aligned with any existing party.2) Intervention as Co-party (kyodo sosho sanka).A third party may intervene in pending litigation as a co-plaintiff orco-defendant when he has a legally cognizable interest in theoutcome of the litigation in common with an existing party.3) Intervention to Assist Parties (hojo sanka).A third party may intervene in pending litigation as a supporter toassist either party, when his interest would be affected by thejudgment of such litigation.


The court has discretion to consolidate two or more proceedings.The court takes into consideration: 1) whether rights or liabilities incontroversy are common to the parties; 2) whether rights orliabilities in controversy are based on law or facts in common; 3)whether the rules of court procedure applicable to each of theproceedings may be consistently applied in one action; 4) whetherexcessive delay will be caused as a result of the consolidation; and5) other relevant factors.


The CCP does not provide for split trials or bifurcated proceedings.However, Japanese courts, especially in the intellectual propertylitigation, at its discretion, may determine whether a defendantinfringed the plaintiff’s rights before the amount of damages maybe addressed.


6.1 Is there any particular case allocation system before thecivil courts in Japan? How are cases allocated?

Allocation of cases at the first instance court is made pursuant to the

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court’s internal rules, but cases are generally automatically assignedto judges.Certain district courts which deal with numerous cases, such asTokyo District Court, have special divisions which deal withspecific categories of cases, such as those relating to intellectualproperties, construction, labour, and medical malpractice. If a newlawsuit falls under one of these categories, then such lawsuit will beallocated to one of the appropriate special divisions.

6.2 Do the courts in Japan have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The court has discretion how to manage cases over which itpresides. The court may order the parties to clarify the allegationsin the pleadings, and it may also establish a case management plan(which is required in case of certain kinds of lawsuits, such as acomplex case). In addition, the court may establish timelines for the filing of courtbriefs or submitting evidence. Further, the court can activelyencourage the parties to settle the case or any issues raised therein,and, as a matter of actual practice, the court frequently promotesresolution of the case by settlement.For interim applications, please see questions 3.4, 4.1 and 7.1.

6.3 What sanctions are the courts in Japan empowered toimpose on a party that disobeys the court’s orders ordirections?

The primary type of sanctions available is the adverse inference. Inaddition, if any submission of allegations and/or evidence isunreasonably late, the court may dismiss such submission.

6.4 Do the courts in Japan have the power to strike out part ofa statement of case? If so, in what circumstances?

There is no established system of “strike out”.

6.5 Can the civil courts in Japan enter summary judgment?

There is no summary judgment.

6.6 Do the courts in Japan have any powers to discontinue orstay the proceedings? If so, in what circumstances?

Legal proceedings are stayed in very limited cases, such as where acivil reconciliation procedure has been separately commenced onthe same matter, where a litigant (individual) dies, etc.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Japan? Are there any classes of documents that do notrequire disclosure?

A party may file an application with a court to require an adverseparty to produce documents. This application should be made forspecific documents, and comprehensive production is notpermitted. In addition, the applicant should establish that thedocuments in question are necessary to prove the applicant’sallegations. The other party may oppose such application by saying

that production is unnecessary or that the documents are immunefrom productions (e.g., documents prepared solely for internalpurposes or those which may invoke criminal liabilities). As amatter of practice, Japanese courts are not inclined to grantdocument production requests. If a document production request isgranted and if the adverse party fails to comply with such order,then the court may draw an adverse inference.

7.2 What are the rules on privilege in civil proceedings inJapan?

There is no categorical concept of “attorney-client privilege” withrespect to production of documents. Please also refer to question7.1 above.

7.3 What are the rules in Japan with respect to disclosure bythird parties?

Japanese courts are entitled to order, at the request of a party, a non-party who is in possession of documents that are critical to theproceedings to produce such documents. If such non-party does notcomply with the order, he will be subject to an administrative fine.

7.4 What is the court’s role in disclosure in civil proceedingsin Japan?

See questions 7.1 and 7.3.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Japan?

The CCP does not specifically govern the use of documentsobtained by the document production order. Under the Patent Lawand certain intellectual property laws, however, the court may enteran order prohibiting litigants from using certain evidencecontaining trade secrets for any purposes outside of the litigation, aviolation of which is subject to criminal sanctions.

8 Evidence

8.1 What are the basic rules of evidence in Japan?

A party is entitled to submit any evidence in his possession. A partycan submit evidence which is disclosed by other persons. The courthas discretion to determine which evidence is credible and whichevidence is valuable.


In Japan, essentially all forms of evidence are admissible, includinghearsay, expert opinions, and witness statements.


If the parties would like to call a witness, they must file anapplication setting forth the identity of the witness and the mattersupon which such witness will testify. The court will determinewhether such testimony is necessary and, if so, will hear thewitness’ testimony.



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Although it is not mandatory, written statements are usuallyprepared and exchanged to shorten examination-in-chief and toenable the opposite party to fully prepare for cross-examination.There is no deposition system.If the witness does not appear, it is possible for the court to forcehim to appear before the court with the assistance of the police.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Japan?

See questions 7.1, 7.3, 8.1 and 8.3.


9.1 What different types of judgments and orders are the civilcourts in Japan empowered to issue and in whatcircumstances?

A final judgment on the merits (shukyoku hanketsu) is renderedwhen the court concludes that it has reached a conclusion. Another type of judgment (sosho hanketsu) is rendered when thecourt does not decide the case on the merits, but rather dismisses thecomplaint if it determines, for example, that it does not havejurisdiction over a case. A court may render a certain type of decision (kettei) or order(meirei) to make ancillary decisions, such as those for witnessexaminations or document production orders (see question 3.2).


If the court concludes that a party is liable for damages, the court willassess the amount of damages and enter a judgment in such amount. There is no punitive damage system.When the court renders the judgment ordering monetary payment,it decides the interest payable. In principle, the court uses a statuterate of 5% per annum or, for payment arising from commercialactivities, another statute rate of 6% per annum. If the claim derivesfrom a contract which adopts a different interest rate, then the courtmay use such agreed interest rate.With respect to the cost allocation, please refer to question 1.5.


There are different procedures for monetary and non-monetaryclaims. Monetary claims are enforced by garnishment of thedefendant’s bank account or its accounts receivables, and/or byattachment of the defendant’s real estate or movable assets. Fornon-monetary claims, such as eviction of a tenant, enforcement cantake place in various ways as stipulated in the Civil Execution Act(1979 Law No. 4). Regarding a judgment of a foreign (non-Japanese) court, Japanesecourts will issue an enforcement order, provided that all of thefollowing requirements are satisfied:1. in light of principles of international jurisdiction established

under Japanese law, the foreign (non-Japanese) court hasjurisdiction over the matter;

2. the defendant was properly served; 3. the foreign court’s judgment is not contrary to Japanese

public order and sound morals;

4. there is a reciprocal guarantee with the foreign jurisdictionrendering the judgment; and

5. the foreign court’s judgment is final and conclusive. If the enforcement order is rendered, then it is possible for theplaintiff to proceed with the enforcement procedures against thedefendant’s assets just like the case of the Japanese domestic courtjudgment.

9.4 What are the rules of appeal against a judgment of a civilcourt of Japan?

Judgments of the first instance courts (usually district courts) can beappealed to the intermediate appellate courts (usually high courts)and then to the second appellate courts (usually the SupremeCourt). Non-prevailing parties can appeal if they are not satisfiedwith a judgment, and their appeals may be based on legal error orfactual findings. However, the gateway to the Supreme Court isquite narrow and the grounds for secondary appeals are limited toconstitutional violations, misinterpretation of the Constitution,significant misinterpretation of laws, etc. An appellant must file an appeal within 14 days after the service ofa judgment and must submit detailed reasons for the appeal within50 days thereafter.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Japan?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Arbitration (chusai)Parties are generally free to agree to resolve disputes througharbitration prior to or after occurrence of a dispute. If one partyfiles a lawsuit with a Japanese court in defiance of an arbitrationagreement, the Japanese court is, in principle, bound to dismiss thelawsuit. Arbitrations are not as common in Japan as they may be inother jurisdictions.Civil Mediation (minji chotei)Civil mediation is one of the dispute resolution systems provided bythe Japanese courts and is a mechanism which tries to achieveresolution through a consensus of the parties. For this procedure, amediation panel is formed by one judge and two neutral civicpersons (often lawyers or experienced businessmen). When theparties have reached an amicable settlement or when the mediationpanel finds an amicable settlement cannot be reached, the panelcloses the mediation proceeding. During the process, the twoneutral civic persons (not the judge) take initiative roles. Thesecivil mediation procedures are frequently used in Japan.Labour Tribunals (rodo shinpan)Labour tribunals are also one of the dispute resolution systemsprovided by the Japanese courts and they consist of a panel of onejudge and two neutral experts (one being chosen by managementand the other by labour). The panel is expected to resolve disputesrelated to employment within three hearings (about 2 to 3 months)by facilitating a settlement between the parties, or, if no settlementis reached, by rendering an order. A party may object to such anorder within two weeks, in which case the order will be deemed nulland void. If no objection is filed, then the order becomes final and

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enforceable. These labour tribunals were introduced in 2006, andan increasing number of cases have been resolved in an expeditiousmanner (mainly by settlement).


The laws governing each dispute resolutions are as follows:1. Arbitration: the Arbitration Law (2003 Law No. 138).2. Civil Mediation: the Civil Mediation Law (1951 Law No.

222).3. Labour Tribunal: the Labour Tribunal Law (2004 Law No.

45).

1.3 Are there any areas of law in Japan that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

A basic rule is that if the matter in question can be resolved throughsettlement by its nature, then such matters are considered arbitrable.Therefore, most of the commercial matters are arbitrable. Anexample of a non-arbitrable case is a family law matter. In addition,there are certain restrictions on the ability to arbitrate certaindisputes which involve labour law and consumer law. Mediation is supposed to cover any civil disputes. However, familymatters are subject to family conciliation (kaji chotei) available atthe family courts. Labour tribunals are available only for labour disputes.


2.1 What are the major dispute resolution institutions inJapan?

The major dispute resolution institutions in Japan are as follows:1. Arbitration: Japan Commercial Arbitration Association

(JCAA), Japan Shipping Exchange (JSE).2. Civil Mediation: district courts and summary courts.3. Labour Tribunal: district courts.


An arbitration decision has the same legal effect as the final andconclusive judgment and is enforceable. If a settlement is reachedthrough the civil mediation or family conciliation, then suchsettlement has the same effect.With respect to Labour Tribunal, please see question 1.1.



To promote a fair and just ADR procedure, the Law ConcerningPromotion of Alternative Dispute Resolution (2004 Law No. 151)took effect on April 1, 2007. To this end, the government mayprovide permission to act as an officially authorised ADRorganisation to a private entity. As of the time of this writing,nineteen private entities have such permission. The number of suchprivate entities is expected to increase gradually.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Japan?

One of the current trends is to make dispute resolution systemsmore accessible to Japanese residents. To this end, the Japanesegovernment established a legal aid institution known as“Houterasu” (Japan Legal Support Centre) based on theComprehensive Legal Support Law (2004 Law No. 74) on April 10,2006. The head office of Houterasu is in Tokyo, and it has morethan 50 local offices throughout Japan. It provides, for example,information on the Japanese legal system and dispute resolution aswell as free legal consultation services to citizens. It also financeslegal fees for those who are of limited means. However, accordingto Houterasu’s announcement of April 10, 2008, 80% of personssurveyed are unaware of the existence of Houterasu, which revealsthat Houterasu has not become popular among Japanese.



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Kenichi Sadaka

Anderson Mori & TomotsuneIzumi Garden Tower, 6-1, Roppongi 1-chomeMinato-ku, Tokyo 106-6036Japan

Tel: +81 3 6888 1053Fax: +81 3 6888 3053Email: [email protected]: www.andersonmoritomotsune.com

Kenichi Sadaka is a litigation partner at Anderson Mori &Tomotsune, engaged mainly in international & domestic commerciallitigation, commercial arbitration and other dispute resolution. He isranked as a leader in dispute resolution in major directories, such asChambers Global. Mr. Sadaka has represented many internationalcompanies in dispute resolution matters concerning M&A, companyreorganisation, intellectual property, real estate transactions, labour,antimonopoly, financial products, product liability, debt collections,mortgage enforcement, defamation, professional malpractice,international trade, insurance, administrative remedies, anddisputes among management and/or shareholders. Mr. Sadaka alsohas experience with overseas litigation and he has providedassistance in discovery procedures in and outside Japan. Inaddition to these civil dispute activities, Mr. Sadaka has conductedinternal investigations for several international companies in relationto intra-company crimes, such as embezzlement and criminalaccusations.

Nobuhito Sawasaki

Anderson Mori & TomotsuneIzumi Garden Tower, 6-1, Roppongi 1-chomeMinato-ku, Tokyo 106-6036Japan

Tel: +81 3 6888 1102Fax: +81 3 6888 3102Email: [email protected]: www.andersonmoritomotsune.com

Nobuhito Sawasaki is a senior Associate at Anderson Mori &Tomotsune. He has been engaged in a wide range of practice areasat Anderson Mori & Tomotsune since he joined the firm in 2001. Hehas advised clients on labour law, pension law, mergers andacquisitions, corporate law, the Private Information Protection Law,and financial business laws including the Financial Instruments andExchange Law. He has also represented numerous domestic andinternational companies in matters concerning dispute resolution.

Anderson Mori & Tomotsune is one of Japan’s premier law firms. As of September 2008, the firm has around 250Japanese lawyers (bengoshi), approximately 10 lawyers qualified in foreign jurisdictions, approximately 110 otherprofessional staff including patent lawyers, immigration lawyers, foreign legal trainees, translators and paralegals, andapproximately 160 other general staff members.

Anderson Mori & Tomotsune has offices in Tokyo and Beijing and it provides a full range of specialised legal servicesfor both international and domestic corporate clients. The firm is frequently involved in domestic and international legalmatters of substantial import. In particular, the firm has extensive expertise in large M&A and finance transactions,global securities offerings and other cross-border investment transactions. The firm also represents clients in complexinternational and domestic legal disputes.




Chapter 29

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Korea

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Korea got? Are there anyrules that govern civil procedure in Korea?

Korea has adopted and maintained a legal system based on the civillaw tradition. The Korean Civil Procedure Act (“KCPA”), enacted in 1960 andamended several times thereafter, provides the basic guideline forthe matters about civil proceedings.

1.2 How is the civil court system in Korea structured? Whatare the various levels of appeal and are there anyspecialist courts?

In Korea, an ordinary civil lawsuit can be tried by three differentcourts: the court of first instance (e.g. a district court, a branchcourt, or a municipal court); the appellate court (e.g. a High Court,or an appellate panel of district court); and the Supreme Court. Acivil case may be assigned to a court of first instance presided by asingle judge, or to a panel consisting of three judges, depending onthe value and nature of the claim. If a decision of the court of firstinstance is appealed, the appellate court, composed of a panel ofthree judges, will conduct the proceedings de novo. As such, whilethe appellate court may give weight to the decision and findings offact by the court of first instance, it is not required to give deferenceto the lower court’s conclusions on issues of either fact or law, andthe parties may introduce new evidence and arguments in theappellate proceedings even if such evidence or arguments werenever examined by the court of first instance. The decision of theappellate court may be appealed to the Supreme Court only for thequestions of law, and no new evidence may be introduced to theSupreme Court. It is noteworthy that the rule of evidence is one ofthe questions of law reviewed by the Supreme Court, and this mayin some cases require the Supreme Court to review the evidencesubmitted to the lower courts. The Family Court, responsible to oversee family and juvenile issues,and the Patent Court, responsible to adjudicate the intellectualproperty issues, are special courts assigned to deal with specialisedcivil matters. To deal with complex disputes involving specialisedissues more efficiently, some courts have designated that certainpanels of judges deal with certain types of disputes, including but notlimited to, those concerning international transactions, securities,construction, employment and the environment.

1.3 What are the main stages in civil proceedings in Korea?What is their underlying timeframe?

Once a complaint setting out the claim and attaching the documentaryevidence referred therein is filed to the court having jurisdiction overthe case by the plaintiff, the defendant is required to file a responsethereto. The parties will then exchange briefs and submit additionalevidence to assert their claims and defence. Before beginning thecourt hearings, the responsible court would convene one or morepreparatory session(s) to clarify issues in dispute and reviewevidence. In Korea, there is no concentrated trial or hearing that lastsfor a number of days or weeks in a row. Instead, the court holds shorthearings at intervals until it determines that it has received andreviewed sufficient information to render its judgment. As such,there may be more than one (1) court hearing, each being held at aninterval of several weeks. Upon the closing of the hearing orhearings, the court will announce a judgment. In normal cases, it usually takes about 8 to 12 months (substantiallylonger for more complex cases) for the court of first instance to rendera judgment. It generally takes an additional 8 to 12 months for ajudgment to be rendered by the appellate court, and another 4 to 12months before the issuance of a final judgment by the Supreme Court.

1.4 What is Korea’s local judiciary’s approach to exclusivejurisdiction clauses?

The Korean Supreme Court, through a number of its rulings, hasdeclared that a provision regarding agreement to recogniseexclusive jurisdiction of a foreign court would be deemed effectiveif the following requirements are met: (i) the case must not be aboutthe matter subject to the exclusive jurisdiction of the Koreancourt(s); (ii) the foreign court designated as the court with exclusivejurisdiction must have jurisdiction about the matter under relevantlaw of the foreign country; and (iii) the foreign court designated asthe court with exclusive jurisdiction should have “reasonablenexus” to the matter in dispute. The Korean Supreme Court alsoadded that if it is deemed that the agreement on exclusivejurisdiction of a foreign court is clearly unreasonable and/or unfair,then such agreement shall be declared null and void for beingagainst the public order and good morals (Supreme Court Decisionon 2001Da53349 Case issued on March 25, 2004; Supreme CourtDecision on 96Da20093 Case issued on September 9, 1997).

1.5 What are the costs of civil court proceedings in Korea?Who bears these costs?

In Korea, court costs consist generally of stamp taxes (filing fees),service of process fees, and other out-of-pocket expenses (per diem

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fees for witnesses, photocopies, etc.).The stamp tax is payable by the party instituting the action and theappeal. The amount levied is based on the claim amount. Theamount of stamp tax to be paid for filing a complaint at the court offirst instance can be calculated by multiplying the value of the claimwith a fraction as specified by the provision of Stamp Tax Act. Incase the value of the claim exceeds KRW 100 million, the amountof stamp tax payable by the plaintiff will be (i) an amount equal to0.35% of the claim value, plus (ii) KRW 555,000. The stamp tax at the second level court is 1.5 times of the tax at thefirst level court. The tax at the third and highest-level court is twiceof the tax at the first level court. The costs for service of process and other out-of-pocket expenses(including witness fees for local fact witnesses) are nominal. Thecosts of expert witnesses are determined separately, depending onthe charges of the expert. The losing party is to bear the full amount of above-listed courtcosts. However, in the case of attorney’s fees, only a part of suchfees is usually recoverable pursuant to a tariff schedule promulgatedby the Supreme Court.

1.6 Are there any particular rules about funding litigation inKorea? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

KCPA provides a number of provisions on exemption of paymentfor costs and expenses of a civil litigation (KCPA Article 128 -Article 133). While there is no specific law or regulationspecifically prohibiting funding of a lawsuit by a third party,provisions of the Attorney-at-Law Act ban non-members of theKorean Bar Association from engaging in any activity related tolawsuits or legal disputes. Contingency fee arrangements are allowed in Korea, and arefrequently used in practice. However, even in the case of acontingency fee arrangement, a party is usually asked to pay acertain amount as an initial fee. When the plaintiff does not have a presence in Korea, the defendantmay file a motion to order the plaintiff to provide security for courtcosts (KCPA Article 117). Subject to court approval, the securityfor court costs may be provided by way of a surety bond.


2.1 Are there any pre-action procedures in place in Korea?What is their scope?

There are not any pre-action procedures in place in Korea.


General provisions on the statute of limitations for various types ofcivil claims are provided under the Korean Civil Code and theKorean Commercial Code. For general contractual claims, the statue of limitations of ten yearswould be applicable while the obligation out of commercialcontracts or deeds would be subject to the statute of limitations afterfive years. In case of obligation to a merchant based on the sale andpurchase contract, the shorter term of statute of limitations, namely,three years, would be applicable. The statute of limitations would

start running from the day immediately following the date when theclaim could have been exercised (namely, the due date of eachaccount receivable or, in case the due date is not decided inadvance, the day the obligation has accrued).For tort claims, the statute of limitations will be generally the earlierof (i) three years from the day the victim becomes aware of thedamage and the offender; or (ii) ten years from the day the actiongiving rise to the damage takes place.The statute of limitations is regarded as a substantive issue thatwould dispute the validity of the merits of the claims.


3.1 How are civil proceedings commenced (issued and served)in Korea? What various means of service are there? Whatis the deemed date of service? How is service effectedoutside Korea? Is there a preferred method of service offoreign proceedings in Korea?

A civil lawsuit begins upon a plaintiff’s filing of a complaint to therelevant court having jurisdiction over the case. In Korea, the courtserves a copy of the complaint on the defendant(s) using a number ofmethods, including but not limited to hand delivery by a court officialor delivery by postal service. If the address of the defendant isunknown, the complaint may be served through the use of publicnotice upon the order of the presiding judge under strict requirements. Service of the complaint by means other than the public noticewould be deemed effective (i) immediately upon delivery of thecomplaint (in case of hand delivery) or (ii) on the date the noticewas mailed (in case of service by postal service). The service bypublic notice would be generally deemed effective two weeks aftersuch notice is posted at the bulletin board of the court, published inan official gazette or newspaper, or disclosed on the internethomepage of the Supreme Court. In case the complaint needs to be served to a (natural or judicial)person residing in a foreign country, under Article 191 of the KCPA,the presiding judge is required to ask the Korean ambassador,minister or consul stationed in such foreign country or the competentgovernment authorities of such country to conduct the service. If it isimpossible to use the service provided under Article 191 of the KCPAbecause no diplomatic relationship has been formally establishedbetween the relevant country and Korea or the service of thecomplaint through such diplomatic channel seems impossible forother reasons, the presiding judge may order the service of thecomplaint through the public notice (KCPA Article 194 (1)).With regard to service of foreign proceedings to a resident in Korea,the Republic of Korea became a party to the Convention on theService Abroad of Judicial and Extrajudicial Documents in Civil orCommercial Matters on January 13, 2000, and the Convention hasheld the force of law in Korea since August 1, 2000. Pursuant toArticle 2 of the Convention, the Ministry of Court Administration atthe Supreme Court has been designated as the Central Authority toprocess service of documents coming from other ContractingStates, and the documents coming from other Contracting Stateswill be served to a Korean resident in accordance with the methodprescribed by KCPA.

3.2 Are any pre-action interim remedies available in Korea?How do you apply for them? What are the main criteria forobtaining these?

The plaintiff may apply for provisional attachment or preliminaryinjunction to prohibit the defendant(s) from disposing of

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assets/properties before a court issues a decision in favour of theplaintiff. More specifically, the claimant seeking a monetary judgment mayobtain a provisional attachment on the assets/properties of thedebtor (defendant) as security for satisfaction of any futurejudgment. Provisional attachment is broadly accepted in Korea.The Court would grant the provisional attachment order if a primafacie case is established by the plaintiff/applicant and the assets areowned by the debtor (defendant), and if it is shown that, unless suchinterim remedies are effected, (i) enforcement of the judgmentwould be impossible, or (ii) there exists a concern about thesubstantial difficulty in enforcing the judgment (Article 277 of theCivil Enforcement Act). The court will normally require theapplicant to deposit 1/2 to 1/10 of the claim amount as security fordamages to be sustained by the debtor (defendant) in the event theunderlying claim is eventually determined to be groundless. Thesecurity may be posted by way of surety bond, subject to courtapproval and acceptance by the bond company. The claimant (or potential claimant) may also request the court toissue an order for preliminary injunction (Article 300 of the CivilEnforcement Act). There are two types of preliminary injunctions,namely, (i) preliminary injunction for the preservation of the subjectmatter in dispute and (ii) preliminary injunction granting temporaryrelief. In case of the preliminary injunction for the preservation ofthe subject matter in dispute, the underlying rights to be protectedby such injunction must be a claim of performance against specific,non-monetary property, and the party applying for the injunctionmust show that the claimant will not be able to exercise the rightsor it is unduly burdensome to do so if there were any changes in thestatus quo. In case of the preliminary injunction granting temporaryrelief, the applying party must show that the preliminary injunctionis necessary (i) to avoid material prejudice that would affect thecontinuing legal relationship between the parties, (ii) to preventimminent danger, or (iii) for other apparent needs. The courts have a large degree of discretion in deciding whether togrant the application of the interim remedies.


The complaint will need to contain (i) the parties, (ii) their legalrepresentative, (iii) the demand for relief, and (iv) the grounds forthe claim. For the demand for relief, the claimant will need tospecify the specific decision of the court being sought through thelawsuit (KCPA Article 249, Article 274 and Article 275). For thegrounds of the claim, the claimant will need to provide and explainthe reasons that the claim is being made, with reference to adequateevidence if possible.


A plaintiff may alter the demand for relief or the grounds for theclaim, as long as the fundamental basis of the claim is not altered(KCPA Article 262). Such amendment cannot be made after theclosing of the hearings, and it will not be allowed if it is deemed thatsuch amendment will cause a significant delay in the proceedings.The amendment of the complaint may only be made in writing.

4 Defending a Claim


In a statement of defence, the defendant will need to include theresponse to the plaintiff’s demand for relief and theopinion/arguments regarding the grounds of the claim asserted inthe complaint. As well, the defendant would need to submitevidence to support the defence, opinion about the evidencesubmitted by the plaintiff, and attach any relevant evidentiarydocument to the statement (KCPA Article 256(4), Article 274 andArticle 275). The defendant is allowed to file a counterclaim against the plaintiff(KCPA 269). The defendant may file a conditional counterclaimthat need to be reviewed only when certain prerequisites are met(i.e. the Court’s conclusion to grant the plaintiff’s claim). Thedefendant’s counterclaim needs to meet the following requirements:(i) the counterclaim must be related to the plaintiff’s original claimor the defence thereto; (ii) the counterclaim should not substantiallydelay the proceedings of the original complaint; (iii) the originalcomplaint should be pending in the court of first instance orappellate court (no counterclaim may be filed during the SupremeCourt proceedings), and the counterclaim must be filed before theclosing of the hearings; and (iv) the counterclaim should not besubject to an exclusive jurisdiction of another court. The defendant can also cite set-off as grounds for defence,counterclaim, or a separate claim against the plaintiff.


Unless a copy of the plaintiff’s complaint is served to thedefendant(s) through a public notice, a defendant(s) contesting theplaintiff’s claim should submit a written statement of defencewithin 30 days from the date of receiving a copy of the complaint(KCPA Article 256(1)).


In Korea, a defendant is not allowed to bring a third party into thepending action to pass on the liability. However, it is noteworthy that a party to the pending lawsuit, anintervenor who joined the pending lawsuit under KCPA Article 71,or a third-party who was notified of the pending lawsuit may notifyanother party, who has interests in the outcome of the pendinglawsuit and is able to participate in the pending proceedings, of thepending lawsuit (KCPA Article 84). If a party notified a third partyof the pending lawsuit under Article 84 of the KCPA andsubsequently lost the lawsuit, when the notifying party files a newlawsuit against the third party to recover damage by exercising therecourse or indemnification right, in the new lawsuit, the notifiedthird party may not submit a defence that would be against thedecision of the court in the previous lawsuit (KCPA Article 86). Assuch, while it would be necessary to file a new lawsuit against thethird party, the notification of a pending lawsuit to an interestedthird party serves as an effective means to pass on the liability tosuch third party.



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If the defendant fails to defend the plaintiff’s claim in a civillawsuit, in principle, it will be deemed by the court that thedefendant had acknowledged the existence of the liabilities asalleged by the plaintiff’s complaint, and the court may render adecision in favour of the plaintiff for the entire claim withoutholding any court hearing (KCPA Article 257(1)).


The jurisdiction of a court can be challenged by the defendantbefore the case is reviewed on merits. If the matter is not subject tothe exclusive jurisdiction of another court, the defendant would notbe able to present an argument based on the jurisdictional issuesonce the defence on the merits of the plaintiff’s claim is put forth.(KCPA Article 411.)



A third party having interests in the outcome of a civil lawsuit mayintervene in the pending proceedings to assist one of the parties, aslong as participation of such intervenor would not substantiallydelay the proceedings (KCPA Article 71). A third party may also intervene in the pending civil proceedings ifthe decision of the court in the pending proceedings would beeffective against such third party (KCPA Article 78).Furthermore, a third party may also intervene in the pendingproceedings, if the whole or part of the object of the lawsuit pertainsto the right of such third party, or if the result of the proceedingsmay infringe upon the rights of such third party (KCPA Article 79).In such case, the intervening party could file a lawsuit against oneor both parties of the pending litigation. Additionally, it is also possible that a third party may join or replacethe parties voluntarily (KCPA Article 81), or upon request of theparties to the pending proceedings (KCPA Article 82), if the wholeor part of the subject of the lawsuit (e.g. specific right or obligation)has been assigned to such third party after the commencement ofthe proceedings. Finally, it is also possible for a third party to join the proceedings ifthe subject of the dispute needs to be resolved in a consistent mannerin case there is a related dispute between such third party and one ofthe parties to the original proceedings (KCPA Article 83).


In Korea, it is possible to consolidate two or more proceedings intoa single proceeding after the commencement of the proceedings, ifthe following conditions are satisfied: (i) it should be possible forthe same court to review and resolve all relevant claims (KCPAArticle 253); and (ii) the responsible court should have jurisdictionover all the claims (i.e. no claim should be subject to an exclusivejurisdiction of another court). In addition, relatedness of claims andno substantial delay pursuant to consolidation of the claims aregenerally required.


Under the Korean civil proceedings, it is not allowed to split theproceedings if the proceedings only involve a single cause ofaction, and as such, bifurcation of the proceedings for assessment ofliability and damages are not allowed. However, it is possible to divide or bifurcate the proceedings in thefollowing circumstances: (i) when the nature of the proceedingsinvolving multiple causes of action does not prohibit or ban thedivision or bifurcation of the proceedings; or (ii) when there areobstacles in continuing the proceedings with regard to somemembers of the co-plaintiffs or co-defendants.


6.1 Is there any particular case allocation system before thecivil courts in Korea? How are cases allocated?

Once a civil lawsuit is filed to a particular court of first instance, thechief judge of the relevant court has the authority to assign the caseto a particular judge or a panel of judges (in certain cases, the chiefjudge of the court may delegate such authority to another judge).The case would be allocated after comprehensive consideration ofvarious factors, including but not limited to special nature of theissues in dispute, case loads of available judges/panels, andexistence of related case or cases with similar issues in dispute.

6.2 Do the courts in Korea have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

In Korea, the courts, not the parties, have the exclusive authority tomanage the case. As such, the courts, upon consultation with theparties and/or their legal representatives, will determine theschedule for the proceedings, including but not limited to deadlinesfor submission of briefs as well as dates for preparatory meetings,examination of evidence and witnesses, court hearings, andannouncement of judgment. The court is not bound by the request of the parties with regard tothe scheduling of the proceedings.

6.3 What sanctions are the courts in Korea empowered toimpose on a party that disobeys the court’s orders ordirections?

While a Korean court may not hold a party in contempt fordisobeying the order or direction of the court with regard to the civilproceedings, it is entrusted with a variety of means with which itcan manage the overall case schedule and court procedures onhearing dates. The court may prohibit submission of averment or application forexamination of evidence if a party fails to abide by the due dates setby the court (KCPAArticle 147). As well, if a party causes delay ofthe conclusion of litigation by belatedly producing arguments/allegations/means of defence or offence intentionally or throughgross negligence, the court may refuse to consider such arguments(KCPA Article 149). The presiding judge may also prohibit a person from speaking on ahearing date if the person does not comply with the court’s order(KCPA Article 135). In order to maintain the order of the court, ifany person disrupts the court proceedings, the presiding judge mayorder detention of such person and/or order payment of certain fine.

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6.4 Do the courts in Korea have the power to strike out part ofa statement of case? If so, in what circumstances?

In Korea, the statements at the hearing are generally not transcribedfor court records. Instead, the court would prepare a brief protocol,or court hearing report, containing the gist of important argumentsmade during the hearing. If a party, at the end of a hearing, withdraws certain statementsmade during that hearing, the protocol of a court hearing wouldgenerally not show that the party ever made such statement.

6.5 Can the civil courts in Korea enter summary judgment?

There is no summary procedure in Korea, such as a motion for asummary judgment frequently seen in US litigation.

6.6 Do the courts in Korea have any powers to discontinue orstay the proceedings? If so, in what circumstances?

A civil lawsuit pending before the Korean lawsuit would beautomatically suspended under certain circumstances, including butnot limited to the following: (i) when a party, who is a naturalperson, deceases after the commencement of the proceedings(KCPA Article 233); (ii) when a party, who is a juridical person,merges with another entity and loses its legal standing (KCPAArticle 234); (iii) when a party loses the ability to continuelitigation, or when the legal representative of the party dies, or whenthe legal representative no longer has the authority to represent theparty (KCPA Article 235); or (iv) when the party is declaredbankrupt (KCPA Article 239). In addition, the Korean proceedings may be ceased temporarily ifthe court is unable to perform its functions by a natural disaster orother accidents (KCPA Article 245), or if the court issues an orderto interrupt the proceedings when a party is unable to participate inthe proceedings due to an impediment for an indefinite duration(KCPA Article 246).

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Korea? Are there any classes of documents that do notrequire disclosure?

In a Korean civil lawsuit, there is no such procedure called“discovery” as used in the US. The documents in possession of thecounterparty or a third party are obtained as evidence for a civillitigation through a document production order issued by the courthearing the case. Major differences of such procedure from the USdiscovery procedures would include the following: (i) basically theKorean procedures are conducted by and are under the directsupervision of the court, and as such, a party cannot directly ask theother party to produce documents or witnesses unless through thecourt; and (ii) there is no such procedure as “deposition” (i.e., out-of-court questioning of witnesses by the parties and subsequent usethereof during trial), and all witness testimony must be taken inprinciple during a court hearing. The entity in possession of the following documents may refuse todisclose the documents: government documents in possession of aformer or present government official; documents which maydiscredit the requested person and/or family members of suchperson (when an individual person is requested to producedocuments); documents containing certain information that therequested person needs to protect because of confidentiality

obligation (when an attorney or a CPA is requested to producedocuments); documents containing trade secret information; anddocuments prepared by the requested person for personal use.

7.2 What are the rules on privilege in civil proceedings inKorea?

In the Korean civil proceedings, a party is not required to discloseany document it possesses unless it is subject to a documentproduction order issued by the court, and as such, privilege isconsidered only at the time when the court issues a documentproduction order. An attorney, a patent attorney, a notary public, aCPA, a tax accountant, a medical doctor, a pharmacist, a personwho has a duty to keep confidentiality under other applicable laws,or a person who is engaged in religious service may refuse tosubmit the documents containing information of a confidentialnature in light of such person’s professional duty. It is noteworthy that the aforementioned persons may also refuse totestify on the confidential information when they are called aswitnesses.

7.3 What are the rules in Korea with respect to disclosure bythird parties?

First of all, a “catch-all” request for documents that does notexpressly name the specific documents sought would not beallowed generally. The parties can request that the court issue an order to producedocuments in the possession of the third party (KCPA Article 343,Article 347). A person ordered to submit documentary evidence bythe court is obliged to do so (KCPA Article 344). If a third partyfails to comply with a court order to produce documentaryevidence, they may be ordered to bear the costs caused by suchfailure to produce the documents and may be subject to anadditional fine not exceeding KRW 5 million (KCPA Article 351,Article 318, Article 311(1)). The privilege set forth in question 7.2above is applicable to the third parties as well.Furthermore, if necessary for its adjudication, a Korean court canask an entity such as a public agency, a school, other organisationsor individuals in Korea or a foreign public agency to examinecertain matters performed as a part of its regular business oractivities, and to forward a certified copy or a copy of documents inpossession of such entity (KCPA Article 294). Upon request by aparty, a court can also examine documentary evidence at a placewhere such document is situated.

7.4 What is the court’s role in disclosure in civil proceedingsin Korea?

As noted above, in the Korean civil proceedings, the court controlsthe disclosure of documentary evidence through the documentproduction order. Further, the witness examinations are conductedbefore the court and the court will determine whether a witness maylegitimately refuse to disclose certain information relying on theexemptions provided for by KCPA.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Korea?

There is no express provision that specifically restricts the use ofevidentiary documents obtained by disclosure. However, the use ofevidentiary documents outside of the court proceedings may giverise to a tort claim.



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8 Evidence

8.1 What are the basic rules of evidence in Korea?

KCPA Article 202 provides that a court has freedom or totaldiscretion in deciding whether or not an allegation of facts is true,after taking account of the whole purport of pleadings and theresults of examination of evidence, based on logic and experienceand in light of social justice and equity principle. As such, unlessthe relevant laws specifically proscribe admission of certaindocument or testimony as evidence, the judge can use anydocument/testimony as evidence in adjudicating a civil case.


As explained in the response to question 8.1, most documents,materials, and statements are admissible as evidence in the Koreancivil proceedings. However, there are certain documents andmaterials that should not be admitted as evidence under relevantlaws (e.g. information/materials obtained from an illegalwiretapping or recording cannot be used as evidence under theProtection of Communications Secrets Act). With regard to the expert evidence, a party has the right to challengean expert if any circumstances under which an expert witness is unableto faithfully give expert testimony (KCPA 336) exist, and if the courtdecides that such challenge is valid, then the expert witness would notbe able to testify at the particular proceedings. Moreover, unless theexpert witness is properly sworn in before giving the testimony, thetestimony of such expert witness cannot be used as evidence.


Except when a potential witness is exempt from the obligation totestify under relevant laws, the Korean courts can order anybody(except the parties and their legal representatives) to be present andtestify in the court as a witness (KCPA Article 303). In order to conduct the proceedings more efficiently, the court mayallow the party who requested examination of a particular witnessto have the witness submit written statements prior to appearance inthe court, and then provide the other party with sufficientopportunity for cross-examination of the witness with regard to thecontent of the written statements. The witness may also testify through written statements withoutappearing in the court, if permitted by the court (KCPAArticle 310).

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Korea?

It is the court who issues an order to the party or third party toprovide evidence in the Korean civil proceedings.


9.1 What different types of judgments and orders are the civilcourts in Korea empowered to issue and in whatcircumstances?

The Korean courts may issue a ruling on the whole or part of the

claims (KCPA Article 198, Article 200). The issuance of a decisionwith regard to part of the claims can be made if it is possible todivide the plaintiff’s claims and/or defendant’s counterclaims. The Korean courts may dismiss the plaintiff’s claims for variousprocedural reasons, including but not limited to the following: (i) ifa foreign court has the exclusive jurisdiction on the matter; (ii) if theparty lacks the standing; or (iii) if the claim does not involve ajusticiable controversy. The plaintiff’s claims may also be dismissed on merits in whole orin part, or alternatively, the claims may be granted in whole or inpart.


KCPAArticle 203 provides that a court cannot render any judgmenton matters which have not been claimed by the parties. As such, thecourt may issue a ruling on damages, interests, and costs within thelimit of the party’s claims. Korean law limits the type of damages that may be granted in a civilsuit. Specifically, under Korean law, only those damages that aredeemed to have been actually caused by the defendant’s wrongfulacts are allowed. In the event that negligence is involved, thosedamages that are deemed to have been proximately caused by thedefendant’s negligence are permitted. Punitive or treble damagesare not allowed under Korean law.With regard to interests, in a dispute involving monetary claim, thecourt may generally apply the legal interest of 5% or 6% p.a. fromthe due date even in case there is no agreement on the defaultinterest. The court may raise such rate to 20% p.a. from the dateimmediately after the complaint is served, if the court finds that thedefendant does not have justifiable grounds to dispute the claim. With regards to costs, the court has large discretion in allocating theburden to bear the costs of the litigation, depending on the result ofthe litigation.


Once a domestic judgment is issued for the plaintiff, the plaintiffmay enforce the judgment against the property/asset of thedefendant(s), by asking the court to place the property/asset of thedefendant(s) into a public auction and distributing the proceedstherefrom. In order to enforce a foreign judgment, the party needs to requestand obtain an enforcement judgment for the decision of a foreigncourt from a Korean court of law under Article 26 of the CivilEnforcement Act.

9.4 What are the rules of appeal against a judgment of a civilcourt of Korea?

A party desiring to appeal the decision of the court is required to filean appeal within two weeks after the decision of the court has beenofficially served (KCPA Article 396(1), Article 425). As explainedearlier, the appellate court will conduct the proceedings de novo,while the Korean Supreme Court does not review the facts of thecase but only the merits on the legal arguments.

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1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Korea?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Arbitration and court mediation are used for resolution of civildisputes in Korea. An arbitration award is granted the same effect as a judgmentrendered by the court. Mediation in Korea, also known as judicial conciliation, is analternative dispute resolution mechanism that can be commenced intwo ways. First, the parties involved in a civil dispute may file apetition to a court of law to commence the mediation proceedingsto resolve the dispute. Secondly, after a formal complaint is filedby a party in a court of law, the court may refer the dispute to thejudicial conciliation proceedings. The judicial conciliationproceedings would be conducted before a conciliation committeecomposed of a judge or two or more court appointed mediators. Ifthe case is not successfully conciliated, the case would be referredback to the ordinary civil proceedings.


The Korean Arbitration Act (“KAA”), originally legislated in 1966and wholly revised in 1999, which is largely based on theUNCITRAL Model Law on International Commercial Arbitrationof 1985, governs arbitration in Korea. The Judicial Conciliation of Civil Disputes Act (“JCCDA”) governsthe mediation procedure in Korea.

1.3 Are there any areas of law in Korea that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

There is no specific restriction regarding resolution of civil disputesthrough arbitration or mediation in Korea.


2.1 What are the major dispute resolution institutions inKorea?

The Korean Commercial Arbitration Board (“KCAB”) is in chargeof administering arbitration in Korea. Mediation proceedings are presided or administered by the courts.


Once the result of mediation is memorialised in a record, suchmediation record has the effect of a finalised decision of the court(JCCDA Article 29, KCPA Article 220), and the party may takeenforcement actions based on the record. Rulings issued upon arbitration also have the effect of a finaliseddecision of the court (KAA Article 35), and may be enforced asother finalised decision of the court.



The judicial conciliation has steadily increased during recent years:while cases resolved through mediation made up 6.2% of total civilcases resolved by the court in 2005, that number increased to 12.8%in 2007.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Korea?

Recently, the Korean courts tend to encourage resolution of civildisputes through the mediation or judicial conciliation. The use of arbitration as a means to settle commercial disputes inKorea has steadily increased. In fact, arbitration is the mainalternative dispute resolution method used to settle largecommercial disputes. The increased use of arbitration in Koreacould be attributed to several factors, including an increase inforeign investment in Korea and the general tendency of the Koreancourts to allow enforcement of the arbitral awards.



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Jin Yeong Chung

Kim & ChangSeyang Building, 223 Naeja-DongJongno-gu, Seoul 110-720Republic of Korea

Tel: +82 2 3703 1108Fax: +82 2 3703 1590Email: [email protected]: www.kimchang.com

Mr. Chung is a partner and head of the cross-border litigationpractice at Kim & Chang. For more than 19 years, Mr. Chung hassuccessfully represented various foreign and domestic clients innumerous international litigations and arbitrations. His advocacy ofa financial institution before the Korean court in a dispute againstthe governmental deposit insurance corporation led to an award ofabout one trillion Korean Won, the largest award ever granted by theKorean court up to that point. He also represented a U.S. privateequity fund in two ICC arbitrations with a total claim amount ofapproximately US$ 950 million and successfully obtained consentawards favourable to the client. Recently, Mr. Chung successfullyassisted nine Korean Banks to reach at comprehensive settlementswith a US Bank in an international dispute being litigated before astate court in California for claims worth over $100 million. Mr.Chung received his B. Jur. from Seoul National University, College ofLaw in 1984, was educated at the Judicial Research and TrainingInstitute of the Supreme Court of Korea from 1984 to 1985, andreceived his LL.M from Yale Law School in 1994. Prior to joiningthe firm, Mr. Chung served as a Judge Advocate in the Republic ofKorea Air Force from 1986 to 1989. He is a member of the KoreanBar Association and the New York Bar Association.

Jun Ki Park

Kim & ChangSeyang Building, 223 Naeja-DongJongno-gu, Seoul 110-720Republic of Korea

Tel: +82 2 3703 1509Fax: +82 2 3703 1590Email: [email protected]: www.kimchang.com

Mr. Park is a member of the cross-border litigation team at Kim &Chang. Since joining the firm in 2005, Mr. Park has been involvedin a number of cross-border lawsuits of civil and criminal nature.Mr. Park received the A.B. degree cum laude from Harvard College(field of concentration: Chemistry/Physics) in June 1995, and hewas educated at the Judicial Research and Training Institute of theSupreme Court of Korea from 2003 to 2004. Mr. Park worked as adeputy director at the Office of International Legal Affairs, Ministryof Justice, in 1996, and served as an officer in the Republic ofKorea Air Force from February 1997 to January 2000.

Founded in 1972, Kim & Chang is the largest and the most specialised law firm in Korea. It is a full service law firmbased in Seoul with more than 450 professionals including lawyers, tax lawyers and accountants, patent and trademarkattorneys. Its professionals are top graduates of prestigious universities in Korea and abroad, including the UnitedStates, Europe and Japan. Many of its attorneys have practiced with major law firms abroad, adding their wealth ofexperience and expertise in specialised practice areas to the firm’s resources. The expertise and multi-culturalbackground of Kim & Chang’s professionals make the firm the recognised leader in providing specialised legal servicesfor cross-border transactions and uniquely qualified to address the legal needs of international companies doingbusiness in Korea.

Kim & Chang Korea



Chapter 30

Gencs Valters Law Firm

Latvia

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Latvia got? Are there anyrules that govern civil procedure in Latvia?

There is a civil law system in Latvia. Civil, administrative andcriminal cases are examined by separate procedural rules. Civilprocedure in Latvia is governed by the Civil Procedure Code(Civilprocesa likums).

1.2 How is the civil court system in Latvia structured? Whatare the various levels of appeal and are there anyspecialist courts?

There is three-level court system in Latvia formed by:34 District/City Courts.5 Regional Courts.The Supreme Court, which consists of:

the Civil Matters Department; andthe Senate.

District/City Courts examine all civil cases, except those under thejurisdiction of Regional Courts (which are disputes in respect ofreal property, claims exceeding LVL 150,000.00 (approx. EUR213,430.80), patents, trade marks and insolvency). Rulings of firstexamination by District/City Courts might be reviewed by RegionalCourts such as in appellation instances. In addition, rulings of firstexamination by Regional Courts might be reviewed by the CivilMatters Department of the Supreme Court such as in appellationinstances. The rulings after the appeal review either by theRegional Courts or the Civil Matters Department of the SupremeCourt might be reviewed in cassation instance by the Senate of theSupreme Court.There are no specialist courts (commercial courts and such like) inLatvia, therefore all civil disputes are examined by the generalCourts according to their jurisdiction.

1.3 What are the main stages in civil proceedings in Latvia?What is their underlying timeframe?

The main stages in civil proceedings before the Latvian courts are:bringing of action;securing of claim, including freezing of assets and propertyarrest (optional);

preparation for trial;trial; andjudgment.

The timing of a case depends on the type of case. Some may besettled within one month and others may last for several years. Onaverage, cases that are not appealed last up to six months.


Latvian courts nether accept claims in case of foreign disputeresolution forum, nor recognise the ruling of foreign courts in caseof breach of an exclusive jurisdiction clause in favour of a Latviancourt. Contracting parties are entitled to determine the court of firstinstance, where all disputes in respect of the contract or itsperformance shall be decided. However there are exceptions whereparties are not entitled for such exclusive jurisdiction clauses - forexample the disputes regarding real property shall be brought onlyto the jurisdiction of location of such real property.

1.5 What are the costs of civil court proceedings in Latvia?Who bears these costs?

Litigation costs vary considerably depending on the type, size andcomplexity of the civil proceeding. In general the court fee will becalculated from the claim amount, which may be 0.5% - 15%depending on the amount of claim. Attorney’s fees in general arecalculated on a per hour basis in Latvia. The bailiff, expert,translation/interpretation and document legalisation fees shall beconsidered by the party willing to litigate as well. In general theloser of the proceeding shall bear the costs of the wining party.Attorney’s fees shall be borne by the losing party not exceeding 5%of the claim amount.

1.6 Are there any particular rules about funding litigation inLatvia? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

There are no particular rules about funding litigation in Latvia - alawyer and his client are free to set up any fee arrangements by theiragreement, which may include contingency/conditional fees. Thereare no rules on security for costs in Latvia either.

Valters Gencs



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Gencs Valters Law Firm Latvia


2.1 Are there any pre-action procedures in place in Latvia?What is their scope?

There are no pre-action procedures in place set by the CivilProcedure Code. Such thing as the provision of a ‘letter of claimbefore action’ is not mandatory for proceedings in Latvian court.


The general limitation period for contract and damage claims is 10years in Latvia. If so provided by statutory act, the limitationperiods in particular cases can be different - for example 2 years foremployment claims. The general principle is that the time starts torun from the breach of the contract or the date on which the causeof action occurred. By some limited reasons the limitation periodcan be either suspended (by period of war) or started anew again(for example reminder to the debtor). The limitation periodsapplied to different classes of claim for the bringing of proceedingsbefore the civil court are treated as an issue of substantive law,therefore such periods are not subject to the renewal tools byapplication of the Civil Procedure Code.


3.1 How are civil proceedings commenced (issued and served)in Latvia? What various means of service are there? Whatis the deemed date of service? How is service effectedoutside Latvia? Is there a preferred method of service offoreign proceedings in Latvia?

If there are no grounds to refuse or suspend the commencement ofa proceeding, the civil proceeding shall be commenced by the courtwithin 3 days from the statement of claim being received from theplaintiff. After this the court shall send the statement of claim to thedefendant immediately by registered mail, as well set the term tosubmit the statement of defence 15-30 days from the sending of thestatement of claim. The courts prefer to perform the service of asummons by registered mail, although other means are provided bythe Civil Procedure Code such as telegram, fax and courier. TheCivil Procedure Code does not set the exact term by which suchservice shall be provided before a hearing - in general this isapproximately 1 month, but not less than 1 week. In respect toservice outside the jurisdiction, the Latvian court shall consider thenumerous conventions (1954 Hague Convention, 1965 HagueConvention, 1970 Hague Convention, and 9 bilateral conventions)and EC Regulation 1348/2000 and EC Regulation 1206/2001.

3.2 Are any pre-action interim remedies available in Latvia?How do you apply for them? What are the main criteria forobtaining these?

There are several pre-action interim remedies in Latvia for thesecuring of a claim, which includes freezing of assets, propertyarrest and establishment of prohibitory endorsements in publicregisters. Those can be applied either during the proceeding or priorto the bringing of the action. The criteria for the obtaining theinterim remedies during the proceeding is if there is reason tobelieve that the execution of the court judgment may become

problematic or impossible. The criteria for the obtaining suchremedies prior to the bringing of the action is if the debtor avoids hisobligations by replacing or alienating his property, by leaving hisplace of residence without informing the creditor, of by performingother actions in bad faith. Other parties of the proceeding shall notbe informed that such a decision is taking place.


The main elements of the pleadings in Latvia are:the court, to which the statement of claim is addressed;the names and addresses of the parties;the infringed rights;the claim amount if any, and its calculation thereof;reasoning and evidence;applicable law;claims;list of documents attached; andthe date.

In case any element is lacking, the court is entitled to not processthe statement of claim. In this case the judge shall take a reasoneddecision and set a time limit for rectifying the deficiencies (no lessthan 20 days). If such deficiencies are not rectified in the set timelimit, the statement of claim shall be returned to the submitter.


Pleadings can be amended in writing. Amendments can be made atany moment up until the commencement of the case substancereview, which starts with the report of judges regardingcircumstances of the matter in the hearing.

4 Defending a Claim


The main elements of a statement of defence are:whether the defendant admits the claim fully or in a part;objections against the claim and substantiation thereof;evidence and the applicable law;petition to accept the evidence or require it; andother significant facts for the review of matter.

The defendant is entitled to bring a counterclaim up until the end ofthe examination period of the case substance in the hearing of firstinstance. A court shall accept such counterclaim if:

the set-off of the claim and the counterclaim is possible;the satisfaction of the counterclaim excludes the satisfactionof the claim in whole or in part; orthe counterclaim and the claim are related in a way, the jointexamination of them would favour quicker and more correctadjudicating of the case.


The court shall set a time-limit between 15 to 30 days for the

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submission of the statement of defence. This period starts to runfrom the day the court has sent the statement of claim and therequest to provide the statement of claim. In case the defendantfails to submit his statement of defence on time, he may be fined.


The defendant on his own is able to pass on liability by bringing anaction against a third party in separate proceedings only.


In case the defendant fails to defend the claim, a default judgmentmay be entered against him. A default judgment is a judgment,which is entered into at the request of plaintiff by the court of firstinstance in matter, where the defendant has failed to provideexplanations regarding the claim and has failed to attend the hearingpursuant to the court summons without first notifying the reason fortheir failure to attend.


The defendant is entitled to dispute the court’s jurisdiction bysubmitting a petition for the change of jurisdiction to another court.



The Civil Procedure Code provides a mechanism where a third partycan be joined into ongoing proceedings, if the rights and duties ofsuch third party may be affected by the judgment. The joinder ispossible up until the end moment of the hearing of the case substancein first instance. Such third parties have all procedural rights, with theexception of modifying the subject-matter or the amount of the claim,admitting the claim or entering into a settlement; third parties can alsonot require the execution of a judgment. Third parties with separateclaims have the same procedural status as the plaintiff. The requestto join the third party in ongoing proceedings shall be addressed tothe court, which determines the joinder.


A plaintiff is entitled to join several mutually related claims in onestatement of claim. The court is entitled to consolidate several sets ofproceedings into one, if there are several sets of proceedings beforethe court between the same parties, or if a plaintiff brings an actionagainst several defendants, or if several plaintiffs bring an actionagainst the same defendant. Such consolidation is permitted if thisfavours the review of the case and if parties do not object to this.


The court is entitled to require a plaintiff to split the case intoseveral claims if the court finds that separate reviews of such claims

will be more preferable. The court is entitled to separate one ofseveral claims, if the review of the case has become difficult orimpossible.


6.1 Is there any particular case allocation system before thecivil courts in Latvia? How are cases allocated?

There is no particular case allocation system before the civil courtsin Latvia.

6.2 Do the courts in Latvia have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The courts have the following management powers:controlling the process of the case in a cost-conscious andefficient manner by setting a procedural timetable and givingother appropriate directions;notifying parties that no evidence for some facts has beensubmitted and setting a time period for the submissionthereof;encouraging the parties to arbitrate in ADR institution; andencouraging the parties to reach a settlement.

The parties can make the following interim applications:securing a claim, including freezing of assets and propertyarrest;securing evidence;requiring the court to request the documentary evidence;ordering the expert-examination; andjoining a third party to the ongoing procedure.

For some interim applications court fees exist. For example forsecuring the claim (such as freezing of assets) the court fee of LVL20.00 (approx. EUR 28.46) shall be paid; however if the claimamount exceeds LVL 4,000 (approx. EUR 5,691.49), a fee of 0.5%of the claim amount shall be paid.

6.3 What sanctions are the courts in Latvia empowered toimpose on a party that disobeys the court’s orders ordirections?

The courts in Latvia are empowered to impose on a party thatdisobeys the court’s orders or directions the following sanctions:

a warning;expulsion from the court room;a fine; orenforced delivery of person to the court.

6.4 Do the courts in Latvia have the power to strike out partof a statement of case? If so, in what circumstances?

The courts of Latvia have no power to strike out part of a statementof case. As far as formal requirements are observed, the court shallprocess the statement of case.

6.5 Can the civil courts in Latvia enter summary judgment?

Courts in Latvia are not entitled to enter summary judgment.



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6.6 Do the courts in Latvia have any powers to discontinue orstay the proceedings? If so, in what circumstances?

The courts in Latvia have no powers to discontinue proceedings;only the plaintiff is entitled to discontinue his claim in whole or ina part.The court shall stay the proceeding if:

a party to the proceeding died (natural person) or ceased toexist (legal person);a party to the proceeding lost his legal capacity;a party to the proceeding is not capable of litigation becauseof his serious illness, old age or disability;the court decides to submit the application to theConstitutional Court of Latvia; or the Constitutional Courthas initiated a case on its own by the request of the party;the court assigns for the preliminary ruling from theEuropean Court of Justice; and/orthe review of the case is impossible due to a prior decision inanother case in civil, administrative or criminal procedure.

The court is entitled to stay the proceeding if:a party to the proceeding is abroad due to long-term businesstrip or state service;a search of the defendant has been announced;a party to the proceeding is unable to participate in theproceeding due to illness; orthe parties to the proceeding have agreed to stay theproceeding.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Latvia? Are there any classes of documents that do notrequire disclosure?

The court is entitled to request the documentation, tapes and suchlike evidence from the opposite party and any other person or stateauthority as well, if the party of the proceeding requires it to do sowith the good reason. The party, who requests the court to requirethe documentation, shall describe the document and provide thereasons why this document is in possession of the person referredto. If the person is not able to provide the requested document ontime or at all such person shall notify the court in writing of thereasons. Otherwise such person might be fined. If the party of theproceeding refuses to provide the requested document but does notdeny he has it, the court is entitled to presume that the factsprovided in such document are as proved.

7.2 What are the rules on privilege in civil proceedings inLatvia?

A person is entitled to refuse to provide the requested documentsbecause of reasons of legal profession, confidentiality, state secretand such like.

7.3 What are the rules in Latvia with respect to disclosure bythird parties?

The rules with respect to disclosure are general and the same onesapply to the parties of the proceeding and any third party/stateauthority. Please see question 7.1.

7.4 What is the court’s role in disclosure in civil proceedingsin Latvia?

After the application of a party, the court decides if the request fordocumentation shall be made and, if so, the court will oversee theperformance of such request.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Latvia?

The documents provided at the request of the court shall be usedonly for the purposes of a particular proceeding. After the judgmentcomes into effect, the person who submitted the requesteddocument is entitled to apply in writing for the originals of thedocument(s) to be returned to him.

8 Evidence

8.1 What are the basic rules of evidence in Latvia?

Each party shall prove the facts upon with they substantiate theirclaims. In general evidence shall be submitted to the court no laterthan seven days before the court hearing. No evidence shall have apredetermined effect that would be binding upon the court. Noevidence is necessary to prove the facts not challenged by theopposing party.


The Civil Procedure Code may admit the following types ofevidence:

the statement of a party of the proceeding (if such facts areconfirmed by other evidence);testimony of a witness;documentary evidence (including audio and video tapes,CD’s and such like);physical evidence;expert evidence; andthe opinion of the state authority.

As a general rule hearsay is not admissible as evidence. Certainfacts must be proved by particular documents only.Parties are entitled to apply to the court to order expert examination.In this case each party is entitled to provide questions to beanswered by the expert, but the final scope and edition of questionsto the expert shall be decided by court. It is done by making aseparate order in writing addressed to the expert. The expertopinions made before the proceedings are admissible as evidence aswell.


The calling of witnesses is made by the court in accordance with therespective application by a party. If a witness fails to appear inhearing, he might be enforced to come. Witness statements inwriting shall be considered as evidence only if made in scope ofsecuring of evidence - that is if such witness statement was made bya judge examining the respective witness.

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8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Latvia?

The parties make applications to the court to make orders either to callwitnesses, to provide documentation from other persons, to performexpert examination, to secure evidence and such like. The court isentitled to inform the party that the some facts have not been provedby evidence and set the term for the respective submission.


9.1 What different types of judgments and orders are the civilcourts in Latvia empowered to issue and in whatcircumstances?

Judgments can be issued either for the recovery of an amount ofmoney, the transfer of goods, or the performance of a certain action.In case the defendant is absent, the court may issue a defaultjudgment. In case the parties agree on a settlement, the courtprovides a decision approving the terms of the settlement - thisdecision can be executed as a judgment. The court is empowered toissue several types of orders such as requesting documents frompersons, joining a new party to the proceeding, establishing interimmeasures, applying procedural fines and sanctions and such like.


Only rulings to recover loss suffered and lost profit can be made byLatvian Civil Law. The interest from the dept can be awarded bythe court; in case the rate is not stipulated in a contract, the rate canbe calculated based on the Civil Code (approx. 6-13% per year).Costs of litigation shall be compensated by the losing party;however the lawyers’ fees shall be compensated in an amount notexceeding 5% of the amount of the claim.


When a domestic judgment comes into effect, the beneficiary isentitled to apply in writing to the court to provide Execution Writ.Based on this document the state officials are entitled to compulsoryexecution. The foreign judgment shall be recognised by the court atfirst. The Civil Procedure Code provides several reasons why suchjudgment shall not be recognised - for example, lack of jurisdiction ofa foreign court. If the foreign judgment is recognised, the court issuesa decision about recognition and execution of the foreign judgment,which might be appealed. When such decision comes into effect, thebeneficiary can execute it in the same way as a domestic judgment.

9.4 What are the rules of appeal against a judgment of a civilcourt of Latvia?

The judgment of first instance may be appealed within 20 days fromits announcement by providing reasons why it is wrong. This isdone by the submission of an appellation petition to the same court,which issued the judgment. If there is no contradiction to theformalities required by the Civil Procedure Code, the courtproceeds the case to the higher level court. The appellation courtreviews the case once again in the range requested by the party, butnot exceeding the scope of the initial claim. The judgment of theappellation court may be appealed in cassation instance within 30days from its announcement by providing reasons how the courtwrongly applied the rules of material or procedural law.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Latvia?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Parties are entitled to agree to settle their dispute in arbitration,which might be either ad hoc or permanent. If there is an arbitrationagreement clause the court shall not accept the case covered by it.The award of the arbitration is not subject to appeal. If such awardis not performed voluntarily or made in accordance with the rulesof law, the court shall grant the execution writ and therefore suchaward shall be executed mandatory in the same way as a courtjudgment. The courts shall assist in applying interim measures,such as freezing of assets.


There is a separate chapter provided in the Civil Procedure Code inrespect to dispute resolution in arbitration. There are rules providedregarding general rules on the conclusion of an arbitration clause,the establishment of arbitration and its procedural requirements,and the execution of an arbitration award.

1.3 Are there any areas of law in Latvia that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

There are several areas of disputes, which shall not be resolved inarbitration. Otherwise such arbitration award will not be acceptedby the court and consequently will not be enforceable. In general itapplies to: disputes where the interests of third parties may beaffected; the party is the state or a municipal institution; in respectto amendments in civil registers, and in some instances in respect tofamily, real property, leases, employment and insolvency matters.


2.1 What are the major dispute resolution institutions inLatvia?

There are 156 permanent arbitrations in Latvia for the moment. Themajor dispute resolution institutions are the Latvian Chamber ofCommerce and Industry Court of Arbitration (LatvijasTirdzniecibas un rupniecibas kameras Škirejtiesa), RigaInternational Arbitration Court (Rigas starptautiska škirejtiesa)and Court of Arbitration of the Association of Commercial Banks ofLatvia (Latvijas Komercbanku asociacijas škirejtiesa).


Domestic or foreign arbitration awards made in accordance with theCivil Procedure Code and accepted by the court are binding andenforceable in the same way as a court judgment.



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Valters Gencs

Gencs Valters Law FirmValdemara Center, 3rd Floor21 Kr.Valdemara StreetLV-1010, RigaLatvia

Tel: +371 6724 0090Fax: +371 6724 0091Email: [email protected] URL: www.gencs.eu

Founding partner of the GENCS VALTERS LAW FIRM. Education:Law School of the University of Latvia (LL.B., - 1993); Institute ofInternational Affairs (International Business Studies, 1994);Recipient of the U.S. Senator Edmund F. Muskie scholarship, 1994;John Marshall Law School, Chicago, IL, USA; (LL.M., 1995). WorkExperience: Legal Counsel for Ministry of Foreign Affairs of Latvia(1994); Welsh & Katz, Ltd., Chicago (1995); Member of theWorking Group on Tax Law appointed by the Prime Minister (1997);Member of the Working Group on Intellectual Property Protectionand Enforcement Issues appointed by Prime Minister (1999); Headof Tax & Legal department of Ernst & Young Latvia, Head of Tax adhoc group of the Foreign Investors Council in Latvia (1998-2002).Publications: On editorial Board of Tax Analysts (USA) Member:Latvian Bar Association; IBA, AIPLA; FICPI, ECTA; AIPPI; LES USA& CANADA; ITMA; INTA; MARQUES, GRUR, European Patent andTrademark Attorney. Practice areas: Tax; Competition, Finance;Litigation; and Intellectual Property. Languages: English, Latvian,Russian.

The Gencs Valters Law Firm is a full service, general practice international business law firm having offices in Riga(Latvia) and Tallinn (Estonia) and focused on tax, litigation, corporate, mergers and acquisitions, competition, financeand intellectual property law.

The firm consists of a team of more than 14 professional lawyers and tax advisers and has represented the governmentof Latvia in an international arbitration case in Denmark and Sweden.

Our publicly disclosed representative clients comprise: Statoil ASA (Denmark), Nestle SA (Switzerland), Yamaha(Japan), Beiersdorf (Germany), L’Oreal (France), Wyeth Pharmaceuticals (UK), Firebird Republics Fund (USA), GeneralMotors (USA) and Coca-Cola (USA).

Areas of Practice: Corporate, M&A and Commercial Insolvency & Corporate Recovery, Litigation and Dispute Resolution,Tax, Immigration, Finance, Business Law, Intellectual property, Due Diligence, Patent and Trademarks Registration inEU, Competition.




It is quite common to use arbitration procedures unfairly and in badfaith in Latvia. Therefore there are trends to provide more and moreregulation for this type of dispute resolution. The Government isworking on a draft Arbitration Act and amendments to the CivilProcedure Code in this respect. At least in this legislation stageinter alia the possibility to appeal arbitration awards to the courts isprovided.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Latvia?

It should be noted that only arbitrators included in the list ofpermanent arbitrations may be chosen by parties. The rareexception from this is the Latvian Chamber of Commerce andIndustry Court of Arbitration (Latvijas Tirdzniec?bas unrupniecibas kameras Škirejtiesa), where parties are able to chooseany person they wish as arbitrator. The statements of parties,documental and physical, and expert evidence might be used, butthe testimony of witnesses is not allowed as evidence in arbitrationprocedures. The arbitration clause included in an agreement losesits effect if such agreement is ceded (assigned) to another person(Supreme Court Decision No SPC-28 of 12.05.2004.). In case oneof the parties of an agreement is a consumer, there is a considerablechance that the arbitration clause could be invalidated as an unfairprovision of the contract (Supreme Court Decision No SPC-13 of03.01.2007).



Chapter 31

Law Firm Eversheds Saladzius, a member of Eversheds International Limited

Lithuania

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Lithuania got? Are thereany rules that govern civil procedure in Lithuania?

Lithuania has a continental codified legal system. The main lawgoverning the civil procedure is the Civil Procedure Code of theRepublic of Lithuania of 28 February 2002 (hereinafter - “CivilProcedure Code”).

1.2 How is the civil court system in Lithuania structured?What are the various levels of appeal and are there anyspecialist courts?

There are four levels and three instances of civil courts in theRepublic of Lithuania. The levels include: district courts; regionalcourts; Court of Appeal of Lithuania; and Supreme Court ofLithuania. Meanwhile there are three instances - first instance, appealand cassation - in civil proceedings in the Republic of Lithuania.District courts and regional courts act as the courts of first instance.The district court and Court of Appeal of Lithuania are the courts ofappellate instance. The decision of a district court can be appealed toa regional court as a court of appellate instance; whilst the decision ofa regional court can be appealed to the Court of Appeal of Lithuania.The decision of the appellate court under certain circumstances canbe challenged before the Supreme Court of Lithuania, which is thecourt of cassation in the Republic of Lithuania.There are no specialised courts in the civil court system of theRepublic of Lithuania.

1.3 What are the main stages in civil proceedings inLithuania? What is their underlying timeframe?

There are three main stages (commencement of the civilproceedings, preparation for the court hearing and the hearing at thecourt) and four optional stages (appeal, execution of the decision,cassation and renewal of the process) in civil proceedings inLithuania. The laws do not establish any specific underlyingtimeframe for main stages.


The parties can agree on territorial jurisdiction of the court (i.e.

which particular regional or district court shall hear the case).However, the laws of the Republic of Lithuania do not provide thepossibility to change jurisdiction concerning the level of courts tohear the case as the court of first instance and cannot change theexclusive jurisdiction as provided in question 6.1 herein.

1.5 What are the costs of civil court proceedings in Lithuania?Who bears these costs?

The costs of civil court proceedings in Lithuania consist of thestamp-duty and costs related to the court hearing. Article 80 of theCivil Procedure Code establish the amount of the stamp-duty fordifferent claims, meanwhile Article 88 of the Civil Procedure Codeenumerates what can be regarded as the costs related to the courthearing.The party losing the case has to bear the costs that the winning partyincurred. In case the claim was granted in part, the costs of theclaimant shall be satisfied proportionally to the part of satisfiedclaim, and the costs of the defendant - proportionally to the part ofunsatisfied claim. However, the costs of litigation are limited by theRules on Amount and Paying of Costs Related to the Court Hearing,by the Instruction on Execution of Decisions and Recommendationson Maximum Amount for the Legal Assistance (Services) of theAdvocate or assistant of Advocate in Civil Cases.

1.6 Are there any particular rules about funding litigation inLithuania? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

Usually each party has to fund the litigation until the courtdistributes the costs in the decision. However, natural persons whocannot protect their rights and legally protected interests because oftheir insufficient financial situation are eligible to use the scheme ofState Guaranteed Legal Aid; they might also be exempted from thestamp-duty.As the Law on the Bar provides, an advocate can agree acontingency fee arrangement with the client pursuant to theprinciples of activity of the advocate.There are no rules on security for costs, except as provided in theArticle 794 of the Civil Procedure Code when the claimant is theforeign person or person without citizenship, who does not haveenough property to cover possible litigation costs and presents theclaim before a Lithuanian court against the resident of the Republicof Lithuania.

Alvydas Gineitis

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Eversheds Saladzius Lithuania


2.1 Are there any pre-action procedures in place in Lithuania?What is their scope?

The Civil Procedure Code provides that other laws might prescribefor the pre-action procedures before the dispute can be solved atcourt. The example of such pre-action procedures might bedisputes arising out of trademark, patent or design legal relationswhen the laws establish the pre-action procedure for any disputearising during the registration of these rights of industrial property.If a party does not follow such pre-action procedure the court shallnot accept the pleading. Whereas, when the pleading is acceptedthe court shall leave the pleading unconsidered, if it is still possibleto use such pre-action procedure, and shall terminate the case, if itis not possible to use the pre-action procedure.Under the Labour Code of the Republic of Lithuania theCommission on labour disputes established in the company shallresolve the labour disputes. However, such pre-action disputeresolution method is not used very frequently, because the employerhas no right to appeal against the decision of such commissionbefore the court, therefore such Commissions are not constituted ona regular basis.


Under the laws of the Republic of Lithuania the limitation periodsare treated as a matter of substantive law and are regulated by theCivil Code of the Republic of Lithuania. The general limitationperiod comprises a period of ten years. However, the Article 1.125of the Civil Code of the Republic of Lithuania establishes abridgedlimitation periods from 1 month to 5 years in certain cases.The limitation period shall be calculated under the Article 1.127 ofthe Civil Code of the Republic of Lithuania.


3.1 How are civil proceedings commenced (issued and served)in Lithuania? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Lithuania? Is there a preferred method ofservice of foreign proceedings in Lithuania?

A person whose rights or law-protected interests were violated has topresent a pleading in writing to the appropriate court. There are nospecific ways of delivery of the pleading prescribed by the law,however, as the pleading has to be presented upon original signatureof the claimant, the main ways of delivery are by mail and by deliveryin person. In case the pleading was sent by mail the deemed date ofservice shall be the dispatch date, meanwhile in case of the personaldelivery the deemed date of service shall be the day of registration ofthe pleading (performed by the secretariat of the court).As Article 804 of the Civil Procedure Code provides that personsresiding in the territory of the Republic of Lithuania, but notbelonging to its jurisdiction, shall be served with the proceduraldocuments through the Ministry of Foreign Affairs of the Republicof Lithuania. Such documents to foreign citizens, persons withoutcitizenship or foreign companies have to be translated into Englishor any other language they can understand.

3.2 Are any pre-action interim remedies available in Lithuania?How do you apply for them? What are the main criteria forobtaining these?

A person is entitled to request the court to apply interim measureseven before the pleading is presented to the court. In such a casethe person has to pay half of the stamp-duty and must provide thecourt with the reasons why the pleading cannot be served togetherwith the request, as well as presenting the evidence proving thethreat to his/her proprietary interests. If the court agrees to applyinterim measures, it shall prescribe the term not longer than 14 daysfor the delivery of the pleading. In case the pleading is not servedduring the said period, interim measures are revoked.


The pleading of the claimant as with every procedural documentunder the Civil Procedure Code shall meet the general requirementsfor procedural documents: the name of a court; procedural standing,name, surname, personal identification code and address of personsparticipating in the court proceedings (in case of a legal person: fullname; address of the head office; code; bank account no.; andprerequisites of the bank); character and subject matter of the claim;circumstances, proving the subject matter of the claim, andevidence, proving such circumstances; annexes; the date of draftingof the claim and signature of the person presenting the claim; and,if a person is represented by the representative, the abovementioneddata about the representative should also be presented as well as thedocument proving the powers of representative.The pleading as such shall have the following additionalinformation: the amount of the pleading, if the pleading has to beevaluated; circumstances that the claimant uses to justify his claim(factual ground of the pleading); evidence, proving thecircumstances provided by the claimant, places of residence ofwitnesses and places of other evidence; the claim of the claimant(the subject matter of the pleading); the opinion of the claimantabout the default judgment in case no statement of defence or otherpreliminary procedural document is served by the respondent; andinformation on whether the claimant is presented by the advocate.The pleading has to be supplemented by documents and otherevidence that the claimant uses to justify his claims, as well as thedata proving the payment of the stamp-duty and requests onevidence that the claimant cannot provide, indicating the reasonswhy he cannot present such evidence.


The claimant is entitled to amend the subject matter of the pleadingor the ground of the pleading only till the stage of the hearing atcourt commences. The later amending is allowed only if thenecessity of such amendment appeared after the stage of the hearingat court has commenced or the defendant consents, or the courtconsiders that such amending shall not delay the court hearing.

4 Defending a Claim


The statement of defence, being one of the procedural documents

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shall meet the general requirements for the procedural documents.The statement of defence shall have the following additionalinformation: whether the defendant agrees or not with the pleading;reasons for the objection; evidence that is used to prove the reasonsfor the objection; the opinion of the defendant about the defaultjudgment in case no preliminary procedural document is served bythe claimant; and information on whether the defendant shall bepresented by the advocate.The defendant is entitled to bring a counterclaim if: the respondentseeks to set-off the claim with the counterclaim; after thesatisfaction of the counterclaim it will become impossible to satisfythe initial pleading in full or part; the mutual link between thecounterclaim and initial pleading exists and by considering themboth it shall be possible to hear the case faster and rightly.


The court by sending a copy of the claim to the respondentestablishes the period not less than 14 calendar days and notexceeding 30 calendar days from the date of delivery of the claimto the respondent to serve the statement of defence. In exceptionalcases, the court might extend the period to 60 calendar days.


There is no such mechanism in civil procedure when the defendantcan pass on liability by bringing an action against a third party.


In case the defendant does not reply to the claim or present anystatement of defence, the court upon the request of the claimantmight pass a default judgment. Default judgment means that thecourt makes a decision after a formal assessment of the evidencepresented to the case, i.e. the court ascertains that such judgmentcan be rendered under the evidence provided to it.


There is no special procedure to challenge the jurisdiction of thecourt during the civil proceedings. However, the challenge that aninappropriate court is hearing the case can be used as one of thearguments during the appeal or cassation.



Under the Civil Procedure Code, a third party can be joined by thecourt into ongoing proceedings in the following circumstances:upon the written request of the claimant; if it appears during thecourt hearing that the claim can be switched to other persons notinvolved in proceedings; and if the court during the court hearingdetermines that the decision might influence the rights andobligations of a third party.


The court is entitled to consolidate several sets of proceedings intoone set of proceedings if after such consolidation the disputes shallbe considered faster and more accurate, as well as, when the claimsare so mutually interrelated that it is impossible to hear the casesseparately and the following circumstances are present: there areseveral proceedings commenced in the court (courts) where thesame parties participate; there are several proceedings served by theone claimant to different respondents; or there are several claimantsthat served claims against the same respondent.


The court is entitled to split trials in two instances. First of all, thecourt accepting the pleading with several consolidated claims isentitled to split one or several of them into separate proceedings ifit decides that it is more expedient to hear them separately.Secondly, when consolidated claims are served by several claimantsor when they are served against several defendants the courtaccepting the pleadings is entitled to split one or several of theclaims into separate proceedings if it decides that it is moreexpedient to hear them separately.


6.1 Is there any particular case allocation system before thecivil courts in Lithuania? How are cases allocated?

The Civil Procedure Code establishes the case allocation systembefore the civil courts. Under such system first of all it is necessaryto determine the level of courts, i.e. whether district court orregional court is entitled to hear the case as the court of firstinstance, and then decide the issue of territorial jurisdiction, i.e.which particular court from the same level has jurisdiction over thedispute.The regional court has jurisdiction as the court of first instance tohear the cases where the amount of the claim exceeds LTL 100,000and in other specific cases prescribed in the Articles 27-28 of theCivil Procedure Code. The district courts have jurisdiction to hearall other cases as courts of first instance. After determining which -regional or district - court has jurisdiction to hear the case it isnecessary to establish territorial jurisdiction under the Articles 29-30 of the Civil Procedure Code. However, the Article 31 of theCivil Procedure Code prescribes circumstances when the exclusivejurisdiction is established which cannot be changed by the consentof parties.

6.2 Do the courts in Lithuania have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The court has the following case management powers: applicationof interim measures; requirement of a deposit; imposing sanctions(as provided in question 6.3 herein); or requesting the evidence (asprovided in question 8.4 herein).The court upon the written request of parties participating in civilproceedings can apply interim measures if without such measuresthe execution of the final decision might be burdened or impossibleto perform. In certain cases concerning the public interest such asfamily disputes related to the rights or interests of a minor child, as

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well as in labour disputes, the court may apply interim measures onit own initiative.There is no limited number of interim measures the court mayapply, but the standard list of them is prescribed in the Article 145of the Civil Procedure Code.The court may also make a request for a deposit in order to ensurethe performance of procedural actions or the reimbursement ofpotential losses. The court may make such request for a deposit inthe following circumstances: while considering the request onextension of the procedural period; upon the request to ensure theavailability of evidence; and on certain cases when the claimant isthe foreign person or person without citizenship as provided inquestion 1.6 herein.

6.3 What sanctions are the courts in Lithuania empowered toimpose on a party that disobeys the court’s orders ordirections?

The court is entitled to impose the following sanctions on a partythat disobeys the court’s orders or directions:1) warning;2) removal from the courtroom;3) fine; and4) arrest.

6.4 Do the courts in Lithuania have the power to strike outpart of a statement of case ? If so, in what circumstances?

Civil Procedure Code does not provide the court the power to strikeout part of a statement of case during the proceedings.

6.5 Can the civil courts in Lithuania enter summary judgment?

The courts in the Republic in Lithuania are entitled in certaincircumstances to enter a kind of summary judgment. The court canenter a summary judgment under specific procedures (documentaryprocesses) only upon the written request of the plaintiff when thesubject matter of the pleading is a pecuniary claim, claim over amovable thing, securities or claims regarding eviction of the lesseeunder the lease agreements of immovable thing and the plaintiffbases all his claims by admissible written evidence. CivilProcedure Code also provides specific procedure for the contest ofsummary judgment.

6.6 Do the courts in Lithuania have any powers to discontinueor stay the proceedings? If so, in what circumstances?

The courts are obliged to discontinue the proceedings under thecircumstances prescribed in Article 293 of the Civil ProcedureCode.The courts have to stay the proceedings under circumstancesprescribed in Article 163 of the Civil Procedure Code. However,the court is entitled to stay proceedings when: there is a search ofthe respondent; the court appoints expertise; the party serves in aunit of the armed forces of the Republic of Lithuania where martiallaw is imposed; and in other instances when the court acknowledgethat it is necessary to stay the proceedings.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Lithuania? Are there any classes of documents that donot require disclosure?

There are no such rules of disclosure under the laws of the Republicof Lithuania. However, during the stage of preparation for a courthearing, each party in the proceedings has to present the courts withall the evidence and explanations that are of importance to the case,as well as informing the court about the evidence the party cannotpresent indicating the circumstances obstructing such delivery andfinally formulating the claim and defence to such claim.

7.2 What are the rules on privilege in civil proceedings inLithuania?

Under the Law on the Bar the data concerning the meeting betweenan advocate and his client cannot be used as evidence. Theadvocate cannot be called as a witness or submit explanations oncircumstances that he learnt during the performance of hisprofessional duties. It is prohibited to seek the information formingthe professional secret of an advocate and to use such informationas evidence. The professional secret of an advocate consists of thefact of approaching the advocate with regards to the terms andconditions of the agreement with the client, information and dataprovided by the client, the nature of the legal service provided andthe data that the advocate collected under the instructions of theclient.

7.3 What are the rules in Lithuania with respect to disclosureby third parties?

The same rules as provided in question 7.1 herein are applicable tothird parties, i.e. third parties can present explanations andattachments to the pleading or defence, including evidence provingtheir case.

7.4 What is the court’s role in disclosure in civil proceedingsin Lithuania?

The court may offer parties and third persons to provide additionalevidence and to establish a term for such evidence if the evidenceprovided herein is insufficient. The court is entitled to collectevidence only in cases arising out of labour or family relations aswell as in non-contentious proceedings. Besides, the court isentitled to refuse to admit the evidence, if such evidence could havebeen presented earlier, and such later disclosure can delay the courthearing.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Lithuania?

The court during the consideration of the decision can make anorder providing that the materials of the case or part of them shallnot be public. The court is entitled to make such order so that toprotect the secrecy of private life and of ownership, confidentialityof health, as well as when there is a threat that commercial,professional, official or governmental secrets might be revealed.

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8 Evidence

8.1 What are the basic rules of evidence in Lithuania?

Every party and third party to the proceedings have an obligation toprove circumstances that it uses to justify the claim or reply andprovide the court with the evidence. The evidence has to prove ordeny the circumstances that are related to the case. However certaincircumstances that are prescribed in Article 182 of the CivilProcedure Code are discharged from being proved.


The following types of evidence are admissible under the laws ofRepublic of Lithuania: explanations of the parties and third parties(directly or through representatives); witness statements; writtenevidence; exhibits; records of review and expert findings; andpictures, video and audio records made in a manner notcontradicting the laws. Factual data containing governmental orofficial secret cannot be used as evidence in civil proceedings untiltheir secrecy is removed in a manner prescribed by law.In order to clarify the questions, which require special scientific,medical, artistic, technical or craftsmanship knowledge the court isentitled to appoint the expertise and, considering the opinion of partiesparticipating in the procedure, to appoint an expert or qualified expertinstitution to present the expert findings on presented questions.


Any person of legal age and with consanguinity with the partiesparticipating in the proceedings can be a witness in the case if heknows or may know any circumstances related to the case.However, the persons outlined in Article 189 of the Civil ProcedureCode cannot be called as witnesses. Every person called as witness must arrive at the court and give fairevidence. However, a person called as witness can refuse to testifyif such evidence means testifying against himself, his familymembers or close relatives.The specific rules on questioning a witness are provided in Articles192-194 of the Civil Procedure Code.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Lithuania?

The court upon the application of a person may issue a requestagainst parties participating in civil proceedings or other persons topresent it with the written evidence. The person has to indicate thefollowing information in the application: the written evidence to berequested; basis for belief that this particular person is in possessionof the particular written evidence; and the circumstances that thiswritten evidence can prove.


9.1 What different types of judgments and orders are the civilcourts in Lithuania empowered to issue and in whatcircumstances?

Courts in the Republic of Lithuania can issue a decision, if the caseis finally resolved, and orders if only certain questions regarding theproceedings, but not the case itself, are resolved.These are the following decisions available: final decision; partialdecision; preliminary decision; default judgment; and additionaldecision.A final decision is issued after the court has examined all the evidenceand the question on justification of all claims can be resolved.A partial decision is issued if the court solves only part of thedispute. A partial decision is available only when there are severalclaims in the case and the court has collected enough evidence tofinally decide on one or several claims in the case.The court hearing the case can issue a preliminary decision asprovided in question 6.5 herein.A default judgment can be issued if the party failed to participate inthe court hearing or failed to serve the procedural documents to thecourt, and the failure was due to reasons that the court recognisedas not important reasons, or if the party did not ask to hear the casewithout its participation, or the opposing party participated in thehearing. A default judgment can only be issued regarding theclaims that the respondent was informed about.The court can issue an additional decision if, after the final decisionwas rendered: there is a claim that was not resolved in the decisionnotwithstanding that the parties gave evidence and explanationsherein; the court solved the question of law but failed to indicate theadjudicated amount, property or actions that the respondent has toperform or withhold from their performance; and/or the court failedto solve the question on the costs.The orders issued by the court can be either in written or in oralform. Oral orders are allowed only during the court hearings andsuch orders are inscribed in the minutes of the case.


The court during the civil proceedings cannot extend the requests ofthe parties with regards to damages, therefore the court has nopower to award an amount that exceeds the damages indicated bythe parties in their pleadings or counterclaims. However, the courtis entitled to decide on the damages after evaluating all the evidenceand circumstances of the case.The court has the power to reduce the interest that it findsunreasonable.The court has to follow the Recommendations on the maximumamount for the legal assistance (services) of the advocate orassistant of the advocate as provided in question 1.5 while decidingon the costs of the litigation.


Once a domestic judgment has entered into force, it should bedelivered to the bailiff who is responsible for the enforcement of thejudgments of the court. Meanwhile foreign judgments can bepresented to the bailiff after the recognition by a competent court ofthe Republic of Lithuania.

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Unless otherwise provided by the bilateral international treaties oncooperation in commercial and civil cases concluded by theRepublic of Lithuania, an interested party has to present a requestto the Court of Appeal of Lithuania to recognise and approve forexecution the decision of a foreign court and after that he is entitledto present such judgment for the execution. Requests concerning the recognition of a decision of foreign courtsfrom countries other than those of in the European Union areconsidered in a manner prescribed by Article 811 of the CivilProcedure Code, while requests concerning the recognition of adecision of foreign courts from the countries of the European Unionare considered in a manner prescribed by Article 818 of the CivilProcedure Code.

9.4 What are the rules of appeal against a judgment of a civilcourt of Lithuania?

AppealEvery decision of the court of first instance when the amount of theclaim exceeds LTL 250 can be appealed by the person participatingin the proceedings to the court of appellate instance within theperiod of 30 calendar days from the date the court of first instancemade the decision or 40 days if the appellant is a resident or has aregistered office abroad. Lithuania adopted a limited model of appeal, therefore the courtshould refuse to accept any new claims or new evidence that werenot presented before the court of first instance, except when thecourt of first instance unreasonably refused to accept them, or theneed for such evidence appeared after the proceedings at the courtof first instance. The appeal suspends the decision from entry intoforce until the court of appellate instance solves the dispute.CassationIt is possible to challenge court decisions that already entered intoforce before the Supreme Court of Lithuania. However, theunderlying claim must exceed the amount equal to LTL 5,000, thecourt decision in question has to be challenged within 3 monthsfrom the date it came into effect and the challenge is possible onlyon the ground of law that the previous courts have decided. It isworth mentioning that there is a special committee consisting of 3judges of the Supreme Court that decide upon the acceptance ofsuch challenge and their decision is final.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Lithuania?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a quick overview of each available method.)

ArbitrationThere are two arbitral institutions in Lithuania as provided inquestion 2.1 herein, however arbitration in general is not a verypopular method of dispute settlement in the Republic of Lithuania.MediationThe laws of the Republic of Lithuania do not specifically regulatemediation. However, in case a peaceful settlement agreement isreached between the parties, such agreement usually is approved bythe court, as under Article 6.985 of the Civil Code of the Republic ofLithuania such approval gives the agreement the effect of finaljudgment.


ArbitrationThe Law on Commercial Arbitration of the Republic of Lithuania,Vilnius Court of Commercial Arbitration Rules of Arbitration CivilProcedure Code, 1958 New York Convention on the Recognitionand Enforcement of Foreign Arbitral Awards govern the method ofarbitration.MediationThere are no specific laws governing mediation.

1.3 Are there any areas of law in Lithuania that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Under the Law on Commercial Arbitration the disputes arising fromconstitutional, employment, family, administrative legal relations,as well as disputes connected with competition, patents, trademarksand service marks, bankruptcy and disputes arising fromconsumption agreement may not be submitted to arbitration.


2.1 What are the major dispute resolution institutions inLithuania?

There are 2 main arbitration institutions established and registeredin a manner prescribed by the laws other than courts: Vilnius Courtof Commercial Arbitration and Vilnius International and NationalCommercial Arbitration. These arbitral institutions also providemediation services.


Arbitration provides binding and enforceable decisions.Meanwhile mediation has a binding effect only if the peacefulsettlement agreement is approved by the court as provided in thequestion 1.1 herein.



There are initiatives from the Ministry of Justice and Vilnius Courtof Commercial Arbitration to encourage the use of mediation incivil proceedings. It is possible to mediate disputes in Vilnius 2ndDistrict Court, where the court provides professional assistance.Besides, the use of arbitration as a method of settling the disputes isalso actively encouraged in the legal society of Lithuania.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Lithuania?

As there are only two arbitration institutions and no association ofprofessional mediators in Lithuania yet, the main alternative disputeresolving method preferred in Lithuania is arbitration. However,litigation still prevails over arbitration in most of the disputes.

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Dr. Alvydas Gineitis

Law Firm Eversheds Saladzius, a member ofEversheds International LimitedJ. Jasinskio 16B, Victoria TowerLT-01112, VilniusLithuania

Tel: +370 5 2392 391Fax: +370 5 2392 390Email: [email protected]: www.evershedssaladzius.lt

Dr. Alvydas Gineitis is a senior associate with Eversheds Saladziusin Lithuania. Alvydas specialises in arbitration and commerciallitigation. He appears regularly before both national courts andarbitration tribunals in relation to domestic and international cases.Alvydas assisted local and multinational companies in developinglitigation strategies in major commercial cases and advised onappropriate dispute resolution forum. He also acted for the clients incomplex negotiations, mediation and other alternative disputeresolution procedures.Alvydas is a lecturer of Private International Law at Mykolas RomerisUniversity (Law University of Lithuania) and also delivers lectures onDispute Resolution and Litigation at International Business School ofVilnius University.

The Law Firm Eversheds Saladzius is a member of Eversheds International Limited.

The Law Firm Eversheds Saladzius focuses on all aspects of business law, including areas of corporate law, commercialand competition law, financial services and banking, mergers & acquisitions, public law, real estate and construction,insurance law, intellectual property, employment law, dispute resolution, technology, media and communications andEU law.

The Law Firm provides comprehensive and integrated solutions for dispute resolution and litigation matters in variousbusiness sectors.

Eversheds Saladzius assists clients in developing litigation strategies, provides advice on whether their interests wouldbe best served by regular court proceedings, an arbitration award, or by other means, and assists in enforcementmatters. Eversheds Saladzius represents clients in national or international civil and business lawsuits before regularcourts or arbitration tribunals in and outside of Lithuania.

The Law Firm is committed to providing clients with high quality proactive legal advice in a practical and commercialcontext that anticipates, challenges and provides complete solutions.

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Chapter 32


Molitor, Fisch & Associés

Luxembourg

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Luxembourg got? Are thereany rules that govern civil procedure in Luxembourg?

The Luxembourg legal system is based on the written law tradition.The sources of law are international treaties, European Communitylaw, the constitution, statutes and regulations, and the generalprinciples of law.The issue of case law:National case law: theoretically, judges are not bound by judicialdecisions given in other cases; each decision must always beconfined to the actual case before the judges. But in practice,earlier court decisions in comparable cases are bound to beconsidered seriously. Especially if a statute is open tointerpretation, the judge has the power to make law through theinterpretation of it.European case law: by virtue of Article 234 of the Treatyestablishing the European Community, the case law of the Court ofJustice does affect national courts through requests for preliminaryrulings in the sense that Luxembourg courts, before giving a ruling,may ask the Court of Justice for a solution to problems caused bythe application of community law.

1.2 How is the civil court system in Luxembourg structured?What are the various levels of appeal and are there anyspecialist courts?

Civil law proceedings in Luxembourg are conducted, at the firstlevel in the District Courts (2 Districts Courts), which hasjurisdiction in all civil and commercial matters for which the lawdoes not confer jurisdiction on a specific court. Examples of thesespecific courts are:Small claims are dealt with by the local court (there are 3 localcourts), if the claim is worth less than EUR 10,000.Cases concerning contracts of employment are dealt with by theEmployment courts (there are 3 Employment courts).Jurisdiction in disputes concerning leases lies with the local courts,whatever the value of the dispute.All disputes relating to the national insurance system (problems ofaffiliation, qualification to get pensions, contributions,administrative fines etc.) are set out by the Arbitration Council ofInsurance.

There is no specific court for commercial matters, these being dealtwith by specialised divisions of the District Court.Appeals are brought to the Court of Appeal for appeals againstdecisions of District Courts and Employment courts, and to theDistrict Court for appeals against decisions of local courts (exceptfor special matters).After the level of appeal, if a party still wishes to contest a legalpoint excluding any point relating to the facts of a case, the case isbrought before the “Cour de Cassation” in the last instance.Representation by a lawyer who is a member of the LuxembourgBar is compulsory before the District Court (with some exceptions),whereas parties appear before the local court and the Employmentcourts, either in person or through a representative who might be alawyer, a spouse, parents, etc.

1.3 What are the main stages in civil proceedings inLuxembourg? What is their underlying timeframe?

The main stages in civil law proceedings are:Before the District Court and the Court of Appeal:

Issue of a writ (“assignation”) served on the defendant by abailiff.Exchange of written statements between lawyers anddisclosure of documents, exchange of witness and/or expertevidence in some cases.Closing of the investigation.Trial.Handing down of the judgment.

Before the local courts, employment courts:Issue of a summons to the defendant by a bailiff (“citation”)or by the clerk of the court (“requête”) depending on types ofcases. Court hearing of the parties and/or of their representatives.Handing down of the judgment.

As a principle, judges try to give strict guidance in terms oftimeframe by issuing written notices or by calling parties before thecourts to check the progress of the case, in order to have anexchange of written statements, documents and expert evidencewithin a reasonable time limit.It is difficult to calculate the average duration of civil proceedingsas it varies depending on the number of parties involved, and if it isat first level or an appeal.

Paulo Lopes da Silva

Nadine Bogelmann

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The Luxemburgish judiciary accepts exclusive jurisdiction clausesfor territorial jurisdiction, but makes some restrictions to avoidabusive use. The court will always appreciate the validity of anexclusive jurisdiction clause with regards to the protection of theconsumer and the possible abusive character. For a long time, the Civil Code stipulated expressly a restrictionregarding all kinds of clauses introduced in the terms and conditionsof an agreement, which had to be specially accepted. Even if thisstatutory provision was repealed, the case law still applies the sameprinciples based on the general principle of avoidance of abusiveclauses.Regarding this subject, it is important to refer to the CouncilRegulation (EC) No. 44/2001 which imposes some formalrestrictions relating to the validity of this kind of clause. Indeed, theexclusive clause must be stipulated:

in writing;in an usual form admitted by the community, like acommercial custom; orin a known custom of either parties in international trade, forexample, by email.

Up until February 2008, a special provision (article 63) wasimposed to persons not residing in Luxembourg, for all contractswith Luxemburgish people to which the above Council Regulationapplies, to obtain a written acceptance or an oral acceptance with awritten confirmation by the Luxemburgish party. Consequently, inall agreements concluded with Luxemburgish people, the exclusivejurisdiction clause had to be at least accepted in a written form.This special constraint is not effective any more as the transitionalperiod has expired.

1.5 What are the costs of civil court proceedings inLuxembourg? Who bears these costs?

In the Luxemburgish civil courts system, two kinds of costs of civilcourts are distinguished: “expenses of proceedings” (article 238 ofthe New Code of Civil Proceedings, “N.C.P.C.”); and“compensation of proceedings” (article 240 of the N.C.P.C.).The concept of “expenses of proceedings” includes the bailiff fees,the clerk fees, the tax rights and the fees resulting from thepreliminary investigation.In principle, “expenses of proceedings” are chargeable to the partyhaving lost the trial but the judge may also decide to divide the“expenses of proceedings” between all the parties of theproceedings.The concept of “compensation of proceedings” is dedicated tocover fees which are not included in the concept of “expenses ofproceedings”, i.e. mainly the lawyers’ fees. These costs are borneby the party which has lost the trial. The allocation of a “compensation of proceedings” is not automatic.Indeed, a “compensation of proceedings” is ordered by the courtonly if the party, who wishes to receive it, has requested it and if itis unfair to refuse this request considering the particularcircumstances.

1.6 Are there any particular rules about funding litigation inLuxembourg? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

Even though the Luxembourg Bar Association has determined a

table of reference for the fees, lawyers are still free to determinetheir fees, which will depend on the work needed for the resolutionof the case. Lawyers and clients can also agree on a flat fee inadvance and lawyers will be under the duty to respect the agreementconcluded.In all cases, the client has the possibility to claim to the Board of theLuxembourg Bar Association if he considers the invoiceexcessively high.The Luxemburgish legal system does not admit “de quota litis”agreements. Consequently, all agreements based on obtaining a rateof the proceedings gain are banned by article 3.3. of theDeontologic Code. Furthermore, the Luxemburgish judiciary does not know any ruleson security for costs. Indeed, only the judge can decide to sentencethe payment of the fees of the proceedings.


2.1 Are there any pre-action procedures in place in Latvia?What is their scope?

Luxembourg law does not provide any pre-action procedures.


The Luxemburgish law contains different time limits for thebringing of proceedings before civil courts.Article 2262 of Civil Code provides that all claims, in rem as wellas in personam, are limited by thirty years. This code contains otherkinds of limits (one, ten, or twenty years etc.).A limit of ten years applies to the obligations deriving from tradebetween professionals or between professionals and consumersunless they are subject to special shorter time limits.The proceedings shall lapse where no party has fulfilled courtformalities within three years. The lapse of proceedings will notextinguish the right of action; it will result in the extinction of theproceedings that will deprive a party of the right to oppose any ofthe pleadings of the lapsed proceedings or to rely upon it. The lapseof proceedings must be requested by one lawyer to another lawyer.Time limits start from the end of the last day of the period and aretreated as a substantive or procedural issue depending on the matter.Time limits may be suspended or interrupted under certaincircumstances.


3.1 How are civil proceedings commenced (issued and served)in Luxembourg? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Luxembourg? Is there a preferred methodof service of foreign proceedings in Luxembourg?

Civil proceedings are usually commenced by a document stating theclaims of the claimant, which is served to the defendant (a writserved by a bailiff, or a summons sent by the court clerk byregistered mail).In general, documents can be served either through a bailiff (to theparty in person or to his residence), by recorded mail delivery sent



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by a bailiff, or by recorded mail delivery sent by the court clerk.In most cases, service by a bailiff is required for a case to beinitiated.Once a judgment is handed down, the bailiff serves the judgment.As an exception, proceedings before a local court and before anEmployment court starts with a document stating claims addressedto the court, then the court clerk serves the parties with a summonsto a hearing.Services outside Luxembourg are done through a bailiff inLuxembourg sending the document to be served to another localbailiff for serving, according to EU Service Regulation (EC No.1348/2000) inside the EU and according to The Hague Conventionof Services Abroad of 1965.

3.2 Are any pre-action interim remedies available inLuxembourg? How do you apply for them? What are themain criteria for obtaining these?

Courts can order to settle, temporarily, a conflict situation betweenparties until a final solution is reached after a full trial on the issue.The purpose of these interim remedies is to prevent a furtherdeterioration of a situation and to preserve the rights of a party, suchas ordering protection or establishment of evidence.Each interim remedy is set out by statutes.Generally speaking, the court can adopt such measures only if thereis a real need or urgency, based on specific grounds. The court canconfine the validity in time or confine its order to specific assets oracts.Some measures are ordered by the court without adversarialhearings: the court receives a unilateral application from the partyasking for an interim order and then gives its decision on the basisof information provided by the party.Some other measures are ordered by the court following adversarialhearings.Appeal against a court decision ordering an interim measure ispossible, but the timeframe to do so is shorter than the usual timeframe.


The statutes define mandatory mentions to be included in thisdocument:

the date on which the document is served;the name, address and the profession of the claimant if aperson;the company’s name, address of incorporation and thecompany’s type if a company;the name and address of his lawyer;the name and address of the bailiff;the way the pleading was served;the name, address and the profession of the defendant if aperson;the company’s name, address of incorporation and thecompany’s type if a company;the facts and the remedy sought and/or the damagesincluding interest; andthe name of the court to which the case is brought and thedate of the first hearing.

Depending on the case, some other mentions are necessary, such asthe company registration number, the land registry number, thelegal grounds etc.


Pleadings can be amended or supplemented during exchange ofstatements, in regard to facts, legal grounds (with some exceptions),amount of the damages claimed etc. and this remains the case untilthe investigation of the court is declared closed by a court order(“ordonnance de clôture”) scheduling the case for final hearing.

4 Defending a Claim


The defendant must state all arguments of facts or law in order todispute the claimant’s allegations.All allegations of the claimant not challenged by the defendant canbe considered by the court as admitted.The statements of the defendant are mainly based on exhibits,evidences, and on law, case law and doctrine. The defendant can also formulate a counterclaim to which theclaimant will file a defence. If the counterclaim is exclusivelybased on the main claim (for instance a claim for damages) and ifthe court declares the main claim not admissible, the counterclaimwill be rejected.


A statement of defence can be served until the court pronounces theclosure of the pre-trial examination in written proceedings and untilthe end of the pleading in oral proceedings.


The N.C.P.C. provides the mechanism of interference proceedings.According to these proceedings a third party has to intervene in acase which he or she was not originally a party.The issue of these proceedings is to rule a common judgment to thethird party, or to obtain a decision ordering him to indemnify thedefendant, to contribute to the payment or to the damages allocatedto the claimant by the judge. The interference proceedings should not delay the main action.


In case a defendant fails to respond to a claim, the court has tocheck whether or not the writ of summons was personally served onthe defendant. If the writ of summons was personally served on the defendant, thecourt entered a judgment deemed contradictory. The defendant isonly allowed to lodge an appeal against this decision during 40 days.If the writ of summons was not served on the defendant in personbut if he was reached, a default judgment is rendered against him.The defendant is then allowed to “oppose” this decision within 15days before the same court, or to lodge an appeal against it within40 days before the court of appeal.If he was not reached, no decision could be entered against him.

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The defendant can dispute the rationae materiae court jurisdictionat any time of the proceedings if this issue is not raised by the courtspontaneously. As for the rationae loci jurisdiction of the court, the defendant hasto raise the court’s lack of jurisdiction in limine litis at the first stageof the proceedings, before the submissions of any other legalarguments to the court.



The Luxemburgish civil justice system contains the mechanisms of“voluntary intervention” and of “forced intervention”.Thanks to “voluntary intervention”, a third party can spontaneouslyjoin into ongoing proceedings either to get a declaration of commonjudgment (“passive voluntary intervention”) or to support one of theparties or to assert its own rights (“active voluntary intervention”).To be authorised to make a “voluntary intervention”, the third partymust have an interest in relation to the outcome of the ongoingdispute.The mechanism of the “forced intervention” allows a party intoongoing proceedings to compel a third party to join theseproceedings. The aim pursued by the party, which is attached to thismechanism, is either the verdict of declaration of commonjudgment (“conservatory forced intervention”) or the obtaining ofthe conviction of the third party (“aggressive forced intervention”).This mechanism may only be used in case the concerned party hasan interest in opposing the judgment against the third party.Furthermore, it is necessary that the ongoing proceedings are likelyto result in a judgment affecting the rights of the third party.The “voluntary intervention” may take place before the court offirst instance. On appeal, the voluntary intervention is authorisedonly if the ongoing appeal proceedings are likely to result in ajudgment affecting the rights of the third party.“Conservative forced intervention” is possible before the court offirst instance and also before the Court of Appeal.On the other hand, “aggressive forced intervention” may only be usedbefore the court of first instance. It is not admissible on appeal.Furthermore, the court of first instance admits “aggressive forcedintervention” only if no preparatory act was already carried out.


In our civil justice system, according to article 262 of the N.C.P.C.,it is possible to consolidate two sets of proceedings. This article isdedicated to two mechanisms of consolidation: “litis pendens” and“connexity”.Thanks to “litis pendens”, a court may consolidate two sets ofproceedings which concern the same claim and are carried beforedifferent courts.“Connexity” mechanism does not apply to identical claims butconcerns matters between which there is a strong link. This link hasto be so strong that the solution to one of these sets influences thesolution to the other set in such a way that if these cases were

judged separately, the final decisions could be contradictory.Unlike “litis pendens”, connexity does not require that theconcerned claims are carried before different courts. Therefore,connexity may also be used to consolidate two sets of proceedingspending before the same court.


Under the Luxemburgish civil courts system, the courts have adiscretion to split the different claims pursued in the proceedings(articles 206 and 275 of the N.C.P.C.).The aim of this mechanism is to avoid that an uncertaincounterclaim indefinitely delays the judgment of the main claim.So, pursuant to articles 206 and 275 of the N.C.P.C., the court maypostpone the judgment of the counterclaim and adjudicate firstly themain claim.However, one important thing has to be underlined: the mechanismprovided by articles 206 and 275 of the N.C.P.C. does not result inthe counterclaim’s withdrawal but only to postponement of thejudgment of this claim. Therefore, despite the splitting, the courtcontinues to be in charge of the split claim.


6.1 Is there any particular case allocation system before thecivil courts in Luxembourg? How are cases allocated?

Luxembourg has no particular case allocation system (but seequestion 1.2 above).

6.2 Do the courts in Luxembourg have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

Article 51 of the N.C.P.C. provides that the involved parties lead theproceedings, but article 52 provides that the judge makes sure that theproceedings go smoothly. He has the power to set proceduraltimetables and to order all measures of investigations provided by law.He may also ask the parties to provide him with all explanations oflaw or facts useful for the solution of the dispute. He ensures therespect of contradictory principle by the parties.If a party seriously fails to respect justice, the judge may pronounceinjunctions, strike out slanderous written documents or declarethem slanderous and order “the publishing or the posting” of hisdecisions.

6.3 What sanctions are the courts in Luxembourg empoweredto impose on a party that disobeys the court’s orders ordirections?

If a party disobeys a court’s order (e.g. an order to respect theprocedural time table) the court may close the proceedings andenter a decision.After that, the party cannot submit any briefs or exhibits to the court.Under the N.C.P.C., the court has the power to award penaltypayment to oblige party to submit an exhibit.

6.4 Do the courts in Luxembourg have the power to strike outpart of a statement of case? If so, in what circumstances?

Courts have the power to strike out from the roll of the court a claim



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if a party does not attend a court’s hearing. This decision is not ajudicial decision, but an administrative decision. The claimant orthe defendant may ask the court to file the claim again.

6.5 Can the civil courts in Luxembourg enter summaryjudgment?

The civil court may enter a summary judgment and not hold a fulltrial if a party disputes for instance the court’s jurisdiction, or arguesthe irregularity of the proceedings like nullification, or raises aprotest against the proceedings.

6.6 Do the courts in Luxembourg have any powers todiscontinue or stay the proceedings? If so, in whatcircumstances?

A claimant may discontinue a claim by serving a notice ofdiscontinuation from one lawyer to another lawyer. Thediscontinuation must be accepted by the defendant. The claimant isthen liable for the costs of the proceedings.In particular circumstances, the court can maintain a claim onrequest of one party on the ground that for instance criminalproceedings is pending, if the coming decision could influence thedecision of that court. Another case in which the judge may orderthe stay of proceedings is when a preliminary question is addressedby the court to the European Court of Justice.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Luxembourg? Are there any classes of documents thatdo not require disclosure?

The Luxemburgish judiciary stipulates that the parties are requiredto communicate to their opposing party in due time all documentsand evidence which they intend to use during the proceedings(article 64 of the N.C.P.C.). This communication will enable theparties to prepare their defence and legal argumentation. This principle called “contradictory principle” is the cornerstone ofthe Luxemburgish legal system. Indeed, the judge will not take intoaccount any document or evidence not submitted to the appreciationof both parties.Nevertheless, it is not required to disclose the legal documentswhich a party relies on for making its case; for instance, the partiesdo not have to communicate to each other the case law extract or thedoctrine extract on which they intend to build their case.

7.2 What are the rules on privilege in civil proceedings inLuxembourg?

All documents can be communicated for the good administration ofthe justice. Nonetheless, some documents are confidential bynature, such as:

all correspondence between the lawyers and their clients; orall correspondence between opposing lawyers and alldocuments communicated during the proceedings “withoutprejudice” and consequently covered by confidentiality.

7.3 What are the rules in Luxembourg with respect todisclosure by third parties?

Unless the third party invokes a lawful refusal, it has a duty to

respect the court order by disclosing the documents in due time.The court is allowed to make the order of disclosure under penaltyof payment.

7.4 What is the court’s role in disclosure in civil proceedingsin Luxembourg?

Article 52 of N.C.P.C. gives the judge a general power to insure thatthe proceedings are conducted lawfully. Consequently, he isempowered to make any order required for the instruction of thecase, ex officio or at the request of one of the parties.The judge can, among others:

order one of the parties to disclose a document (article 59 ofthe N.C.P.C.);order a third party to disclose needed documents (seequestion 7.3 above); andassure the respect of the “contradictory principle”.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Luxembourg?

The principle of professional secrecy prevents any lawyer fromusing information obtained during specific proceedings for otherpurposes. This is a founding principle of all judiciary.Under article 35 of the 10 August 1991 Law concerning the legalprofession and articles 5 and 6 of the Deontologic Code, lawyers aresubject to a duty of confidentiality and professional secrecy,meaning that they cannot reveal any information obtained duringand because of civil proceedings.Moreover, any violation of professional secrecy is punished byarticle 458 of the Criminal Code, which makes provision for acriminal sentence for lawyers breaching secrecy.

8 Evidence

8.1 What are the basic rules of evidence in Luxembourg?

The basic principle relating to the burden of proof is that the personrequesting enforcement of an obligation must prove his case. And aperson who claims to be no longer bound by an obligation must provethat he made the payment, or that he actually fulfilled his obligation. As an exception, the law provides for some presumptions, whichrelease a person from having to prove a fact. There are alsopresumptions which are not established by law but that could begiven according to the discretion of the judge. Generally speaking, itis possible to rebut presumptions by providing evidence against it.


The various means of proof are written evidence, oral evidence,presumptions, admission and sworn evidence.In civil law cases, written proof is necessary for the drawing up ofa legal document if the value at stake exceeds EUR 2,500.The form of evidence of a fact is discretionary in any case, but somemethods of proofs are stronger than others (i.e. an authenticdocument issued by a public official such as a notary or a bailiffwhich is deemed true unless a plea of forgery is applied, whereas aprivate agreement will be deemed true unless there is the evidenceto the contrary).Evidence by witness is only possible if there is a commencement of

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proof in writing etc.The calling of witnesses before the court, affidavits given by a thirdparty and an expert’s opinion can also be used as evidence.An expert’s opinion is usually admitted when the court orders anexpert, who must be qualified in the field concerned, to personallyfulfil a specific assignment in a given timeframe. There are 3 types of possible assignments, depending of thecomplexity of the facts/situation to be proved: the expert canprovide the court with a statement (“constatation”); a specialist’sadvice (“consultation”); or a specialist’s assessment (“expertise”).As a rule, a specialist’s assessment, in order to be admissible byboth parties, needs to be the result of contradictory proceedings,after due hearing of both parties involved.


The party wishing to present evidence by means of witnessesprepares an “evidence offer” in writing stating the facts he wishesto establish and the name and address of the witness.The possibility to be a witness is rather broad in Luxembourg asanybody can be called as a witness, except the parties directlyinvolved in the case, and except the children of a party in case ofdivorces.Consequently, in a witness statement, one has to state clearly thedegree of relationship, or the employment relationship, he has witha party, or the lack of any such relationship and common interestwith a party.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Luxembourg?

The courts in Luxembourg have broad powers to order variousmeans of investigation either upon request of a party or on its ownin order to investigate in a case.


9.1 What different types of judgments and orders are the civilcourts in Luxembourg empowered to issue and in whatcircumstances?

The courts are empowered to issue the following judgments:Interim judgments, in order to settle temporarily a conflictsituation until a final solution is given after full trial.Judgments “before ruling” (jugements avant-dire droit)which are a kind of preliminary judgments ordering anexpert’s intervention or ordering witnesses’ hearing.Final judgments (jugement au fond) as a result ofproceedings in which the court hands down a solution afterfull trial. These can either order an obligation to pay,obligation to return, obligation to do or to refrain from doingsomething; or it can also release the defendant and dismissthe claimant’s claim.Summary judgments (ordonnances), which is an immediatejudgment of a case upon unilateral application of a partyasking the court to recognise his rights without a trial, onlypermitted under certain circumstances expressly determinedby law (for instance it is used to obtain payments of debtswhich are fixed and certain not exceeding EUR 10,000, froma debtor residing in Luxembourg).


If the victim requests it, the courts are entitled to order thecompensation for material damages and/or moral damages.In relation to the calculation of the compensation’s amount, thecourt has to respect the principle of “full repairing” according towhich the compensation must put the victim in the same situation inwhich she would be in if the damage had not occurred.Furthermore, the courts must examine the damage suffered inconcreto, i.e. by considering the concrete situation of the victim.The court may also order the payment of interests. There are twokinds of interests: interests on overdue payment (“Intérêtsmoratoires”) and compensatory interests (“intérêtscompensatoires”).The interests on overdue payment are interests of delay in theirclassical meaning. They are automatically granted by the courteven if the claimer forgets to request them. They run from theformal demand of the claimant to the defendant or from the judicialdecision ordering the payment of the principal.The compensatory interests consist in additional compensation inorder to repair the damages arising from the compensation’s delay.They are not automatically granted and must be requested by theclaimant. They run from the moment the damage occurred, to thejudicial decision setting the compensation.


If a debtor fails to comply voluntary with a judgment, the claimantcan enforce such judgment by means of compulsory enforcement(execution forcée). The judgment must be first given “enforcementtitle” through appropriate procedure, then the enforcement itself isexecuted by a bailiff. This compulsory enforcement is mainly usedto recover money (attachments) and sometimes also to enforceperformance of an act.Penalty payments (astreinte) can be used as a means to put pressureon the debtor to fulfil its obligation.The enforcement of foreign judgments handed down in a countryoutside the EU in Luxembourg is possible once the said judgmentsare given enforcement title by the District Court.As for judgments originated in an EU country, Council Regulation(EC) No 44/2001 on Jurisdiction, Recognition and Enforcement ofJudgments in Civil and Commercial matters allows the directenforcement of judgments throughout the EU by means of asimplified procedure by which the District Court will only check ifthe set of documents required is complete, without any review ofthe issue which was at stake before the foreign court.

9.4 What are the rules of appeal against a judgment of a civilcourt of Luxembourg?

A party may appeal a judgment within 40 days of the date of thenotification or of the serving of the decision. The time to lodge anappeal may be different in particular matters (e.g. 15 days forsummary proceedings) or if a party lives in a foreign country.The writ of summons must contain the grounds of the appeal.Usually, a party cannot lodge an appeal against a civil judgmentwhen the amount of payment ordered by the court is equal to or lessthan EUR 1,250.00.



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1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Luxembourg?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

There are different methods of alternative dispute resolution.Arbitration and mediation have been generating interest for someyears.The arbitration proceedings are provided by the N.C.P.C.Luxembourg also ratified international agreements regardingarbitration. Mediation in Luxembourg is not yet governed by any particularlegislation except for criminal matters.The method is above all contractual. Indeed, either the partiesplanned to use it within the contract (adding a mediation clause), orthey decided to seize the Mediation Centre in process of litigation.


The arbitration proceedings are provided in articles 1224 to 1251 ofthe N.C.P.C.Besides those national provisions, several international agreementsratified by the Grand Duchy govern arbitration. Among them, theEuropean Convention on International Commercial Arbitrationsigned in Geneva on 21 April 1961; the Arrangement regarding theEuropean Convention on International Commercial Arbitration,ratified in Paris on 17 December 1982; the United NationsConvention on the Recognition and Enforcement of ForeignArbitral Awards signed in New York on 10 June 1958; and theConvention on Conciliation and Arbitration within the CSCEratified in Stockholm on 15 December 1992.Finally, the Chamber of Commerce of Luxembourg has its ownArbitration Centre created in 1987 and put its Secretariat at theservice of the parties interested in using arbitration to settle theirdispute.The arbitral award is contained either in a statement established bythe arbitrators or in a notarial deed, and is binding on the parties.The decision can only be challenged before the District Court upona request to get its nullification, and such nullification is possibleonly for limited grounds (if contrary to the public order or ifpronounced in violation of the defence rights).There is no specific legislation about civil and commercialmediations for the moment; the Mediation Centre of theLuxembourg’s Bar (CMBL) has been set up on 13 March 2003.The CMBL is a non-profit association created, by the “Ordre desAvocats du Barreau de Luxembourg”, the Chamber of Commerceand the Chamber of Trade. This association can be contacted byany legal entity or natural person within the context of their civil,commercial or social disputes resolution. The mediators are then chosen on a list approved by the CMBLdepending on the nature of the dispute and the wishes of the parties.At the beginning of the process, the mediator has to ensure theparties signed a mediation convention in which they undertake tosettle the conflict using the mediation proceedings.The process is entirely confidential.

The mediator’s mission is to help the parties to find a negotiatedsolution.Mediation is not yet widely used as a method of dispute resolutionin Luxembourg.

1.3 Are there any areas of law in Luxembourg that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

The N.C.P.C. provides for a set of rules relating to arbitration whichincludes a legal framework for the appointment of arbitrators.The principle stated in article 1224 of the N.C.P.C. is that in orderto submit a dispute to arbitration, the issue has to relate to rights ofwhich parties has free disposal of. Therefore, disputes involvingfamily law, criminal law, or more broadly involving public order,are non-arbitrable.


2.1 What are the major dispute resolution institutions inLuxembourg?

Arbitration is commonly used to resolve contract and commerciallitigations, but it is more and more used for cross-border disputeswhich occur within the borders of the Grand Duchy, due to itsgeographical and economic position.The Chamber of Commerce of Luxembourg set up its ArbitrationCentre in 1987 and puts its Secretariat available to the partiesinterested in using arbitration.The above mentioned Mediation Centre of the Luxembourg’s Bar isanother major institution of alternative disputes resolution.


The arbitration award is binding on the parties and if the award isdefinitive, it is enforceable under the rules of the N.C.P.C.Under article 1241, Luxemburgish arbitration awards are renderedenforceable by the president of the District Court of the district inwhich the arbitration award was handed down. A foreign arbitration award is only enforceable after proceedingsbefore the District court rendering the foreign arbitration awardenforceable (“exequatur”).The arbitration award can be challenged before the District Courtfor annulment and only for limited cases defined by the provisionof article 1244 of the N.C.P.C.The agreement reached upon mediation has also a binding effect onthe parties and is enforceable, like other contracts, according to theprovisions of Civil Code.



Arbitration is commonly used to resolve contract and commerciallitigations. As a matter of fact, it is usually only in those contextsthat the parties choose to put arbitration clause in their agreement. Arbitration is also increasingly used as an alternative settlementmethod for cross-border disputes.

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Nadine Bogelmann

Molitor, Fisch & Associés 8, rue Sainte-Zithe PO Box 690 L-2016 Luxembourg

Tel: +352 297 298 1Fax: +352 297 299Email: [email protected]: www.mfa.lu

Partner of Molitor, Fisch & Associés since January 2007, NadineBogelmann is co-heading the Labour and Employment LawDepartment, one of the most active and best established of theFirm. With over ten years’ experience, Nadine has built a strongreputation of consciousness and perfectionism in providing theclients with the most appropriate solutions for their individual legalqueries. Mrs Bogelmann works in collaboration with HumanResources Managers, on contentious matters related to employmentlitigation, personal data protection and individual and collectivedismissal procedures. Other fields of expertise include civil contractsand commercial litigation.Education: 1988, Nancy University, France (Maîtrise en Droit desAffaires).Associations: Luxembourg Bar Association, Employment LawSpecialist Association Luxembourg (ELSA).Languages: English, French and German. Additional information: Social Security Law Lecturer at theChamber of Commerce in Luxembourg.

Paulo Lopes da Silva

Molitor, Fisch & Associés 8, rue Sainte-Zithe PO Box 690 L-2016 Luxembourg

Tel: +352 297 298 1Fax: +352 297 299Email: [email protected]: www.mfa.lu

Partner at Molitor, Fisch & Associés since 2002, Paulo Lopes DaSilva is co-heading the Business Activities and RegulationsDepartment. Regularly involved in dossiers dealing with Arbitrationand Commercial litigation with cross-border aspects, Mr Da Silva isalso very active in banking litigation, particularly matters involvingthe liability of banks and their directors. His other fields ofspecialisation include Construction as well as Employment andLabour law.Education: 1997, Strasbourg University, France (D.E.A. Droit desAffaires), 1996 Strasbourg University, France (Maître en Droit).Associations: Luxembourg Bar Association; AssociationInternationale des Jeunes Avocats (AIJA); International BarAssociation (IBA), European Employment Law Association (EELA). Recommendations: Paulo has been recommended as DisputeResolution practitioner in the Chambers Europe online 2007 editionand recently by the Legal 500 US Edition 2008.Languages: English, French, German, Luxemburgish andPortuguese.

Molitor, Fisch & Associés is a top business law firm established in the city of Luxembourg since 1996. The law firmis specialised in commercial law with special focus on business activities and regulations, banking, finance andinsurance, corporate and tax, labour and employment, real estate and construction as well as IP, IT and Media. It hasestablished a co-operation with Houthoff Buruma, a leading law firm in the Netherlands.

Traditionally, the law firm has a very strong litigation experience, specialising in highly complex Court cases and behindthe scenes negotiation. Thanks to a knowledgeable and highly motivated team, which currently employs 25 lawyers,Molitor, Fish & Associés has developed a strong experience in complex commercial litigation and other disputeresolution procedures with cross-border aspects.

Litigation practice includes contentious matters in the construction, governmental, banking and financial sectors,including asset tracing and a range of enforcement actions, as well as disputes in the areas of labour and employment.Molitor, Fisch & Associés has been recommended for Dispute Resolution by Legal 500 EMEA 2007, PLC Which Lawyer2008 and Chambers Europe 2008 edition.


3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Luxembourg?

The Court of Appeal regularly hands down decisions related toarbitration.On 5 July 2006, the Court of Appeal (Court of Appeal, civiljudgment No 30480) held a ruling which was interesting in tworespects.Firstly, it was ruled that the timeframe given to an arbitral tribunalby the parties in order to render an arbitral award could not beunilaterally extended by arbitrators themselves.Therefore, an arbitral award rendered far after the time limitstipulated in the arbitration clause might be subject to annulment asbeing rendered over an arbitration clause which is considered tohave expired. The court stressed on the difference between a

regular court, enjoying a “permanent jurisdiction”, and an arbitraltribunal which mission is strictly defined by the arbitration clause.Additionally, the court ruled about the “nationality” of arbitrationawards: an arbitration award is deemed to be domestic if the awardis rendered in Luxembourg. This ruling therefore rejected thealternative solution deciding that an arbitration award will bedeemed to be “foreign” if its proceedings were governed by aforeign law even if the award itself was rendered in Luxembourg.This definition of the “nationality” of an arbitration award has aconsequence on possible recourses against it. If an arbitrationaward is qualified “domestic”, its annulment is to be requested tothe District Court. Whereas if an arbitral decision is qualified“foreign”, an appeal against such decision will be possible beforethe Court of Appeal against the order of enforcement renderedbeforehand by the District Court.

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I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Malta got? Are there anyrules that govern civil procedure in Malta?

The Maltese legal system is predominantly a codified civil lawsystem; however given that Malta was part of the British Empirefrom 1881 to 1964, a great number of laws which were promulgatedin England during this period became part of the law of Malta.Consequently our banking law, maritime law, employment law,industrial legislation and financial law is based on English Law. Our civil procedure is contained in the Code of Organisation andCivil Procedure which will be referred to hereunder as the COCP.

1.2 How is the civil court system in Malta structured? Whatare the various levels of appeal and are there anyspecialist courts?

Our Civil Court system is essentially split into two. If the merits ofthe claim relate to a value of Euro 11,647 or less then the action isheard by the Inferior Courts - the Magistrates Court. If the meritsrelate to a value which exceed Euro 11,647 then the action is heardby the Superior Courts - normally the First Hall of the Civil Court.There are few specialised courts, these are the Family court whichdeals exclusively with separations and annulments, and a Court ofVoluntary Jurisdiction which deals with the ordering of the openingof secret wills, as well as adoptions, testamentary executors andcuratorships. Other than that all actions irrespective of the meritsare heard by the First Hall of the Civil Court. A right to appealbefore the Court of Appeal exists from judgments given by both bythe Magistrates Court and the First Hall of the Civil Court.

1.3 What are the main stages in civil proceedings in Malta?What is their underlying timeframe?

Generally speaking a plaintiff must file in the registry of the court asworn application outlining briefly the facts of the case andrequesting the court to order the defendant to do that which theplaintiff is claiming. That sworn application is then given to a judgewho normally orders the service of the sworn application on thedefendant. The judge would also set a first hearing date and sonormally the defendant is served with both the sworn application aswell as with a notification of the first hearing date. If that is done,then the defendant has 20 days within which to file a defence.

The above procedure is the one used by the majority of judges.However our COCP does give judges the latitude to embark on pre-trial procedures should they wish to do so. In fact a number ofjudges do adopt this method and request the plaintiff to present hisevidence by affidavit prior to a first hearing date being set. At the first hearing date it is normal for the judge either to order theplaintiff to commence with the presentation of his evidence or if theevidence has been collected at the pre-trial stage to ask whether hehas any further evidence. In the first case, this may take one or anumber of sittings. When the plaintiff has concluded thepresentation of his evidence it is normal for the defendant to begiven the opportunity to cross examine the plaintiff’s witnesses.Following that, the defendant is then given time to present hisevidence and again on the conclusion of that exercise the plaintiff isgiven the opportunity to cross examine the defendant’s witnesses. What happens thereafter very much depends on the merits of the case.In more complex cases, it is normal for the court to order the partiesto present written submissions, and sometimes further time is given tothe parties to exchange reply submissions and even finally present oralsubmissions prior to the judge adjourning the case for judgment.This entire procedure may take a number of years. As can be seenthis procedure is very different to the procedures prevalent in anumber of countries where once a hearing date is given the entireaction is heard on a number of consecutive days.


Generally speaking the judiciary’s approach to exclusivejurisdiction clauses is that it will accept and respect them. Howeverthere are a number of instances where if the Maltese Courts havejurisdiction in any event in terms of the COCP they would maintaintheir jurisdiction and continue to hear the case notwithstanding theexistence of an exclusive jurisdiction clause. These instances arenormally limited to when the judge believes that the principles ofNatural Justice will not be applied by the foreign forum or in caseswhere the action has a very strong Maltese connection and forinstance all the evidence is available in Malta.

1.5 What are the costs of civil court proceedings in Malta?Who bears these costs?

Court costs related to Civil Court Proceedings are entirely governedby the Law. There is a tariff which the court registrar will follow atthe end of the case for the purposes of issuing a taxed bill. The tariffwill also include set rates for court work carried out by advocatesand legal procurators. In addition to the tariff the advocate and his

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Dr. Ann Fenech

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client are free to discuss, before the commencement of the action, anyadditional fees payable to the advocate which in commercial cases arenormally calculated on an hourly rate. Recoverable costs howeverrevolve entirely around court work taxed by the court according to thetariff. Therefore hours spent in considering files, attending clients andgenerally studying and preparing the case normally covered by anhourly rate are not even taxed by the court registrar and therefore notrecoverable. Costs are borne by the party who incurs them unless aspecific order as to costs is made by the judge in the judgment.

1.6 Are there any particular rules about funding litigation inMalta? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

The law does provide for legal aid to be given to persons below thepoverty line.No win/no fee arrangements are not permissible. There areprovisions for security for costs except when a party files an appealfrom a judgment of the first Hall of the Civil Court and/or in thecase of a retrial in which case prior to the date set for the hearing ofthe appeal, the appellant must have deposited in court the amountshown on the taxed bill which would have been prepared by thecourt registrar plus one third of that amount. If the appellant failsto pay this security before the registry of the Court of Appeal theappeal is dismissed.


2.1 Are there any pre-action procedures in place in Malta?What is their scope?

It is normal that prior to commencing any action all attempts bemade by a plaintiff to serve the defendant with an intimationdemanding the settlement of the claim. There are certaincircumstances were the law specifically requires a judicialintimation prior to proceeding judicially such as in the execution ofa preliminary agreement of sale of an immovable property, in theassignment of a debt and eviction.However it is probably correct to say that in the vast majority ofdisputes arising out of contract and out of tort there is no pre-actionprocedure necessary.


There are literally several time limits which apply to differentcategories of claims most of which are calculated from the datewhen the debt arises. Because there are several categories it is bestthat the client explains in detail the nature of the claim to the lawyerconcerned. For instance by virtue of our Carriage of Goods by SeaAct, there is a time limit of one year from the discharge of the cargofor the consignee to file a claim against the issuer of the bill oflading, property claims usually have a time limit of 10 or 30 yearsdepending on whether the property would have been transferred toa third party in good faith or otherwise and there are several specifictime limits tailor-made for specific claims.Generally speaking and unless the merits fall within a specificcategory of claim, disputes arising out of contract have a 5-yeartime limit and disputes arising out of tort have a 2-year time limit.Time limits are normally treated as procedural law issues.


3.1 How are civil proceedings commenced (issued and served)in Malta? What various means of service are there? Whatis the deemed date of service? How is service effectedoutside Malta? Is there a preferred method of service offoreign proceedings in Malta?

Civil proceedings in Malta are commenced by means of a swornapplication which has recently replaced the Writ of Summons.Service of the sworn application is taken care of by the court systemitself. Once the writ is filed together with as many copies as there aredefendants the court marshal would at the appropriate time serve thewrit on the defendant. This may be effected by the court marshalhimself by hand or it may be effected by the court marshal byregistered mail. The sworn application is deemed served when it isgiven to the defendant in person or when it is left at the place ofresidence or business or place of work or postal address of such personwith some member of his family or household or with some person inhis service or his attorney or person authorised to receive his mail. The method of service outside the Maltese jurisdiction now dependson whether the defendant is resident in a European Union country ora non-European Union country. If the defendant is resident in aEuropean Union country then service is effected in terms of EURegulation 44 of 2001. If the defendant is resident outside theEuropean Union then together with the sworn application, the plaintiffmust file an application requesting the court to appoint curators torepresent the defendant. The curators would be an advocate and alegal procurator and the court would appoint such advocate and legalprocurator from lists kept by the Court registrar for that purpose.With regard to service of proceedings on vessels in Actions in rem,the vessel is deemed to have been served if a copy of the pleadingis delivered to the master or any other person acting on his behalfor in the absence of such persons, on the agent of the ship. If thereis no agent then curators will have to be appointed.

3.2 Are any pre-action interim remedies available in Malta?How do you apply for them? What are the main criteria forobtaining these?

There are numerous pre-action remedies referred to as precautionarywarrants. The entire object of precautionary warrants is for theplaintiff to obtain security for his claim and to ensure that in theeventuality of a successful outcome, he has in his hands sufficientsecurity to satisfy the claim. These precautionary warrants are in theprocess of being amended, however at the moment the warrantsavailable include: the warrant of seizure which is an ex parteapplication requesting the court to order the seizure of any movableitem owned by the defendant; the garnishee order which is an ex parteapplication requesting the court to order a person holding funds in thename of the defendant to refrain from allowing the defendant accessto his funds and ordering the holder of such funds to deposit the fundsin court; and the warrant of impediment of departure of a ship whichis the closest thing to a warrant of arrest of a ship requested on thebasis of an ex parte application to secure a claim in rem or inpersonam, and the warrant of prohibitory injunction. With regard tothe latter warrant, the demand is for the court to prohibit the defendantfrom doing something or to order the defendant to refrain from doingsomething. Unlike the other warrants, normally the order is notgranted on the basis of an ex parte application, and on receipt of theapplication it is normal for the judge seized of the matter to order theapplication to be served on the defendant who is given time to reply.Generally speaking these applications are granted and the pre-



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cautionary warrants are issued. Once they are issued, there are verystrict time limits (which vary depending on the warrant, howeverone is speaking in terms of a few days) within which the plaintiffwho would have succeeded in obtaining the precautionary warrantmust commence an action on the merits. The law however provides that if the parties would have betweenthem agreed to proceed to arbitration, it would not be necessary tocommence an action in Malta within the stipulated period from theobtainment of the precautionary warrants, provided that thearbitration process is commenced within a period of 1 month. Sucharbitration process may even be conducted outside Malta.


Claimant’s main “pleadings” would be the sworn applicationcontaining the requests to the court, and any other writtensubmissions on the merits of the case. The sworn application must contain: (i) a statement which gives ina clear and explicit manner the subject of the cause in separatenumbered paragraphs, in order to emphasise his claim and alsodeclare which facts he was personally ware of; (ii) the cause of theclaim; and (iii) the claim or claims which have to be numbered. The sworn application must be sworn by the applicant before aCommissioner for oaths. It must be accompanied by a list ofwitnesses and a list of documents attaching any documents as hemay consider to be necessary in support of the claim. The list ofwitnesses is important because this list must contain all thosepersons whom the plaintiff may wish to call upon to give evidenceduring the running of the case. If an individual would not have beenindicated as a witness in the list filed with the sworn application, itis very probable that the plaintiff will be stopped from producingthat individual as a witness during the case particularly if he couldhave known about this witness prior to the filing of the case. If theneed to hear a witness not indicated in the list arises during therunning of the case, the judge may in his discretion allow the newwitness to give evidence. On the other hand plaintiffs are notobliged to produce all the witnesses that would have been indicatedin the list of witnesses.


In Malta it is not customary to have “amended” pleadings as onewould have in the English system. Therefore a sworn application isfiled once and it remains the same unless, during the running of thecase, the plaintiff wishes to withdraw any of the requests made therein.In fact pleadings can only be amended in an extremely limitedmanner as listed in the COCP.

4 Defending a Claim


The statement of defence takes the form of a sworn reply. Like thesworn application it must be sworn before a Commissioner forOaths. Unless the defendant intends to admit the claim, the swornreply must contain: (i) any such pleas as would be taken to bewaived if not raised before the contestation of the suit; (ii) a clearand correct statement of the pleas on the merits of the claim orclaims without any reference to authority; and (iii) all the facts

concerning the claim, denying, admitting or explaining thecircumstances of fact set out in the plaintiff’s declaration, whilststating which facts are within his own knowledge. As the sworn application, the defence must be accompanied by a listof witnesses and a list of documents. A Defendant is perfectly entitled to bring a counterclaim.


The defence would have to be filed in court within 20 days frombeing served with sworn application.


The COCP provides that in order to obtain what is due to him acreditor may exercise any right or action pertaining to his debtor.This right emanates from Roman law known as Actio Debitor,Debitoris Mei.


Generally speaking if the defendant does not defend the claim byfailing to file a defence within the stipulated 20 days, the plaintiff isawarded the judgment in default. However in the eventuality thatthe defendant fails to file a defence within the stipulated period andthe claim appears to the judge on the face of it to be an absurdclaim, the judge will not grant a plaintiff a judgment in default.


Yes a defendant can dispute the court’s jurisdiction. Thejurisdiction of the Maltese court in personam is regulated by section742 (1) of the Code of Organisation and Civil Procedure and thejurisdiction of the Maltese court in rem is regulated by a newsection 742 (B) in the same code. A defendant is therefore perfectlyfree to argue that the court should not hear the matter because itdoes not have jurisdiction. For the defendant to succeed with thispreliminary defence he must show that the court does not havejurisdiction in terms of these sections of the law.



A third party can be joined into on going proceedings either by hisown application or by the application of the parties to theproceedings. Any person who shows to the satisfaction of the courtthat he is interested in any suit already pending between other parties,may, on an application, be admitted as a party to the action at anystage. Such admission will not however suspend the proceedings. Either party to the proceedings may by application request the courtto order that a third party be joined at any stage of the proceedingsbefore the judgment. Such a third party is then served with theapplication and shall for all purposes be considered as a defendant;he will therefore be entitled to file any defence or other writtenpleading, raise any plea and avail himself of any other benefit which

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the law allows to a defendant; the action then proceeds as pernormal and the claim contained in the application may according tocircumstances be allowed or disallowed in his regard as if he werean original defendant.


Our COCP provides for the procedure to be adopted when two ormore actions before one and the same court are connected in respectof the subject matter, or if the decision on one of the actions mightaffect the decision on the other action. In this case the law providesthat the court may order that several actions to be tried simultaneously,however each action remains separate from the other and a judgmentis delivered in each one. In practice this can easily be done when thetwo cases are before the same judge in the same court. The law also provides that in cases where an action is broughtbefore a particular court after another on the same merits is broughtbefore another court, the second action may be transferred for trialto such other court. In practice what happens is that rather than atransfer of the second case to the court seized of the first case, oneof the parties to the second case asks the court to stay theproceedings pending an outcome in the first action. It is usual forcourts to agree to such a request if both plaintiff and defendant inthe second action agree that that action be stayed pending theoutcome of the first one.


No we do not have split trials.


6.1 Is there any particular case allocation system before thecivil courts in Malta? How are cases allocated?

Sworn applications are allocated in turn and in the order in whichthey are received by the registrar of the courts to the different judgesserving in the First Hall of the Civil Court. Emergency ex parte applications such as the precautionary warrantsabove described are allocated to the “duty” judge. The “duty” judgeis the judge who for a period of 15 consecutive days is the judgebefore whom and by whom all such emergency ex parteapplications are heard, decided and ordered.

6.2 Do the courts in Malta have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

Judges and magistrates have full powers to manage cases within theparameters set by our Code of Organisation and Civil Procedure.Therefore the presiding judge can as stated earlier decide to embarkon pre trial procedures prior to setting a first hearing date, or thejudge may opt to set a first hearing date and proceed with theservice of the claim form on the defendant prior to that first hearingdate and then proceed with the case following the first hearing date. During the running of the case judges and magistrates may give allthe necessary orders and direct and manage the case as they deemfit, and may generally do any other thing that would assist the judgeor magistrate in reaching his or her conclusions.

6.3 What sanctions are the courts in Malta empowered toimpose on a party that disobeys the court’s orders ordirections?

The judge or magistrate may sentence to a fine or detention anyperson who fails to abide by the court’s order or direction.

6.4 Do the courts in Malta have the power to strike out part ofa statement of case? If so, in what circumstances?

Our Code of Organisation and Civil Procedure does not specificallydeal with this matter.

6.5 Can the civil courts in Malta enter summary judgment?

Our Courts are able to enter summary judgment in actions for therecovery of a debt which is certain, liquidated and due and notconsisting in the performance of an act.The method adopted varies depending on whether the amount beingrequested exceeds or not the sum of Euro 11,647. In amounts of under Euro 11,647 the creditor proceeds with filingin court a judicial letter sent in accordance with the criteriaestablished by the COCP confirmed on oath by the creditor whichmust be served upon the debtor stating the cause of the claim, thereasons why the claim should be upheld and containing a statementof fact supporting the claim. If the debtor does not reply withinthirty days from service, such an official letter of itself will in turnconstitute an executive title and the claim therein immediatelyenforceable. With regard to amounts which exceed Euro 11,647 it is possible fora plaintiff to request in his sworn application that the courtproceeds to judgment without proceeding to trial provided that thesame plaintiff also declares that in his belief there is no defence tothe action. The sworn application is then served on the defendant who isordered to appear in court on a given date. If the defendant fails toappear in court on the indicated date or if he does appear and doesnot satisfy the court that he has a prima facie defence to the claimbeing made, the court may proceed with awarding judgment to theplaintiff. If on the other hand the defendant does satisfy the courtthat he has a prima facie defence to the claim, the court will givehim leave to defend the action and file a defence within 20 daysfrom the date when the court makes an order allowing the defendantto file a defence.If such leave is granted then the action will proceed as per normal.

6.6 Do the courts in Malta have any powers to discontinue orstay the proceedings? If so, in what circumstances?

If at a hearing date, the plaintiff or his advocate fails to appear thecourt may order the cancellation of the action from the court list atthe expense of the plaintiff. In such a case and in the eventuality of a cancellation, if the plaintiffwishes the action to be reinstituted he must within 10 days file anapplication requesting the reinstatement of the action. This requestwould only be granted once and the court will appoint a hearingdate and on condition that the plaintiff would first deposit in theregistry of the court taxed costs incurred by the defendant as a resultof the plaintiff’s failure to attend the hearing. As far as discontinuance of proceedings is concerned, any of theparties may by means of a note signed by him or his advocate at anystage of the trial withdraw the acts filed by him. The party



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discontinuing the action shall pay the costs of the proceedings, andhe may not commence another action for the same cause before hehas actually paid such costs to the other party. Our COCP also contains another form of non continuation ofproceedings, and that is when the proceedings are considered“deserted”. In practice if during the running of a case a plaintiff ora defendant fail to proceed with any actions which would have beenordered of them by the court, for instance the production ofevidence, the court may order the action to be adjourned on anunspecified date or may order its “suspension.” Unless one of theparties files an application within 6 months requesting the court tore-appoint the action for a hearing the action is deemed deserted andterminated. The stay of proceedings has been dealt with in question 5.2 above.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Malta? Are there any classes of documents that do notrequire disclosure?

The concept of disclosure as understood in Anglo Saxon systems isalien to our legal system. There is no obligation to disclosedocuments. A party to an action is entitled to present anydocumentation which will assist it in its claim, however there is noobligation whatsoever to disclose.Our Code of Organisation and Civil Procedure does provide amechanism whereby a party may demand under certaincircumstances the production of documents which are in thepossession of another person.

7.2 What are the rules on privilege in civil proceedings inMalta?

Lawyers, legal procurators and clergymen (under the seal ofconfession) are bound by professional secrecy and privilege. Noadvocate, legal procurator or clergyman may be questioned oncircumstances or may disclose correspondence as may have beenstated by or exchanged with the client to the advocate, legalprocurator or clergyman without the consent of the client. This privilege is also extended to accountants, medicalpractitioners, social workers, psychologists and marriagecouncillors. None of these may by order of the court be questionedon any circumstance as may come to the knowledge of such personsin their professional capacity.

7.3 What are the rules in Malta with respect to disclosure bythird parties?

Please see answer to questions 7.1 and 7.2 above.

7.4 What is the court’s role in disclosure in civil proceedingsin Malta?

Please see answer to questions 7.1 and 7.2 above.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Malta?

Not applicable.

8 Evidence

8.1 What are the basic rules of evidence in Malta?

Our Code of Organisation and Civil procedure contains severalsections and subsections on Evidence. Generally speaking howeveras indicated above, if either party intends to produce the evidenceof witnesses either viva voce or by means of sworn affidavits, thenames of these witnesses must be contained in lists of witnessesattached to the sworn application or the defence at the beginning ofthe action. If any person is not listed as a witness, the court mayproceed to disallow any evidence to be brought via that witness. In presenting the list of witnesses with the sworn application or thedefence the parties must also indicate what the scope and object ofthat individual’s testimony may be. It is also not unusual for thejudge presiding over the case, to request the parties to file a note incourt explaining in greater detail the object of the evidence to begiven by the witnesses.Generally speaking all evidence brought must be relevant to thematter at issue between the parties and the court will disallow anyevidence which it considers irrelevant or superfluous.Witnesses may either be produced in court to give evidence vivavoce, or the parties may request the court to allow their evidence tobe brought by affidavit. If the witness is Maltese then the affidavitmust be sworn before a Commissioner for oaths. If the witness isnot Maltese, for the affidavit to be accepted by the Courts in Maltathe affidavit must be sworn and be validly taken in accordance withthe laws of the country in which the affidavit is made.Evidence in the form of documentation can also be produced. Alldocuments which are produced need to be either in original orcertified to be true copies of original documents by the lawyerrepresenting the case.


Ex parte expert evidence is a relatively new introduction to ourlegal system and it was first allowed in 1995. Prior to that no exparte expert witnesses were allowed and witnesses could not givean opinion on issues regarding which they had no directinvolvement.Prior to 1995 when the court felt it needed an expert to assist it, itwould be the court who would appoint a court expert to give his orher opinion on any given issue.That has changed and it is today permissible for parties to draw onthe expertise of ex parte expert witnesses. The law now states thatwhere a person is called as a witness, a statement of opinion by himon any relevant matter on which he is qualified to give expertevidence shall be admissible in evidence only if, in the opinion ofthe court he is suitably qualified in the relevant matter.What happens in practice is that either party wishing to include anex parte expert witness in their list of witnesses must attach a copyof that expert witness’ CV together with his evidence in order thatthe court may ensure that prima facie the witness is indeed suitablyqualified in the relevant matter.If in any given case a party tries to pass of as an “expert” a personwho are not, unless the court is aware of this, it is entirely up to theopposing side to draw the attention of the court to that fact.

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This question has already been answered above in question 8.1.The one cardinal rule is that all persons to be called as witnesses offact must be listed in a list accompanying the plaintiff’s swornapplication or the defendant’s defence.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Malta?

Once witnesses give their evidence either viva voce or by means ofan affidavit the opposing side has a right to cross examine thosewitnesses. The witness must answer any question which the courtmay allow to be put to him and the court can compel that witness todo so by committing him to detention until he answers the questionsput to him.


9.1 What different types of judgments and orders are the civilcourts in Malta empowered to issue and in whatcircumstances?

The courts are able to deliver various types of judgments dependingon the claims being made. Consequently a judgment can be fordamages, specific performance or to order the other party toperform an obligation under a contract. The court may also give final judgment on the merits or giveinterim and preliminary judgments during the running of a case onpreliminary issues such as jurisdiction, time bar, and the capacity ofthe parties. The courts are also empowered to give summary judgments asexplained above or enter judgment in default in the eventuality thatthe defendant fails to file a defence within the 20-day periodallotted to him to file such a defence.The courts may also be called upon to give a variety of ordersfollowing the presentation of either ex parte applications requestingthe issuing of warrants of seizure, impediments of departure,garnishee orders or warrants of prohibitory injunction or any otherorders which would be expedient and would appear as necessaryduring the running of a case.An interesting order which a court in Malta can give, arises notfrom the Code of Organisation and Civil Procedure but from theMerchant Shipping Act. Under section 37 of the MerchantShipping Act a person can by means of a sworn application ask thecourt to prohibit the transfer or sale of a vessel registered in Maltauntil the merits of the case are decided in the appropriatejurisdiction. Because any sworn application needs to be served onthe other side, who in turn will have time to defend the action as inany other case, this may very well defeat the object of the exercisewhich is normally to obtain a court order very quickly to stop animpending sale. Therefore together with the sworn application, thesame section of the law allows the plaintiff to file an ex parteapplication requesting the court to order exactly the same thing.The difference being that the latter is a form of interim relief, theorder is granted immediately on the basis of an ex parte applicationand it remains in force until judgment is delivered in theproceedings commenced by the sworn application.This is an extremely useful tool in the hands of the creditor of avessel and has been used very successfully to encourage vessels

who owe money to third parties to settle the debt prior to the sale ofa vessel. This is called a section 37 order and injunction.


A court will allow a plaintiff those damages which he has proved tohave suffered as a result of the defendant’s breach of contract or asa result of the tort committed by the defendant. In the latter case,the level of damages are contained in article 1045 of our Civil Codewhich states that the damage which is to be made good by theperson responsible in accordance with the foregoing provisionsshall consist in the actual loss which the act shall have directlycaused to the injured party, in the expenses which the latter mayhave been compelled to incur in consequence of the damage, in theloss of actual wages or earnings and in the loss of future earnings.As far as interest is concerned, Article 1141(1) of the Civil Codeprovides that where the obligation is of a commercial nature, or thelaw provides that interest is to run ipso jure, interest shall be due asfrom the day on which the obligation should have been performed.In any other case and therefore if the obligation is of a civil nature,interest shall be due as from the day of an intimation by a judicialact, even though a time shall have been fixed in the agreement forthe performance of the obligation.This rule has been the subject of some very interesting case law.Some have indicated that this provision should be subject to theLatin maxim “in liquidatis non fit mora” i.e. no default would existif the debt is not liquidated. Others have held that this maxim issubject to various exceptions. With regard to costs the Code of Organisation and Civil Proceduredeals specifically with the aspect of costs and states in article 177that the words “with costs” shall in all cases be deemed to beincluded in any written pleading where costs may be asked for.


With regard to domestic judgments, it is necessary for various timesto lapse from the date of the final judgment before that judgmentcan be enforced. For instance any judgment on any collateral issueor any interlocutory decree, provided the time for enforcement isnot stated in the judgment or decree itself, any judgment rescindinga warrant of impediment of departure of any ship, or rescinding anywarrant of seizure or any garnishee order relating to ships ormerchandise, any judgment ordering the supply of maintenance,and any award of an arbitrator in accordance with the ArbitrationAct may be enforced after the lapse of 24 hours from delivery. Any other definitive judgment which does not contain anysuspensive condition and which condemns a debtor to pay aliquidated sum or to deliver or surrender a specific thing, or toperform or fulfil any specific act or obligation whatsoever, may beenforced after two days from the day of its delivery.As far as foreign judgments are concerned, one has to distinguishbetween judgments delivered by courts of Member States of theEuropean Union and by courts of non Member States. Judgmentsdelivered by courts of Member States of the European Union areenforced as provided by Council Regulation 44 of 2001. For the enforcement of a judgment delivered by a foreign court of acountry that is not a Member State of the European Union, thejudgment creditor must file a sworn application requesting the courtin Malta to order the enforcement of the judgment. The foreignjudgment must constitute a res judicata. There are a number ofcircumstances mostly based on rules of natural justice which are



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listed in the COCP which would prohibit the enforcement of aforeign judgment such as the judgment obtained by fraud etc. A judgment can be enforced by a variety of executive warrantsincluding a warrant of seizure and a garnishee order as well as by ajudicial sale by auction.

9.4 What are the rules of appeal against a judgment of a civilcourt of Malta?

An appeal may be entered against a judgment by means of anapplication filed in the registry of the Court of Appeal within 20days from the date of judgment.When during the running of a case and prior to a final judgment thejudge delivers a judgment on a preliminary issue such as jurisdiction,the judgment debtor may request the first court leave to appeal fromthat preliminary judgment. If he does not choose to do that he maywait until the final judgment on the merits of the case is deliveredbefore filing an appeal on all judgments given in that action.It is not necessary to appeal from an entire judgment and the partiesmay choose to appeal certain parts of the judgment. No appeal canbe filed from any judgment given following the admission of aclaim and judgments delivered by the Court of Appeal are notappealable.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Malta?Arbitration/Mediation/Tribunals/Ombudsman?

ArbitrationMalta is a member of the UN Convention on the recognition andenforcement of Foreign Arbitral Awards (New York 1958).Arbitration in Malta has over the past few years been activelyencouraged by the local authorities for a variety of reasons,including the fact that it is seen as a more appropriate manner forcommercial persons to resolve their disputes away from what canbe a more hostile court environment and including the need toreduce court lists.Arbitration in Malta is regulated by the Arbitration Act 1998 asamended over the years. The Act provides for the setting up of anArbitration Centre and a Board of Governors of the Centre. The Acttogether with the Arbitration Rules 2004 provide for both DomesticArbitration as well as International Commercial Arbitration whichincorporates the Model Law on International CommercialArbitration adopted on June 21st 1985 by the United NationsCommission on International Trade Law. MediationMediation is also available and is, in some cases i.e. for instancemarital separations, obligatory by law. The law governingMediation is contained in the Mediation Act, 2004. The latter setsup the Malta Mediation Centre, a body corporate having distinctlegal personality, which provides a forum where mediation partiesmay refer, or be referred to, in order to resolve their dispute throughthe assistance of a mediator. The Centre is vested with variousfunctions, including the promotion of domestic and internationalmediation as a means of settling disputes, to provision of thenecessary facilities for the conduct of domestic and internationalmediation, the setting up of criteria for the appointment of

mediators and the provision of its own procedure of the handling ofdisputes. The policy and general administration of the affairs andbusiness of the Centre is entrusted to a specially appointed Board. TribunalsThere are several tribunals set up by specific laws such as the SmallClaims Tribunal, the Consumer Claims Tribunal, the DataProtection Appeals Tribunal, the Financial Services Tribunal, theIndustrial Tribunal, the Mental Health Review tribunal and others.The acts under which they are set up specify their area ofcompetency and any dispute falling within the parameters of thesetribunals is heard by such tribunals in accordance with theprocedures laid down in the respective acts. OmbudsmanThe Ombudsman institution in Malta was set up by theOmbudsman Act 1995. The Ombudsman is an independentOfficer of Parliament who is appointed by the President of theRepublic acting in accordance with a resolution of the House ofRepresentatives that is supported by the votes of not less than two-thirds of all Members of the House. The main aim of theOmbudsman is to contribute towards and to promote anadministrative culture across the full spectrum of the Maltese publicservice based on good governance and quality service delivery interms of best practice, good conduct, fair decision-making andaccountability. The Ombudsman investigates complaints bycitizens who are of the opinion that there has been an infringementof their economic, social and cultural rights arising frommaladministration caused by involuntary or intentional mishandlingof executive power or by improper, unreasonable or inadequateconduct on the part of the public authorities concerned.Maladministration has been defined by the European Ombudsmanas an instance of poor administration which occurs “when a publicbody fails to act in accordance with a rule or principle which isbinding upon it”. The powers and remit of the Ombudsman and therelative procedures adopted by his office are laid down in the Act. The Ombudsman does not investigate matters where a remedy maybe sought by means of an appeal to an independent tribunal.Likewise the Ombudsman cannot investigate decisions taken bycourts and tribunals. The Ombudsman institution is an institutionof the last resort.


Please see the answer to Part II, question 1.1 above.

1.3 Are there any areas of law in Malta that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Please see the answer to Part II, question 1.1 above.


2.1 What are the major dispute resolution institutions inMalta?

The major dispute resolution institution in Malta is the MaltaArbitration Centre and an increasing amount of persons areresorting to the Malta Mediation Centre.

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Maltese Arbitration Awards as well as judgments from the Tribunalsmentioned above are fully enforceable in Malta as though they werejudgments delivered by the First Hall of the Civil Court. As far as foreign Arbitration Awards are concerned, the ArbitrationAct provides for a procedure for the registration of that foreignaward with the Arbitration Centre. Once the foreign Award isregistered with the Centre it can be enforced by the courts in thesame manner as if such awards were delivered in Malta.



Traditionally, the Maltese have preferred full scale court proceduresto arbitration. This was particularly so prior to the enactment of theArbitration Act and when therefore there were very limited rules onArbitration in our Code of Organisation and Civil Procedure. Sincethe enactment of the Arbitration Act the number of commercialdisputes referred to arbitration has increased principally because ofthe fact that the parties see the benefits in appointing arbitratorswho are well versed in the subject matter in dispute, because of thefact that arbitration is as quick as the parties make it and because ofthe fact that the arbitration process is in fact cheaper.We have witnessed the increase in numbers of contracts betweenNorth African and European entities opting for Arbitration in Malta.Malta is seen as an impartial, sound and solid forum.

It is evident that the number of local commercial disputes beingreferred to arbitration is increasing also because persons involved ina dispute consider the arbitration process to be much lessconfrontational and more informal which will no doubt be ofassistance if the same parties wish to maintain a good workingrelationship. There are also classes of claims in which arbitration is obligatorysuch as condominium disputes, motor traffic disputes and disputesconnected with electricity and water services. Having said the above, the court system for the resolution ofdisputes is still the preferred route for most Maltese persons.Currently substantial amendments to the COCP includingamendments to the existing system of precautionary and executivewarrants are before parliament. An important introduction is a newsection in the COCP providing the procedure for Court ApprovedSales of Vessels. Up until now in the case of a defaulting owner,one could only go down the route of a judicial sale by auction in theeventuality that the creditor wished to sell the vessel. Now with theamendments on the table it would be possible for the Maltese courtsto “approve” a private sale which normally means a higher price, ingiven circumstances.



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Dr. Ann Fenech

Fenech & Fenech Advocates198 Old Bakery StreetVallettaMalta

Tel: +356 2124 1232Fax: +356 2599 0645Email: [email protected]: www.fenlex.com

Ann Fenech is the managing partner of and the head of the marinelitigation department at Fenech and Fenech Advocates. Afterqualifying in Malta in 1986 she joined the shipping and commercialfirm of Holman Fenwick and Willan in London where she stayeduntil 1991 when she moved to New Orleans and joined Chaffe,McCall, Phillips Toler and Sarpy. In 1992 she joined Fenech and Fenech Advocates. She dealsexclusively with the whole spectrum of ship related matters includingdisputes arising out of Charter parties and Bills of lading, shipbuilding contracts, salvage, collision, towage, pilotage and shortageand contamination claims; she has substantial experience in thearrest of vessels and other similar procedures acting for both plaintiffor defendant; she has gained considerable experience in providingimmediate response and assistance following a shipping casualty.She has over the years been involved in the majority of high profileshipping casualties either in Malta or effecting vessels flying theMalta flag. She is the Chairman of the Pilotage Board in Malta, anArbitrator accredited to the Malta Arbitration Centre and is a lecturerat the University of Malta on Charter parties, Salvage, Towage,Pilotage and Collisions. She is also the legal correspondent of theWest of England P&I Club in Malta.

Dr. Edward Debono

Fenech & Fenech Advocates198 Old Bakery Street VallettaMalta

Tel: +356 2124 1232Fax: +356 2599 0645Email: [email protected]: www.fenlex.com

Edward DeBono LL.D.Dr. Edward DeBono qualified in December 1981 and joined the lawfirm Fenech & Fenech Advocates working exclusively in Civil andCommercial Litigation and Conveyancing. In 1987 he became aPartner of Fenech & Fenech and co-leads the Civil and CommercialLitigation sector of the firm together with another partner Dr.Kenneth Grima. His expertise and experience is concentrated onCivil and Commercial Litigation ranging from disputes relating tocomplex commercial transactions, debt recovery and property law tosuccession, probate and family matters. With Malta’s increasingprominence in the financial services sector Dr. DeBono has gainedextensive experience in assisting both local and internationalbanking and financial institutions in their dealings with local andforeign private and corporate clients. Dr. DeBono is also Chairmanof the Data Protection Appeals Tribunal.

Established in 1897, Fenech and Fenech Advocates is one of the oldest and largest law firms in Malta with a total of18 practising lawyers and two legal procurators and another 25 professional staff operating within its variousdepartments. The Firm has established itself at the forefront of legal services within both the domestic and internationalspheres of practice. Areas of expertise of the Firm’s domestic legal services include civil law including contract law,family law, property law and conveyancing, and commercial law, including notably maritime litigation, as well asconstitutional law, public and administrative law, criminal law. Insofar as the international dimension to the firm’spractice is concerned, it boasts a wide expertise in international commercial law with particular emphasis on maritimelaw, international contract law, information technology law, aviation law, ship registration, company law and relatedcorporate services, competition and consumer law, tax law, banking law, financial services law, bankruptcy law, trustlaw, tax law and intellectual property law. The majority of lawyers practising within the Firm have successfullycompleted post-graduate studies both at the University of Malta as well as overseas. Several of its members are orhave been lecturers at the University of Malta and have also lectured overseas on a number of occasions. Fenech &Fenech is also a member of the World Services Group (WSG) and Terralex. The Firm is supported by various associatedcompanies which provide back-office and corporate services, management consultancy and ship registration. Theseancillary services consolidate the Firm’s inter-disciplinary structure, enabling its clients to obtain comprehensive legaland related services under one roof.



Chapter 34

Portilla, Ruy-Diaz y Aguilar, S.C.

Mexico

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Mexico got? Are there anyrules that govern civil procedure in Mexico?

In Mexico, our legal system is a written law based on the Roman orcivil law tradition. Mexico is a federal country; notwithstanding theabove, our legal system has federal, as well as local laws for eachone of the 31 States and for the Federal District (Mexico City,Federal District, or DF) that form this Country. In this regard, the Mexican legal system is integrated by federallaws (i.e. Commercial Code, Federal Code of Civil Procedures,Federal Civil Code) and by local laws of each one of the MexicanStates (i.e. Civil Code for the Federal District, Code of CivilProcedures for the Federal District).The scope of local laws is limited to the State that enacted them, andthe scope of federal laws applies to all Mexican States, includingthe Federal District; however, it will be necessary to address thenature of the act in question and the specific area of the law todetermine whether it is a local or a federal matter (i.e. theCommercial Code, which is a federal law, contains substantive andprocedural rules; it regulates commercial acts in general andestablishes the rules governing the commercial court proceedings,which can be processed by local courts [ordinary] and/or federalcourts because, under Mexico’s Constitution, there is concurrentjurisdiction between local and federal courts with respect todisputes involving the application of federal law).

1.2 How is the civil court system in Mexico structured? Whatare the various levels of appeal and are there anyspecialist courts?

The civil justice system in Mexico is basically divided, in bothfederal and local jurisdictions, by subject matter, expertise, gradelevel and in some cases, by the amount or value of the matter indispute. The highest court at the federal level is the Supreme Courtof Justice, comprised of eleven Ministers grouped in two Chambers,each integrated by five members and the president. The SupremeCourt essentially resolves matters regarding the constitutionality oflaws and constitutional conflicts among the Federation, States andmunicipalities.In addition to the above, our federal judicial system is also comprisedof Collegiate Circuit Courts with three Magistrates each, DistrictCourts and Unitary Circuit Courts formed by a single Magistrate.

District Judges resolve matters regarding civil, commercial, labour,administrative and criminal disputes and criminal proceedings infederal matters, as well as indirect amparos (constitutional actionalleging the violation of rights committed by a court or an authority).Unitary Circuit Courts resolve amparos (constitutionalproceedings) and also act as an appellate court for proceedingsresolved by District Judges. Collegiate Circuit Courts are divided by subject matter, into civil,administrative, labour and criminal. These courts resolve directamparos (constitutional proceedings against final court resolutions)and also act as a court of appeals regarding the indirect amparos(constitutional action alleging the violation of rights committed bya court or an authority) resolved by District Judges. Regarding local matters, each State has its own judiciary structure,which consists of a Supreme Court for hearing, on appeal, civil,commercial, family, criminal and lease disputes. The localSupreme Court is formed by chambers of three judges each, withspecific and/or concurrent (mixed) jurisdictions. Below the local Supreme Court are the judges of the first instanceand at yet a lower level, the Justices of the Peace. These judgesresolve issues or disputes whose competence is determined by thenature of the dispute and the amount or value of the matter at hand.

1.3 What are the main stages in civil proceedings in Mexico?What is their underlying time frame?

The general or main stages of civil proceedings in Mexico are thefollowing:First Instance:Introductory stage, which includes:

Claim: The written document that must be filed in order toinitiate the trial.Service of process: The formal act in which notice of theclaim is served to the defendant and in which he is requiredto file his defence (due process of law). Answer of claim/defence: Must be filed during the specificterm established by law, which may vary from five to fifteendays, depending on the specific matter. Counterclaim: The action brought by defendant againstplaintiff at the time of responding to the claim.

Probatory stage, which includes: Offering of evidence: Parties have a term of ten days to offerevidence, once the probatory stage is opened by the court. Admission of evidence: The act in which the court admits orrejects the evidence offered by the parties.Submission of evidence: The stage of the trial in which

Enrique Aguilar Hernández

Carlos Fernando Portilla Robertson



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evidence is submitted and heard in court.Allegations / Pleadings stage:

Closing arguments made to the Judge by the parties.Allegations / pleadings can be presented orally or in writing,depending on whether the proceeding is civil or commercial.

Decisive stage:At this stage, the court must issue a ruling to resolve the firstinstance trial, and this must be done within the time specified by thelaw governing the proceeding.Second Instance (Court of Appeals):Appeal: the party to which the resolution is not favourable canappeal within the specific term set in the law governing theproceeding.Third Instance (Constitutional action):Writ of amparo: It is heard in federal Collegiate Circuit Courtsagainst final court decisions that violate the constitutional rights ofany of the parties involved in the proceeding.

1.4 What is Mexico’s local judiciary’s approach to exclusivejurisdiction clauses?

The jurisdiction is normally determined by agreement of the parties.If there is no jurisdictional agreement between the parties, thecompetent courts will be the courts located at defendant’s addressand/or at the place designated by the debtor to be required forpayment and/or at the location of the real estate for actionsconcerning property rights. In case there are several defendantswith different addresses, the plaintiff may choose the competentcourt, from among the defendants’ addresses.

1.5 What are the costs of civil court proceedings in Mexico?Who bears these costs?

According to our Constitution, justice is free. Notwithstanding theabove, procedural laws determine the obligation for courts to orderparties to pay court costs in several cases, including the following:(i) when no evidence is filed in order to justify its action or motionon disputed facts; (ii) when submitting false documents orwitnesses; (iii) when condemned in a summary commercial trial orwhen not obtaining a favourable ruling in a summary commercialtrial; and (iv) when condemned in two judgments (first instance andappeal resolutions).

1.6 Are there any particular rules about funding litigation inMexico? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

In the Mexican legal system, there are no particular rules aboutfunding litigation or rules on security for costs, or conditional feearrangements. There is no limitation or prohibition for thenegotiation of legal fees between counsellors and clients.


2.1 Are there any pre-action procedures in place in Mexico?What is their scope?

In the Mexican legal system, there are pre-trial procedures andprovisional remedies. Pre-trial procedures: In our legal system, it is possible to preparea trial by recognition of debt, declaration of possession, obtaining

documents and testimony of witnesses, among other actions.Provisional remedies: Their main purpose is to ensure goods or toobtain a restraining order, to ensure the execution of a court resolution.

2.2 What limitation periods apply to different classes of claimfor bringing proceedings before your civil courts? How arethey calculated? Are time limits treated as a substantive orprocedural law issue?

The limitation periods are established in the local and federal civilcodes and in the commercial code. The limitation period for actionmay vary, depending on the code and the action involved. Incommercial matters the general period for limitation of actions isten years. For actions arising from corporate matters (derived fromarticles of incorporation or by-laws), the limitation period is fiveyears; the limitation period with respect to fees and compensationfor hidden defects, liability from wrongful acts and moral damageis two years. In civil matters such as collection of rents, pensionsand in any other periodic benefit, the limitation period is five years.Notwithstanding the above, there are other obligations that do nothave a limitation period, such as alimony (alimentary obligations).


3.1 How are civil proceedings commenced (issued and served)in Mexico? What various means of service are there? Whatis the deemed date of service? How is service effectedoutside Mexico? Is there a preferred method of service offoreign proceedings in Mexico?

The civil trial begins with the filing of the claim and when the claimis admitted, the judge serves the defendant to process.Service of Process: The formal act in which notice of the claim isserved to the defendant and in which such defendant is required toanswer, defend and/or object to the claim in the specific termestablished by law for such matter. Service of process must be carriedout in person at the address of defendant, by officers of the court.Service of process outside Mexico: The serving of process to adefendant living outside Mexico must be done through a diplomaticletter rogatory addressed to the judge located in the domicile ofdefendant, requiring such judge to help the Mexican judge serveprocess to the defendant. The term to answer the claim will beincreased because of the distance. The letter rogatory must haveattached the following documents, duly translated into thecorresponding language: judge’s order, claim and appendixes,among others.Forms to serve process: When the plaintiff ignores the address ofdefendant and when it is not possible to know it through officialrecords (of authorities and institutions, such as: Police Department,Transit Authorities, Treasury Department, Federal Voters’ Registry,Social Security Authorities, etc.,) then process is served throughedicts, which are publications addressed to the defendant in a localnewspaper of the domicile of the court. In this case, the time limitto answer the claim is extended.

3.2 Are any pre-action interim remedies available in Mexico?How do you apply for them? What are the main criteria forobtaining these?

As indicated above, in Mexico there are interim remedies whichaim to ensure goods and to obtain a restriction order. Their mainpurpose is to ensure the execution of a court resolution. Interimremedies can be requested when there is a well-founded fear that,

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by personal actions, the debtor might squander its assets, in order todeclare bankruptcy.


Claimant’s pleadings must contain the following main elements: (i)court before which the claim is filed; (ii) full name of plaintiff andan address to receive notices regarding the proceeding; (iii) nameand address of defendant; (iv) object or objects claimed; (v) facts onwhich plaintiff bases and grounds its claim, narrated clearly andprecisely, describing and identifying the documents on which theclaim is based and the names of people who have knowledge of thefacts; (vi) applicable law and type of action/proceeding filed; (vii)value of the negotiation / business, in case it is necessary in order todetermine the competent court; and (viii) signature of plaintiff or ofhis legal representative.


Yes, pleadings can be amended, albeit with restrictions. In general terms, local procedure laws allow plaintiff to amend theclaim only when defendant has not been served to process. In federal procedure laws, defendant is allowed to amend itsdefence only if the final hearing of trial has not taken place, and theamendment may only concern motions or defences regarding actsthat were not know when filing the defence. Furthermore, plaintiffmay file a new claim, only if the final hearing of trial has not takenplace, whereby the original claim is extended and amended. Theaforementioned amendment may only by filed once by the plaintiff.

4 Defending a Claim


The main elements of a statement of defence are the following: (i)court before which the claim is answered; (ii) full name ofdefendant and an address to receive notices regarding theproceeding; (iii) facts on which plaintiff bases its claim, confessingor denying them, describing and identifying the documents inwhich his defence is based and the name of people who haveknowledge of the facts, (vi) motions; and (viii) signature ofdefendant or of his legal representative.In addition, defendant can bring a counterclaim. The counterclaimmust have the same elements as a claim.

4.2 What is the time-limit within which the statement ofdefence must be served?

The time limit for serving defence of a claim varies, depending onthe matter and the applicable law. For example, in civil matters, thetime limit is nine days; in commercial matters, the time limit isfifteen days, although there are special trails (such as summarycommercial actions) in which the time limit is five days.


Yes. In order for defendant to pass liability on to a third party, it is

necessary to mention credited reasons, such as: (i) assignment ofdebt with creditor’s consent; and (ii) when the defendant ceased topossess the property subject matter of the trial, etc., and in suchcase, the defendant must provide the name and address of the thirdparty in order to serve him to process. Only the judge resolving the proceeding can determine whether ornot a defendant is liable.


As a general rule, the lack of defence (response) in a civil orcommercial claim leads the judge to presume that the facts allegedby the plaintiff are correct. Nevertheless, plaintiff is not absolvedfrom proving the facts in which his action is based and the judge isnot obligated to resolve against defendant.In family matters, when the defendant does not contest the factsalleged by plaintiff, the defendant is presumed to deny such facts.In federal matters, when the defendant has been served to processin person or through its legal representative and does not answer theclaim, the facts alleged by plaintiff are presumed to be correct, as ifthe defendant were to have confessed to them. Nevertheless, thedefendant will have the right to prove otherwise in trial. If thedefendant is not served to process in person or through its legalrepresentative, and if he does not answer the claim, then the factsalleged by plaintiff will be presumed to be denied.


Yes, the defendant can dispute the court’s jurisdiction, filing amotion of incompetence (lack of jurisdiction), which can bedetermined depending on the matter, amount or territory.Incompetence can be filed as follows: a) As a motion of change of venue filed by defendant with the

court believed to lack proper jurisdiction, by which it isrequired to remit the case to the court believed to have properjurisdiction (declinatoria).

b) As a motion for change of venue filed by defendant with thecourt believed to have proper jurisdiction, by which it must askthe court presently hearing the matter to refrain from hearingthe case and to remit it over to the former (inhibitoria).



Yes, a third party can ask to be joined into an ongoing proceeding,when it has a personal and a different interest from the onecorresponding to plaintiff and defendant, in any trial and in anystage, provided the case has not been resolved.


Yes, our Mexican legal system allows consolidation of two or moreproceedings.Consolidation can be filed in the following circumstances:a) When a trial between the same parties and on a related cause

of action is pending resolution in the same or in another court

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(conexidad).b) When a trial between the same parties and the same causes

of actions is pending for resolution (litispendencia/lispendens).

c) When a procedure that affects the assets of a person (i.e.inheritance, bankruptcy), in which case all trials against himshould be accumulated.


No. The Mexican legal system does not allow split trails orbifurcation of proceedings. Neither the civil procedures codes nor the commercial code grantauthority to the courts to split trials.


6.1 Is there any particular case allocation system before thecivil courts in Mexico? How are cases allocated?

Yes, in Mexican civil courts there is an allocation system. Civil affairs (including family and leasing) and commercial affairsare allocated to the courts through a computerised system in arandom manner.

6.2 Do the courts in Mexico have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

Yes, judges and magistrates are empowered to enforce theirresolutions and impose sanctions such as: (i) fines; (ii) assistance offorces; (iii) forcible removal of locks; and (iv) up to 36 hours’ arrest.Moreover, judges and magistrates have the duty to maintain orderand demand respect of the parties; therefore, they can enactmeasures to prevent or punish any act contrary to these principles.

6.3 What sanctions are the courts in Mexico empowered toimpose on a party that disobeys the court’s orders ordirections?

See answer to question 6.2, above.

6.4 Do the courts in Mexico have the power to strike out partof a statement of case? If so, in what circumstances?

No, courts in Mexico have no power to strike out part of a statementof the case.

6.5 Can the civil courts in Mexico enter summary judgment?

In the Federal District and in some States of Mexico, the summarytrial was derogated, but in other States of Mexico there is still asummary civil trial for cases considered urgent (i.e. the collection ofprofessional fees, issue of public deeds, etc.).

6.6 Do the courts in Mexico have any powers to discontinue orstay the proceedings? If so, in what circumstances?

Yes, courts in Mexico can discontinue proceedings in the followingcircumstances:a) when a party asserts a cause for disqualification or

impediment to the judge to whom the case was allocated;and/or

b) once the trial has begun, an impediment that occurs requiresthe judge to excuse the case from further hearing (i.e. whenone of the parties appoints a relative of the judge as hisattorney).

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Mexico? Are there any classes of documents that do notrequire disclosure?

Pursuant to civil and commercial legislation, parties must attach allthe documentary evidence that support their claim and those onwhich the defendant bases its defence or counterclaim. Thesedocuments should be disclosed at the time of filing the claim orwhen answering it. No documentary evidence will be admittedafter this point, unless: (i) documents in question have a date laterthan the one on which the claim was filed; (ii) documents are datedprior to the date on which the claim was filed, and thecorresponding party did not have knowledge of their existence; and(iii) when the corresponding party was not able to obtain thedocuments, due to reasons not attributable to him.When the parties are not able to file the documents that supporttheir claim, defensc or counterclaim, they must declare, under oathto tell the truth, the corresponding reasons why they where not ableto file such documents.

7.2 What are the rules on privilege in civil proceedings inMexico?

Mexico recognises Attorney’s Professional Secret (SecretoProfesional) as an equivalent of the American Attorney-ClientPrivilege. Nevertheless, in Mexico exceptions to Attorney’sProfessional Secret (Secreto Profesional) are recognised only inrare cases.

7.3 What are the rules in Mexico with respect to disclosure bythird parties?

In order to know the truth about the disputed facts, the court mayuse any third party, and any document or thing (evidence), whetherit belongs to the parties of the proceeding or to a third party, withthe only constraint that such evidence is not prohibited by law andis not contrary to morals. Therefore, third parties are required at all times to assist courts inthe ascertainment of truth, as witnesses, or through the display ofdocuments and things that are in their power, only when they arerequired to do so by the judge.

7.4 What is the court’s role in disclosure in civil proceedingsin Mexico?

Evidence is submitted and heard in court. The court will indicatethe date and time at which the hearing will take place, within 30days of its admission.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Mexico?

See answer to question 7.3, above.

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8 Evidence

8.1 What are the basic rules of evidence in Mexico?

There are different rules and principles related to evidence in Mexico,which regulate its admission and presentation in a legal proceeding.We refer, among others, to the following activities: (i) neither theevidence in general, nor the means of evidence established by the lawcan be waived; (ii) only the facts shall be subject to evidence, as wellas the uses and customs upon which the law is founded; (iii) the courtshall apply the foreign law just as would the judges in the State whoselaw were to be applicable; to this end, the court must be informed asto the text, term, sense and legal scope of the foreign law; (iv) thecourt must receive the evidence submitted by the parties, provided itis permitted by the law and refers to the points questioned; (v) theobvious facts do not have to be proven, and the judge can invokethem even though they have not been argued by the parties; (vi) theparties shall assume the burden of proof of the facts that support theirarguments; (vii) the documentary evidence must be offered anddisclosed along with the claim or response to such claim; and (viii)the evidence must be offered, clearly expressing the fact or facts thatit is trying to show, as well as the reasons why the offeror considersthat it will prove his affirmations, etc.


As mentioned previously, to know the truth on the disputed points,the judge can avail himself of any person, whether a litigant or a thirdparty, and of any thing or document, whether they belong to a litigantor to a third party, without further limitation than the fact that theevidence is not prohibited by the law, and is not contrary to morals. Expert testimony is a necessary element whenever special knowledgeof the science, art, technique, trade or industry in question is required,but not with regard to general knowledge that the laws assumes thatthe judges should know. Consequently, any expert testimony offeredby the parties for that type of knowledge will be dismissed by thejudges, or that is accredited in writs with other evidence, or thatmerely refer to simple arithmetic or similar operations. The parties shall clearly indicate the science, art, technique, trade orindustry on which the evidence shall be prepared, the points it mustaddress, and the questions that must be resolved in the experttestimony, as well as the professional certification, the technical,artistic or industrial capacity of the expert being proposed, his firstand last names and address, with the corresponding correlation ofsuch evidence with the facts disputed.Before admitting the expert testimony, the judge shall give it to theopposing party for three days, so that such party can declare withregard to the pertinence of such evidence and can propose theexpansion of other points and questions in addition to thoseformulated by the offeror, to be examined by the experts.When the reports rendered are substantially contradictory, such thatthe judge considers that it is not possible to find conclusions thatprovide elements of conviction, the judge shall designate a third-party expert to render his opinion on the disagreement.


Yes. There are rules that regulate the admission and hearing of thetestimonial evidence. Our laws establish that all persons who have

knowledge of the facts that the parties must prove are required todeclare as witnesses. The parties will be required to present their own witnesses;however, in the event that they cannot do so, they shall so stateunder oath to tell the truth, and shall request that the witnesses besummoned, expressing the reasons for such impossibility, which thejudge shall qualify at his discretion.The witnesses’ examinations will not have to be presented inwriting. The questions will be formulated verbally and directly bythe parties and must be directly related to the points in dispute, andshall not be prohibited by law or contrary to morals.The statements and examination of the witnesses shall be made in thepresence of the parties in attendance, and their statement shall beentered in writing, first interrogating the offeror of the evidence, andthen the other parties to the lawsuit, prior warning that suchstatements must be conducted truthfully, because their false statementconstitutes a conduct that the law penalises with imprisonment.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Mexico?

The Mexican courts are empowered to decree at any time, in anymatter, the practice of any diligences or the submission of anyevidence.


9.1 What different types of judgments and orders are the civilcourts in Mexico empowered to issue and in whatcircumstances?

The type of judgments and orders that courts in Mexico can issueare the following:Executive orders, which are determinations of procedures.

Provisional court orders, which are determinations that areexecuted provisionally.Definitive court orders, which are decisions with definitiveforce that prevent or permanently paralyse the proceeding.Preparatory court orders, which prepare the decision aboutthe settlement ordered, admitting or discarding evidence.Interlocutory judgments, which resolve issues before or afterthe judgment, but not the subject matter of the case.Final judgments, which resolve the subject matter of the trial,which can be declarative or constitutive of rights (or both)and of conviction.


The courts are public bodies whose primary purpose is to resolvecontroversies and/or litigations within their jurisdiction. Therefore,they can order the payment of damages and/or interest and courtcosts, provided the plaintiff has justified his right to claim theaforementioned.


There are primarily four international treaties/conventions thatMexico has entered into, to confirm decisions, awards and/orarbitral resolutions that were issued in a country other than the onein which they shall be enforced, such as the 1958 Convention on the

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Recognition and Enforcement of Foreign Arbitral Decisions (theNew York Convention); the Inter-American Convention onInternational Commercial Arbitration (1975 Panama Convention);the Inter-American Convention on International Jurisprudence forthe Enforceability of Foreign Judgments, 1979; and the Inter-American Convention on the Extraterritorial Enforceability ofForeign Decisions and Arbitral Awards, 1987. For the above, our laws contemplate the possibility of recognisingand enforcing in Mexico, decisions, commercial and non-commercial arbitral awards and other jurisdictional resolutions thathave been issued abroad. The Federal Civil Procedures Code establishes that the decisions,non-commercial arbitral awards and other jurisdictional resolutionsthat have been issued abroad shall be enforceable and shall berecognised in the national territory, provided, in addition to notbeing contrary to internal public order in the terms of such legalordinance and of the Federal Civil Code, they fulfil the necessaryrequirements to be considered authentic, except as provided for inthe terms of the treaties and conventions to which Mexico is a party.In no case can the Mexican courts examine and/or decide on thereasons or grounds of fact or of law upon which the foreign decisionto be enforced is based, because the function of our courts is limitedto examining the authenticity of such reasons or grounds, andwhether they should be enforced in conformity with the terms ofMexican law. With respect to the enforceability of arbitral awards, theCommercial Code states the following: a) the arbitral award whoseenforcement is being requested must be filed in a certified copy,accompanied by the certified copy of the arbitrage settlement; andb) that the recognition or enforcement of an arbitral award can bedenied, the issuing country notwithstanding, only when: i) the partyof concern verifies that one of the parties in the arbitrationagreement was in some way incapacitated, or that such agreementis not valid; and ii) that the designation of an arbitrator in thearbitral actions was not notified, etc.

9.4 What are the rules of appeal against a judgment of a civilcourt of Mexico?

The general rules are the following: (i) only the party or third partyto whom the resolution is not favourable can appeal; the party towhich the resolution is favourable can appeal only if he has notobtained restitution of benefits, compensation of losses anddamages, or the payment of court costs; (ii) the appeal must be filedin writing, and it must express the grievances caused by theresolution; (iii) the party to which the resolution is favourable hasright to argue the causes of grievance filed by the appealing party;(iv) the appeal is resolved by the court superior to the court issuingthe resolution being disputed; and, (v) the judgment that resolvesthe appeal does not admit any remedy whatsoever. Notwithstanding the above, in case the appeal resolution violatesany constitutional right of the parties, the may file an amparo(constitutional action alleging the violation of rights committed bya court or an authority).


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Mexico?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

The most frequently used methods are mediation and arbitration inlaw or in equity. The ombudsman is not a dispute resolutionmethod under Mexican law.


To answer this question, certain distinctions must be made, namely:1. the civil or commercial nature of the dispute submitted to

arbitration; and2. whether the arbitration is domestic or international.In the first scenario, the procedural rules are those of the applicableState or Federal Code of Civil Procedure, or those of theCommercial Code.If the arbitration is domestic, the domestic procedural rules wouldapply; if it is international, it will be governed by the provisions ofconventions such as the following:

The New York Convention on the Recognition andEnforcement of Foreign Arbitral Awards. (The New YorkConvention, 1958).The Inter-American Convention on InternationalCommercial Arbitration (Panama Convention, 1975).The Inter-American Convention on the Validity of ForeignJudgments and Arbitral Awards (Montevideo Convention,1979).

1.3 Are there any areas of law in Mexico that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Yes. There are certain matters which cannot be submitted toarbitration, such as disputes related to:

Land and waters (lakes, rivers, sea).Family cases (parenthood, divorce, etc.).Consular and diplomatic cases.Antitrust.Criminal, labour and tax matters.

The concept of “public policy” is the general or main principle thatmust be taken into account, in order to determine whether a disputecan be submitted to arbitration.


2.1 What are the major dispute resolution institutions inMexico?

Among others, are available the International Court of Arbitration,through the International Chamber of Commerce (CCI Mexico); theCAM (Mexican Arbitration Center); and CANACO (Mexico CityChamber of Commerce), and the Mexican Institute of Mediation.

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It must be noted that Mexican law has long accepted arbitration asan alternative in the resolution of disputes. Thus, and due to thegrowth of international transactions, an educational process began.Said process has not been completed; however, it is fair to say thatour courts favour the recognition and enforcement of both domesticand foreign arbitral awards.In order to obtain the recognition and enforcement of an arbitralaward, the interested party must file its petition before thecompetent court. An original or certified copy of the award must beattached to the petition.The court will serve the party against whom enforcement is sought,and pass its resolution. The party who may be affected by thedecision of the court can appeal the same.



Mediation and arbitration are the most commonly required methodsof dispute resolution used in Mexico.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Mexico.

Even though there have been a limited number of questionabledecisions related to arbitration in Mexico, the general trend towardsits development can be regarded as positive.

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Carlos Fernando Portilla Robertson

Portilla, Ruy-Díaz & Aguilar, S.C.Bosques de Guayacanes 117Col. Bosques de las Lomas11700 Mexico, D.F.Mexico

Tel: +52 55 5596 6047Fax: +52 55 5596 6047Email: [email protected] URL: www.portilla.com.mx

Admitted as a lawyer on July, 1986.Law degree obtained from Universidad La Salle.Thesis: “Feasibility of the Creation of a Fiscal Court with FullJurisdiction”. This thesis received special recognition from theUniversidad La Salle and was proposed for competition at The FiscalCourt.Postgraduate studies at Universidad Panamericana on ConstitutionalProceedings (Amparo), Corporate and Business Law.Postgraduate studies at the Escuela Libre de Derecho on the LegalSystem of International Business in Mexico and on InternationalArbitration.Practice: Litigation in Civil and Commercial, Bankruptcy andReorganisation, Banking and Insurance, Consumer Protection,Mediation and Arbitration, Real Estate, Public and PrivateConstruction and Corporative Law. Negotiation, Drafting andExecution of International Agreements. Mr. Portilla was invited by the International Chamber of Commerceto participate at the Institute of International Business Law andPractice, and at the International Court of Arbitration, where heobtained valuable practice in the area of International Arbitrationand International Business Law.Former partner of Basham, Ringe & Correa, S.C., where hepracticed law from 1980 to 2007. Languages: Spanish and English.Managing Partner and founding member of Portilla, Ruy-Díaz &Aguilar, S.C.

Enrique Aguilar Hernández

Portilla, Ruy-Díaz & Aguilar, S.C.Bosques de Guayacanes 117Col. Bosques de las Lomas11700 México, D.F.Mexico

Tel: +52 55 5596 6047Fax: +52 55 5596 6047Email: [email protected] URL: www.portilla.com.mx

Admitted as a lawyer on December, 1994.Law degree obtained from Universidad Nacional Autónoma deMéxico.Thesis: “Legal Nature of Transfer of Property in the PurchaseAgreement”. Postgraduate studies at Universidad Panamericana on ConstitutionalProceedings (Amparo), Civil, Commercial, Corporate and BusinessLaw.Postgraduate studies at the Escuela Libre de Derecho onInternational Arbitration.Practice: Litigation in Civil and Commercial, Bankruptcy andReorganisation, Banking and Insurance, Consumer Protection,Mediation and Arbitration, Real Estate, Public and PrivateConstruction and Corporative Law. Negotiation, Drafting andExecution of International Agreements. From 1989 to 2007 he practiced law as an associate of Basham,Ringe & Correa, S.C.Languages: Spanish and English.Partner and founding member of Portilla, Ruy-Díaz & Aguilar, S.C.

Portilla, Ruy-Diaz & Aguilar, S.C. is a law firm with enormous experience gained by its members in serving clients,based on superior ethics, quality and professionalism. Some of our clients are the largest and best-known companiesin the world, including international and domestic law firms, as well as financial institutions, and of course, smallerfirms and individuals.

The Firm offers services in various areas of the law including: administrative; bindings and privatisations; arbitration;civil and commercial litigation; consumer protection; corporate and contracts; criminal litigation; franchising; health;immigration; labour; mergers and acquisitions; real estate; social security; tax; and trusts.

Our Firm currently has four partners and 15 associates, and a supporting staff including paralegals, translators,technical specialists and administrative staff, with offices in Mexico City and Queretaro, Mexico.

The specialisation and development of each of the Firm’s practice areas, the support provided among different areas,and our deep knowledge of Mexico, its legal system, markets and industry, enables the Firm to offer clients innovative,timely, and comprehensive solutions to their needs, at very good and competitive prices. In order to prevent problemsbefore they develop, we take a preventive, coordinated, and strategic approach to advise our clients.

The Firm and its lawyers actively participate in various public and private organisations at an international level, keepsus attuned to what is happening in the community and in the world at large. It enables us to not only better understandand be closer to client needs, but also to participate in and have an influence upon the changes affecting them.

A more detailed description and further information is available upon request at [email protected];[email protected] or at our World Wide Web http://www.portilla.com.mx



Chapter 35

Arias & Muñoz

Nicaragua

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Nicaragua got? Are thereany rules that govern civil procedure in Nicaragua?

Nicaragua’s legal system is the Civil Law System. Civil proceduresmust be written, the parties must give the process impulse, and itmust be public.

1.2 How is the civil court system in Nicaragua structured?What are the various levels of appeal and are there anyspecialist courts?

The Judicial Branch is organised by the following jurisdictionalorgans: 1. Supreme Court of Justice, which is organised into four

divisions:a) Civil Division.b) Penal Division.c) Constitutional Division.d) Administrative Division.

2. Court of Appeals; one for each judicial district of the country.3. District Courts; at least one in each Department and

Autonomous Region, and they are classified in the followingmanner:a) Unique Courts.b) Civil Courts.c) Family Courts.d) Penal Courts.e) Labour Courts.

4. Local Courts; at least one in every Municipality of theCountry, and they are classified in the following manner:a) Unique Courts.b) Civil Courts.c) Family Courts. d) Penal Courts. e) Labour Courts.

All first instance judgments may be objected by the parties bymeans of appeals recourses, as well as by any other legal recourseestablished by the law. In any process, there shall only be two instances. The Court of

Appeals shall resolve in second instance the Recourses againstjudgments dictated by District Courts. Likewise, District Courts shallresolve the Recourses against judgments dictated by Local Judges. Against definitive or interlocutory judgments dictated in the secondinstance which put an end to the process, the parties may only filea cassation recourse.

1.3 What are the main stages in civil proceedings inNicaragua? What is their underlying timeframe?

1. Complaint: The limitation periods to exercise a legal righthave to be observed. However, if the defendant does notoppose an exception, the process may go on.

2. Mediation: A judge must call for a mediation session withinthe sixth day.

3. Service of Summons: A summons must be served in order forthe defendant to appear in the lawsuit and is given view ofthe file for six days in order to reply.

4. Reply: the terms to answer a claim are six days for ordinaryprocesses, three days for summary processes and for 24hours ordinary verbal processes or small claim processes.

5. Evidence Period: the evidence period is of 20 days inordinary processes, eight days in summary processes, 10days in executive processes, and six days in ordinary verbalprocesses or of small claim processes.

6. Verdict: Judges have 30 days to issue a verdict, except whenspecial laws establish a lesser period.

1.4 What is Nicaragua’s local judiciary’s approach to exclusivejurisdiction clauses?

Exclusive jurisdiction clauses are enforceable in Nicaragua.

1.5 What are the costs of civil court proceedings in Nicaragua?Who bears these costs?

The administration of justice in Nicaragua is free. However, thecosts of the process, which include lawyer’s fees and any otherexpenses incurred by the parties, are usually payable by the losingparty. The assessment of litigation expenses and fees are requestedby the parties and become effective in the verdict.

1.6 Are there any particular rules about funding litigation inNicaragua? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

This is not applicable in Nicaragua.

Ana Cecilia Chamorro Callejas

Edgard Leonel Torres Mendieta



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Arias & Muñoz Nicaragua


2.1 Are there any pre-action procedures in place in Nicaragua?What is their scope?

Nicaraguan Civil Legislation recognises two prejudicial proceedings: 1. Recognition of Private Documents.2. Answers to Interrogatories.They both serve to prepare for an executive process, by obtainingconclusive evidence, which may be used as sufficient executive titleto open the executive process.


Nicaraguan time limits are the following:Civil: five years.Criminal: it depends on the crime. Mercantile: three years.

They are calculated as of the parties’ knowledge of the event.These time limits are treated as substantive since they are filed asan exception or incidental motion.


3.1 How are civil proceedings commenced (issued and served)in Nicaragua? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Nicaragua? Is there a preferred method ofservice of foreign proceedings in Nicaragua?

Once the complaint is filed, the judge proceeds to summon and giveview of the file to the defendant in order that he/she replies thecomplaint, which is served by means of an official notification.Summons and all other Resolutions may be served personally, bywritten notice, by the passage of 24 hours, on the announcementBoard, or the Official Paper, depending on the circumstances. All the decisions, rulings and judgments shall be served the sameday of their date or publication, and not being possible, on thefollowing one.When service has to be effected outside Nicaragua, a request mustbe sent to the Supreme Court of Justice to send a communication tothe public functionary that must intervene. The Supreme Court thenasks the Ministry of Foreign Affairs to take charge of the pertinentproceedings with its counterpart in the country of destination.The same procedure must be followed for service of foreignproceedings in Nicaragua.

3.2 Are any pre-action interim remedies available inNicaragua? How do you apply for them? What are themain criteria for obtaining these?

Pre-judgment Attachment.Temporary Lien on property during trial.Exhibition of documents and of the res.Deposit of Property in Litigation or Judicial Attachment.Provisional Property Registration.Prohibition to Transfer.

In order to apply for these interim remedies, the only requirement isthat the interested party must deposit a guarantee equivalent to thevalue plus an additional third part of what is requested. Suchguarantee shall be evaluated by the judge.


The complaint must contain: (i) the name of the claimant; (ii) thename of the defendant; (iii) the thing, quantity or act that is requested;and (iv) the reason for which it is requested. If the first threerequirements are not met, the judge may not admit the complaint. Likewise, if the property or possession of something is requested inthe complaint, it must be accurately described in order to properlyidentify it.


The claimant may amend the complaint; however he/she must do sobefore the defendant presents his reply to the claim. The amendedcomplaint shall be considered a new complaint only for notificationeffects; therefore, the term to reply will be counted as of the day ofthe notification of the amended complaint.

4 Defending a Claim


The defendant may acquiesce to the claimant’s pleadings or maydeny the claim. The parts of the claim that are not denied will beconsidered to be accepted as truth. The defendant may also counterclaim or set-off the claim in thereply. When counterclaiming, the same requirements as when filinga complaint must be met. Nonetheless, if the defendant does notcounterclaim in the reply, it may be done in a separate process.


There is no time limit to serve the statement of defence.


The defendant shall file an incident of illegitimacy of legal capacity,stating that he/she has no liability, and this incident must be solvedby the judge before the process can continue.


The defendant may choose not to reply, in which case the claimshall be considered to have been denied by the defendant; therefore,the claimant has to prove his/her claims even if the defendant doesnot reply. The claimant may request the defendant be declared in contempt ofcourt; if so, the defendant may not be a taken into account in theprocess until the costs incurred by the claimant are paid by thedefendant.

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Yes, by filing a motion requesting the judge abstain from hearing aclaim or requesting the judge be separated from the process.



A third party with interests in the outcome of the process may jointhe process at any stage by opposing claims against the defendantor the claimant, or against both.


Yes, two or more separate processes that should constitute a singleprocess may be consolidated in order to obtain one verdict when thelawsuit pertains to the same litigants, subject matter and type ofaction; or to the same litigants and subject matter; or to the samesubject matter and type of action; or to the same cause of action; orto the same type of actions and litigants.




6.1 Is there any particular case allocation system before thecivil courts in Nicaragua? How are cases allocated?

Yes, all Complaints must be presented at the Case DistributionOffice (Oficina de Distribución de Causas). This office isresponsible for selecting the Court with jurisdiction to hear of thecase by means of a random computerised system.

6.2 Do the courts in Nicaragua have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?


6.3 What sanctions are the courts in Nicaragua empowered toimpose on a party that disobeys the court’s orders ordirections?

A judicial punishment for non-criminal contempt of court ornegligence in legal proceedings may be imposed upon individuals,legal representatives, judges, and other judicial functionaries.

6.4 Do the courts in Nicaragua have the power to strike outpart of a statement of case? If so, in what circumstances?

The judge must admit or reject the complaint as a whole; however,in the verdict, it is possible to only admit those statements of a claimthat have been proven by the parties.

6.5 Can the civil courts in Nicaragua enter summaryjudgment?

Yes, when the complaint is accompanied by certified or notariseddocuments that are not refuted or when the claimant’s statementsare not denied by the defendant, there is no need for an evidenceperiod; therefore, the judge emits the verdict once the complaint hasbeen replied. Likewise, in executive processes it is not necessary to open theprocess for evidence period since the claims are based on anexecution paper.

6.6 Do the courts in Nicaragua have any powers todiscontinue or stay the proceedings? If so, in whatcircumstances?

No, it is not allowed. However, when more than eight months passby without any activity from the parties the judge may declare theprocess lapsed, in which case the claimant would have to initiate theprocess again.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Nicaragua? Are there any classes of documents that donot require disclosure?


7.2 What are the rules on privilege in civil proceedings inNicaragua?


7.3 What are the rules in Nicaragua with respect to disclosureby third parties?

During the evidence period the parties may request the judge toorder a third party to disclose certain information relevant to thecase. If the third party does not comply with the order the judgemay declare him/her in civil contempt.

7.4 What is the court’s role in disclosure in civil proceedingsin Nicaragua?

When requested by the parties, the judge must emit orders to thirdparties in order for them to disclose certain information.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Nicaragua?


8 Evidence

8.1 What are the basic rules of evidence in Nicaragua?

Our Civil System is ruled by the Legal and Weighted EvidenceSystem, whereby judges must assign the weight to a given type ofevidence as established by Law. The claimant has the duty of producing the evidence to support

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his/her arguments, while the defendant that simply denies the claimsdoes not have to produce any evidence. However, if the defendantmakes affirmations, he/she must also prove his/her statements. All claims have to be proved during the Evidence Period of theprocess.


The following types of evidence are contemplated in NicaraguanCivil Legislation:

Res Judicata.Documents.Confession.On-site inspection.Experts Opinion.Witnesses.Presumption.

Expert evidence is admitted. It must be proposed by the interestedparty, and exceptionally by the judge. The proposed person must bequalified as an expert in the area that he/she is going to give anopinion, and the judge shall evaluate the weight of the evidence.


In order to be called as witness it is required to comply with thefollowing:

Age: must be 16 years or older.Physical and psychic capacity: the blind, deaf, mute or insanemay not be witnesses. Rectitude: debtors, vagabonds, habitual drunkards, those thathave been declared false witnesses, or forgers of documentsor currency may not be witnesses.Condition: those that have a relation with the any of theparties that could make them impartial.

Only six witnesses will be admitted in ordinary process and three insummary, executive and verbal processes as well as in incidents. The interrogations will have to be formulated by the interested partyin an affirmative way, specifying only one fact in every question.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Nicaragua?

Once all the steps that must precede have been concluded, the judgemust open the evidence period ex officially or at the parties request. The Judge may reject, ex officially or when requested by theparties, the evidence that is not useful and does not meet therequirements established by law.


9.1 What different types of judgments and orders are the civilcourts in Nicaragua empowered to issue and in whatcircumstances?

Judges may issue definite or interlocutory judgments. Definitejudgments put an end to the process by solving the parties’ claims. Interlocutory judgments may be simple when they only solve

incidents but not the main claims of the case, or interlocutory withdefinite force when they solve an incident that directly andimmediately influences the process by putting an end to it.


Courts can condemn a party to pay for damages when requested bythe parties as a principal or accessory claim. Interest may also begranted when requested by the parties in accordance to the legalinterest rate in force. The costs of the litigation are determined bylaw and the parties are entitled to receive them by law.


Once the domestic judgment is firm, the interested party mustrequest a competent court to execute the judgment. In cases that the execution of a foreign judgment is required, thegeneral rules of reciprocity must be observed. They shall beexecuted in accordance with Nicaraguan Law or with treaties. The execution must be requested before the Supreme Court ofJustice, and, if admitted, the Supreme Court must issue a court orderto the competent Judge in order execute the foreign judgment.

9.4 What are the rules of appeal against a judgment of a civilcourt of Nicaragua?

There are only two instances in Nicaragua. Appeals to first instancedefinite and interlocutory judgments must be presented before thesame judge that emitted the judgment and are solved by theHierarchic Superior. Therefore, judgments emitted by a Local Court may be appealedbefore a District Court, and judgments emitted by a District Courtmay be appealed before a Court of Appeals.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Nicaragua?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Arbitration: A mechanism by which the parties decide to submit toarbitration all the controversies or certain controversies that havearisen or may arise between them regarding a certain juridical,contractual or non contractual relation. The arbitration agreementmay be included in a contract as an arbitral clause or it may be anindependent or autonomous agreement.The arbitration agreement shall consist in writing, and the partiesshall expressly establish the terms and conditions that will governthe arbitration in the written agreement.Mediation: Any procedure designated as such, or any otherequivalent term, in which the parties request a third party or partiesto assist them in their attempt to reach a friendly arrangement of acontroversy originated from a contractual relation or another type ofjuridical relation. The mediator is not authorised to impose asolution of the controversy to the parties.Tribunals: This method is exercised before judges in order to solvecontroversies by means of the application of laws.

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The parties may freely choose the method of dispute resolution thatis more convenient to them, in accordance to the Mediation andArbitration Law, the Civil Procedure Law and other applicable laws.

1.3 Are there any areas of law in Nicaragua that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Matters that have been solved by a firm judicial judgment will notbe subject to arbitration, except for the aspects derived from itsexecution.Likewise, matters inseparably joined to others on which the partiesdo not have free disposition or when prohibited by law or when aspecial procedure for certain cases is indicated.Matters regarding alimony, divorces, nullity of marriages, a personsmarital status, declarations of majority of age, and in general, thecases of natural or juridical persons that can not representthemselves may not be subject to arbitration. Those cases in which the Justice Department must be a party arealso not subject to arbitration, nor are those who arise among a legalrepresentative and the person represented.


2.1 What are the major dispute resolution institutions inNicaragua?

Centro de Mediación y Arbitraje de la Cámara de Comerciode Nicaragua “Antonio Pérez Leiva”.Centro de Mediación y Arbitraje UCA.Centro de Mediación y Arbitraje AMCHAM.


Yes. All of them.



Currently, it is becoming more and more common to incorporateinstitutional arbitral clauses to contracts, specifying the rules andprocedures that must be followed in case of disputes.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Nicaragua?

One of the principal problems is the lack of institutional clauses,clauses that incorporate the necessary elements in order that theprocess of mediation or arbitration is truly effective as for costs andtime invested by the parties in comparison with a judicial process.Another disadvantage is that judges and arbitrators do not haveenough experience working together. Alternate dispute resolutionprocesses in some cases require the assistance of judges for certainproceedings, which in many occasions is not well taken by judges.Nicaragua does not count with jurisprudence or precedents in whichan arbitration award has been executed judicially by means of adomestic court.On the other hand very few centers of mediation and arbitrationexist in Nicaragua, and those that exist do are not well known bysociety. Likewise, the operative costs of these must be improved.Finally, the mediation and arbitration law must be reformed in orderto incorporate elements that offer the parties more safety, speed anddynamism inside the process.

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Edgard Leonel Torres Mendieta

Arias & MuñozKilometro 4 ½ carretera a Masaya Centro Financiero BAC, Quinto pisoNicaragua


Main areas of practiceLitigationBanking LawInternational TradeExperienceEdgard has participated in various commercial litigations,representing large local and international companies. He hasprovided general advice to companies facing litigation or involved inlitigation of various types.CareerEdgard has a Law Degree from Universidad Americana in Managua,Nicaragua (2001) and is authorised as a Practicing Attorney andNotary Public by the Supreme Court of Justice in Nicaragua. He hasa Master’s Degree in Corporate Laws from the Pontificia UniversidadCatólica de Chile (2006).LanguagesHe is fluent in Spanish and English.

Ana Cecilia Chamorro Callejas

Arias & MuñozKilometro 4 ½ carretera a Masaya Centro Financiero BAC, Quinto pisoNicaragua


CareerAna Cecilia is currently a student from the Universidad Americana(UAM) and has been a paralegal at Arias & Muñoz since 2006, andprincipally collaborates in corporate and litigation matters. LanguagesShe is fluent in Spanish and English.





Chapter 36

Pachiu & Associates, Attorneys at Law

Romania

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Romania got? Are there anyrules that govern civil procedure in Romania?

Romania has a civil law system. The main regulations governingcivil procedure are the Romanian Constitution, the Romanian Codeof Civil Procedure (hereinafter “CCP”), Law No. 304/2004concerning the judicial system (“Law No. 304/2004”), Law No.146/1997 on judicial stamp taxes, Law No. 47/1992 onConstitutional Court and Law No. 188/2000 on court marshals. Forcertain areas of law, additional regulations apply.

1.2 How is the civil court system in Romania structured? Whatare the various levels of appeal and are there anyspecialist courts?

The Romanian civil court system consists of courts of law, thePublic Ministry and the Supreme Council of Magistrature.The structure of the courts of law is the following:

first instance courts;tribunals (organised at the level of each county and of thecity of Bucharest);courts of appeal (having legal capacity for the jurisdiction ofa number of tribunals); and the High Court of Cassation and Justice (the “High Court”).

As such, the Romanian legal system distinguishes between lowercivil courts (first instance courts and tribunals) and higher civilcourts (courts of appeal, High Court), determining jurisdiction by adual mechanism that takes account of the value of the claim and ofthe types of cases.Based on Law No. 304/2004, the following specialised sections orpanels were set up with courts of law: (i) specialised sections orpanels at the courts of first instance in order to settle cases involvingminors and family matters; (ii) sections or panels at tribunals forcivil cases, criminal cases, commercial cases, cases involvingminors and family disputes, cases of administrative and fiscaldisputes, cases regarding labour disputes and social insurance, aswell as maritime and inland waterways sections; (iii) specialisedsections or panels at courts of appeal for civil cases, criminal cases,commercial cases, cases involving minors and family disputes,cases of administrative and tax disputes, cases regarding labourdisputes and social insurance and maritime and domestic waterwayssections; and (iv) four sections established within the High Court

for civil and intellectual property cases, criminal cases, commercialcases and cases of administrative and fiscal disputes. Specialisedpanels and sections for minors and family matters, as well asspecialised tribunals for minors and family matters are to settleoffences committed by/against minors.

1.3 What are the main stages in civil proceedings in Romania?What is their underlying timeframe?

The main stages in Romanian civil proceedings are: the firstinstance; the appeal (except for certain categories of courtdecisions, expressly provided by law); and the second appeal. Thesecond appeal may be filed with regard to court decisions whichmay not be appealed by the parties upon settlement of case by a firstinstance court, or upon decisions rendered in the appeal or uponother decisions in cases provided by law.The appeal and the second appeal may be filed in principle within a15-day term as of the date when the court decision subject to bechallenged was communicated to the parties.


Where one or more of the parties is domiciled in an EU MemberState, regard must be had to EC Regulation No 44/2001 onJurisdiction and the Recognition and Enforcement of Judgments(hereinafter the “Regulation”). Under Article 23 of the Regulation,where the parties have agreed that the courts of a Member Stateshall have jurisdiction to settle disputes, then those courts haveexclusive jurisdiction.However, Article 27 of the Regulation provides that, in case there isa situation where proceedings involving the same cause of actionare submitted before courts of different EU Member States, it is thecourts of the country in which the proceedings are first broughtwhich must decide whether they have jurisdiction. Until thosecourts have decided whether they have jurisdiction, the courts ofany other Member State in which proceedings have also beensubmitted for settlement shall adjourn their proceedings.

1.5 What are the costs of civil court proceedings in Romania?Who bears these costs?

The costs of civil proceedings are composed of stamp taxes(Romanian: “taxe de timbru” and “timbru judiciar”), attorney feesand appraisal fees. Stamp taxes apply to all requests, claims,documents and services addressed to the courts.When submitting his initial claim, the claimant must pay a stamp

Silviu Predescu

Voichita Craciun(

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Pachiu & Associates, Attorneys at Law Romania

tax calculated under Law No. 146/1997, as follows:a) for claims having a monetary content: the tax shall be

determined in accordance with the value of claim; orb) for claims which do not have a monetary content, the tax has

a fixed value.The sanction in case the claimant does not comply with theobligation to pay such stamp taxes is the annulment of the claim bycourt order.The stamp taxes for the defendant’s counterclaim, the request forintervention of a third party and the warranty claim shall bedetermined based on the same criteria as the claimant’s pleadings.The party whose claim was rejected or against whom the courtdecision was rendered shall bear the litigation costs, upon request ofthe winning party.

1.6 Are there any particular rules about funding litigation inRomania? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

Under the general rule, payment of the legal fees is required.However, certain categories of claims or persons are exempted fromsuch payment obligations, as follows: claims related to labourissues; allowances; damages for bodily harms; adoption; copyrightsetc. As regards the entities benefiting from the above mentionedexemptions, these include the tutelary authority in matters related tofamily law, public attorneys, labour unions, consumers’ protectionagencies etc.Contingency/conditional fee arrangements are not permitted underRomanian civil law. General rules apply on security for costs, e.g. an attorney may askits client for a deposit covering the litigation costs.


2.1 Are there any pre-action procedures in place in Romania?What is their scope?

Prior to submitting with the court a commercial monetary claim, theclaimant has the obligation to attempt the amicable settlement ofsuch claim by direct reconciliation. The claimant shallcommunicate to the other party an invitation for reconciliationinforming such party of his claims and their legal ground as well asall supporting documents. The date for reconciliation shall beestablished no sooner than 15 days as of the date when thedefendant received the documents from the claimant.


The limitation period for bringing the proceedings before the civilcourts is treated as a substantive law issue. The statute of limitation,i.e. the term within which the creditor may request from the debtorthe performance of its obligation, is governed by the provisions ofDecree No. 167/1958 (“Decree No. 167/1958”), which providesthat the general limitation period for payment obligations is 3(three) years as of the date when the payment obligation becamedue for patrimonial claims and of 30 (thirty) years for claims on realproperty subject to limitation. However, the law expressly providesfor certain exceptions, such as certain claims on real property,which are not subject to statutes of limitation.

Under the general rule, the limitation periods are calculatedbeginning with the date when the right to claim arises. However,for certain categories of claims the law provides for special rulesregarding the moment when the limitation periods begin, that is:claims related to rights under a suspensive condition or suspensiveterm; or claims related to civil liability for unlawful acts, etc.Please be advised that the limitation periods are established by lawand, therefore, such periods may not be amended by the creditorand the debtor, under the sanction of absolute nullity of sucharrangements.


3.1 How are civil proceedings commenced (issued and served)in Romania? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Romania? Is there a preferred method ofservice of foreign proceedings in Romania?

When receiving the claimant’s pleadings, the court shall establishthe first hearing date and shall resolve on the summoning of bothparties.The service of process is mandatory for the legality of theproceedings, except for the cases when the law expressly providesotherwise. In case a party attended the proceedings, it shall not besummoned for any of the subsequent hearings, based on thepresumption that it has acknowledged such hearings.As regards the service of proceedings, the following methods areused by the court:

personal service, whereby court officers personally deliverthe documents to the claimant/defendant, who shall sign thereceipt confirmation;substituted service, if the individual party to be served isunavailable for personal service, the court agent shall draftminutes attesting to the delivery or refusal of receipt; orservice by publication with the court and with the RomanianOfficial Gazette or another wide circulation newspaper, incase, in spite of claimant’s best efforts, the defendant’sdomicile could not be acknowledged.

The service outside Romanian jurisdiction is performed by means ofpostal delivery or by any other means providing for confirmation ofreceipt. In case the defendant doesn’t have his domicile or residencein Romania, he shall be informed by the court that he has the legalobligation to choose a domicile in Romania for performance of theservice of proceedings and in case of non compliance, the serviceshall be performed by means of postal delivery.

3.2 Are any pre-action interim remedies available in Romania?How do you apply for them? What are the main criteria forobtaining these?

The claimant is entitled to request the court to approve theestablishment of precautionary measures, such as proceduralmeasures ordered with regard to the debtor’s assets either during theproceedings or at the enforcement stage, in order to ensureenforcement of the court decision.Precautionary measures are: preventative attachment; judicialattachment; and preventative garnishment.The existence of a pending proceeding is necessary in the case ofpreventative attachment and preventative garnishment. In the caseof judicial attachment, the measure can be taken even if there is nopending proceeding.

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The claimant’s pleadings shall contain the following elements:a) name, address or domicile of the parties to the litigation (in

case such parties are individuals) or name, headquarters,registration number from the register of commerce, fiscalsole registration number and bank account (in case theparties are companies);

b) name and capacity of the person representing the partybefore court and in case such person is a lawyer, his nameand professional headquarters;

c) the scope of claim and an estimation of its value, if suchestimation is possible;

d) the arguments of the claim;e) the evidence supporting the claim, such as written, testimony

of parties, witnesses; andf) the claimant’s signature.The lack of the elements contemplated under items a), c) and f)shall be sanctioned with the annulment of the claim.


The claimant may request the court to postpone the hearings inorder to amend the pleadings. However, in case the amendmentsrefer to typing errors, the increase or decrease of the value of theclaim, the monetary amount representing the value of the perishedor lost good or in case the claimant replaces the object of the claim,the pleadings shall not be deemed as modified.

4 Defending a Claim


The statement of defence shall include: the procedural pleas; theanswer to the arguments raised by the claimant in his claim; theevidence against the claimant’s request; and the defendant’ssignature.In case the defendant has certain claims against the claimant relatedto the claimant’s pleadings, he shall be entitled to file suchcounterclaim.


The statement of defence has to be filed five days prior to the dateof the first hearings.


In case the defendant holds an asset on behalf of a third party orexercises a right over an asset on behalf of a third party, thedefendant shall have the right to indicate such party when beingsued by a person claiming an ownership right over such asset. The defendant is also entitled to file a warranty claim with regard toa third party, against whom he would be entitled to raise claims incase a claim would be rendered against him.


Taking into account that the filing of the statement of defence is notmandatory, the court shall request the defendant on the date of firsthearings to submit its defence pleas and to deliver the evidencesupporting his defence.


The defendant may dispute the court’s jurisdiction until the date ofthe hearing when the parties are able to submit their final argumentsor until the end of the proceedings, depending on the type ofdisputed jurisdiction.Courts shall issue a decision settling the disputed jurisdictionvenue. The decision stating that a court is not competent to hear acase may be subject to appeal.



Our legal system provides for the possibility for third parties to bejoined in a pending litigation, under the form of:a) voluntary intervention, upon request of a third party to enter

an ongoing litigation to defend a right of its own or to defendthe right of a party already involved in such litigation; or

b) forced intervention, upon grounded request of a claimant ordefendant that a third party must join the litigation.


Based on the CCP, the parties may request the consolidation ofseveral litigations being submitted for settlement with the samecourt of law or with different courts of law, in case there is a tightconnection between such litigations. The consolidation may also bemade ex officio by the judge.


The court may decide the split of the proceedings, in case the courtestablishes that the proceedings would be delayed due to the filingof an intervention claim or counterclaim.


6.1 Is there any particular case allocation system before thecivil courts in Romania? How are cases allocated?

In Romania, the case allocation system is computerised, the casesbeing randomly allocated to a judge.

6.2 Do the courts in Romania have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The courts are entitled to exercise their powers in order to establish



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the scope of claims, based on submitted evidence, or to decide uponthe interim applications of the parties and to render the finaldecision. The parties are entitled to make interim applications asregards the requests mentioned under question 5.1 herein, to raisepleas regarding procedural issues and pleas on the merits, to submitrequests for the approval of evidences supporting the claims, etc.

6.3 What sanctions are the courts in Romania empowered toimpose on a party that disobeys the court’s orders ordirections?

Based on the CCP, the following sanctions may be decided by thecourt in case a party disobeys the court’s orders or directions:financial sanctions; disciplinary sanctions; the party’s obligation torecommence the procedure if not complying with the court’s ordersor directions in a certain delay; and the obligation to indemnify theparty who incurred damages as a result of the non observance of thelegal provisions when performing a certain procedural action.If the orders or directions given by the courts are refused to beenforced, absent legal grounds, the opposing party may besentenced by court to six months to three year’s imprisonment. Afive-year sentence may be issued in case such party employedviolence when opposing the court order or direction.

6.4 Do the courts in Romania have the power to strike outpart of a statement of case? If so, in what circumstances?

Under Romanian law, the Romanian courts do not have the powerto strike out part of a statement of a case.

6.5 Can the civil courts in Romania enter summary judgment?

The Romanian law provides for the summary judgment proceduresin certain cases, such as injunction motions, debt recovery andevidence preservation.

6.6 Do the courts in Romania have any powers to discontinueor stay the proceedings? If so, in what circumstances?

The adjournment of the proceedings may be decided by the court inone of the following cases:a) voluntary adjournment: in case both parties request the

adjournment or in case none of the parties present themselvesbefore the court at the hearings, except for the case when theparties requested in writing that the settlement of the caseshould be performed in their absence;

b) mandatory legal adjournment: in certain cases provided bylaw, the court has the obligation to decide upon theadjournment of proceedings; or

c) suppletory legal adjournment: the court may adjourn theproceedings: (i) in case the settlement of the case filedepends on the existence or non existence of a certain rightsubmitted for settlement in another case file; (ii) whencriminal prosecution was commenced for a criminal offenceinfluencing the decision subject to being rendered; or (iii)when the claimant did not submit the evidence requested bycourt.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Romania? Are there any classes of documents that donot require disclosure?

The general rule of the CCP is that all documents to which referenceis made in the pleadings must be attached to the claim when it isregistered with the court. The same rule applies to the defendant’swritten motion of defence.Disclosure is settled by the CCP as a procedure during a lawsuitwhen a party can be forced by court to reveal a document.A petition requesting the opponent party to disclose a documentcannot be rejected by court if:

it refers to a document signed by both parties;the party who must reveal the document referred to suchduring the lawsuit; orit is forced by law to reveal that document.

The court can order the inspection of the party’s files, in case suchparty is supposed to be harbouring/hiding a certain document. If a party refuses to reveal a certain document, the court may deemsuch behaviour as an admission regarding the content of suchdocument.

7.2 What are the rules on privilege in civil proceedings inRomania?

According to the CCP, the court must preserve confidentiality andnot admit a claim for disclosure of written evidence, in case suchrefers to:

personal issues;issues which cannot be revealed because of the duty ofconfidentiality; orissues which are detrimental to the party or to other personsand which can attract a criminal investigation against them.

7.3 What are the rules in Romania with respect to disclosureby third parties?

Disclosure of written evidence performed by a third party ispossible under the provisions of CCP, provided the court orderssuch disclosure.The rules mentioned under question 7.2 on preservation ofconfidentiality apply.

7.4 What is the court’s role in disclosure in civil proceedingsin Romania?

In the disclosure procedure ruled by the CCP, the court can issue anorder to a party or to a third party to reveal a document.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Romania?

There are no restrictions on the use of documents obtained bydisclosure, provided such disclosure does not harm confidentialityundertakings assumed under question 7.2 herein.

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8 Evidence

8.1 What are the basic rules of evidence in Romania?

There are two types of rules regarding the evidence.The first type of rule concerns the admissibility of the evidence andthe second the way the pieces of evidence are administrated by thecourt.In order to be admitted in a lawsuit, evidence must be (i) legallyclaimed (a legal foundation for that specific lawsuit is required), (ii)relevant to the issue, (iii) plausible, and (iv) conclusive andpermitted under applicable law. The judge can examine all pieces of evidence lawfully submittedfor the court’s attention and is free to decide on the merits andrelevance of such pieces of evidence.Evidence must be administered in front of the court.Regarding the power of the pieces of evidence, there are no rulesestablishing which have more power than others, so the judge canexamine all pieces of evidence freely.


There are five classes of evidence admitted by the CCP:documentary (written) evidence; witness statements; parties’testimonies; expert evidence; and inspection reports, whereby thedocumentary (written) evidence, witness statements and the expertevidence are the predominant sources of evidence.As regards the parties’ testimonies, the CCP provides that if theparty, in the absence of a grounded reason, refuses to answer to theexamination or refuses to appear in front of the court to testify, thejudge may consider such behaviour a frank admission or evidenceon behalf of the other party.The scope of the expert evidence and inspection reports is to assistand help the court in determining the issues in dispute or to furnishthe court with scientific information which is likely not to be in thecourt’s competence. The expert’s evidence must clearly identify thefacts and/or assumptions on which the opinion of the expert wasbased. Under the provisions of the CCP, the parties may have theirown experts, as consultants.


As the witness must attend the court hearing, a summons must beissued in this regard.Witness statements are under oath according to the CCP. Eachwitness is examined separately, in the absence of the otherwitnesses. The witness is first questioned by the judge about all thefacts he knows related to the case. After that, the parties can askfurther questions separately. Witness statements are noted down bythe court clerk in a report, which is signed by the witness, the judgeand the court clerk. If the witness does not want to sign or cannotsign, the court clerk will mention this aspect at the end of thestatement. Such statement will be signed only by the judge and thecourt clerk.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Romania?

In the Romanian civil law system, the court has an active role in theparties’ provision of evidence. The court is entitled to propose andadminister all pieces of evidence which the court considers to berelevant for solving the case.


9.1 What different types of judgments and orders are the civilcourts in Romania empowered to issue and in whatcircumstances?

The judgments of the Romanian civil courts are divided into thefollowing types:

final judgments, divided in two categories: first instancejudgments (Romanian: “sentinta”); and appeal or secondappeal judgments (Romanian: “decizie”);non-final judgments, which decide on incidental orpreliminary matters (Romanian: “incheiere”); orinjunctions (by which a party is required to perform or torestrain from performing a particular act for a certain amountof time).

Orders of payment in connection with civil or commercial debts arealso issued under the form of a final judgment.

9.2 What powers do your Romania have to make rulings ondamages/interests/costs of the litigation?

Local courts have full power to make rulings on damages/interests/costs of the litigation. For example, the power of thecourts for making rulings on damages is grounded on the provisionsof the Romanian Civil Code. The interests are payable on allmoney judgments from the day the cause of action arose. The rateof interests is applied by the court according to the provisions of thecontract (if the cause of the action arose from a contract) oraccording to the statute (if the contract is without penalties or whenthe cause of the action does not arise from a contract). TheGovernment Ordinance No. 9/2000 establishes rules concerning theinterests in civil and commercial contracts and introduces the termof legal interests (which is used when the parties establish interestsbut do not establish the rate of interests). Regarding legal costs, theCCP establishes the principle by which the party who lost the casewill be ordered to pay all the costs of the litigation, including legalfees incurred by the winning party. However, the court has the rightto increase or decrease the costs consisting of the lawyer’s fee.


Domestic final judgments can be enforced on the basis of a certifiedcopy of the enforcement order given by the presiding judge of thecourt which issued the judgment in the first instance stage.If the party which lost the litigation does not comply with thejudgment, such party can be forced to comply under the authority ofa court marshal.Regarding foreign judgments, if a judgment was rendered by acourt of an EU Member State where the Brussels Conventionapplies, the enforcement of such foreign judgment in Romania isgoverned by the provisions of such Brussels Convention.Regarding the non-EU judgments, Law no. 105/1992 regardingPrivate International Law is applicable, in case the international



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conventions to which Romania is a party does not provide otherwise.The recognition and enforcement of such non-EU judgments ispossible if the following cumulative conditions were met:(i) the judgment is final and enforceable in the country where it

has been rendered and it was issued by a court that had suchjurisdictional competence;

(ii) there is reciprocity regarding the recognition andenforcement of court decisions between Romania and thecountry where the judgment has been rendered;

(iii) the judgment is not fraudulently obtained; (iv) the judgment does not violate the principles of public order

applicable in accordance with the Romanian law;(v) a Romanian court has not rendered a decision in the same

matter prior to the date of submission of such foreignjudgment; and

(vi) the three-year term for performing of such enforcement hasbeen upheld, unless otherwise provided.

9.4 What are the rules of appeal against a judgment of a civilcourt of Romania?

The CCP establishes the rule that only final judgments can beappealed, while non-final judgments can only be appealed togetherwith the final judgment.The appellant must file an appeal notice in which he should set outthe grounds of the appeal. The grounds for an appeal may relateboth to questions of fact, including the evaluation of evidence, andto questions of law.The appeal notice is registered at the court which issued the finaljudgment. The appeal is settled by the next superior court.The filing of an appeal notice must be made within 15 days as of thecommunication of the final judgment. In certain cases, such asdivorce proceedings, the term is 30 days.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Romania?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

The most used method of dispute resolution in Romania is litigationbefore courts of law (see question 1.2 for details). Arbitration is also an alternative method for the settlement ofdisputes and is used particularly in the business field. The CCPenables the parties to appoint the arbitrators.Mediation is a new form of alternative dispute resolution (itappeared in Romania in 2006). Under mediation, parties have thepossibility of solving in a short period of time minor disputes,without involving the courts of justice.The institution of the Ombudsman (Romanian: “AvocatulPoporului”) was founded in order to settle in an amiable way thedisputes between individuals and the public administration, bymediation or dialogue. In 2008, the Ombudsman institution hasreached a decade of existence.


The CCP sets out the rules governing litigations and Law No.304/2004 refers to the hierarchical organisation system of the courtsand to the structure of the panel of judges. Regarding arbitration, under the Decree Law No. 139/1990, theCourt of International Commercial Arbitration attached to theChamber of Commerce and Industry of Romania was reorganisedas a permanent arbitration institution attached to the Chamber ofCommerce and Industry of Romania, for the administration ofinternational and domestic arbitration.The Civil Procedure Code sets up the rules governing domestic andinternational arbitration (arts 340 - 370³) and was amendedaccording with the UNCITRAL Regulations.Romania is a party to the Geneva Conventions on Arbitration of1923 and 1927, the New York Convention of 1958 on theRecognition and Enforcement of Foreign Arbitral Awards, theEuropean Convention on Commercial Arbitration of 1961 and theWashington Convention on the Settlement of Investment Disputesbetween States and Nationals of Other States of 1965.The mediation activity is regulated by the Law No. 192/2006 andthe activity of the Ombudsman Institution is regulated by theConstitution and Law No. 35/1997.

1.3 Are there any areas of law in Romania that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

As a rule, the parties are entitled to settle by arbitration/mediationtheir patrimonial disputes, except for the disputes implying rightsupon which the law allows no transaction. Exceptions are oncertain cases, regulated by law, such as the employment disputes.


2.1 What are the major dispute resolution institutions inRomania?

The major dispute resolution institutions in Romania are the courtsof justice, as described by Law No. 304/2004, the Court ofInternational Commercial Arbitration attached to the Chamber ofCommerce and Industry of Romania, the courts of commercialarbitration attached to the Chamber of Commerce and Industry ofeach county and the mediation centres from each county.


Arbitral decisions are binding and enforceable. Arbitral decisionsmay be annulled if certain strict requirements are met, according tothe provisions of the CCP.Regarding the mediation procedure, the law does not allow themediator to issue a decision which may be enforced by the parties.The parties solve their disputes by signing an agreement equivalentto a contract.

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The growth in the use of arbitration proceedings is relevant andshould be noted, as parties are more willing to rely on decisionsissued by arbitrators, as in most cases, arbitrators are reputablepractitioners of the law and arbitration proceedings are less time-consuming than litigations before courts of law.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Romania?

The growth in the number of litigation cases and the fact that theadministration of litigation proceedings is so time-consumingmakes arbitration a reasonable choice for commercial disputes. Thesame is also the case for civil disputes where mediation is beginningto be used more often to solve a dispute.

Voichita Craciun

Pachiu & Associates, Attorneys at Law4-10 Muntii Tatra Street, 5th floorBucharest 1, RO-011022 Romania

Tel: +40 21 312 1008Fax: +40 21 312 1009Email: [email protected]: www.pachiu.com

Voichita is a graduate of the Law School of Nicolae TitulescuUniversity in 2001. Voichita is a senior member of the Bucharest Bar Association, anda member of the National Romanian Bars Association.Voichita has extensive experience in domestic and internationalcommercial arbitration and is a member of the Banking and RealEstate Departments of the firm. She assists Austrian and Germanclients in providing legal assistance in matters related to commercialcontracts and corporate law.

Silviu Predescu

Pachiu & Associates, Attorneys at Law15 Isac Emil Str, Suite No. 5400023, Cluj-Napoca, Cluj countyRomania

Tel: +40 36 410 0762Fax: +40 36 410 0762Email: [email protected]: www.pachiu.com

Silviu graduated the Law School of Babes-Bolyai University fromCluj-Napoca in 2001. He is also a postgraduate in criminal law ofthe Law School of Babes-Bolyai University. Silviu is a senior member of the Cluj Bar Association and a memberof the National Romanian Bars Association.Silviu currently heads our Cluj-Napoca branch office and provideslegal advice in matters related to corporate law, real estate law, andcommercial contracts.

Pachiu & Associates is a business law firm established by Romanian attorneys. The lawyers of the firm are all graduatesof leading universities in Romania or abroad and are all members of the Bucharest Bar Association and the NationalUnion of Lawyers. Currently, the firm has 24 lawyers. More than half of the lawyers are senior members of theBucharest Bar Association. All lawyers are fluent in Romanian and English, and some are fluent in German, Frenchand Spanish. The Firm provides for a full range of commercial and corporate legal advice.

The Firm has extensive expertise in matters related to corporate governance, corporate disputes, securities, mergers andacquisitions, bankruptcy, commercial contracts, offshore and tax structures, labour law, real estate, competition, anti-trust law, intellectual property, banking and project financing, secured transactions, cross-border transactions, publicacquisitions, procurement, and litigation.

The firm maintains a close relationship with some leading multinational law firms and other small and medium-sizedlaw firms from abroad, so as to ensure efficient liaison with important foreign business centres and jurisdictions.

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Chapter 37


Yukov, Khrenov & Partners

Russia

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Russia got? Are there anyrules that govern civil procedure in Russia?

The Russian Federation has a continental system of lawcharacterised by division into substantive and procedural law.Rules of civil procedure for the courts of general jurisdiction areincorporated in the Code of Civil Procedure (CPC) [2002], and forthe state arbitration courts (established specially for resolving ofcommercial disputes) in Arbitrational Procedure Code (APC)[2002]. Court decisions in Russia are not treated as the source oflaw but provide for the forming of unified judicial practice. Thehighest judicial instances have the power to issue explanations andconstruction of laws after analysis of the court’s practice on specificmatters, which the lower courts rely upon.

1.2 How is the civil court system in Russia structured? Whatare the various levels of appeal and are there anyspecialist courts?

The civil court system in the Russian Federation consists of twomain branches - the courts of general jurisdiction and statearbitration [arbitrazh] courts. Their structures are established by theConstitution of the Russian Federation [1993], federalconstitutional laws “On the Court’s System” [1996], “On theArbitration Courts” [1995], “On the Courts of Military” [1999] andthe law “On the Court’s Structure” [1981]. The courts of general jurisdiction solve mostly civil disputes withnatural persons as parties (family, inheritance, labour disputes,complaints against actions of state officials, etc.). State arbitration courts have special jurisdiction over all kinds ofbusiness disputes, including those from corporate and tax relations. The system of the general jurisdiction judiciary consists of justicesof the peace (on the lowest level), city district courts, regionalcourts, courts of republics and autonomous areas of RussianFederation, district courts of military (navy) and the Supreme Courtof Russian Federation (the Supreme Court).The system of the state arbitration courts consists of four levels: 81regional arbitration courts; 20 appellate courts; 10 federal districtcourts; and the Supreme Arbitration Court of the RussianFederation (the Supreme Arbitration Court). Judicial acts of the justices of the peace can be challenged in

appellation procedure to the city district court in ten days sinceadoption (Ch.39 CPC). Any other court act can be challenged incassation procedure also in a term of ten days (Ch.40 CPC). Anyjudicial act can be also overruled in supervisory procedure wherefundamental violations of due process or mistakes in the use ofsubstantive norms exist (Ch.41 CPC). Such powers are vested inthe highest panels (presidium) of the regional courts or the SupremeCourt. A supervisory complaint can be filed within six monthssince judicial acts challenged became enforceable and all othermeans for judicial review were exhausted (§376 CPC). Judicial acts of the state arbitration courts can be appealed to: 1) appellate arbitration courts within a month since their

adoption, after which they enter into legal force; and 2) federal district (cassation) arbitration courts within two

months since entering into legal force. The appellate courts can fully reexamine a case and admit newevidence while the courts of cassation check if substantive andprocedural norms were used correctly. In exceptional circumstances, stated in §304 APC, the judicial acts,which became binding, may be appealed to the Supreme ArbitrationCourt, within three months, for review in the supervisory procedure(§292 APC). The court which has adopted an award may also review it under thenewly revealed circumstances which couldn’t be known during thehearings (§392(2) CPC, §311 APC).

1.3 What are the main stages in civil proceedings in Russia?What is their underlying timeframe?

The main stages in civil proceedings in the Russian Federation are: preparation for a trial which may take up to two months(§152 CPC, §§134-135 APC); trial proceedings (generally, a case must be consideredwithin two months in the court of general jurisdiction andthree months - in the state arbitration court); appellation proceedings (one month, §267 APC); cassation proceedings (one month, §348 CPC, §285 APC);and proceedings for review in the supervisory procedure (fromone to, roughly, six months in case the application isaccepted for review).

It takes one year, approximately, for a commercial dispute to passfrom the court of the first instance to the Supreme Arbitration Court,if there was no remand.

Andrew Yukov

Alexander Khrenov

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Yukov, Khrenov & Partners Russia

1.4 What is Russia’s local judiciary’s approach to exclusivejurisdiction clauses?

Procedural rules for both courts of general jurisdiction and statearbitration courts provide for the possibility to conclude exclusivejurisdictional agreements between the parties (§37 APC, §32 CPC).

1.5 What are the costs of civil court proceedings in Russia?Who bears these costs?

The costs consist of the court fees and other expenses related toconsideration of a case. The court fees have to be paid by aclaimant before filing of a statement of claim. The amount of the court fees are determined by the Tax Code ofRussian Federation (§§333.19-333.21). When filing of a statementof claim the minimum amount of fees is 100 roubles (approx. $4);the maximum amount cannot be more than 100,000 roubles(approx. $4,000). Other costs of the hearings may include sums to cover experts’ fees,expenses on interpreters, fees to representatives of the parties, costsof on-site review, and postal costs incurred by the parties inconnection with the case and recognised by the court. See also question 9.2.

1.6 Are there any particular rules about funding litigation inRussia? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

There are no special rules regulating funding of litigation. Thecourt may provide for a suspension of payments of the court’s feesunder the motion of the claimant experiencing financial difficulties. There are number of cases when natural persons filing claims to thecourts of general jurisdiction don’t pay legal fees. According to the recent Ruling of the Constitutional Court of theRussian Federation [23/01/2007] contingency fees, which dependexclusively on judicial or administrative decisions, are not possibleunder the Russian law. At the same time in compliance with the opinion of the SupremeArbitration Court of the Russian Federation reasonable and provedcosts on legal services have to be reimbursed even if the contractprovides only for payment of contingency fees.


2.1 Are there any pre-action procedures in place in Russia?What is their scope?

There is a prejudicial procedure in the Russian Federation whichmay be established by a federal act or stipulated by a contract. The prejudicial procedure obliges to present a written claim beforepleading. The filing of a claim may follow only in case of non-receipt of the answer to the written claim or in case a counterpartrefused to satisfy the claim.


Periods of limitation belong to the civil law substantive norms.Generally they are calculated from the moment an interested party

learns about the violation of its rights and/or legal interests. Forclaims on annulment of contracts the period flows from the start ofthe contract’s performance. The general term of limitation of action is established as three years. Certain kinds of claims may fall under special periods oflimitations:

one year for the claims on recognition of disputabletransactions void; two years for the claims following from the contract ofproperty insurance; and six months and two months, respectively, for the claims onannulment of a general shareholder’s meeting decision of ajoint-stock company and a limited liability company.


3.1 How are civil proceedings commenced (issued and served)in Russia? What various means of service are there? Whatis the deemed date of service? How is service effectedoutside Russia? Is there a preferred method of service offoreign proceedings in Russia?

The civil proceedings are commenced by initiation of a civil case inthe court with filing of a claim. The statement of claim has to contain a number of points andattachments that are required by the procedural codes; otherwise itmay be left immovable or returned to the claimant on a certainperiod of time for its correction. After the claim has been adopted the court initiates the case andappoints a preliminary hearings’ session. Persons participating in a case and other participants of proceedingshave to be notified by the court about the time and place of a courtsession by directing a copy of a judicial act. A copy of a judicial act must be mailed by a court as a registeredmail with a notice of serving or by sending a telegram, a fax orelectronic mail message, as well as with the use of other means ofcommunication, which ensure confirmation of the receipt. The service for the foreign litigants is usually performed throughdiplomatic channels and foreign ministries of justice according tothe rules of procedural codes and international treaties of theRussian Federation.

3.2 Are any pre-action interim remedies available in Russia?How do you apply for them? What are the main criteria forobtaining these?

State arbitration courts have the right to grant preliminaryinjunctions under special circumstances (§99 APC) and whenapplying for them one should consider the position of the SupremeArbitration Court (Information letter from 07/07/04 #78).Preliminary injunctions may be also sought for the perspectiveclaim to be considered in international commercial arbitralprocedures. Generally countersecurity from the applicant is needed (but itsprovision doesn’t guarantee the injunction sought). The applicationmay be filed to the court other than being a place for the settlementof the claim if circumstances demand. When adopting a preliminary injunction, the court sets terms forfiling a statement of claim, which the measure was sought for, andit may not exceed 15 working days. After filing of the claim thesemeasures act as an ordinary injunction.



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The main elements (§125 APC, §131 CPC) for the claimant’spleadings, besides from formal requirements like the names of theparties’ and their addresses, include:

claim (claims) addressed to the defendant or each of them incase of the multi-party dispute with reference to certainnorms of substantive law; circumstances being the background for the claim (claims); the amount of the claim (claims), if it can be appraised, andits calculation; and proof of fulfilment of the pre-action procedures whennecessary.

The claimant must attach proofs of sending off copies of thepleadings to other parties and payment of the court’s fees.


The claimant may change the subject of the claim or thecircumstances that make up its background (but not both); theclaimant may also increase or decrease the claimed amount. Thesemay be performed at any stage before adoption of the decision onthe merits by the court of first instance (§49(1) APC, §39(1) CPC).

4 Defending a Claim


The statement of defence must contain the respondents’ objectionson the merits the claim. Certain documents or their copies, whichprove arguments of the defence, must be attached to the statement.The statements should be prepared and filed in advance before thehearings to provide the court and other parties the possibility to readit and prepare their arguments. The respondent may file a counterclaim against the claimant to beconsidered jointly with the initial claim. A counterclaim may beaccepted in the same process if it is directed to set-off both claims,or granting of the counterclaim excludes the whole or partsatisfaction of initial claim, or if there is a relation between acounterclaim and initial claim and their joint consideration providesa fast and correct dispute settlement.


The defendant may present arguments at any time prior to adoptionof the court’s decision if he doesn’t violate the other parties’ rightsto know about his position and prepare to it.


There is no possibility for a defendant to bring an action against athird party in the same process started under the claim against him.It can be done in a separate proceeding following adjudication ofthe first claim.

If the court’s decision may influence rights or obligations of acertain natural person or legal entity, the court may join it into thecase as a third party without claims (on a party’s motion or underthe court’s initiative §51 APC, §43 CPC).


A defendant conducts his defence and files pleadings on hissovereign discretion. If he doesn’t present a position on the merits,the court considers the dispute under the evidence and on the meritspresented by the plaintiff (§156(1) APC).


A defendant may dispute the court’s jurisdiction, asking to dismissthe claim, as an argument for his defence at any time prior toadoption of the court’s decision. There’s no preliminary stagewhere the defendant may ask for such order as at any time the courtfinds it has no jurisdiction, the case should be dismissed (§150(1)APC, §135(1) CPC).



A third party with or without independent claims relating to thesubject of the dispute may enter a case prior to the rendering of thecourt’s decision. In order to join a case with independent claims a third party mustfile a statement of claim following general requirements (§50 (1)APC, §42 CPC; see question 3.3). Such third party receives itsstatus under the court’s order and has all the rights and duties of theclaimant except for fulfilment of pre-action procedures. A third person’s independent claims usually must be incontradiction with the rights claimed by the other parties to belongto them. Satisfaction of the third party’s demands must excludesatisfaction of the claim and/or counterclaim.


A court of the first instance may combine several similar cases ofwhich the same persons are participants in a single procedure forconsidering them together (§130(2) APC, §151(4) CPC). Combining similar cases is caused by a principle of processeconomy: the legislator aspires to use the time and means of thecourts and participants of the litigation process in the most effectiveway.


A court of the first instance may single out one or several claims forconsidering them in separate procedures if such seems reasonableand appropriate (§130(3) APC, §150(2) CPC).

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6.1 Is there any particular case allocation system before thecivil courts in Russia? How are cases allocated?

The main rule of case allocation is that a claim must be filed with acourt at the respondent’s location or place of residence. There is a possibility for a choice of jurisdiction in certaincircumstances, for example, if there are several defendants locatedin different regions, or the dispute concerns the defendant’sproperty, or there’s a place of performance stated in a contract. Exclusive jurisdiction norms, inter alia, include bankruptcyprocedures (at the debtor’s location), claims connected to the rights onimmovable property or sea/river vessels (at the location of the propertyor location of the shipping registry), and claims against carrierscoming from transportation contracts (at the carrier’s location). The Supreme Arbitration Court has exclusive jurisdiction for thedisputes on the validity of acts of the President, the Government orfederal bodies of the executive branch, connected with rights orinterests in the sphere of entrepreneurship or economic activity. Itsjurisdiction also covers economical disputes between the Russianstate and Russian regions, or between the Russian regions.

6.2 Do the courts in Russia have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The civil procedure norms provide for preliminary hearings on acase mainly for the discovery of evidence (§136 APC, §152 CPC)as well as institute general case tracks the courts must follow. Forthis reason there is not much discretion in case management vestedto the courts.

6.3 What sanctions are the courts in Russia empowered toimpose on a party that disobeys the court’s orders ordirections?

Failure to execute acts of judiciary entails criminal, administrativeand civil liability established by the federal laws. A party (physical person, organisation or its director) failing to complywith certain interim orders, for instance, to present the evidencerequested by the court, may be fined. The upper amount of fines isdetermined by the procedural codes (§119(1) APC, §57(3) CPC).

6.4 Do the courts in Russia have the power to strike out partof a statement of case? If so, in what circumstances?

The court strikes out a statement of case (§150 APC) if it finds outthat:

the case cannot be considered by the court; there is a judicial act of the state arbitration court, the courtof general jurisdiction or the competent court of a foreignstate, or the arbitration tribunal falling under the res judicataprinciple (except when recognition and enforcement of aforeign court’s or arbitral tribunal’s award has been alreadydenied); the plaintiff had already been cleared from his claim in aprevious process and his refusal was accepted by the court; the parties had reached an amicable settlement; or the organisation being a party to a case has been liquidatedor a natural person being a party has died and there’s nopossibility for legal succession.

6.5 Can the civil courts in Russia enter summary judgment?

There are no special rules equivalent to the institute of summaryjudgment in countries with common law. Procedure in state arbitration courts allows the judge to grant a finalaward without considering the merits of the claim if the defendanthas agreed with the claim, just referring to this confession(§170(4)).

6.6 Do the courts in Russia have any powers to discontinue orstay the proceedings? If so, in what circumstances?

The court is obliged to suspend the proceedings: if it is impossible to consider the given case until theresolution of another case in the other court of the RussianFederation; if a citizen who is a plaintiff or defendant, joins the RussianArmy and requests a suspension; in case of the death of a citizen who is a party to a case, iflegal succession is not possible; or if a citizen who is a party in a case loses legal capacity.

The court also usually suspends proceedings if: it appoints an expert examination; an organisation, who is a party to a case, undergoesreorganisation; a citizen who is a party to a case is called up to state service; a citizen who is a party to a case is at a medical treatmentinstitution or on a long business trip; or an international court or a court of a foreign state isexamining another case, the decision on which may beimportant for the consideration of the given case.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Russia? Are there any classes of documents that do notrequire disclosure?

Each person participating in a case has to disclose thecircumstances he refers to as the ground of his claims andobjections, to other persons participating in the case and toexchange all evidence. Parties may refer only to the evidence thatwas preliminary disclosed. So, it’s more a right than an obligation,meaning that if the party has not performed disclosure it may lose acase, and the other party may refer to undisclosure proving itsposition but demand disclosure only if it needs the documentsrevealed to prove its own arguments. Parties may enter into an agreement, acknowledging certaincircumstances of the case. These facts have to be accepted by thecourt not requiring further proving. Acknowledgment by a party of the circumstances, which the otherparty uses as the basis for its claims and objections, relieves theother party of a burden of proof for such circumstances.

7.2 What are the rules on privilege in civil proceedings inRussia?

The Russian civil procedural law has no special rules on privilegeas these rules are contained in special laws.



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7.3 What are the rules in Russia with respect to disclosure bythird parties?

The rules of disclosure by third parties under the court’s order arethe same as the rules of disclosure by parties to a case.

7.4 What is the court’s role in disclosure in civil proceedingsin Russia?

Any party, which needs certain evidence from the other party or athird party to prove its arguments and has no possibility to get it,may file a motion for the court’s order on disclosure. This may beneeded, for instance, to obtain banking documents. The court setscertain time limits for disclosure and imposes a fine if theresponsible person disobeys without respectful reasons.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Russia?

There are no special restrictions on the use of documents obtainedby disclosure except for the case with closed hearings.

8 Evidence

8.1 What are the basic rules of evidence in Russia?

Evidence means any data on facts obtained in the court’s procedureto establish the presence or absence of circumstances for a claim orobjections against it, as well as other circumstances important formaking correct adjudication. The order of collection of the evidence and its usage in the processare defined by the norms of APC (Ch.7) and CPC (Ch.6).


Evidence must be relevant to the case under consideration. The court may admit written and other material evidence,explanations of the parties, expert opinions, testimonies ofwitnesses, sound recordings and videotapes, prints from electronicdata sources, etc. Expert opinion as an evidence may only appear in a case if the courtappoints expert examination by special order. An expert or expert’scommission presents results of the research in a form of a writtenexpert statement on the questions put by the court. The statementis announced in hearings and the expert may be asked to presentexplanations on his research and answer the questions of the parties.


The court on the motion of a party to a case may summon a witnessfor participation in the hearings. Under the proposal of the court awitness may state under oath his testimonies in writing to beattached to the case’s materials.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Russia?

See question 7.4.


9.1 What different types of judgments and orders are the civilcourts in Russia empowered to issue and in whatcircumstances?

There are three types of judicial acts that the state courts may adopt: 1) reshenije - decision of the court of the first instance on the

merits of a case;2) opredelenije - decision of the court of any level on various

procedural matters or on the claim without evaluating itsmerits (for instance, dismissal on formal grounds); and

3) postanovlenije - decision of the appellate arbitration court,the arbitration court of cassation or Presidium of SupremeArbitration Court on the merits of complaint.

Appellate and cassation panels for the courts of general jurisdictionas well as the Supreme Court issue an order called opredelenijeafter considering complaint on the merits. Courts of general jurisdiction may also issue court’s order (prikaz)as a result of the simplified procedure on certain categories of cases(Ch.11 CPC).


In the final award the court must decide the issues on distribution ofcosts between the parties. Usually the losing party compensates thecourt’s fees and other legal fees. The court may lay all expensesupon a party, which abused its procedural rights causing damages toother parties and delays in hearings. The court, which decided the dispute on a claim, has jurisdiction toconsider the issues related to the damages caused by interimmeasures or failure to follow them. If the defendant wins the casehe may demand compensation of the damages caused by theprocedure by filing a claim to the same court.


The execution of a judicial act may be effected voluntarily or on theground of a writ of execution issued by the court after the act comesinto the legal force, except for some cases of immediateenforcement (in labour disputes, for instance). The winning party with a writ of enforcement may submit it to abank where the debtor has its accounts to transfer the money fromhis funds. Another way is to submit a writ of execution to the state bailiffs’service, which carries enforcement proceedings on the expense onthe debtor. A foreign judgment has to be recognised and enforced by theRussian state courts according to the order established byinternational treaties and federal laws. Afterwards it is enforced inthe same manner as the domestic awards.

9.4 What are the rules of appeal against a judgment of a civilcourt of Russia?

The parties to a case and interested third parties may challenge actsof judiciary by filing complaints to the higher courts of appellate orcassation levels. They may also appeal to the highest judicialbodies (the Supreme Court or the Supreme Arbitration Court) forsupervision review on a limited number of circumstances.

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1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Russia?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Usually parties to a dispute resolve it using the state judicial systemor permanent arbitral tribunals. In contrast to the state judicial system or commercial arbitration themain feature of mediation is the absence of any award as a result ofthe procedure. Despite fast growth of different mediation centers inthe country, their role on dispute resolution remains quite modest. The parties to a dispute may turn to mediation procedure at any timeduring the court’s proceedings. In accordance with the proceduralrules the state arbitration courts take measures for reconciliation ofthe parties and assist them in settling the dispute. The parties maysettle a dispute by making an amicable agreement or by using otherconciliatory procedures, where it does not violate federal laws. Ombudsman and special tribunals are not used in the RussianFederation for carrying out justice in the area of civil disputes.


Two main laws should be mentioned:The Law on International Commercial Arbitration [1993], based onthe UNICITRAL Model Law 1985, which establishes the rules forresolution of disputes with a foreign element (§1).The Law on Arbitration (third-party) Tribunals [2002], whichregulates the foundation and activity of domestic arbitralinstitutions.

1.3 Are there any areas of law in Russia that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

There are several areas of law where an arbitral tribunal as a placefor dispute resolution cannot be used. It depends on the type of case(subject jurisdiction), for instance, disputes coming frombankruptcy procedures, or related to public rights and duties, or ofan administrative (public) nature are excluded from arbitration. Thesame is true for the disputes from corporate relationships orantitrust cases.


2.1 What are the major dispute resolution institutions inRussia?

The major dispute resolution institutions in the Russian Federationexcept for the system of state courts are presented by permanentarbitral tribunals. The oldest arbitration institutions with international authority arethe International Commercial Arbitration Court and MaritimeArbitration Commission at the Chamber of Commerce and Industryof the Russian Federation (CCI RF). Their statutes are establishedby the mentioned Law on International Commercial Arbitration.

One of the most respectful forums for domestic ADR is Arbitration(third-party) Tribunal at CCI RF. The biggest companies, whose control share is owned by the state,like “Gazprom” or “United Energy Systems of Russia”, have longestablished arbitration courts, specialising on the resolution ofdisputes related to certain industries. There’s a special arbitration atthe National Association of Securities Market Participants(NAUFOR), which specialises on the resolution of disputes arisingfrom transactions with securities.


Any decision rendered by a foreign or domestic arbitration tribunal(arbitral award), irrespective of the country in which it was made,must be recognised as binding and may be enforced by filing anapplication to the competent court under the rules of the UNConvention on the Recognition and Enforcement of ForeignArbitral Awards 1958, CPC (Ch. 45 and 47) or APC (Ch.30 (§2) and31). Arbitration awards can’t be challenged on the merits in thestate courts. When the court’s order is obtained the procedure of enforcement isexactly the same as with enforcement of writs issued by the statecourts. The limitation period for submitting a foreign arbitral awardto the state court in the Russian Federation for recognition andenforcement is three years.



One of the trends in the development of ADR methods is an attemptof formal regulation of the mediation procedure in Russia withpreparing of draft of the Law on Mediation in 2007. During the lastfew years there was a certain cross-flow of arbitrations withRussian companies as parties, or even between them only, toforeign arbitration institutions in Europe (LCIA, International Courtof Arbitration of ICC, Arbitration Institute of the StockholmChamber of Commerce). That was, partly, due to the transitionalperiod of economy and vast law reform. Now the situation israpidly changing and International Commercial Arbitration Court atCCI RF returns to its position as the main center of disputeresolution for companies within CIS and neighbouring countries.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Russia?

One of the main tendencies is that decisions by the state arbitrationcourts became mostly open through the Internet sites of the courts.This brought to the growing influence of the court’s practice and therole of precedents in resolution of business disputes. The SupremeArbitration Court in its practice is following favourable attitude forresolution of more business disputes in arbitral tribunals (which canease the burden on the state courts) and use of different mechanismsfor pre-trial settlement of the disputes.



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Russia Yukov, Khrenov & Partners

Alexander Khrenov

Yukov, Khrenov & PartnersVorontsovskaya st., 17MoscowRussia 109147

Tel: +7 495 933 4676Fax: +7 495 933 4677Email: [email protected]: www.yklaw.ru

Managing Partner, attorney-at-law.Graduated with honours from the economic and legal faculty of theUral State Law Academy (UrGYuA) in 1996. Specialises in civil lawand civil litigation.Before joining the Law Office “Yukov, Khrenov and Partners” he wasattorney-at-law of the Law Office No 94 of the Inter-RepublicanAdvocacy Collegium and the Law Office No 4 of “Injurcollegia”.He represents clients’ interests before judicial, administrative andother bodies, conducts major negotiations and supervises currentprojects of the Law Office. He is responsible for building andsupport of relations with clients and strategy of the law practice’sdevelopment, particularly abroad.Mr. Khrenov is the Chairman of the Human rights commission of theAll-Russian Lawyers’ Association. The Commission examines thelegal regulations regarding human rights and works out therecommendations to provide protection of the rights, liberties andinterests of the citizens. He is also a member of the Moscow CityBar and the International Bar Association.

Andrew Yukov

Yukov, Khrenov & PartnersVorontsovskaya st., 17MoscowRussia 109147

Tel: +7 495 933 4676Fax: +7 495 933 4677Email: [email protected]: www.yklaw.ru

Managing Partner, attorney-at-lawGraduated from the Moscow State Law Academy (MGYuA) in 1995,specialising in civil law and complex litigation.Before joining the Law Office “Yukov, Khrenov and Partners” was anattorney-at-law of the Law Office No 94 of the Inter-RepublicanAdvocacy Collegium and the Law Office No 4 of the “Injurcollegia”.He started his legal practice as a Prosecutor of the Department forEnsuring the Prosecutor’s Participation in the Arbitration Procedureof the Russian Federation General Prosecutor’s Office.Mr. Yukov represents clients’ interests before judicial, administrativeand other authorities, conducts major negotiations on currentprojects of the Law Office. With rich experience of legal support forlarge-scale business law projects he is in charge of strategicaldevelopment of the firm. Participant of many seminars and conferences in Russian andabroad on the current problems of business regulation and civilprocedure.

Yukov, Khrenov and Partners Law Office is a law firm that has accepted international professional standards consistentlyfollowing imperishable values and traditions being the core of advocacy.

The Office specialises in representation of Clients’ interests in state arbitration courts of the Russian Federation,international commercial arbitration and legal consulting services for business sector.

The combination of our team members’ specialisation with rich experience of trial advocacy allows us to supportprojects of any complexity and scope (from preparing of a legal opinion to providing complex trial defence).

Our Law Office has proved itself to be a worthy and reliable partner for the clients, most of which are the major andmid-level Russian companies (investment, banking, railway transportation, fuel and energy complex, development andconstruction, metallurgy, telecommunications).

The Office has a network of foreign correspondent law firms, which doesn’t restrict us only to Russian jurisdiction andapplicable Russian law.



Chapter 38

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has the Slovak Republic got?Are there any rules that govern civil procedure in theSlovak Republic?

The Slovak system of law belongs to the countries of the so-calledContinental European law. The central sources of law that arerecognised as authoritative are legislative enactments (rather thanjudicial precedents). However, in reality, courts pay attention toprevious decisions, especially to decisions of higher courts. The basic principles for civil procedure can be found in theConstitutional Act No. 460/1992 Coll., Constitution of the SlovakRepublic, as amended. The civil proceedings are governed by the ActNo. 99/1963 Coll. Code of Civil Procedure as amended(subsequently referred to as the “CCP”), the Act No. 757/2004 Coll.on Courts, the Act No. 385/2000 Coll. on Judges and Lay Judges andthe Act No. 244/2002 Coll. on Arbitration proceedings as amended.

1.2 How is the civil court system in the Slovak Republicstructured? What are the various levels of appeal and arethere any specialist courts?

The court system of the Slovak Republic consists of common courtsand the Constitutional Court of the Slovak Republic, which has aspecial status. The Slovak Republic has a two-instance courtsystem.The system of courts is composed of:

District courts.Regional courts.The Supreme Court of the Slovak Republic.

andConstitutional Court of the Slovak Republic.Arbitration courts.

District courts are competent courts to decide cases at first instance.Regional courts hear cases as appellate courts, except casesexplicitly stated as those that are to be decided by Regional courtsat first instance. The Supreme Court of the Slovak Republic has thefunction of an appellate review court. Being the supreme judicialbody, the Supreme Court of the Slovak Republic never acts as a firstinstance court. Besides jurisdiction of common courts, there is theConstitutional Court of the Slovak Republic. It decides cases wherenatural persons or legal entities claim the breach of their basic rights

and fundamental freedoms or their human rights and fundamentalfreedoms implicit in international agreements ratified by the SlovakRepublic. Arbitration courts decide commercial and civil casesupon mutual agreement of the participants on such decision.Arbitration cases are cases which could be decided by judicialconciliation before the common courts. Arbitration proceedingshall take place in the Slovak Republic.

1.3 What are the main stages in civil proceedings in theSlovak Republic? What is their underlying timeframe?

1. The stage before the proceeding commences - where the courtmay, for example, authorise the conciliation between the litigants orissue a preliminary injunction (this stage is not obligatory). 2. Proceedings before a court of first instance consist of a) adiscovery proceeding where the court hears evidence and makes adecision and b) an execution proceeding for enforcement of thedecision of the court by legal force in case the litigant fails to fulfilthe obligations imposed on him (her) by the decision of the court(this stage is not obligatory).3. Appellate proceedings (appeal, protest against the judicialorders). Regular remedial measures can be filed against decisionsof the courts of first instance which are not final yet.4. Proceedings on special remedies (renewal of proceeding,review of an appeal, extraordinary review of an appeal). Specialremedies can be filed only upon fulfilment of the legal statutoryrequirements.The courts are not bound by any statutory time periods foradjudication of a dispute. According to court statistics, the averagetime for the first instance proceedings is estimated to be 15 months.

1.4 What is the Slovak Republic’s local judiciary’s approach toexclusive jurisdiction clauses?

In general, the Slovak courts have jurisdiction in civil matters apartfrom the following exceptions. The jurisdiction of the civil courtmay be reduced only by forum agreements or special legal acts,explicitly by the legal acts as follows: 1. The Act No. 97/1963 Coll. On International Private Law, asamended, stipulates in the Article 37d, that the jurisdiction of theSlovak court is exclusively given:a) in the proceedings, subject of which are rights in rem to

immovable property or the lease of the immovable property,if the immovable property is situated within the territory ofthe Slovak Republic; and

b) in the proceedings concerning registration and validity ofpatents, trade marks, designs or other rights, which must be

Konecná & Šafár, s.r.o.

Slovakia

Diana Herényiová

Dagmar Yoder

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registered, if the application for registration was filed withinthe territory of the Slovak Republic.

2. The parties to a contract may make a choice in the arbitrationcourt, which will be entitled to determine disputes between theparties. However, the Act No. 244/2002 Coll. on ArbitrationProceedings, as amended, enumerates the disputes, withinarbitration, which cannot be decided upon in the provision § 1,Section 2: a) disputes, subject matter of which is creation, change or

termination of the property right and other rights in rem;b) disputes, the subject matter of which is personal status of an

individual;c) disputes relating to enforcing of judgments; andd) disputes which will arise in the course of bankruptcy

proceedings.Article 22 of EU regulation 44/2001 Brussels I Regulation listscircumstances that warrant exclusive jurisdiction, where there is apresumption of a particularly close connection to the courts of aparticular Member State or where there is special need for legalcertainty. These include, inter alia, proceedings which have as theirobject rights in rem in immovable property or tenancies ofimmovable property or proceedings concerned with the registrationor validity of patents or other industrial property rights. In all caseslisted in Article 22, actions are barred from being brought beforeother courts, such as the court of the defendant’s domicile or anyother court, which the parties may have agreed on in a choice offorum clause.

1.5 What are the costs of civil court proceedings in the SlovakRepublic? Who bears these costs?

The costs for the proceedings comprises mainly of the court fee(regulated by the Act No. 71/1992 Coll. on Court Fees and Fees forCriminal Register), legal fees (regulated by the Decree No.655/2004 Coll. on Fee and Compensations of Advocates forProvision of Legal Services), cash expenses incurred by the partiesand evidence expenses.Each party pays its own costs incurred during the proceedings. Thereimbursement of the costs is adjudicated by the court according tothe cost-allocation rule, i.e. the losing party shall bear the costs ofthe proceedings. If the party wins only in a part of the proceedings,the court shall distribute the costs between the partiesproportionally; the exceptions of this rule are specified by the CCP.

1.6 Are there any particular rules about funding litigation inthe Slovak Republic? Are there anycontingency/conditional fee arrangements? Are there ruleson security for costs?

The obligation of the plaintiff to pay the court fee in the respectiveamount pursuant to the Act No. 71/1992 Coll. on Court Fees arisesupon filing of the lawsuit. Moreover, the court is entitled to requestan advance payment for execution of evidence from the party thatsubmitted the proposal of evidence.As much as the legal representation fee is concerned, the client andhis legal counsel may come to an agreement of the award forproviding of legal services without any restrictions (e.g. hourlyrates, fixed rates, remuneration as a success fee etc.). However, thecourt may acknowledge only the fee calculated according to theabovementioned legal act (see question 1.5). In case theremuneration has not been agreed, it shall be calculated accordingto Decree No. 655/2004 Coll.


2.1 Are there any pre-action procedures in place in the SlovakRepublic? What is their scope?

Adjudicating on the interim remedies and securing evidence mayprecede the commencement of the proceedings, however, notunconditionally. Also, the CCP specifically regulates “Conciliationproceedings” and “Determination of fatherhood by unanimousdeclaration of the parent proceedings” in the Section called “Theactivity of the court before the commencement of the trial”.


Time limits are treated as a substantive issue; therefore, theprovisions of the Act No. 40/1964 Coll. Civil Code apply. The CivilCode distinguishes the general limitation period of three years (TheCommercial Code distinguishes the general limitation period offour years) and “special” limitation periods of shorter or longertime. The limitation period starts running from the date on whichthe right could be exercised for the first time, practically meaningthe filing of a lawsuit at the relevant court.Different classes of claim are explicitly enumerated in Sections101-110 of Civil Code together with the special dates of timelapsing, e.g.a) right to compensation of damage/unjustified enrichment

shall become time-barred in two years from the day when thedamaged person got knowledge of the damage/unjustifiedenrichment and of the liable person;

b) rights from transport shall become time-barred within oneyear, except for rights to compensation of damages from thetransport of persons; and

c) the right corresponding to an easement shall become time-barred if not exercised for 10 years.


3.1 How are civil proceedings commenced (issued and served)in the Slovak Republic? What various means of service arethere? What is the deemed date of service? How is serviceeffected outside the Slovak Republic? Is there a preferredmethod of service of foreign proceedings in the SlovakRepublic?

Civil proceedings are commenced on the day the filed action isdelivered to the court. The action can be filed in written form or evenorally at the court. Although, the oral form is not recommended andis very rarely used. The proceedings are commenced as well byissuing the resolution on the commencement of the proceedings, butonly in matters that may be initiated ex officio. If the claim isdelivered by fax, telegraph, or via electronic means, it must befollowed by the original copy, delivered to the court within three days. Documents are served at the hearing, by post, by a bailiff or bybeing posted on an official notice board. Documents served by postmay be sent by registered mail or delivered to the addressee inperson. The court can serve the document: a) itself (e.g. at the courthearing or on the notice board); b) via post or by electronic means(if the party requests so); c) via bailiff; d) via local authority bodyor police department; or e) via the Ministry of Justice of the SlovakRepublic, in cases stipulated under special rules.

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Service may be effected at the addressee’s home, registered office(place of business), workplace or any other location where theaddressee is found. Where stipulated by law or ordered by thecourt, documents must be handed to the addressee in person. Theday of such delivery is deemed as the date of service. Where adocument must be handed over in person but the addressee is notfound at the service location where he is meant to be, the partyeffecting service notifies the addressee by a suitable means that asecond delivery attempt will be made at a specified time on aspecified day. If the second delivery attempt is unsuccessful, theparty effecting service deposits the document with the post office orlocal authority body and notifies the addressee accordingly by asuitable means. If the addressee fails to collect the document whilethe document is deposited, it is deemed to have been served on theday of the delivery of the document to the court, even when theaddressee was unaware that it had been left for him to collect.Council Regulation (EC) No. 1348/2000 on the service of judicialand extrajudicial documents in civil or commercial matters isapplicable to the Slovak Republic, as an EU Member State. Nopreferred method of service is used for service to foreign countries.

3.2 Are any pre-action interim remedies available in the SlovakRepublic? How do you apply for them? What are the maincriteria for obtaining these?

The court orders an interim measure on the basis of an application.No application is needed for interim measures for proceedings thecourt can initiate without an application. There are three types of interim measures that can be taken prior tothe commencement of or during the litigation:1. The court may order an interim measure if it is necessary to

temporarily freeze the status quo between the parties or ifthere are fears that the enforcement of the judgment may befrustrated. The application for interim measure shall include: thedesignation of relevant court, identification of the parties,description of decisive facts, designation of the evidencewhich defendant claims, statement of claim, date andsignature of the applicant. The application is subject to apayment of court fee of SKK 1,000.00 (approx. EUR33.1939) in civil matters, and SKK 2,000.00 (approx. EUR66.3878) in commercial matters.

2. Before the start of the substantive proceedings, evidence maybe secured on the basis of an application, where there arefears that this evidence would subsequently be impossible orextremely difficult to obtain.

3. Securing evidence in the proceedings concerning theintellectual property rights is a legal means which may beused by the applicant whose intellectual property rights werebreached or jeopardised. The court may impose payment ofthe deposit for the security of the damage which may arise bythe interim measure. The amount of the deposit shall bedetermined by the court at its discretion, on the basis of thecircumstances of the case.


Acts of the parties may be done in any form, unless the CCPprescribes the form. The claimant’s pleading does not create anyexception to this rule. The pleading should contain elements as follows:

the designation of relevant court;identification of the parties: if natural person - the firstnames, family names, places of residence of the parties and

their nationality; if legal entity is concerned - the entity’sname or trading name, registered office and identificationnumber if one has been assigned;faithful description of the key facts;list of evidence the applicant intends to rely on;what the applicant is seeking - i.e. statement of claim; anddate and signature of the claimant.


The claimant may, complying with the “right of disposal” principle ofCCP, alter its pleadings with the consent of the court anytimethroughout the proceedings. The court shall not allow the amendmen,should the results of the ongoing proceedings not serve as the groundsfor the amended pleadings proceedings. Further restriction todisposition principle enables the court to withhold its consent, if theother court would be competent to decide in the altered proceedings.

4 Defending a Claim


The action shall be delivered by the court to the defendant (therespondent). If the nature of the case or the circumstances require,the court may request the defendant to respond in writing, statingthe key facts in its defence, attaching the relevant documentationand listing the evidence to substantiate its claims.The defendant may assert its rights by bringing a counterclaimagainst the action. The set-off, as a monetary cross-claim that isalso a defence to the claim made in the action by the claimant, isconsidered to be a counterclaim on condition that the defendantclaims to be awarded more than the claimant did.


The court lays down a time limit at its own discretion for thedefendant to submit its response.


The CCP does not recognise any such mechanism. On the otherhand, the accession of a third party to the defendant’s side isallowed, subject to court approval. In a single proceeding thedefendant may not bring an action against a third party, whereas theconsolidation of two sets of proceedings is not excluded (for moredetail please see the question 5.2).


The court may deliver a judgment by default without a hearingtaking place if: a) the defendant does not comply with the court’s obligation to

respond in writing within 15 days after the delivery of anaction and there are no serious reasons for such behaviour;

b) the defendant was properly invited by the court to the courthearing and afterwards he did not attend such hearing; and




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c) the defendant did not excuse such non-attendance.Such judgment, by default, does not automatically mean winningthe case by the plaintiff. The defendant must be advised on suchconsequence. If the defendant misses the deadline for submission of his responseand has justified its reasons to the court, the defendant may file theplea to cancel the judgment together with its statement and themotion for forgiving its default until the judgment takes effect.


The party to proceedings may dispute the court’s territorial andmaterial jurisdiction as a right of its defence. The court shall giveits reasoning to the defendant’s objection.



Based on the motion of the party, the court may accept the thirdparty to enter into proceedings. Consent of the third party isrequired, if the third party shall act on the claimant’s side. Suchconsent is not required if the party shall act on the defendant’s side.It is solely at the court’s discretion to allow or dismiss such motionof a party to join the ongoing proceedings.


Two proceedings that were initiated at the same court and subject-matter of which are related or the parties to a proceedings are thesame, may be consolidated by the court’s decision. Such procedureis in accordance with the principle of economic efficiency.


The court may decide to split the proceedings, if the plaintiffproposes subject matters that are not suitable for joint proceedingsor if the reason the proceedings were consolidated for has ceased.


6.1 Is there any particular case allocation system before thecivil courts in the Slovak Republic? How are casesallocated?

The proceedings take place at the court having local jurisdiction.Section 84 of the CCP states that the competent court is the generalcourt of the place of residence of the party against whom the actionis being taken (the defendant), except where otherwise stipulated.The CCP specifies the exclusive local jurisdiction in the certain typeof proceedings. Exclusive territorial jurisdiction takes precedencewhen determining a court’s territorial jurisdiction. Only whereexclusive territorial jurisdiction does not apply is considerationgiven to general jurisdiction or to a choice of jurisdiction. As a result of the judicial reform, which was implemented in 2005,computer-based random allocation of cases to judges through a

filing room applies in the whole court system. The schedules ofcourt hearings are publicised, respecting the principle of publicityin civil procedure.

6.2 Do the courts in the Slovak Republic have any particularcase management powers? What interim applications canthe parties make? What are the cost consequences?

The court has the following legal instruments to ensure thatproceedings run smoothly:

the court may impose a disciplinary fine in the amount ofSKK 25,000.00 (approx. EUR 829.8479) to the person: whoobstructs the proceedings by failing to attend a court hearing,although it was duly and timely served by a summons anddid not apologise to the court; who disturbs the order in thecourt room; who disobeys the instruction of the court; and/orwho submits the offensive motion. The discipline fine up toSKK 50,000.00 (approx. EUR 1,659.6959) can be imposed ifthe above mentioned acts were repeated and the court wasobstructed in a large extent by such behaviour;the court is entitled to determine the judicial terms(deadlines) to the parties to secure the speediness of theproceedings, usually in simple acts the term of 10-15 days isset, for more complicated acts of the participants a longerterm may be set;prior to the commencement of the hearing, the court shouldattempt to settle the dispute amicably;the court instructs the parties to the proceedings on theirprocedural rights and obligations; andthe CCP imposes on the court that the matter should be dealtwith at a single court hearing.

There are not many interim options available according to the CCP,the basic being the interim measure described in question 3.2. Formore details regarding costs please see question 3.2 above.

6.3 What sanctions are the courts in the Slovak Republicempowered to impose on a party that disobeys the court’sorders or directions?

Please see question 6.2.

6.4 Do the courts in the Slovak Republic have the power tostrike out part of a statement of case? If so, in whatcircumstances?

The CCP modifies the disposition principle and allows the court toaward more than the party sought for in case the proceedings couldhave commenced ex officio or where the manner of settlement is setforth by law.

6.5 Can the civil courts in the Slovak Republic enter summaryjudgment?

The CCP regulates three kinds of summary proceedings, theoutcome of which are: a) order of payment (ordinary, for bills of exchange or cheques,

European) and order for performance; andb) small claims (payments of sum not exceeding EUR 500.00).The court does not need to order a hearing in the summaryproceedings.A payment order can be challenged. The defendant has 15 days fromthe date of service in which to challenge a payment order. Objectionsagainst bill-of-exchange (cheque) payment orders can be lodged


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within three days of their being served. If just one of the defendantsfiles protest against the judicial order within the respective term, theorder is revoked in its entirety and the court orders a hearing.

6.6 Do the courts in the Slovak Republic have any powers todiscontinue or stay the proceedings? If so, in whatcircumstances?

The court shall discontinue the proceedings if one or any offollowing situations occur:1. the party loses its legal capacity to be a party to the

proceedings and is not represented by his/her representativeauthorised to act in whole proceedings;

2. the decision is dependent on an issue that the court is notentitled to deal with;

3. the court finds a discrepancy between the generally bindinglegal regulations and the Constitution of the SlovakRepublic, legal act or international treaty and submits amotion to the Constitutional Court of the Slovak Republic toprovide its statement;

4. the court raises a preliminary question to European Court ofJustice; and/or

5. the parties unanimously propose to discontinue theproceedings, unless the purpose of the proceedings iscontravened.

Under other less substantial circumstances, the CCP authorises thecourt to decide at their own discretion whether to continue ordiscontinue the proceedings temporarily.The court may stay the proceedings, inter alia: 1. if the legal entity terminates its existence without

establishing a legal successor; 2. if the claimant withdraws its motion; 3. if the matter does not fall within the court’s competence or if

other proceedings shall precede the court proceeding; and4. if the absence of a substantial condition of the proceeding

cannot be repaired.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin the Slovak Republic? Are there any classes ofdocuments that do not require disclosure?

All persons are required by law to appear before a court as a witnessif summoned and to testify; substitution in this case is excluded.Similarly, the persons preserving the documents needed for theproceedings are obliged to submit the documents if ordered by thecourt. The persons are required to provide information importantfor the proceedings and the judgment of the court in writing too. Under Slovak law it is not necessary to prove commonly known facts,facts the court is familiar with from its function, legal enactments ofthe Slovak Republic publicised in the Collection of Laws of theSlovak Republic or legally binding acts publicised in the OfficialJournal of the European Communities and the European Union.

7.2 What are the rules on privilege in civil proceedings in theSlovak Republic?

The taking of evidence should be exercised in such a manner thatthe obligation to maintain confidentiality on classified information,either by the act regulated or by the state approved confidentiality,is observed. Hearing of a witness or a party to a proceeding is not

excluded as long as the respective state authority, or the person onbehalf of which the confidentiality should be preserved, exemptsthe person from maintaining confidentiality. Such rule appliesaccordingly for other means of proof. Witnesses may refuse to testify in cases where such testimonywould give rise to the risk of criminal prosecution of the witness orrelatives; the court decides whether the reasons for refusing to giveevidence are justified. The court must respect the statutoryobligation of witnesses or parties to the proceedings to keep certainmatters secret or confidential (e.g. in accordance with the Act No.215/2004 on Protection of Classified Information as amendedand/or the Act No. 46/1993 Coll. on the Slovak Information Serviceas amended, facts specified in the health documentation of a patient- confidential medical records, confidential banking records, etc.).

7.3 What are the rules in the Slovak Republic with respect todisclosure by third parties?

Besides the obligations of third parties mentioned under question7.1, the court is empowered to order the third party to submit theobject which will be examined to the court.

7.4 What is the court’s role in disclosure in civil proceedingsin the Slovak Republic?

The court is the only authority that may request documents orinformation from parties to the proceedings of third parties orrespective authorities that it believes to be substantial for thedecision. A party to the proceeding cannot directly request the otherparty to present documents that it believes to be relevant for theproceedings. The requesting party must specify the documents thatare demanded to be presented in the proposal to the court. It is upto the court to grant its consent.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in the Slovak Republic?

The Decree of the Ministry of Justice of the Slovak Republic No.543/2005 Coll. On Administration and Office Order for DistrictCourts, Regional Courts, for the Special Court and for MilitaryCourts provides that the presiding judge shall take appropriatemeasures of protection before the inspection of a court file by aperson so that the classified information, information protectedunder special regulations and legitimate interests of the participantcontained in a court file, is secured. If the third parties, wishing toinspect the court file, manage to prove their legal interest, thepresiding judge can give them the consent to such inspection of acourt file.

8 Evidence

8.1 What are the basic rules of evidence in the SlovakRepublic?

Following the so-called concentration principle, parties are obligedto submit the evidence and matters of fact no later than theresolution of the court ruling the termination of the evidence takingis declared. The court shall advise the participants on their abovestated obligations. The CCP in Section 132 provides that the court assesses evidence atits discretion, each piece of evidence separately and all evidence inits mutual context; the court shall take due account of everything




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which comes to light in proceedings, including the facts presentedby the parties.Evidence-taking is governed by the principle of directness andprinciple of oral proceedings. Therefore the evidence-taking ispresumed to be taken essentially throughout the trial and the courtshall decide at the trial.


In essence, all resources that can be used to determine the facts of acase may be used as evidence. These mainly include theexamination of witnesses, experts, expert opinions, items anddocumentary evidence. If, in order to prove its claims, a party proposes evidence that hasbeen obtained or procured by the party in contravention of generallybinding legal regulations, and the obtaining or procurement of theevidence has resulted in an infringement of the rights of anothernatural or legal person, the court will view such evidence asinadmissible. Therefore, inadmissible evidence includes a recordingof a telephone conversation which has been made without theknowledge of the persons in the conversation and in conflict with thelegal regulations (for example with the Code of Criminal Procedure).If the court decision depends on professional knowledge, an expertopinion or expert testimony can be used as evidence. Theparticipants or third parties are obliged to cooperate with the expertupon the court’s order.


Any natural person who is not a party to proceedings is obliged toappear in court if summoned, and to testify as a witness. A witnessmay be forced to attend the court hearing for the purposes oftestifying by being fined a maximum of SKK 50,000 (approx. EUR1,659,6959) or may be brought before a court by the Slovak policeforces on condition that the witness was advised before. Witnessestestify to what they have experienced and observed. They must tellthe truth and not conceal anything (except confidential information- see section 7 above). At the beginning of an examination, theidentity of the witness must be determined along with circumstanceswhich could affect his reliability. Witnesses should be informed ofthe significance of their testimony, of their rights and obligations andof the criminal consequences of a false testimony. The presidingjudge asks witnesses to describe everything they know about thesubject of examination. The judge then asks questions necessary tofill out and clarify aspects of the testimony. Questions may also beasked by members of the chamber and, with the permission of thepresiding judge, by parties and experts.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in the Slovak Republic?

In contentious proceedings, the general principle is that the courtfurnishes proposed evidence; however, the court may decide thatcertain evidence will not be taken, especially if it deems the fact inquestion to be proved. In a situation where none of the partiesproposes evidence, but the need for such evidence has become clearover the course of the proceedings, the court will take such evidenceon its own motion.


9.1 What different types of judgments and orders are the civilcourts in the Slovak Republic empowered to issue and inwhat circumstances?

The court is empowered to issue judgment on the merits or to issueprocedural decisions. The CCP distinguishes five forms of thejudicial decisions:

Judgment - the subject-matter of the case is resolved by thejudgment.Resolution - the CCP states when the court decides in this form(shall be procedural decision for judgment on the merits).Payment order - issued without hearing or expression of thedefendant’s opinion if the plaintiff’s proposal (claim)contains undisputable facts of a monetary claim.Bills of exchange or cheques payment order - bill-of-exchange (cheque) payment order may only be granted at theclaimant’s petition which must be accompanied by theoriginal bill of exchange or cheque and any other documentsneeded to assert the right.European payment order - was implemented into the CCP onthe basis of the Regulation (EC) No. 1896/2006 and is onlyavailable for cross-border cases.Performance order - if other claim than monetary is soughtfor.

Each court decisions must comply with the formal requirements andthe particulars, such as identification of the court and parties,statement, justification, instruction on remedies, and instruction onthe possibilities of the judgment execution.


Claiming damages (e.g. damage for suffered loss and lost profits,satisfaction for moral injury), appurtenances of the receivable(interests, interests on late payment, and payment for delay) and costsof the proceedings are subject to the party’s right of disposal. Thecourt does not rule on these claims ex officio (of its own initiative).Ruling on the interests is integrated in the judgment if the subject ofthe dispute is an amount of money. Interests are considered asappurtenances of the receivable. For more information on costs ofthe litigation see the answers under question 1.5.


The foreign judgment recognised by the Slovak court has the samelegal effects as the decision of the Slovak court.If the party subject to an enforceable judgment fails to comply with it,the claimant can submit an application for the judgment to be executedin accordance with the special legislation governing this (Act No.233/1995 Coll. of the National Council of the Slovak Republicgoverning court executors and execution: “Execution Code”).Methods of enforcement under the Execution Code: a. where based on an enforcement order imposing an obligation

to pay a sum of money, it may take the form of: deductions from a salary or other income; a garnishee order (in respect of a bank account or

other cash receivables); sale of movable property; sale of stocks;


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sale of immovable property; or sale of an enterprise.

b. where based on an enforcement order imposing an obligationother than payment of a sum of money, the method ofenforcement depends on the nature of the obligationimposed. It may take the form of:

eviction; removal or destruction of property at the liable party’s

expense; division of joint property; or performance of work and services.

9.4 What are the rules of appeal against a judgment of a civilcourt of the Slovak Republic?

The party unsatisfied with a judgment may appeal within 15 daysfrom the delivery of a judgment at the court against which theappeal is being filed. The appeal is admissible only against first-instance court decisions. The CCP limits the situations in whichappeals cannot be filed. The appealing party must aim its reasoningexclusively against the judicial statement of the decision; appealingagainst the reasoning of the decision would have no legal effect.The appeal has a suspensory effect, i.e. the decision shall not takelegal effect until the appellate court decides on the appeal.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in the Slovak Republic?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Slovak legal regulations do not prescribe any legal requirement tomake use of any type of dispute resolution alternative to litigation.Arbitration is the prevailing method of alternative disputeresolution in the Slovak Republic, mainly in commercial matters.The parties may appoint a permanent arbitration court or an ad hocarbitrator for resolution of an existing dispute as well as for futuredisputes. Mediation is a voluntary process in which a neutral person - themediator - assists the parties to a dispute to negotiate a settlementof it. It is a quick, informal and relatively cheap process. Mediationcan be used at any time either before or in parallel with litigation orarbitration. The use of mediation does not have any effect on aparty’s positions in litigation or arbitration if they do not succeed insettling the dispute.Dispute resolution does not fall within the competence of the PublicDefender of Rights (Ombudsman), whose role in dispute resolutionis only subsidiary. The Public Defender of Rights may give legaldirections, which consist of the possibilities of resolving its issue aswell as the possibilities to address the respective stateadministration bodies.


Mediation is governed by Act No. 420/2004 Coll. on Mediation;arbitration is governed by the Act No. 244/2002 Coll. on Arbitration

Proceedings; position, duties and competences of the PublicDefender of Rights are regulated by the Constitution and Act No.564/2001 Coll. on Public Defender of Rights as amended.

1.3 Are there any areas of law in the Slovak Republic thatcannot use arbitration/mediation/tribunals/Ombudsman asa means of dispute resolution?

In arbitration proceedings, only disputes resulting in conciliation incourt pursuant to the CCP may be decided. Disputes which cannotbe decided by arbitration courts are listed under provision § 1Section 3 of the Act on the Arbitration Proceedings (for more detailsee the answers under question 1.4). Mediation as a means ofamicable settlement of dispute may be used in disputes arising fromthe relationships in civil, family, commercial and labour law.


2.1 What are the major dispute resolution institutions in theSlovak Republic?

The list of permanent arbitration courts is administered by theMinistry of Justice of the Slovak Republic. Currently, there are 58arbitration courts. The most reputable and the oldest court is theArbitration Court attached to the Slovak Chamber of Commerceand Industry.


The arbitration procedure is concluded by the issuing of anarbitration award. Once an arbitration award has been served, it hasthe same effects for the parties to the arbitration procedure as a finaljudgment. Though, the parties are allowed to file an action forcancellation of the arbitration judgment applying the specificreasons determined under the Arbitration Act.A mediation agreement has the force of an execution order, if it isdrawn up in the form of a notarial deed or confirmed as conciliationin court.



Apart from conciliation in the court enabling parties to settle adispute, mediation is a relatively new method of alternative disputeresolution. Despite the adoption of the Act on Mediation in 2004,it has not been accepted on a larger scale by the public. Since the enactment of the new Act on Arbitration Proceedings, thenumber of the arbitration courts has expanded extremely.Arbitration courts deal mainly with commercial matters.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in the Slovak Republic?

No amendments or new regulations have been proceeded recentlyin the legislature.




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Dagmar Yoder

Konecná & Šafár s.r.o.Ventúrska 12, 811 01 BratislavaSlovakia


Dagmar Yoder graduated from the Faculty of Law, KomenskýUniversity, Bratislava, and received her LL.M. degree at theUniversity of London, Great Britain. She is a lawyer registered withthe Slovak Bar Association and a partner of Konecná & Šafár,Attorneys at law, Bratislava. She speaks Slovak, Czech, English andGerman. She gained her professional experience not only within thelegal profession, but also at a managerial position of a renownedbanking institution. She has assisted local and international clientsin major litigations and arbitration proceedings before local courts,mainly in relation to the real estate. She has abundant experienceassociated with legal agenda related to significant developmentprojects.

Diana Herényiová

Konecná & Šafár s.r.o.Ventúrska 12, 811 01 Bratislava Slovakia


Diana Herényiová, lawyer at Konecná & Šafár, is experienced in thearea of civil law, litigation, arbitration, corporate and criminal law.Her practice covers representation before local courts and inarbitration proceedings as well as different areas of civil andcommercial law - especially in the area of contractual relationships.She has participated on real estate deals and has experienceassociated with legal audits of corporations. Diana Herényiovágraduated from the Faculty of Law, Pavol Jozef Šafárik University,Košice (Mgr. 2006, JUDr. 2007). She speaks Slovak, Czech,English and German.

The law firm Konecná & Šafár was established in 2000 and currently represents a strong and flexible team of morethan 35 lawyers and tax advisors with the high professional standards gained from experience of the partners and seniorlawyers from international law firms.

The firm specialises in providing legal advice to both international and local clients with respect to their businessactivities in the Slovak Republic and through its Prague-based and Bucharest-based branches also in the CzechRepublic and Romania. In order to meet the highest professional quality standards, the firm specialises in specific fieldsof legal practice where our lawyers have obtained the relevant professional skills and experience, namely corporateagenda, M&A, real estate projects, intellectual property law, debt recovery, litigation and governmental administrationagenda, tax matters and PPP.

In the field of arbitration and litigation, the team of Konecná & Šafár represents a strong support to our clients beforelocal courts and in local as well as international arbitrations, in which Konecná & Šafár has already recorded a numberof significant achievements. Konecná & Šafár also provides services in the field of civil and administrative procedures.Partners of Konecná & Šafár are also members of national and international arbitral tribunals.


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Chapter 39

Janezic & Jarkovic

Slovenia

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Slovenia got? Are there anyrules that govern civil procedure in Slovenia?

The Slovenian legal system is based on Continental European lawtradition, which originates from civil law of Rome. The power tomake the law lies predominantly in the legislature whereas thejudiciary is independent at application of the law and is bound bythe Constitution and laws.Civil procedure is governed by Civil Procedure Act (CPA) adoptedin 1999 which has been amended for several times (OJ RS, No.26/1999 with amendments).

1.2 How is the civil court system in Slovenia structured? Whatare the various levels of appeal and are there anyspecialist courts?

Courts of general jurisdiction include 44 local courts (i.e. firstinstance courts with jurisdiction over civil cases concerning claimsfor damages or property rights up to a certain value, civil casesconcerning disturbance of possession, tenancy relations etc.), 11district courts (i.e. first instance courts dealing with civil caseswhich exceed the jurisdiction of local courts, commercial disputes,copyright and IP cases, confirmation of rulings of a foreign courtetc.), four higher courts as courts of appellate jurisdiction whichdetermine appeals against decisions of the first instance courts, andfinally the Supreme Court as the highest appellate court of thirdinstance limited to issues of substantive law and to the most severebreaches of procedure.Specialised courts on the other hand comprise four labour courtswhich rule on labour-related disputes, social court that rules onsocial insurance disputes, and finally the Administrative Court,which provides legal protection in administrative affairs and has thestatus of a higher court.

1.3 What are the main stages in civil proceedings in Slovenia?What is their underlying timeframe?

The main stages in civil proceedings before the Slovenian courts are:filing of a lawsuit by the plaintiff;preliminary examination of the lawsuit made by the court;notification of the lawsuit to the defendant;

defendant’s reply to the lawsuit;plaintiff’s counter-reply, etc.;pre-trial review (attempt of settlement);hearing(s);deliberation and proclamation of the judgment; andassessment of costs.

Some of the stages, in particular those concerning both parties,require certain procedural conducts within strict temporaltimeframes. Such temporal and procedural requirements will beaddressed below, but on average the duration of civil proceedingsbefore the first instance court is approximately three years whereasappeal proceeding between one and two years.

1.4 What is Slovenia’s local judiciary’s approach to exclusivejurisdiction clauses?

According to the Private International Law and Procedure Act (OJRS, No. 56/1999, 45/2008)(PILPA) the parties may conclude anagreement conferring the first instance jurisdiction upon a courtoutside Slovenian jurisdiction only in case one of them is a foreignnational person or legal entity and unless an exclusive territorialjurisdiction is vested to the certain Slovenian court by the statute(e.g. the exclusive territorial jurisdiction over the disputes on title toor other rights in immovable property is vested in the court on theterritory of which the immovable property is located).

1.5 What are the costs of civil court proceedings in Slovenia?Who bears these costs?

The most frequent costs incurred in civil proceedings are besideslawyers’ fees court fees and the costs of court experts, thesummoning of witnesses, court interpreters, plaintiff’s security andadvances for obtaining evidence. The costs in principle depend onthe value of the matter in dispute and are initially borne by theparties themselves as they arise from their actions. As a final stagein civil proceedings a costs decision is made by the court accordingto agreement between either parties or the court’s own assessment.The basic rule is that costs are reimbursed to the successful party bythe unsuccessful party in the action. Special rules apply where costsarise through the fault of a particular party or some other situations.

1.6 Are there any particular rules about funding litigation inSlovenia? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

The Slovenian legal system permits contingency fee arrangements

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Andrej Jarkovic

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provided they are concluded in writing and do not amount to morethan 15% of the amount awarded to the client. Such contingencyfee arrangements are not considered by the court when decidingabout the recovery of costs.If the plaintiff is a foreign national person or legal entity a personwithout nationality which does not have a permanent residence inSlovenia, the defendant may request that the plaintiff deposits asecurity for legal costs. The Law contains certain circumstanceswhere the defendant cannot require a security for legal costs, e.g. incase of factual reciprocity or international treaty providingotherwise. This security requirement does also not apply tonationals of EC member states or of states party to the EEA.


2.1 Are there any pre-action procedures in place in Slovenia?What is their scope?

According to the State Attorney Act a person intending to bring anaction against anyone represented by State Attorney has a duty topropose to the State Attorney that their dispute be settled withoutcommencing proceedings. Other than that there is no legal regulation imposing upon theplaintiff a duty to follow any pre-action procedures.


The general limitation period is five years, whereas for claimsarising from commercial contracts it is three years. On the otherhand, limitation period concerning non-contractual claims fordamages expires within three years following the day when theinjured party had found out the damages and the identity of thewrongdoer, but in any case within five years following the daywhen the damages occurred. Provisions regarding the statute of limitations contained inSlovenia’s Code of Obligations are considered as a substantive lawissue.


3.1 How are civil proceedings commenced (issued and served)in Slovenia? What various means of service are there?What is the deemed date of service? How is serviceaffected outside Slovenia? Is there a preferred method ofservice of foreign proceedings in Slovenia?

Civil proceedings are commenced by filing of a lawsuit with thecompetent court. Documents may be served on addressees in theterritory of Slovenia by post, by a court official, at the court or inanother manner laid down by law. The Slovenian legal systemrecognises two forms of service of documents, i.e. ordinary serviceand personal service (for serving complaints, court decisions thatare open to special appeal, etc.). In the event of ordinary service a document must be served to theresidential or business address by leaving it in the house letter boxin case handing to the individual or someone of his household is notpossible (it shall be deemed that the day of delivery is the date thedocuments have been left in the letter box). In the case of personalservice only a notice of delivery can be left in the mailbox with the

instructions that the delivery should be taken within fifteen days (itshall be deemed that the last day of the fifteen time period is thedate of service). When such judicial document is served outside Slovenia in anotherEU Member State it will be served on the basis of the 1965 HagueConvention on the service in the Member States of judicial andextrajudicial documents in civil or commercial matters and theCouncil Regulation (EC) No. 1348/2000. In case a plaintiff is aforeign person or a legal entity it has to appoint a proxy for receiptof the documents in Slovenia. Should he fail to do so, the courtappoints a temporary proxy on the plaintiff’s costs and serves sucha proxy with a formal request to appoint a proxy. In case theplaintiff does not appoint a proxy, the court dismisses the lawsuit.In case of foreign defendants, the court serves the defendant with arequest to appoint a proxy. If the defendant fails to do so, the courtappoints a proxy on the defendant’s own costs. The preferredmethod of service of foreign proceedings in Slovenia is by way ofpersonal service.

3.2 Are any pre-action interim remedies available in Slovenia?How do you apply for them? What are the main criteria forobtaining these?

Interim measures may be divided into measures to safeguardpecuniary claims (e.g. an instruction to an organisation dealing inpayment transactions to refuse payment from the debtor’s account)and measures to safeguard non-pecuniary claims.When the proposal for an interim measure is filed, it is decided bythe court before which the proceedings have been initiated.However, if the proposal for an interim measure is presented beforecourt proceedings have been instituted, the decision on thatproposal is a matter of the local court which is competent to decideon the proposal for execution. An interim measure to safeguard aclaim will be issued by the court if the plaintiff demonstrates theprobability that his claim exists and that the matter is necessary andurgent.


Besides facultative elements, such as legal basis for the claim, everypleading has to include the following main elements:

identification of the court; the names and addresses of the parties and their legalrepresentatives; the plaintiff’s claim, the relief sought, including interests andlegal costs; andthe facts giving rise to the dispute and sufficient evidenceand documentation to prove the claiming facts.


Amendments of a lawsuit can be made until the end of the lasthearing. If the lawsuit has already been filed but not served suchamendments are allowed without any restrictions, otherwise it canonly be amended with the consent of the other party or withpermission of the court. Such permission is granted by the court ifthe court considers it reasonable and convenient in terms of definiteresolution of the dispute.

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4 Defending a Claim


The plea of defence must contain a statement of grounds indicatingwhether the defendant refutes the claim entirely or partly and, in thelatter case, in which part. The defendant also submits documentsand adduces evidences supporting the statements contained in thedefence plea.Until the end of the main hearing in the court, the defendant mayfile with the same court a cross action:

if it is in connection with the claim contained in the lawsuit; orif the claim and the counterclaim may be set off; orif by filing of the counterclaim the defendant seeks to obtaina judicial resolution of the question of whether a right or alegal relation exist or not, upon which the determination ofthe claim is wholly or partly dependent.

The counterclaim may not be filed if the decision thereupon is to berendered by a different court or in a different type of procedure.


The defendant has to file his statement of defence within thirty daysupon the lawsuit has been handed over to him.


If, being sued as a possessor of a certain thing or as a holder of acertain right, a person asserts that he is possessing such thing, orexercising such right, on behalf of some other person, he may, untilbecoming engaged in trying of the main subject at the main hearing,invite that other person (his predecessor) by intermediary of thecourt to enter the litigation in his place.


If the defendant fails to file the defence plea within the set timeperiod, court renders a judgment granting the claim (defaultjudgment), provided that:

the action has been duly served upon the defendant;that the action does not contain a claim which the parties maynot dispose of;that the claim is founded upon the facts stated in the action; andthat the facts upon which the claim is based upon are not incontradiction with evidence adduced by the plaintiff or withjudicial knowledge.


The court is bound to examine immediately upon receipt of thelawsuit whether it has power to proceed therewith. Until thefixation of the hearing, the court may declare the lack of jurisdictionover the subject matter which falls under the jurisdiction ofdifferent courts or the lack of territorial jurisdiction if the defendantchallenges jurisdiction in his statement of defence, provided thatsuch plea is not filed later than along with his statement of defence.



A person who claims an interest in respect of the subject which isbeing litigated may join the litigation on the side of the party whosevictory would satisfy his interest. Any person who is directlyaffected by a court decision may also join the litigation as anintervener. Such person deems to be an indispensable co-litigant. An intervener may enter the litigation at all times during theproceedings until the decision in respect of the cause of the lawsuitbecomes final, and at all times during the continuation of proceedingsdue to extraordinary judicial review. An intervener shall take over thelitigation in the state as existing upon his coming therein.


If several cases are litigated between the same persons or if severalcases in which the same person is the opponent of several plaintiffsor several defendants are heard by the same court, the court maydecide to consolidate the proceedings provided that this isconvenient to speed up the proceedings or to reduce the costs. Thecourt can render a joint judgment for all consolidated proceedings.


The court may decide to split the proceedings for several claims andrender separate decisions on particular claims after hearing themseparately from each other.


6.1 Is there any particular case allocation system before thecivil courts in Slovenia? How are cases allocated?

Unless another court has exclusive territorial jurisdiction under thestatute, civil proceedings are usually conducted by a court ofgeneral territorial jurisdiction over the defendant, i.e. the court onthe territory of which the defendant has his permanent or temporaryresidence or of which legal person has its registered office.Territorial jurisdiction can also be based on several othercircumstances, depending on the nature of the dispute. (See alsoquestion 1.2 above.)

6.2 Do the courts in Slovenia have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The Slovenian courts are obliged to manage court cases actively bycontrolling the process in a cost-conscious and efficient manner bysetting procedural timetables and giving other direction for requiredactions on behalf of the parties. If the court considers thisappropriate the parties are encouraged to resort to ADR or tofacilitate the settlement. The court also provides that the parties andtheir statutory representatives and/or attorneys as well as witnessesand experts whom the court has conferred to examine aresummoned to the hearing.

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Parties can propose different interim applications, such motion toperform the missed act at a later stage (reinstatement), motion bythe concerned party to make exemption from payment of the costsof proceedings, etc. (see also questions 1.6, 3.2 and 1.5 to identifylegal costs consequences.)

6.3 What sanctions are the courts in Slovenia empowered toimpose on a party that disobeys the court’s orders ordirections?

CPA imposes rather harsh consequences if one or both parties donot appear for hearings. The court may deem the plaintiff to havewithdrawn the lawsuit or render a judgment on the basis of the courtfile/a default judgment/a judgment on the basis of relinquishment/a judgment of refusal. In the event that the parties or theirattorneys, with intention of harming another person or achievinggoals contrary to the custom and usage or good faith and fairness,abuse their rights, the court may impose on them a fine or otherprovided measures.

6.4 Do the courts in Slovenia have the power to strike out partof a statement of case? If so, in what circumstances?

In civil proceedings, the court has to decide within the limits andextent of the claim as defined by the parties to the litigation andcannot refuse to hear any dispute that is within its jurisdiction. Theparties are free in disposition of the claims which they raise in theproceedings but are not permitted by the court to perform anydispositive act which is not in conformity with peremptory normsor with moral principles.

6.5 Can the civil courts in Slovenia enter summary judgment?

No they cannot.

6.6 Do the courts in Slovenia have any powers to discontinueor stay the proceedings? If so, in what circumstances?

The court decides to discontinue the proceedings if it decides not toresolve the preliminary question of law or if a party resides in thearea which is inaccessible to the court due to emergency (floods,etc.). The proceedings can also be discontinued due to otherreasons, provided by the law. The proceedings can be suspended if both parties agree thereuponbefore the completion of the main hearing. The suspension becomeseffective on the day when such agreement is made in court.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Slovenia? Are there any classes of documents that donot require disclosure?

Parties are bound to state all facts upon which their motions arebased, adduce evidence required to establish the truth of theirstatements, to produce declarations regarding the statements andevidence adduced by the opposing party, at the first hearing at thelatest. At later hearing sessions, the parties are allowed to presentnew facts and new evidence only if they could not do so at the firsthearing due to reasons beyond their control otherwise the factsstated and evidence adduced are ignored. The evidences are usuallyproduced before the court at the main hearing.

7.2 What are the rules on privilege in civil proceedings inSlovenia?

Rules on privilege in civil proceedings concern mostly thetestimony of witnesses, e.g. duty to keep official or military secret,attorney-client privilege, on what the party or other person hasconfessed to him as their confessor, on answering particularquestion for justified reasons, especially if, by answering, thewitness might expose himself or some of his relatives to a seriousdisgrace, considerable financial loss or criminal proceedings, etc.Such provisions govern, as appropriate, the rights of the partiesrelated to withholding of other documents.

7.3 What are the rules in Slovenia with respect to disclosureby third parties?

Persons other than parties may be ordered to submit documentsonly if such obligation is imposed on them by the statute, or if thecontents of a document to be submitted relate both to such personand to the party adducing it as evidence.

7.4 What is the court’s role in disclosure in civil proceedingsin Slovenia?

The court orders the production of evidence by passing of a decreeindicating the disputed facts to be proved and the means of evidenceby which they should be proved. If the court establishes that theevidence which a party has adduced is irrelevant for the dispute, itpasses a decree on dismissal thereof and states the grounds fordismissal. No special appeal is allowed against such decree but thecourt is not bound by an evidentiary decree it has passed beforehand.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Slovenia?

According to the Act on the Access to Information of PublicCharacter applicant’s access to requested information is denied bythe state body or other entity of public law if the request relates toinformation acquired or drawn up for the purposes of civil, non-litigious civil procedure or other court proceedings, if suchdisclosure would prejudice the implementation of such procedure.

8 Evidence

8.1 What are the basic rules of evidence in Slovenia?

Each party has to state the facts and adduce the evidence, uponwhich their claims are based, and by means of which they contestthe facts stated and evidence adduced by the opposing party. Thecourt decides which evidence will be produced and afterwardsmakes a decision on facts which are deemed to have been proven.If the evidence produced in respect of a particular fact does notinduce a sufficient degree of persuasion, the court’s conclusions onsuch fact are drawn pursuant to rules on the burden of proof.


Types of admissible evidence include all sorts of documentation,examination of the parties, of the witnesses, expert witness etc. Thecourt examines an expert witness when expert knowledge isrequired for purposes of determination or clarification of a certain

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fact in dispute. Expert examination is carried out by experts (orscientific institutions) appointed by the civil court from amongpermanent experts in the concerned profession. An expert is givendirections and explanations and is shown the object to be examinedand allowed to inspect files. The court specifies a time period inwhich the expert opinion must be produced.


A party calling a certain witness has to state on what such personshould testify, his name, address and occupation. Written andsigned witness statements on the facts that will be testified aboutmay be submitted to the court in response to a call or with theconsent of the court. Witnesses are examined separately and in the absence of otherwitnesses. Witnesses may be confronted when their testimoniesdiffer with respect to important facts. Reluctant witnesses may be subjected to a compulsory appearance,ordered to pay the costs of bringing before the court, and/orimposed a fine.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Slovenia?

The Slovenian courts manage the disclosure process by makingvarious orders, either upon application of a party or of their ownmotion (see question 7.4).


9.1 What different types of judgments and orders are the civilcourts in Slovenia empowered to issue and in whatcircumstances?

Unless the court renders a judgment, its decision is made in theform of a decree. The court has the power to render:

partial judgment, if only one of several claims or only onepart of a particular claim is suitable for decision, the courtmay render the judgment for such part;interlocutory judgment, if the case concerning the ground butnot the amount of the claim is suitable for decision, the courtmay render a prior judgment in respect of the ground of theclaim, when this reasonable or convenient;judgment on the basis of acknowledgment, if the defendanthas acknowledged the claim until the end of the mainhearing;judgment on the basis of relinquishment, if the plaintiff hasrelinquished his claim until the end of the main hearing;supplementary judgment, if the presiding judge finds that themotion to supplement the judgment is well-founded becausepart of the claim has failed to be determined; anddefault judgment (see question 4.4).


The court is empowered to award damages for actual loss, includinglost profit, as well as compensatory damages. They have also thepower to award costs of the litigation and interest on both damagesand costs awarded. The interest rate is set by statute or contract.


Enforcement for the recovery of pecuniary claim will takeattachment of goods, bank assets, assignment of earnings, executionagainst real property, etc. For enforcement of non-pecuniary claimsit will take some other kind of duty performed in accordance withtheir own specific enforcement procedures. Foreign judgments can be enforced in Slovenia after being declaredenforceable on application by the party with interest. Thedeclaration of enforceability is issued after certain formalities havebeen completed and must be served on the other party, who maychallenge it only in the courts. It is possible to refuse to recognisea foreign judgment if recognition would be contrary to publicpolicy, irreconcilable with an earlier judgment, etc.Slovenia is a party to Council Regulation (EC) No 44/2001 of 22December 2000 on jurisdiction and the recognition andenforcement of judgments in civil and commercial matters.

9.4 What are the rules of appeal against a judgment of a civilcourt of Slovenia?

As a rule the parties may take an appeal against a judgment issued bythe court of first instance within fifteen days from the day of service.The waiver and the withdrawal of appeal are irrevocable. A judgmentmay be challenged on the grounds of severe violation of civilprocedure provisions, due to incorrectly or incompletely establishedfacts or due to the incorrect application of substantive law.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Slovenia?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Among the main types of alternative dispute resolution practiced inSlovenia are arbitration, mediation and court action in a broadersense aimed at encouraging a court settlement.The arbitration panel is a private court composed of one or morepersons, appointed by agreement of the parties. A decision on themerits of the case is recognised by law as equivalent to a finaldecision by an ordinary court.Mediation is the settlement of a dispute with the help of a neutralthird party, which cannot deliver a binding decision.During proceedings in a civil court, the parties may at any timeconclude a settlement on the subject of the dispute. Anyoneintending to bring an action may try to reach a court settlement inthe local court at the place of residence of the opposing party. Theagreement on the conclusion of a court settlement is enforceable.


Arbitration law is governed by Arbitration Act (OJ RS, No.45/2008), court settlements by the CPA, whereas mediation isregulated by Mediation in Civil and Commercial Matters Act.

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1.3 Are there any areas of law in Slovenia that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Arbitration is not an appropriate method for resolving all types ofdisputes (e.g. matrimonial disputes or actions for establishing orchallenging paternity or maternity as well as criminal matters).Parties opt for arbitration mainly in economic disputes. A court settlement may be used to resolve all types of civil-lawdisputes, with some exceptions regarding claims which parties arenot free to assert (because they are contrary to mandatoryregulations or moral rules), etc.


2.1 What are the major dispute resolution institutions inSlovenia?

The Chamber of Commerce and Industry of Slovenia has aPermanent Court of Arbitration which is competent for resolvingdisputes arising from business relationships. The arbitration boardat the Insurance Triglav d.d. is a specialised body that rules ondisputes in insurance and compensation cases. The ArbitrationTribunal at Ljubljana Stock Exchange is a specialised bodyresponsible for resolving disputes relating to transactions in serialsecurities. The Arbitration Board at Bank Association of Sloveniais a specialised body which is competent for resolving complaintssubmitted as a result of alleged violation within its jurisdiction.Other mediation institutions in Slovenia are ADR Office with theLjubljana District Court Slovenian Mediators Association, Centerfor Mediation and Conflict Management, Legal Information Centrefor NGOs (PIC), etc.


An arbitration decision has the force of a final decision vis-à-vis theparties (but not third parties). The agreement on conclusion of acourt settlement is also enforceable. An agreement concluded withthe help of mediation is not binding and enforcement is onlyvoluntary.



In practice, only few arbitral awards were issued in Slovenia everyyear in the past. A share of responsibility for this situation wascontributed to insufficient and obsolete rules on arbitration. Toimprove the depicted situation new Arbitration Act was adopted in2008, reforming the most important issues, such as the adoption ofUNCITRAL Model Law, arbitrability, setting aside procedure,enforcement and recognition and provisional measures.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Slovenia?

There are no current issues or proceedings affecting the use ofdispute resolution methods in Slovenia.

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Andrej Jarkovic

Law firm Janezic & JarkovicTavcarjeva ulica 8 SI-1000 LjubljanaSlovenia

Tel: +386 1 230 9000Fax: +386 1 230 9010Email: [email protected]: www.jjlex.si

Andrej Jarkovic is a partner with the Law firm Janezic & Jarkovicwith experience in civil, trade and commercial law. He is anindependent attorney and works in Ljubljana as a legal adviser tolarger Slovenian and European companies. He is also registered asTrademark Attorney and a Mediator at Slovenian Court of Ljubljana. Andrej is fluent in Slovene, English, German and Serbo-Croat. Education and professional training: LLB, University of Ljubljana,Law Clerk Higher Court of Ljubljana, Legal Adviser at the Agency ofSlovenia for privatisation, The Nineteenth Annual Program in USLaw - University of Wisconsin - Madison, Attorney-at-Law admittedto the Slovenian Bar in 1997.

Sara Pavlovic

Law firm Janezic & JarkovicTavcarjeva ulica 8 SI-1000 LjubljanaSlovenia

Tel: +386 1 230 9000Fax: +386 1 230 9010Email: [email protected]: www.jjlex.si

Sara Pavlovic is an associate with the Law firm Janezic & Jarkovicwith experience mainly in the field of civil and commercial litigation.She graduated at University of Ljubljana, Faculty of Law in October,2008 specialising particularly international commercial and financelaw, taking a diploma on Regulation on the Qualifying Holdings inSlovenian Legislation. She is fluent in Slovene, English and Serbo-Croat.

The office Janezic & Jarkovic specialises in most areas of commercial law, in particular in civil and corporate law,commercial transactions, intellectual property, banking and finance as well as real estate and litigation. We provide afull range of services to major corporations and the majority of our clients are multinational companies, internationalbusiness as well as banks.

The office currently consists of six lawyers, two attorneys and four associates. Aleksandra Janezic, Advocate, PatentAttorney and European Trade Mark Attorney has over 20 years of experience in assisting clients in various aspects ofcorporate law, commercial transactions, including competition law matters as well as intellectual property matters.She acts before the Slovenian Intellectual Property Office, Slovenian courts and customs authorities in administrativeand civil litigation proceedings concerning intellectual property rights. Andrej Jarkovic, Advocate, Mediator and TradeMark Attorney, has over 15 years of experience, in particular in civil law, litigation, corporate and real estate matters.He represents clients before courts and arbitrations in commercial litigation.

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Chapter 40


Gómez-Acebo & Pombo Abogados, S.L.P.

Spain

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Spain got? Are there anyrules that govern civil procedure in Spain?

Spain has a civil law system. The basic rule is the SpanishConstitution of 1978. Case law is paramount when it comes tointerpreting legislation and in many cases comes to fill the legalloopholes.The main rule for the Spanish Judicial system is the Organic Act ofJudicial Power No 6/1985 (Ley Orgánica del Poder Judicial). Thecivil procedure is governed by the Civil Procedure Act No 1/2000 (Leyde Enjuiciamiento Civil), which became effective in January 2001.

1.2 How is the civil court system in Spain structured? Whatare the various levels of appeal and are there anyspecialist courts?

Apart from the courts called Justice’s Courts (Juzgados de Paz),which deal with minor disputes (up to €90), the lower civil courtsare the following:

First instance Courts (Juzgados de Primera Instancia),which hear all civil matters in first instance except for thosereserved to the specialised courts.Commercial Courts (Juzgados de lo Mercantil), specialisedcourts to deal insolvencies and disputes involving corporateaffairs, unfair competition, Intellectual Property, Maritimeand Transports Law, among others.

The Provincial Courts (Audiencias Provinciales), in the capital ofeach Province, hear the appeals against lower courts decisions.The civil chambers of the Higher Courts of Justice (TribunalesSuperiores de Justicia) deal, in each of the regions of Spain,applications for review of the Provincial Courts decisions affectingtheir own regional civil Law. The Civil Procedure Act (CPA) grantsthese Tribunals the power to hear as well appeals against theProvincial Courts decisions based on breach of process, but thisrequires an additional new regulation not yet enacted. Meanwhile,the Supreme Court hears these appeals.The civil chamber of the Supreme Court, located in Madrid, is thehead of our civil judicial system. It hears the applications forreview of the judgments issued by the Provincial Courts based onbreach of law in certain narrow circumstances.The Constitutional Tribunal, located in Madrid, retains the highest

power to interpret the Constitution.

1.3 What are the main stages in civil proceedings in Spain?What is their underlying timeframe?

The CPA establishes two main kinds of proceedings: the Ordinaryand the Oral proceedings. Whereas the Ordinary proceeding coversthe most common commercial disputes and those involving anamount of above €3,000, the Oral proceeding is reserved for certainmatters such as eviction and disputes involving a lesser amount.Roughly, the Ordinary procedure compromises the following stages:

The claim, which is required to contain the full statement ofclaim.The Court will examine its own jurisdiction and competenceand orders the service of the procedure on the defendant.This stage can last for some two months.The Response, which must be filed by the defendant, as a fullstatement of defence, in the 20 days after the service ofprocess. Nevertheless, the respondent may, in the 10 firstdays challenge the jurisdiction of the court, on which theCourt must decide after hearing the claimant.Pre-trial hearing, to which the Court summons the partiesupon receipt of the response, and usually takes place withinthe subsequent four to eight months. The main object of thishearing is, among others, (i) to decide on any proceduralmatters that would prevent the process to continue, (ii) todetermine the facts in discussion and (iii) to decide on theparties’ proposal of evidence to be produced.Trial, on the date that has been fixed at the pre-trial hearing,and usually takes place in the subsequent fou to eight months.At the trial, witness and expert testimonies take place and theparties present their oral conclusions on the case.Sentence, which puts an end to the first instance. The CPAestablishes that the judgment must be rendered 20 days afterthe trial, although in practice this period is extended to sometwo to four months depending on the workload of the Court.

The Oral proceeding is simpler than the Ordinary one. Once theclaim is filed, the judge examines the procedural aspects and fixesthe date for the trial. It then serves process to the defendant whoproduces his answer to the claim orally at the trial, where thewitnesses and experts are examined. The judge should hand downits decision in the following 10 days.

1.4 What is Spain’s local judiciary’s approach to exclusivejurisdiction clauses?

Courts take a favourable approach to exclusive jurisdiction clausesand should of their own motion, as a matter of law, stay proceedings

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when they lack jurisdiction in these fields or deny the enforcementwhen the Court of origin has breached an exclusive jurisdiction clause.

1.5 What are the costs of civil court proceedings in Spain?Who bears these costs?

The parties’ main costs are the Attorneys’ fees, the rights of theProcuradores (who act as agents before the Court on behalf of aparty), the experts’ fees and expenses and the judicial tax.The Attorney and the client may agree freely on the fee structure,although subject to certain limitations established by the BarAssociation. The rights of the Procuradores are calculated inaccordance to a fix scale, based on the amount in dispute and theacts performed before the Court. The judicial tax, where applicable,is a relatively small amount, and must generally be paid when filinga claim.Costs may be recoverable by the prevailing party if the Judge sodecides in the judgment under certain rules. The judicialassessment normally does not cover all the costs incurred.

1.6 Are there any particular rules about funding litigation inSpain? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

Our legal system guarantees that people without financial meansobtain access to a lawyer paid by the State. However, this situationis rare in commercial disputes.“No win, no fee” arrangements are not allowed in the Bar rules,though the client and the lawyer may agree that part of the feesdepend upon the result of the procedure. However, both thecompetition authorities and the Supreme Court have recentlyquestioned and ruled against this prohibition, so this rule could bemodified in the future.There are no special rules on security for costs in the Spanish legalsystem, leaving the issue open to the general regime of interimrelief. However, in practice, this sort of issues is rare.


2.1 Are there any pre-action procedures in place in Spain?What is their scope?

No. Parties do not have to fulfil any specific requirement vis-à-visthe other before initiating a legal claim. There are certain rules that allow a party to prepare a legal claim incertain cases where the identity of the respondent is ignored orwhere the exhibition of a document is essential to prepare the claim.


There are many different limitation periods in Spanish Law fordifferent actions, and some of them are different depending on theregional law to apply. Corporate or certain commercial disputesalso have their own statutes of limitation, some of which areextremely short.The term for general contractual claims is 15 years, whereas for tortclaims it is one year. The start of the period depends on the kind of action, but a general

rule is that it starts from the moment that it could be brought beforethe courts. Also, the civil count of terms is natural days, i.e., itincludes festivities and bank holidays. Time limits are treated as a substantive law issue in our legalsystem. The existence of a statute of limitation has to be alleged inthe response, and should be decided upon in the final judgment.


3.1 How are civil proceedings commenced (issued and served)in Spain? What various means of service are there? Whatis the deemed date of service? How is service effectedoutside Spain? Is there a preferred method of service offoreign proceedings in Spain?

Civil proceedings commence with a claim that must be filed by theclaimant. This claim is a full statement of claim and must be filedtogether with all the documents in support thereof. The litis pendens exists as of the date of filing, provided the claimis thereafter admitted for procedure.Service is performed by court officers. In general, service isperformed through personal service to the respondent. If therespondent is not found in the domicile provided by the claimantand no other domicile is known in public records, service may beultimately performed by publication of notices in official stategazettes.The deemed date of service is that on which there is evidence thatthe personal delivery was made, or proof of the refusal by thedefendant to receive the service, or the date on which the notice waspublished in official gazettes.For international service, Spain is a party to the 1965 HagueConvention on the Service Abroad of Judicial and Extra-judicialDocuments in Civil and Commercial Matters. For service withinEU countries, the EC Regulation 1393/2007 on the service in theMember States of judicial and extrajudicial documents in civil orcommercial matters applies. The preferred method of service is personal service, although anymethod regulated in these Conventions that allow ascertaining thecontent and date of delivery is valid, provided it is not incompatiblewith Spanish public policy.

3.2 Are any pre-action interim remedies available in Spain?How do you apply for them? What are the main criteria forobtaining these?

The claimant may request interim measures before or at the time ofstarting proceedings.This is done through a statement of claim, which must include therelevant documents in support of the measures sought. Thecompetent Court may adopt the measures with or without audience tothe respondent. Interim relief is granted only in exceptional cases.The main criteria for granting the measures are:

Periculum in mora (danger in delay): that is, that waiting forthe judgment without adopting the measure might provokethat the relief sought in the main proceeding will no longerbe of any use to the claimant.Fumus boni iuris: a prima facie impression that the claimanthas presented evidence that leads to think that the mainaction is likely to succeed in the future.Caution: the Court only grants interim relief at the risk of thepetitioner, and thereby requests that a sufficient caution isestablished to cover eventual damages if the main case islater dismissed or the interim relief is revoked.



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The statement of claim must include:The names and addresses of the parties.The facts of the dispute, and all the documents that provesuch facts, provided the claimant had access to them.The legal grounds, whether they are laws, regulations or caselaw, on which the claimant bases the claim.The compliance with all the procedural requirements.The relief sought. If it consists on the payment of a sum, thismust be clearly quantified.


The object of a claim cannot be amended once it has been served onthe other party and the response or counterclaim has been filed(pursuant to the prohibition of the mutatio libelli principle). Despite this, in view of the statement of defence, slight changes orcomplimentary arguments may be introduced in the pre-trialhearing (in the Ordinary proceeding) or in the hearing (in the Oralproceeding). However, the claimant cannot introduce new petitionsat this stage unless the adverse party agrees or if the court rules thatit doesn’t affect the right of defence of the defendant.

4 Defending a Claim


The defendant must include in the statement:What facts of the claim are acknowledged or denied. The defendant’s own version of the facts and the documentsin support.What decision it understands the court should issue,generally the absolution of the defendant.

The defendant can bring a counterclaim, but only if it can bedecided in the same kind of proceeding and before the same type ofcourt that is handling the main claim. The counterclaim can bedirected against other parties as well.The defendant may also bring a defence of set-off, even if it onlyseeks its own absolution.In these cases the claimant, as well as the rest of the parties againstwhom the counterclaim is directed, may file a statement of defencein 20 working days from the day of service.


The defendant must file the statement of defence at Court 20working days after service of process. Upon filing, the defendant isto enclose a copy for the claimant, which will be delivered to theclaimant in the next day through a specific mechanism establishedby the CPA performed amongst the Procuradores of the parties.


The defendant may, in the same period available to file its statement

of defence, ask for another party to take part as defendant. If thecourt admits the petition of the defendant after hearing the claimant,the statement of claim will be served on the new defendant. Oncethis new defendant has filed its statement of defence, the originaldefendant might ask that the latter is put in its place as a soledefendant. The claimant and the new defendant will be heard, andthen the court will decide.


If the defendant does not file the statement of defence within thegiven period, the Court will declare the default of appearance andthe process will continue without its participation. This will not bedeemed as surrender or an acknowledgment of the facts, and theclaimant will still have the burden to prove the facts on which itsclaim relies.The declaration of default of appearance must be served on thedefendant, announcing that no other act will be served except thefinal judgment.


The defendant may challenge the Court’s territorial jurisdiction (thecompetent courts are located in another place) or its materialjurisdiction (the competent courts are other due to the matter indispute). The defendant may challenge the court’s jurisdiction ifthere is an arbitration clause.The challenge must be filed within 10 days of the service of processand has the effect of staying the procedure until the Court issues adecision.



A party that considers having a legitimate interest in the result of theproceeding may file a petition to join the proceeding either asclaimant or defendant. The Court will decide after hearing the restof the parties. If the court allows the new party to join theproceeding, the joinder may only do what the CPA allows as of themoment it joined the proceeding, i.e., the proceeding will not betaken back.


Pursuant to the CPA, the parties may request the consolidation oftwo different proceedings if they are closely linked, in such a waythat the decision on one of them might have pre-trial effects on theother one or if the decisions in both proceedings could becontradictory or incompatible. The petition of consolidation mustbe filed before the court that is hearing the most ancient proceedingand said court will be competent to hear the consolidatedproceeding.For a Court to allow this consolidation, both claims must befollowed in the first instance, and under the same type ofproceeding (Ordinary or Oral).

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If the claimant has consolidated two or more actions in its initialclaim in a case in which the consolidation was not permitted by law,the court will grant a term to correct this before resuming theproceedings or will terminate the process. The defendant may as well oppose in its statement of defence thatthe actions have been wrongly consolidated, in which case the courtwill decide in the pre-trial hearing (in the Ordinary procedure) or inthe hearing (in the Oral procedure) which action or actions cancontinue in the proceedings.


6.1 Is there any particular case allocation system before thecivil courts in Spain? How are cases allocated?

Yes, the Superior Council of the Judicial Power publishes theAllocation Rules for the different Courts and Tribunals to ensure thecorrect assignment of the cases and the fair distribution of theworkload.Generally, the cases are distributed to the different Courts by theDean Court of each judicial unit, in accordance to such rules. Therules generally set forth the allocation depending on the subjectmatter and the type of procedure, and distribute the cases by orderof entry at the Registry.

6.2 Do the courts in Spain have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

No. The general principle is that parties have the disposition overthe object of the procedure, and may renounce, withdraw, surrenderor transact on the object of the case, always within the limits setforth by the CPA. Parties may also jointly suspend the course of theprocedure. Courts cannot overrule or decide out of the scopedefined by the parties.Outside this faculty of the parties, the Courts must respect the rulesof process established in the CPA.Parties are free to request interim relief before or during the courseof the procedure, as well as measures to secure and anticipateevidence in certain circumstances.Each incident, request for interim relief or otherwise separatepetition may be subject to separate orders to bear costs.

6.3 What sanctions are the courts in Spain empowered toimpose on a party that disobeys the court’s orders ordirections?

A Court may order a party to pay a fine of up to €6,000 if it findsthat it has acted against the rules of good faith in the scope of theprocedure. A Court may also inform the Bar Association for thecase an Attorney’s act may be the object of a disciplinary sanction.The CPA also contains specific consequences for disobedience inother stages of the process, such as, for example, certain ordersduring the enforcement phase.

6.4 Do the courts in Spain have the power to strike out part ofa statement of case? If so, in what circumstances?

No. The Court must decide each case based on the facts, evidenceand petition of the parties. However, Courts may exceptionally

reject a petition that is produced with manifest abuse of right,although this power is seldom used.

6.5 Can the civil courts in Spain enter summary judgment?

No, in case of the default of appearance of the Respondent, theprocedure will continue and the Court will still require the Claimantto provide sufficient evidence in support of its position. However, there is a specific procedure for debt recovery that ismonetary, due and exigible in a maximum amount of €30,000. Inthis procedure (proceso monitorio), the Court may issue a defaultjudgment based on the default of appearance of the Debtor,provided certain requirements are met.Also, a Court may issue a partial order on certain points of theClaim if parties have so agreed or if the Respondent has partiallysurrendered to the Claim.

6.6 Do the courts in Spain have any powers to discontinue orstay the proceedings? If so, in what circumstances?

No, unless the parties have so requested jointly.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Spain? Are there any classes of documents that do notrequire disclosure?

There is no such procedure in Spain as the disclosure of thecommon law system. In Spain, parties are only obliged to produce the documents that arein support of their positions. However, any party may request the other to produce a determineddocument, provided it can produce a copy thereof or an indicationas exact as possible of the said document. The unjustified negativeto produce such document allows the Court to either deem asevidence the copy or indications thereof or to issue an ordercompelling the party to produce the required document.

7.2 What are the rules on privilege in civil proceedings inSpain?

There are no specific rules on privilege; this has to be determined ina case by case basis. The in-house counsel, however, enjoys aprivilege based on the Bar Association Rules.

7.3 What are the rules in Spain with respect to disclosure bythird parties?

A Court may only order a third party the disclosure of a documentif it is transcendental to the purpose of issuing the judgment. TheCourt will decide on this at the petition of a party, upon hearing theaffected third party. The public entities have the obligation to disclose a document uponthe request of a Court unless such document is declared or classifiedreserved or secret.

7.4 What is the court’s role in disclosure in civil proceedingsin Spain?

The Court has to decide, upon the petition of a party, whether the



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disclosure of a document is accepted or not and whether it issues anorder for a party to disclose the document or not.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Spain?

The CPA does not contain any restriction or limitation to the use ofa document obtained from a judicial process.

8 Evidence

8.1 What are the basic rules of evidence in Spain?

The Claimant must produce any documents in support of itsposition together with the initial complaint. It will not be able toproduce further documents at a later stage (this has someexceptions). Expert reports must also be enclosed to or announcedin the initial written submissions. Any other means of evidence is proposed by the parties andaccepted or rejected by the Court at the preliminary hearing, whichmain object is the determination of the evidence that will beproduce at the trial or in the procedure. Parties must propose the witness testimonies that they will rely onat the trial, and do not have to provide any witness statementbeforehand.


The CPA establishes that the available means of evidence are thefollowing, each with specific regulation:

Interrogation of parties.Public documents (i.e., authorised by Notary Public orcompetent public officer, with the formalities required by thelaw).Private documents.Expert reports.Judicial inspection of a place, object or person.Witness testimony.Reproduction of words, sounds or images.


Witness testimonies take place orally before the Court at the trial.Case-law has established that witness statements are not receivableas witness testimonies because they do not allow the cross-examination of the witnesses. Witness depositions are not availablein Spain. However, under certain circumstances, a witness mayexceptionally declare before a different Court.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Spain?

Courts must decide on whether the means of evidence proposed bythe parties are relevant for the case and are thereby accepted. Ifrejected, the evidence is not produced in the procedure. In this case,the affected party may reiterate its request to produce the evidencein its appeal against the final judgment.

Courts may not request the production of any means of evidence ofits own motion and must decide on the case based solely on theevidence actually produced in the procedure by the parties.


9.1 What different types of judgments and orders are the civilcourts in Spain empowered to issue and in whatcircumstances?

There are different types of judicial orders, depending on the mattersubject to their decision. Namely, the Diligencias de Ordenación, issued by the JudicialSecretaries, are used to give the procedural impulse established bythe Law; the Providencias to rule on procedural matters that requirea judicial decision; the Autos, which are required to contain theirlegal grounds, resolve, among others, issues that would mark theend of the judicial instance; and the judgments (Sentencias) whichput an end to the procedure and are used to decide on the merits ofthe case. Courts can issue declaratory or condemnatory judgments. Theformer is used to declare the existence of a right, a fact or a conduct,which the Respondent must abide with; the latter is used to order aparty to do something, to refrain from doing something or pay acertain amount.


Courts require a party to provide evidence of the real damagesuffered, thereby limiting the remedy to a merely compensatoryscheme. Punitive damages may not be sought. The CPA requires that a judgment must contain the exact amountthat a party must pay or very clear basis for its calculation whichmust consist on a basic arithmetic operation to be performed in theenforcement phase. Any judgment which orders a party to pay a determined amountwill accrue, as a matter of Law, a legal interest since the date it isrendered. Also, a party may seek to recover the interests overduesince the date the obligation to pay was due.As for costs, judgments usually decide which party bears the costsof the procedure or whether each party bears its own. The generalrule is that the prevailing party may recover its costs from the other.The judgment will not contain any amount for this, so parties musteither agree the amount or obtain a judicial assessment. The costs of the Procurador are calculated based on a fixed scale.Also, the fees of the Attorney are calculated, to this effect, based onthe scale of the Bar Association. Although the Bar rules are only anorientation, it is general practice to respect the amounts determinedtherein.


A domestic judgment may be enforced following the enforcementprocedure established by the CPA. This procedure is initiated by alegal claim to enforce the judgment, which is filed before the Courtthat has issued the judgment. In monetary cases, the Court mayseize the assets of the defendant listed in the claim and may orderdifferent means of investigation of the defendant’s assets. The CPAcontains a full set of rules for the realisation of the seized assets,which is performed in the scope of the enforcement process.

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The process to enforce foreign judgments depends on the State oforigin issuing the judgment.A judgment issued by an EU Member State will be enforced inSpain in accordance to Article 32 et seq. of the EC Regulation44/2001. This regulation sets forth that a judgment shall bedeclared enforceable directly. The defendant may only oppose theenforcement based on the grounds established in Articles 34 and 35thereof.Outside the EU, in the absence of an international treaty and whenno clear reciprocity policy has been established, the recognition andenforcement of foreign judgments is possible in Spain inaccordance with the following requisites provided in Article 951 etseq. of the Civil Procedure Act of 1881, partially still in force:(i) the foreign judgment must be the result of a personal action.

This means that a judgment ruled over a matter of SpanishCourts’ exclusive jurisdiction will not be enforced (e.g.,actions in rem; actions re validity of entries in publicregistries);

(ii) the foreign judgment must be the result of a process withoutbreach of the defendant’s rights to a defence. This requisiteis normally examined by the Court if the judgment has beenissued in default of the defendant. The Court examinesprocedural aspects such as whether the defendant wasproperly served of the process, whether it had been able todefend itself, whether the judgment was motivated andaccord with the object of the claim and whether the Court oforigin had jurisdiction;

(iii) the recognition and enforcement must not be contrary to thePublic Policy. This is a broad concept, as it refers to the basicprinciples of Spain (most of them, fundamentalconstitutional rights); and

(iv) the judgment must not be incompatible with anotherprevious judgment issued or recognised in Spain (resjudicata), or with an existing process pending in Spain whicheventual judgment could be incompatible.

9.4 What are the rules of appeal against a judgment of a civilcourt of Spain?

An appellant must announce its intention to appeal a judgmentwithin 5 days of its service. Thereafter, it must file the grounds forthe appeal within the 20 days since the Court admits the appeal.The respondent will then have 10 days to challenge the appeal. Thisprocess is performed before the same Court that has ruled thejudgment, although the competence to decide on the appeal isattributed to the corresponding Provincial Courts (AudienciaProvincial), which may perform a full review of the case.The judgments rendered by the Provincial Courts may in turn beappealed, before the Supreme Court or the Regional Higher Courtsof Justice, depending on the grounds of the appeal. These groundsare limited and narrow and are determined by the CPA.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Spain?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

The one practical alternative to judicial litigation is arbitration. Arbitration is increasingly being used in Spain for commercial

disputes, provided parties had agreed to submit their dispute to thismethod. The awards are largely accepted and enforceable, and theTribunals are accustomed to provide the assistance set forth by theLaw.Tribunals will reject to hear a case if a party files a motion todismiss based on a valid arbitration clause. Also, Tribunals willassist parties in the judicial appointment of arbitrators whereneeded, in the obtaining of evidence and in the issuing of interimrelief. The awards may be the object of an action of annulment before theProvincial Court (Audiencia Provincial) of the place where it wasissued, based on certain narrow grounds determined by the Law.Mediation, although known and acknowledged as a means ofobtaining an enforceable settlement agreement, is still notcommonly used in Spain. As in arbitration, it requires an agreementof the parties to enter into this mechanism. However, it is rare tofind a mediation clause in the contracts between local Companies.Also, the old CPA of 1881 is still in force with regards to the partwhich regulates the conciliation. The conciliation act purported toobtain an enforceable agreement contained in a judicial document,although in practice it is seldom used because it required from aparty a voluntary acknowledgment of an obligation before theJudge.The Law does not grant any powers to the Courts to order theparties to try mediation or any other alternative dispute resolutionmechanism (the Labour jurisdiction is an exception, as it requiresthe attendance at a compulsory conciliation procedure previous tothe judicial solution).


Arbitration is governed by the Arbitration Act No 60/2003, of 23December (Ley de Arbitraje). This Arbitration Act is based on theUNCITRAL Model Law, and applies to all arbitrations that takeplace in Spain, both national and international, without prejudice toother laws containing regulation on specific arbitrations such asconsumer protection and intellectual property. There are also several references to arbitration contained in theCPA. Spain is a party to the New York Convention of 1958 and, as such,will enforce foreign awards in accordance thereto. Finally, arbitrations in certain institutions are governed by their ownprocedural rules to which parties are subject if they have submittedtheir dispute to one of those institutions.

1.3 Are there any areas of law in Spain that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

The Arbitration Act establishes that parties may submit toarbitration any dispute on a matter that is of free disposal accordingto the law. This generic enunciation avoids mentioning which matters may notbe the object of arbitration. This is important, as any award thatrules on a subject matter that may not be the object of arbitrationmay be declared void.Very roughly, there are certain criteria that may determine that amatter is not of free disposal to the parties:

Any matter related to the marital status of a person, capacity,affiliation, matrimony or other matters related to minors orothers in which the Public Prosecutor must intervene.



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Any matter that cannot be the object of a contract because itis related to things that are not in the commerce of men.Any matter that does not affect exclusively the parties in thearbitration and may affect third parties or the public interest.


2.1 What are the major dispute resolution institutions inSpain?

The major local institutions for commercial arbitrations are:Corte Civil y Mercantil de Arbitraje (CIMA).Corte de Arbitraje, of the Official Chamber of Commerceand Industry of Madrid.Corte Española de Arbitraje, of the Superior Council ofChambers of Commerce, Industry and Navigation.Corte Euroamericana de Arbitraje, of the Superior Council ofChambers of Commerce, Industry and Navigation.Corte de Arbitraje of the Bar Association of Madrid.Tribunal Arbitral de Barcelona.


Awards issued in the scope of a valid arbitration procedure are fullybinding and enforceable under the CPA and under the New YorkConvention or under the Arbitration Act.Any settlement agreement reached as a result of mediation is asvalid and enforceable as a contract entered into by the parties.



International arbitration has existed in Spain for many years, andthere are well-reputed Spanish arbitrators who intervene in theseprocedures.

Domestic arbitration, however, follows a different path, as there isnot such a culture of arbitration which exists in the Anglo-Saxoncountries. Nevertheless, several private associations and theMinistry of Justice together with the Superior Council of theJudicial Power are undergoing an extensive programme for thedevelopment of arbitration in Spain.One of the fruits of this development is the promulgation of theArbitration Act of 2003, which is based in the UNCITRAL ModelLaw. This modern law allows to reinforce even more thedevelopment of arbitration in Spain.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Spain?

There is no specific case that affects directly the use of arbitrationin Spain. However, over the past years there has been an increasingtrend in the use of this method. There are multiple reasons for this.Among these reasons we must underline its speed and quality.First, an arbitration case is decided upon in a much more expeditemanner than a judicial one, which can last for years and is subjectto subsequent appeals. Second, arbitrators have expertise andknowledge in certain business areas and industries, as well as inLaw, and for this reason may render a more qualified decision on adetermined dispute. Also, the procedural aspects of an arbitrationprocess allow for a more flexible process in which the evidence isproduced and examined in more detail and with a more proactiveparticipation of the arbitrators. This positive trend is, not only referred to the increasing number ofarbitration cases, but also to the fact that more and more significantcases are brought before arbitrators. This consolidates the generalacceptance of this method as a cost-effective, quick and qualifiedmeans of resolving disputes.

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SpainGómez-Acebo & Pombo Abogados, S.L.P.

Francisco Peña

Gómez-Acebo & Pombo Abogados, S.L.P.Castellana, 216 28046 MadridSpain

Tel: +34 91 582 9100Fax: +34 91 582 9330Email: [email protected] URL: www.gomezacebo-pombo.com

Master of Law from the Complutense University of Madrid. Master’sDegree in Tax Consultancy from the Instituto de Empresa of Madrid. He joined Gómez-Acebo & Pombo in 1980. In 1982 he worked atthe London law firm, Herbert Smith & Co. From 1984 to 1987 hewas Director of Legal Services and Secretary of IndustrialDevelopment and Restructuring Bodies in the Principality ofAsturias. He was appointed partner of the Firm in 1989. He specialises in commercial and business law. Member of theMadrid Bar Association and International Bar Association.Since 1997, he has been professor-collaborator in the MasterDegree in Corporate Legal Consultancy at the Universidad Pontificiade Comillas in Madrid. He also lectured on the framework of theBusiness Practicum II at the San Pablo CEU University of Madrid.

Diego Saavedra

Gómez-Acebo & Pombo Abogados, S.L.P.Castellana, 216 28046 MadridSpain

Tel: +34 91 582 9100Fax: +34 91 582 9330 Email: [email protected]: www.gomezacebo-pombo.com

Diego obtained his Law Degree from the University Francisco deVitoria and the Universidad Complutense of Madrid in 1999. Hehas post graduate formation in international litigation, and hasacquired knowledge of the US legal system in a scholarshipprogramme at UC Davis, California. He has worked in the dispute resolution departments for differentinternational law firms, including more than 6 years at the Madridoffice of Baker & McKenzie. He joined Gómez-Acebo & Pombo inMay 2008.He has extensive experience in commercial disputes and he is alsoa reference advising in international litigation. He has experience inarbitration, concerning both commercial disputes and sports law.Diego is a member of the Madrid Bar Association since 1999. He isa regular speaker in Universities and conferences both in Spain andabroad.

The Firm:

Gómez-Acebo & Pombo is one of the leading law firms in Spain, not only in terms of the number of professionals andturnover, but also in terms of the leading companies that form its client base. Founded in 1971, the Firm has becomea reference law firm in several sectors, such as banking, real estate, energy and water, pharmaceuticals,telecommunications, IT, transport and distribution, regulatory and competition law.

Gómez-Acebo & Pombo has offices in Madrid, Barcelona, Bilbao, Valencia, Vigo, Málaga, Las Palmas de Gran Canaria,Brussels and London.

Litigation and dispute resolution department:

Our work is that of analysing legal controversy, researching the available lines of defence, determining tactics andprocedural strategy for the case, gathering additional evidence and, if appropriate, performing any out-of-courtnegotiations that may be required. We pride ourselves on maintaining ongoing and timely communication with ourclients, whom we continually provide with direct, clear and concise information.

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Switzerland

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Switzerland got? Are thereany rules that govern civil procedure in Switzerland?

The Swiss legal system is based on the civil law tradition. As such,it depends heavily on written codes as a primary source forauthoritative statements of law. Accordingly, judicial decisions areof less importance than they are in common law jurisdictions. Eventhough a line of judicial decisions establishing a particular legalpractice does carry substantial weight, the common law rule ofbinding precedent (stare decisis) is not recognised. Traditionally,more weight is given to the writings of legal scholars than incommon law countries.The rules of civil procedure and the organisation of the judiciary arecurrently governed by the state law of the 26 Swiss cantons. Aunification of the various cantonal rules in the new Swiss Rules ofCivil Procedure is planned for the year 2010.

1.2 How is the civil court system in Switzerland structured?What are the various levels of appeal and are there anyspecialist courts?

The organisation of the judiciary differs from canton to canton. Inlarger cantons, there are several courts of first instance; in smaller,rural cantons, there is usually just one.All the cantons have established a high court which serves as anappellate court or as a court of first instance for a narrow scope ofclaims. Four cantons (Zurich, Bern, St. Gallen and Aargau) have aspecialised commercial court (Handelsgericht) which is part of thecantonal high court and serves as a court of first instance forcommercial matters. There are other specialised courts in certaincantons, such as Labour Courts or Landlord and Tenant LawCourts. Three cantons (Zurich, St. Gallen and AppenzellInnerrhoden) have established a court of cassation, which has thepower to quash or to reverse the decisions of the inferior courtsbased on specific grounds for annulment. The Swiss Federal Courtis Switzerland’s highest court. As an appellate body, it ensures boththe correct application of federal substantive law by the cantonalcourts and continuity of the legal practice in Switzerland.The Commercial Court of Zurich is generally regarded as the mostappropriate forum in Switzerland to decide internationalcommercial disputes. Since considerable differences may exist

between the procedural rules and practices of particular cantons andcourts, the explanations below will give a general description of theSwiss judiciary and, where appropriate, will refer in greater detailto civil proceedings in the Canton of Zurich, particularly those ofthe Commercial Court of Zurich.

1.3 What are the main stages in civil proceedings inSwitzerland? What is their underlying timeframe?

Swiss civil proceedings generally consist of three phases:The “assertion phase”, where the parties present the facts ofthe case to the court. The parties must plead all relevantfacts, submit the documentary evidence and name any otherevidence they wish to rely upon.The “evidentiary phase”, where evidence is taken on therelevant facts that are in dispute and cannot be proved bydocumentary evidence alone. Typically, the court issues adecision on the facts that need to be proved and designatesthe party that has the burden of proof. The actual taking ofevidence takes place in a subsequent hearing.The “post-hearing phase”, where the parties have theopportunity to comment on the evidence that has been takenbefore the court renders a judgment.

Typically, the average duration of commercial civil proceedingsbefore the courts of first instance is between one and two years.This time period can double if one of the parties appeals to higherinstance courts. Of course, in complex cases or cases in which, forexample, evidence needs to be taken abroad, a given proceedingmay take considerably longer.

1.4 What is Switzerland’s local judiciary’s approach toexclusive jurisdiction clauses?

Both domestic and international Swiss law explicitly allow anagreement on jurisdiction for an existing or potential dispute arisingfrom a particular legal relationship. The parties’ choice is restrictedonly in cases where a specific law or a treaty provides for anexclusive or partly exclusive jurisdiction for certain types ofdisputes. Unless provided otherwise between the parties, exclusivejurisdiction of the agreed court will be assumed. The Swiss courtthat has been selected may not decline jurisdiction if one of theparties is domiciled in a Member State of the Convention of 16September 1988 on jurisdiction and the enforcement of judgmentsin civil and commercial matters (“Lugano Convention”). If not,Swiss courts will still honour a jurisdiction clause if, under theSwiss Act on Private International Law or upon the parties’ choice,Swiss law governs the matter in dispute.

Stefan Leimgruber

Alexander Jolles

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1.5 What are the costs of civil court proceedings inSwitzerland? Who bears these costs?

Court fees, as well as all other expenses arising from the litigation,including opposing counsel’s fees, are borne by the losing party. Ifa party prevails only in part, the fees and expenses will be dividedproportionally between the parties.The cantons regulate the amount of the court fees and thereimbursement of the winning party by statute. In financialdisputes, the fees depend on the amount in dispute. Other factorscan have an influence, such as the type of procedure, the complexityof the case and the time spent by the court on the matter.

1.6 Are there any particular rules about funding litigation inSwitzerland? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

The federal law governing the bar allows Swiss attorneys and theirclients to negotiate fee arrangements to a certain degree. While nocontingency fee arrangements with attorneys are allowed, thearrangement of an incentive payment is now considered permissible,as long as the hourly fee at least covers the costs for the attorney.According to a recent decision of the Swiss Federal Court, it is, inprinciple, permissible to finance litigation through a third party,such as a financial institution. The third party funding the litigationcommits to covering the costs as they arise. In return, it is promiseda contingent fee. The issue of security for costs is governed by cantonal proceduralrules, as well as by multilateral treaties - such as the HagueConvention of 1954 on Civil Procedure and the Hague Convention of1980 on International Access to Justice - and by bilateral treaties.The cantonal provisions vary greatly: while some generally requestsecurity for costs, the majority do so only if specific prerequisites aregiven. According to the Civil Procedure Code of the Canton ofZurich, claimants (and counterclaimants) must put down a deposit forcourt fees and the opposing party’s legal fees if, e.g., the claimant isnot domiciled in Switzerland, or if the claimant’s solvency is at risk.The international treaties ensure that parties who are nationals, or aredomiciled in, a Member State are not discriminated against residentsof another Member State with respect to access to justice, includingsecurity for costs and court fees.


2.1 Are there any pre-action procedures in place inSwitzerland? What is their scope?

Typically, the Swiss codes of civil procedure provide for a (state)conciliation proceeding, mainly before a justice of the peace. Whileparticipation is often mandatory, there are numerous exceptions.According to the Civil Procedure Code of the Canton of Zurich, forinstance, there is an important exception with regard tointernational matters: conciliation proceedings are not availablewhen the jurisdiction of the court is based on the LuganoConvention.


In Switzerland, limitation periods are a matter of substantive law.

As a general rule, the limitation period for civil law claims is tenyears; if such claims concern periodic payments or certain types ofservices, they will be time-barred after five years. This general ruleapplies to all claims for which Swiss civil law does not provideotherwise. Important exceptions are tort claims and claims basedon unjust enrichment, which become time-barred one year after theaggrieved party obtained knowledge of the damage or, in any case,ten years after the harmful event has occurred. For claims arisingout of a contract, the statute of limitations starts running upon thematurity of the claim. Limitation is interrupted and will restartwhen an action is filed. Limitation must be pled by motion. Notably, certain claims for alteration of a legal right or status willbe forfeited after a considerably shorter period of time(Verwirkungfrist), e.g., a claim for annulment of a resolution takenat a shareholder meeting (two months after the meeting). For thesespecific claims, as opposed to the general rules on the statute oflimitation set out above, the limitation period will not be interruptedwhen an action is filed and forfeiture of these claims will beobserved ex officio. For any such claim, the limitation period isexplicitly indicated in the applicable laws.


3.1 How are civil proceedings commenced (issued and served)in Switzerland? What various means of service are there?What is the deemed date of service? How is serviceeffected outside Switzerland? Is there a preferred methodof service of foreign proceedings in Switzerland?

Civil proceedings are commenced by the claimant submitting adetailed, usually written, statement of claim to the court. It is thecourt which serves the statement of claim upon the defendant,usually by mail, sometimes through a clerk. The service of judicialdocuments is completed when the addressee - or an authorisedperson in his stead - actually receives the documents. If therecipient deliberately impedes service of documents, service isconsidered complete as per the date of such action.The serving of judicial documents outside Switzerland is effectedpursuant to the corresponding rules of service applicable in thecountry where service is sought. Between Member States of theConvention of 15 November 1965 on the Service Abroad of Judicialand Extrajudicial Documents in Civil or Commercial Matters(“1965 Hague Convention”), the rules as set out in the Conventionapply. According to the Convention, the service of process to andfrom a foreign country is provided by a Central Authority. InSwitzerland, there are cantonal Central Authorities, usually thecantonal high court, and, for federal matters, the FederalDepartment for Justice and Police. In addition to the Convention,bilateral agreements may apply.

3.2 Are any pre-action interim remedies available inSwitzerland? How do you apply for them? What are themain criteria for obtaining these?

Under Swiss civil procedure law, two forms of interim remedies areavailable:

Interlocutory injunctions. The requirements necessary forthe granting of a preliminary injunction differ according tothe applicable cantonal or federal law. Typically, thepetitioner must prove on a prima facie-basis that in theabsence of an injunction he would suffer irreparable harmand that he is likely to prevail on the merits.Attachment of assets (freezing order). Among other grounds,an attachment of assets in Switzerland can be requested



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where the debtor has his domicile outside Switzerland. Thecreditor needs to convince the court that, prima facie: (1) hehas a claim; (2) the claim either has a sufficient link withSwitzerland or is evidenced by a signed acknowledgment ofdebt, or is based on an enforceable court judgment; and (3)there are assets situated in Switzerland that belong to thedebtor.Attachment of assets is also available as a securing meansduring recognition and enforcement proceedings under theLugano Convention.

Interim remedies can also be requested in support of foreignproceedings.


In Switzerland, a claimant must:plead all relevant facts;submit the available documentary evidence and identify anyother evidence claimant wishes to rely upon; andstate the relief sought, including interest.


According to the cantonal civil procedure codes in Switzerland, theamendment of pleadings in a pending suit is either barred oradmissible only under restricted conditions.Before the Zurich courts, an amended or additional claim can beraised if the new claim is closely connected to the original claim.The court can reject an amendment of the claim if the amendmentwould prejudice the legal position of the defendant or unduly delaythe proceedings.

4 Defending a Claim


In Switzerland, a statement of defence must:state which factual allegations made in the statement of claimare being denied by the defendant;submit the documentary evidence the defendant has in handand name other evidence the defendant wishes to rely upon;andstate the motion sought.

The defendant can file a counterclaim with the same court, providedthat there is a factual connection between the claim and thecounterclaim, that the court is competent to deal with thecounterclaim, and that the same procedure applies to both claims.For euro-international disputes, the Lugano Convention requiresthat the claim be based on the same contract or facts. Before Zurichand other cantonal courts, a counterclaim must be raised in thestatement of defence at the latest. However, in some cantons it mustbe raised as early as in the conciliation proceedings.A defence of set-off is available under Swiss law. In proceedingsbefore Zurich courts, it should be raised in the rejoinder or, in oralproceedings, in a party’s last pleading at the latest; otherwise, it willbe treated as an amendment of the pleadings (see Part I, question3.4 above).


The time limit within which the statement of defence must be fileddepends on the applicable cantonal civil procedure code. Normally,before Zurich courts, the statement of defence must be filed within20 days of the service of the claim; upon request, the court mayextend this time limit.


A party can give a ‘notice of litigation’ (Streitverkündung,dénonciation d’instance) to a third person in order to obtain supportduring a proceeding. If the party subsequently loses, the holdingsof the decision will have an effect on the third party if the third partywas obliged to support the notifying party due to its legalrelationship or according to good faith. In most cantons, the thirdparty’s liability will be determined in a subsequent suit. Some cantonal codes of civil procedure that are influenced byFrench law provide for an ‘action on a guarantee’ (action engarantie). Here, the third party itself becomes a party in the mainproceeding.


Under the Zurich Civil Procedure Code, as a rule, the court willassume an admission of the claimant’s allegations by the defendantand will issue a default judgment. However, the court may ask aclaimant to prove his allegations if it has serious doubts as to theircorrectness.


The defendant can dispute the court’s jurisdiction in the statementof defence, which can be restricted to the challenge of jurisdiction.



Under all cantonal laws, joinder is available; this enables thesimultaneous treatment of the claims of several parties in oneproceeding. It is necessary for the claims to have a commonquestion of fact or law of substantial importance, and that the sametype of proceedings be applicable to them.Furthermore, a third party may join ongoing proceedings in supportof either claimant or defendant if it has a legal interest that one ofthem prevails (Nebenintervention).


Claims which are closely connected in factual or legal aspects canbe consolidated, even if they are pending in different courts. Acourt will do so on its own motion if it considers consolidationnecessary in order to avoid contradictory judgments. Alternatively,

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the court can order a stay of one of the claims pendingdetermination of the other claim.


The Swiss courts have the discretion to split trials and to bifurcateproceedings.


6.1 Is there any particular case allocation system before thecivil courts in Switzerland? How are cases allocated?

There is no particular allocation system - a claimant is expected tosubmit the claim with the competent court that has jurisdiction overthe parties and over the subject matter. If a court decides that itlacks jurisdiction over the parties or over the subject matter, it willeither set a deadline within which the claimant can request atransfer to the competent court (which is the practice of Zurichcourts), or dismiss the case without prejudice. In cases whereclaims pending at separate courts have a common question of factor law of substantial importance, they can be transmitted to thecourt first seized (see Part I, question 5.2 above).Internally, a court will allocate the cases among the judges based ona mechanism that is not disclosed to the parties.

6.2 Do the courts in Switzerland have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

As soon as a case becomes pending, it is the court which has theduty to actively manage the whole process and to conclude it in anefficient way; only three cantons (Geneva, Vaud and Ticino) requirethe parties to be proactive.Pending an action, a party can ask for interim measures or fileprocedural motions, e.g., application for legal aid or preservation ofevidence. The requirements for interim measures to be grantedduring a trial correspond to the requirements prior to trial (see PartI, question 3.2 above).The costs for interim measures are usually allocated at the end ofthe proceedings depending on whether and to what extent a party’srequest has been granted or dismissed (see Part I, question 1.5above).

6.3 What sanctions are the courts in Switzerland empoweredto impose on a party that disobeys the court’s orders ordirections?

Failure to obey a procedural order or direction of the court willresult in procedural disadvantages, such as adverse inferences takenby the court or the rendering of a default judgment. The court isalso free to consider the parties’ behaviour during trial in itsevaluation of evidence.

6.4 Do the courts in Switzerland have the power to strike outpart of a statement of case? If so, in what circumstances?

If the procedural requirements to bring an action are met, the courthas the duty to hear the factual and legal arguments and to take thepertinent evidence offered in the case. However, if a claim isobviously without merit, a court may dismiss the claim withouthaving taken evidence on the facts.

6.5 Can the civil courts in Switzerland enter summaryjudgment?

Unlike under common law, where parties make their pleadings andevidence is taken during one big trial, civil law lawsuits proceedwith an assertion phase and an evidentiary phase (see Part I,question 1.3 above). After the parties’ pleadings, the Swiss courtscan - based on the factual arguments raised and the documentssubmitted as evidence - decide that no material issues of fact remainto be proven, that the evidence offered is irrelevant, or they cananticipate the evaluation of evidence and subsequently enter ajudgment.For certain kinds of disputes (e.g. certain family disputes, interimmeasures, etc.), procedural laws provide for summary proceedingswhich, predominantly, rely on documentary evidence.

6.6 Do the courts in Switzerland have any powers todiscontinue or stay the proceedings? If so, in whatcircumstances?

If the court decides that the procedural requirements are satisfiedand therefore takes on the case, it is no longer in the position todiscontinue proceedings, but must render a judgment on the merits.As a consequence of its case management powers (see Part I,question 6.2 above), a court may stay the proceedings if it decides- upon one of the parties’ or its own motion - that this would beappropriate, because, for example, the decision in the case isdependent on the outcome of another case or in cases of settlementnegotiations.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Switzerland? Are there any classes of documents thatdo not require disclosure?

There is no general pre-trial disclosure rule in the procedural codesof Switzerland. Basically, the parties determine the facts and theevidence to be presented to the court in their briefs. If a documentreferred to is in the possession of the other party, this party may, onrequest, be ordered by the court to produce it. Only in cases wherethe evidence might later be unobtainable or where the other party,under substantive laws, has a legal duty to produce certaindocuments (as is the case with agents vis-à-vis their principals orwith keepers of accounting books), it is possible to make a pre-trialrequest for the production of these specific documents. In criminalproceedings, the aggrieved party may gain access to the documentsobtained by the investigation authorities and may use them in asubsequent civil proceeding.

7.2 What are the rules on privilege in civil proceedings inSwitzerland?

Privilege rights in Switzerland protect individuals such as familymembers of a party and certain professionals - among others,attorneys, bankers, notaries, auditors and journalists - from givingtestimony and from complying with a request for the production ofdocuments in their possession; however, the procedural codes mayvary on the scope of the privilege. Unlike under common law, onlythe person who is bound to keep certain information secret canclaim the privilege, i.e. the attorney, but not the client. Accordingly,correspondence and work products received from an attorney, but inthe possession of the client, can be disclosed. Currently, in-house



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lawyers or attorneys acting in a business capacity, such asfiduciaries, may not invoke the legal profession privilege.However, there are ongoing discussions about the extension of theprivilege to in-house counsel.

7.3 What are the rules in Switzerland with respect todisclosure by third parties?

In the absence of any legal privilege, third parties have the duty totestify, if summoned by the court as witnesses. They may beordered by the court to produce specific documents in theirpossession; in practice, such orders are quite rare. Non-compliancemay be sanctioned (by fine or even detention) by the court.

7.4 What is the court’s role in disclosure in civil proceedingsin Switzerland?

Only the court can order the appearance of a witness or - uponrequest of one of the parties - the production of a specific document.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in Switzerland?

No. However, if a party or a third party claims that the productionof certain documents would jeopardise a business secret, virtuallyall procedural codes provide protective measures. The Zurich CivilProcedure Code allows protective measures - such as restrictedaccess to the documents or the redaction of sensitive parts -whenever there is a legitimate interest on the part of a party or thirdparty to do so.

8 Evidence

8.1 What are the basic rules of evidence in Switzerland?

There is no pre-trial discovery in Swiss civil procedure.The parties determine the facts and the evidence to be presented tothe court in their briefs. As a general rule, each party carries theburden of proving those facts upon which its claim or defence isbased. The court is free in the evaluation of evidence. According to the Zurich Civil Procedure Code, the court informsthe parties after the exchange of briefs which contested facts itconsiders to be relevant for the decision of the dispute and whichparty has the burden of proof. Subsequently, the parties arerequired to identify the evidence they intend to rely upon to provethe facts for which they have the burden of proof. The court willthen issue a decree designating the evidence it has admitted.


Swiss procedural codes provide for the following kinds of evidence:witness evidence;expert evidence;documentary evidence;inspection by court;parties’ testimony; andparties’ oath (for certain cantons only; not available under theZurich Civil Procedure Code).

Expert witnesses are appointed and questioned by the court if thetaking of evidence requires special knowledge that the court does

not have. Parties may oppose the appointment of a certain expertand ask additional questions; however, there is no cross-examination.


Fact witnesses are proposed by the parties in their briefs, but areordered to appear and are questioned by the court. Parties may askadditional questions, but there is no cross-examination. Thewitness must appear in person before the court and give oraltestimony. Accordingly, witness statements or depositions aregenerally not admitted as evidence. If a witness does not appear,the court may order fines or detention.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Switzerland?

The court does not facilitate a party’s efforts to obtain evidencefrom the counterparty or a third party; orders by the court toproduce specific documents are rare. The court decides whichevidence that has been offered it will admit. The court also appointsexpert witnesses. During a witness or expert witness hearing, thecourt is in charge of questioning.


9.1 What different types of judgments and orders are the civilcourts in Switzerland empowered to issue and in whatcircumstances?

The court can issue procedural orders which have the purpose ofmanaging the proceedings. In addition, the court has the power toissue judgments on the merits. These include judgments fordamages, judgments for specific performance, declaratoryjudgments, cease-and-desist orders, as well as judgments changinga legal right or status, and partial judgments.


Damages are strictly compensatory. Accordingly, rulings arelimited to the amount of damages actually suffered. Punitivedamages are not available.On monetary claims, a statutory interest rate of 5 percent p.a.applies, unless the parties have agreed on a different interest rate.Interest is generally owed from the date of default. The partyclaiming interest must explicitly state this together with the reliefsought.The losing party bears the costs. The amount of the court fees andthe reimbursement of the winning party are regulated by statute (seePart I, question 1.5 above).


Domestic monetary judgments are enforced in an expeditedprocedure according to the Federal Debt Collection and BankruptcyAct.Non-monetary judgments are enforced according to the applicableprocedural code. A party’s refusal to comply with a judgment isconsidered contempt of court and is punishable.

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The recognition and enforcement of foreign judgments is governedby the Federal Act on International Private Law of 1987 (“IPLA”),multilateral and bilateral treaties, especially the LuganoConvention, and the above mentioned domestic procedural rules:

In relation to Member States of the Lugano Convention, ajudgment rendered in a Member State will, upon motion bythe interested party, be recognised by the competent Swisscourt without a review of the substance unless certainspecific, very limited, circumstances exist, such as a flagrantviolation of due process or of Swiss public policy.Under the IPLA, a foreign judgment will generally berecognised if the judgment was rendered by a competentcourt, if the decision is final and if the recognition does notviolate fundamental principles of Swiss law.

9.4 What are the rules of appeal against a judgment of a civilcourt of Switzerland?

In principle, the Swiss judiciary system offers two levels of appeal:Cantonal appeals: The cantonal rules with regard to appealsdiffer considerably and can provide no, or as many as two,cantonal appeal instances (see Part I, question 1.2 above).Generally, a threshold amount in dispute is required. Thefunction of the cantonal appeal is primarily to ascertainwhether the lower court has correctly applied the proceduraland the substantive law. Incidentally, the factual basis of thelower court’s decision can also be re-examined. The right tobring new allegations of facts and evidence varies under thedifferent procedural codes.Federal appeal: The Swiss Federal Court decides appeals onissues of federal or constitutional law. As a rule, theminimum amount in dispute is CHF 30,000. The Court,however, will deal with cases below this threshold if aquestion of law is of “fundamental significance”. An appealmust be filed within 30 days of the service of the precedingjudgment. The scope of re-examination is limited toquestions of law. An exception exists if the finding of factsby the lower instances was obviously incorrect or in violationof the law.

The decisions of the Commercial Court of Zurich can be challengedeither with the Zurich Court of Cassation and/or the Swiss FederalCourt. The Court of Cassation has the power to quash or to reversethe decisions of the inferior courts if a violation of due process hasoccurred or, should an appeal to the Federal Court not be available,an incorrect application of evident substantive law. The appealmust be filed within 30 days of the service of the judgment of theCommercial Court.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Switzerland?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Due to Switzerland’s proverbial neutrality, arbitration proceedingshave traditionally been and still are frequently used to resolvedomestic and, in particular, international matters. Swiss tribunalsand courts are known to respect arbitration agreements and theparties’ choice of procedure. Arbitral tribunals decide on their ownjurisdiction irrespective of parallel proceedings pending beforestate courts or other tribunals. If necessary and requested, the statecourt at the place of arbitration has jurisdiction to grant judicial

assistance, such as injunctions and the taking of evidence. Thegrounds for appeals against arbitration awards are limited to a fewbasic procedural guarantees and to alleged violations of the ordrepublic. Switzerland is a member of the Convention on theRecognition and Enforcement of Foreign Arbitral Awards of 1958(“New York Convention”).Mediation, ombudsmen offices and similar conciliationproceedings are increasingly available in Switzerland. So far, mostof these institutions are based on private initiative.


International arbitration is governed by Chapter 12 of the FederalAct on International Private Law of 1987 (“IPLA”). The provisionsapply to arbitral tribunals having their seat in Switzerland, if at leastone of the parties did not have residency in Switzerland at the timewhen the arbitration agreement was entered into. Chapter 12 IPLAis an arbitration-friendly lex arbitri, which recognises and respectsthe arbitration rules of the arbitral institution chosen by the parties.Domestic arbitration is governed by the Intercantonal Concordat onArbitration of 1969 (“Concordat”).There is no Swiss Federal law governing conciliation or mediationproceedings. Only the canton of Geneva has adopted a law on civilmediation. However, private institutions have established their ownguidelines and ethical codes on conciliatory proceedings.

1.3 Are there any areas of law in Switzerland that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Subject to the ordre public, any pecuniary claim may be the subjectof international arbitration. In mediation and domestic arbitration,any claim that parties may freely dispose of can be mediated and/orarbitrated, unless a state court has mandatory jurisdiction, as is thecase in employment and consumer law matters. Mediationproceedings are also regularly used in family law disputes insofaras the dispute relates to financial matters. In the cantons of Zurich,Geneva and Fribourg, (state) mediation with regard to criminaloffences, such as minor offences against property, is available.


2.1 What are the major dispute resolution institutions inSwitzerland?

In commercial arbitration, the Swiss Chambers of Commerce(www.swissarbitration.ch) are the most widely known Swissdispute resolution institutions; they have adopted unified rules ofarbitration (Swiss Rules of International Arbitration) and providearbitration services. In addition, certain international Chambers ofCommerce domiciled in Switzerland provide their own arbitrationrules and services, including the Swiss-American and the German-Swiss Chambers of Commerce. In addition, arbitration proceedingsin Switzerland are frequently conducted under the rules ofinternational arbitration institutions, such as the InternationalChamber of Commerce (ICC) in Paris, the London Court ofInternational Arbitration (LCIA), the Stockholm Chamber ofCommerce (SCC) and others.Most Swiss arbitration practitioners are members of the SwissArbitration Association (ASA; www.arbitration-ch.org), a privatenon-profit organisation of more than 1,000 Swiss and non-Swissmembers committed to promoting commercial arbitration.



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In mediation, there are private institutions such as the SwissChamber on Commercial Mediation, the Swiss MediationAssociation and the Swiss Lawyers Association. In certain areas,such as banking, insurance and travel contracts, there are designatedombudsmen offices.


Switzerland is a Member State of the New York Convention. Theenforcement of arbitration awards is a matter of routine inSwitzerland.Solutions reached in (private) conciliation and mediationproceedings are treated as extrajudicial settlement agreements.They have a contractually binding effect, but cannot be directlyenforced (see also Part II, question 3.2 below).



There is a growing trend to evaluate litigation versus arbitration. Indomestic disputes, specialised courts such as the Commercial Courtof Zurich often provide high-quality decisions at lower costs thanarbitration; a panel consists of two High Court judges and threeCommercial Court judges, the latter with specialised expertise inthe relevant business sector. On the other hand, arbitral tribunalsprovide for confidentiality, for the possibility to select thearbitrators, to conduct proceedings in any desired language, forrestricted appeals and for a more widespread internationalenforcement. While arbitration proceedings have becomeincreasingly complex and longer in duration, their use is stillgrowing and is often the only alternative in larger internationalprojects.While the desire of the international business community to resolvedisputes by means of mediation is significant, the successful use ofmediation is not yet frequent. The fact that mediation does notresult in an enforceable award is often an obstacle to a finalresolution of a disputed matter (as to future developments, seebelow, question 3.2).

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Switzerland?

The draft bill of the new Swiss Federal Rules of Civil Procedure,which is scheduled to come into effect in 2010 (see Part I, question1.1 above), includes a provision according to which parties maychoose between (state) conciliatory proceedings and (private)mediation. Furthermore, the parties will be entitled to request thatthe court suspend ongoing proceedings and allow mediation. If theparties reach a settlement in mediation they may jointly apply thatsuch settlement be approved by the court. An approved settlementwill have the effect of an enforceable judgment. With regard to mediation clauses and so-called “multi-tier”arbitration clauses (mediation followed by arbitration) particularissues may arise, such as the effect of the proceedings on thesuspension of statutory limitation periods, issues of lis pendenceand issues of jurisdiction (at what point may the arbitral tribunaladmit the claim: before, during or after the mediation? As of whenis a mediation deemed to have failed?). In a recent decision, theSwiss Federal Supreme Court dealt with the issue of non-compliance with a clause providing for mediation/conciliation.However, most of the controversial questions remained unresolvedsince the Court found that the clause did not provide for a bindingobligation to mediate. The Court’s decision was based on the factthat the clause lacked any indication as to the period in whichmediation would have to be initiated or terminated and expresslystated that pending negotiations should not impede the start ofarbitral proceedings.There is also some debate on the degree of confidentiality in caseswhere parties did not explicitly provide for confidentiality in theirmediation or arbitration agreements or by reference to institutionaldispute resolution rules containing provisions on confidentiality.Apart from the procedural rules of the canton of Geneva (obligingmediators to respect confidentiality), there are no statutory rules inSwitzerland that explicitly deal with confidentiality in alternativedispute resolution mechanisms. Rules on confidentiality are,however, included in the Swiss Rules of International Arbitration,which are the institutional arbitration rules of the Swiss Chambersof Commerce.

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Alexander Jolles

Schellenberg WittmerLöwenstrasse 19, P.O. Box 1876CH-8021 ZürichSwitzerland

Tel: +41 44 215 5252Fax: +41 44 215 5200Email: [email protected]: www.swlegal.ch

Alexander Jolles is a partner of Schellenberg Wittmer and head ofthe firm’s litigation team in Zurich. His main areas of practiceinclude domestic and international commercial litigation andarbitration, enforcement of foreign judgments, legal assistance incivil and criminal matters, insolvency and debt enforcement,contract and liability law, inheritance and estate matters, copyrightand art law.Alexander Jolles graduated from the University of Bern, Faculty ofLaw, and was admitted to the bar in Switzerland in 1988. He spenttwo years as a foreign associate in U.S. law firms in New York andSan Francisco, and joined Schellenberg Wittmer in 1993. Hebecame a partner of the firm in 1998. From 1999 to 2001 he actedas Secretary General of the Claims Resolution Tribunal for DormantAccounts in Switzerland, which was managed by SchellenbergWittmer.Alexander Jolles is on the list of arbitrators of the ICC NationalCommittee for Switzerland and of the World Intellectual PropertyOrganization (WIPO). He is a member of several leadinginternational arbitration and professional organisations (ASA, LCIA,UIA, etc.). His publications are in the field of internationalarbitration, litigation and art law.

Stefan Leimgruber

Schellenberg WittmerLöwenstrasse 19, P.O. Box 1876CH-8021 ZürichSwitzerland

Tel: +41 44 215 5252Fax: +41 44 215 5200Email: [email protected]: www.swlegal.ch

Stefan Leimgruber is an associate in Schellenberg Wittmer’slitigation and arbitration group in Zurich. He specialises in domesticand international commercial litigation and arbitration with specialemphasis on preliminary injunctions, freezing of assets, enforcementof international judgments, debt enforcement and intellectualproperty rights. He has acted as party counsel and as secretary ofthe tribunal in various cases of international arbitration (ICC, VIAC,LCIA, Ad Hoc). Stefan Leimgruber graduated from the University of Zurich, Facultyof Law, in 2002. Between 2003 and 2007, he worked at theZurich District Court as a secretary and as an associate judge,primarily conducting summary proceedings on applications forinterim measures, attachments and debt enforcement. He wasadmitted to the Swiss bar in 2007 and is a member of severalprofessional associations, including the Zurich Bar Association.

Schellenberg Wittmer is one of the leading business law firms in Switzerland with two major offices in Zurich andGeneva offering the expertise and specialisation of more than 100 lawyers. Its core practice areas are disputeresolution, corporate/M&A, banking and finance including capital markets, private capital & estate planning, andtaxation. It has developed further specialised areas of practice complementary to its core activities.

Schellenberg Wittmer’s Litigation Team has considerable experience in coordinating national and internationalcommercial litigation through a network of correspondents. Its highly specialised dispute resolution team conductslitigation and international arbitration in all its practice areas. Firm members have particular expertise in tracing andrecovering assets in Swiss and cross-border situations. Its international arbitration specialists act as both counsel andarbitrators as well as in alternative dispute resolution.


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Ukraine

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Ukraine got? Are there anyrules that govern civil procedure in Ukraine?

Ukraine has got Roman legal system. There are procedural codesthat govern civil procedure: (i) Code of Civil Procedure; and (ii)Code of Commercial Procedure.

1.2 How is the civil court system in Ukraine structured? Whatare the various levels of appeal and are there anyspecialist courts?

The current system of courts includes three levels of the generaljurisdiction and four levels of the specialist courts. The SupremeCourt of Ukraine is a top level for all branches of courts. Thegeneral jurisdiction branch of courts includes local courts andcourts of appeal. Specialist branches are commercial courts andadministrative courts. The specialist branch includes the followingcassation level: the Highest Commercial Court of Ukraine and theHighest Administrative Court of Ukraine. The Supreme Court ofUkraine serves as a cassation court for general jurisdiction courtsand as an extraordinary instance for the commercial andadministrative branch.

1.3 What are the main stages in civil proceedings in Ukraine?What is their underlying timeframe?

The main stages of the civil procedure are the following: (i)submission of the lawsuit (no specific timeframe); (ii) preliminaryhearings in the general jurisdiction courts (generally, within fromtwo weeks up to one month starting from the submission of thelawsuit); (iii) hearings (generally, within from one month up to fivemonths starting from the preliminary hearings); and (iv) judgment(generally, declared on the last session; full text is generally issuedwithin from three days up to ten days after the last session). Itshould be noted that the legal time frames are much lesser;practically they are not observed. There are no specific stages ofthe hearings before the courts of appeal and cassation exceptsubmission of the relevant application and the hearings itself.Generally, hearings before the courts of appeal and cassation courtstake up to six months.

1.4 What is Ukraine’s local judiciary’s approach to exclusivejurisdiction clauses?

Exclusive jurisdiction clauses are strictly observed by the Ukrainiancourts.

1.5 What are the costs of civil court proceedings in Ukraine?Who bears these costs?

The costs include court fees, fees for technical support and legal fees.General court fee amounts to 1% of the amount of claim and has amaximum limit. Fees for technical support are relatively small: (i)about Euro 4 in the general jurisdiction courts and (ii) about Euro 12in the commercial courts branch. Fees of attorneys are borne by theparties and could be partially collected from the failing party.

1.6 Are there any particular rules about funding litigation inUkraine? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

There are no such rules in Ukraine.


2.1 Are there any pre-action procedures in place in Ukraine?What is their scope?

There are no obligatory pre-action procedures in Ukraine.However, the Code of Commercial Procedure of Ukraine providesfor the obligatory pre-action written negotiations in case when acontract contains a pre-action clause.


Most limitation periods are determined by the Civil Code of Ukraine.The general limitation period is three years after the alleged violationhas taken place. Shortened or extended limitation periods may bedetermined by special law for different types of actions. For example,a five year limitation period applies for the invalidation of contractactions made as a result of acts of violence or fraud. The limitationperiod is calculated starting from the moment when a person hasknown or should have known about the violation of his rights. Thelimitation periods are treated as substantive law issue.

Arseniy Milyutin

Alexey Reznikov

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3.1 How are civil proceedings commenced (issued and served)in Ukraine? What various means of service are there?What is the deemed date of service? How is serviceaffected outside Ukraine? Is there a preferred method ofservice of foreign proceedings in Ukraine?

An action starts by the submission of the lawsuit to a relevant court.The lawsuit may be submitted by direct submission to thesecretariat of a court or via post. The date of service is deemed tobe a date of submission to the secretariat or post. Foreigners mayfile lawsuits with relevant courts via post. The preferred method ofsubmission of a lawsuit is through a Ukrainian representativedirectly to the secretariat of a court.

3.2 Are any pre-action interim remedies available in Ukraine?How do you apply for them? What are the main criteria forobtaining these?

Court may introduce a pre-action interim remedies. A claimantshall submit a written application on introduction of the interimremedies, generally, along with the lawsuit. The main criteria ofintroduction are reasonable expectations that the defendant will tryto avoid enforcement of the future judgment.


The main elements of pleadings are explanations of facts,references to the law and the claim.


Pleadings can be amended. Claimant has a right to change eithersubject or grounds of a claim. In doctrine, there is an opinion thatsimultaneous change of grounds and subject of a claim is deemed tobe a new claim and thus to be submitted separately.

4 Defending a Claim


There are no specific requirements to the statements of defence.Usually, the structure is similar to claim. The defendant can bring acounterclaim or defence of set-off before the judgment is delivered.


There are no specific time limits with regard to statements ofdefence. However, with regard to the general jurisdiction courtsdefendant generally cannot refer to evidences which have not beenreferred to at the preliminary session.


The Civil Code of Ukraine provide for a right to recourse of a

person which paid damages made by the third party. However,there is no special mechanism to examine cases simultaneously.


The court will examine the case according to the availableevidences.


The defendant can submit an appeal in case he considers that thecourt lacks jurisdiction. Such an appeal is allowed in the branch ofthe general jurisdiction courts only.



A third party can join into the ongoing proceedings by submissionof a relevant application in case when judgment can influence hisinterests.


Two sets can be joined. This can be done in case when two claimsof the similar nature are made against one defendant.


The proceedings can be spited if joint examination complicates thesolution of the case.


6.1 Is there any particular case allocation system before thecivil courts in Ukraine? How are cases allocated?

Commercial disputes between legal entities are under jurisdiction ofthe commercial branch of courts. Any dispute, party to which is anatural person, is under jurisdiction of the general branch of courts.

6.2 Do the courts in Ukraine have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

There are no special rules with this regard.

6.3 What sanctions are the courts in Ukraine empowered toimpose on a party that disobeys the court’s orders ordirections?

The sanctions are divided in two groups: (i) criminal sanctions and(ii) administrative sanctions. Most of them are in the form of a fineor arrest. The Code of Civil Procedure also contains the followingprocedural sanctions: warning, sending off the court room, interimattachment of the evidences, and bringing by force.



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6.4 Do the courts in Ukraine have the power to strike out partof a statement of case? If so, in what circumstances?

The courts can close a case partially. Generally, this can happenwhen there are several combined claims, each of which has aseparate meaning. In such a case, if there are legal grounds, one orseveral claims can be closed. There is a list of grounds when a case(or part of a case respectively) can be closed. One of the commonreasons for a case to be closed is that the court lacks jurisdiction.

6.5 Can the civil courts in Ukraine enter summary judgment?

There are no such rules.

6.6 Do the courts in Ukraine have any powers to discontinueor stay the proceedings? If so, in what circumstances?

The courts can suspend the proceedings. There are a number oflegal grounds for this. For example, the court must suspend theproceedings in case of death of a party thereto. The courts can alsoleave a case without examination. This can happen, for example,when a claim is submitted by a person lacking locus standi.

7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin Ukraine? Are there any classes of documents that donot require disclosure?

All hearings in Ukraine are public. When appropriate (e.g. thedocument constitutes a State secret), the parties can ask the court toarrange a closed hearing. There are no classes of documents that donot require disclosure.

7.2 What are the rules on privilege in civil proceedings inUkraine?

There are no special rules.

7.3 What are the rules in Ukraine with respect to disclosureby third parties?


7.4 What is the court’s role in disclosure in civil proceedingsin Ukraine?


7.5 Are there any restrictions on the use of documentsobtained by disclosure in Ukraine?


8 Evidence

8.1 What are the basic rules of evidence in Ukraine?

There are two basic rules of evidences: relevance and admissibility.


The court shall not consider evidences obtained in breach of legalprocedure. The court shall not consider certain evidences of facts ifsuch facts shall be evidenced by special means only. Generally,expert evidences on issues requiring special knowledge areadmissible evidences.


According to Code of Civil Procedure, the witness shall give hisstatements personally before the court. The necessity to call awitness shall be explained by a party on a preliminary session. TheCode of Commercial Procedure does not allow witnesses.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in Ukraine?

The essential principle of the civil jurisdiction is that the courtsassist to parties. There is no obligation of the courts to collectevidences. Under the request of a party the court can secureevidences.


9.1 What different types of judgments and orders are the civilcourts in Ukraine empowered to issue and in whatcircumstances?

The courts issue three types of decisions: (i) judgments, (ii) rulingsand (iii) separate rulings. The judgments of the courts of appeal andcassation appeal instances can be named resolutions and decisions.Judgment is the final outcome of a case. The same refers toresolutions and decisions. Ruling is a decision regarding differentprocedural issues. Separate rulings are rarely issued decisionsregarding courts’ directions to persons or entities to preventviolations of law.


The courts adjudge collection of the costs to a winner party in thejudgment. The maximum amount of costs which can be collectedis determined by the law. The courts can collect court fee, fee ontechnical support, legal fees, travel costs, witness travel costs andexpert fees. The court can also adjudge damages caused by theinterim remedy.


The final judgment can be enforced by the State Bailiffs’ Service. Thecourts of general jurisdiction issue enforcement letters while the courtof commercial jurisdiction issue orders. These enforcementdocuments are to be filed with the bailiffs’ services for enforcement.

9.4 What are the rules of appeal against a judgment of a civilcourt of Ukraine?

The appeal can be submitted within the prescribed term. The

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application can contain references to the procedural breaches andon merits. In fact, courts of appeal and cassation appeal instancesreview the cases in whole.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in Ukraine?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

Generally, the available method of dispute resolution is acommercial arbitration governed by the Law of Ukraine “OnArbitration” (courts of arbitration). The award of the arbitration isnot directly enforceable but can be enforced through the procedureof the court confirmation. Mediation is not governed by the law andused mostly as an element of business negotiations. Otherpreliminary methods are available in labour disputes.


Law of Ukraine “On Arbitration” (courts of arbitration).

1.3 Are there any areas of law in Ukraine that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

There are a number of areas that cannot use arbitration, forexample, cases connected with State secret, divorce cases, and casesto which a state body is a party.


2.1 What are the major dispute resolution institutions inUkraine?

Major institutions are the following: local courts, courts of appeal,Supreme Court of Ukraine, Highest Commercial Court of Ukraine,Highest Administration Court of Ukraine, and InternationalCommercial Arbitration Court before the Chamber of Commerceand Industry of Ukraine.


Yes, all of them except the commercial arbitration awards whichshall be confirmed by the local court.



Arbitration courts are becoming more and more frequently used.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in Ukraine?

As a rule, use of arbitration courts is a novel for Ukrainians. Manyof them doubt whether non-professional judges can resolve adispute. Besides, there are two contradictory factors which affectusing arbitration courts: (i) people who expect failure are afraid ofthe award of arbitration being final and non-appealable, and, thus,there will be no chance for them for revision on merits; and (ii)people who expect success are afraid that the enforcement of theaward shall be approved by the decision of the local court whichcan be appealed. Thus, they prefer to start litigation before the courtrather then to loose time with the arbitration.



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Alexey Reznikov

Magisters 38 Volodymyrska St. Kyiv, 01034 Ukraine

Tel: +380 44 492 8282Fax: +380 44 492 8272Email: [email protected]: www.magisters.com

Alexey Reznikov has been a Partner with Magisters since April2006. He co-heads the Litigation Practice of the firm. Beforejoining Magisters he was a Senior Partner with Reznikov, Vlasenkoand Partners. Mr. Reznikov has extensive experience in litigationand dispute resolution. He participated in the following cases, winning broad publicresonance: representation and defence of interests of the Presidentof then presidential candidate Victor Yushchenko in the SupremeCourt of Ukraine in the dispute of annulment the results of thepresidential elections in 2004; disputes on Krivorizhstal and NikopolFerroalloy Plant; protection of interests of Russian company MTSregarding purchase of shares in OJSC “Ukrainian MobileCommunication” (UMC) authorised fund; defence of interests ofCJSC “Gaztranzit” in the process of annulment the tax inspectionresolution; and protection of interests of Ukrainian largest mobileoperator UMC in the dispute with tax inspection on inclusion ofpension tax to VAT tax base.

Arseniy Milyutin

Magisters38 Volodymyrska St. Kyiv, 01034 Ukraine

Tel: +380 44 492 8282Fax: +380 44 492 8272Email: [email protected]: www.magisters.com

Arseniy Milyutin works in the Litigation Practice of Magisters andrepresents clients in economic, administrative and law courts. Prior to that, Mr. Milyutin worked in Reznikov, Vlasenko andPartners, Attorneys and Counselors at Law, where he was involvedin the following cases: protection of interest of JSC NikopolFerroalloy Plant (Case law of the European Court of Human Rights);protection of interests of JSC Oschadbank of Ukraine; protection ofinterests of Viktor Yuschenko, President of Ukraine, in SupremeCourt of Ukraine; and protection of interests of foreign clients (AveryDennison, Zorlu Petrogas). Since January 2003 he was a seniorspecialist, and since January 2004 he was in charge of the civil andeconomic law department in National Bureau of Convention for theProtection of Human Rights and Fundamental Freedoms ofUkrainian Ministry of Justice.

Magisters (formerly Magister & Partners) was established in 1997 and initially specialised in international trade law.Today Magisters is a full-service, international law firm, advising leading global and domestic organisations throughoutthe Commonwealth of Independent States (CIS).

Magisters employs more than 130 internationally trained and locally experienced lawyers in its Moscow, Kyiv andBelarus offices.

The Firm is consistently recognised by Chambers, Legal 500, PLC Which Lawyer?, IFLR 1000 and others for the qualityof its work in mergers and acquisitions, banking and finance, dispute resolution, corporate and commercial law, realestate and construction, tax and international trade.

Magisters assists numerous governmental and inter-governmental organisations, including the International FinanceCorporation (IFC), EUFA, the International Court of Arbitration (ICC, Paris), and the World Bank. Magisters is a memberof international law firm associations including Lex Mundi, Globalaw, Taxand, and FraudNet. These affiliations alongwith its network of correspondent arrangements, allow Magisters to provide the best-in-class cross-border legal advicein the CIS and worldwide.

Web site: www.magisters.com



Chapter 43

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has the USA got? Are there anyrules that govern civil procedure in the USA?

The United States is a common-law country, with court systemsmaintained by the federal government and by each individual state.The federal judiciary’s jurisdiction is limited to cases (1) betweenparties from different states or from foreign countries (where theamount in controversy exceeds $75,000), (2) arising from orinvolving a question of federal law, (3) where the United States is aparty, or (4) involving questions of admiralty law. Each of the 50 U.S. states maintains its own distinct court system.These courts can hear all civil cases not otherwise subject toexclusive federal jurisdiction. In the federal courts, the Federal Rules of Civil Procedure(“FRCP”) govern. Each state also has its own civil procedure code.In general, federal courts use the FRCP for procedure, and rely onstate law to adjudicate the substantive claim. Federal courts mayrefer to state civil procedure rules, however, to resolve questionsdelegated by the FRCP to state law (e.g. statutes of limitations, rulesfor attachment, and rules for execution). Unless otherwise specified, the discussions below refer only to thefederal judicial system.

1.2 How is the civil court system in the USA structured? Whatare the various levels of appeal and are there anyspecialist courts?

The federal judiciary has three levels. The 94 district courts, spreadthroughout the 50 states and the U.S. territories, are the trial courts ofthe federal system. Each district also has a separate bankruptcy court. All judgments and final orders of the district courts can be appealedto one of 11 Courts of Appeals. Court of Appeals decisions may besubmitted to the Supreme Court for further review, but the SupremeCourt accepts only a small percentage of the appeals submitted toit. See question 9.4, below.In addition to these courts, there are several specialty courtsestablished by the federal executive branch, including immigrationcourts, tax courts, military courts, the Court of Federal Claims (forclaims against the U.S. government), and the Court of InternationalTrade. Each state has its own court structure for state civil, criminal, and

administrative proceedings, but each state must have one supremecourt. Decisions of a state supreme court may be appealed directlyto the U.S. Supreme Court if they involve questions of federal law(particularly constitutional law).

1.3 What are the main stages in civil proceedings in the USA?What is their underlying timeframe?

The stages of a U.S. litigation will generally include:filing and service of a plaintiff’s complaint;filing and service of a defendant’s answer; pre-trial discovery (required disclosures, document requests,interrogatories, and depositions);trial; andjudgment.

Cases might also include motion practice, scheduling conferences,court-mandated mediation, pre-trial fact and expert witnessstatements, and legal briefing. Aside from the deadline for thefiling of an answer (due 20 days after the service of the complaint),FRCP 12(a)(1), the timeframe for a U.S. litigation will vary by thecomplexity of the case.


Federal courts will generally enforce contractual exclusivejurisdiction clauses, E. & J. Gallo Winery v. Andina Licores S.A.,446 F.3d 984 (9th Cir. 2006), unless enforcement of the clausewould contravene a strong public policy of the forum in which suitis brought, or there is a clear showing that enforcement of the clausewould be unreasonable under the circumstances. Canon Latin Am.,Inc. v. Lantech (CR), S.A., 453 F. Supp. 2d 1357, 1363 (S.D. Fla.2006).

1.5 What are the costs of civil court proceedings in the USA?Who bears these costs?

The filing fee for a complaint in federal court is $350. Overall costsof litigation, including attorney’s fees, vary depending on thecomplexity of the case, but generally the cost of litigation in theU.S. is comparatively high, owing largely to the cost of mandatorydiscovery (see section 7, below). Each side is expected to bear itsown costs, barring a showing that the litigation was frivolous orfiled in bad faith. A limited set of federal statutes creating privatecauses of action (e.g., civil rights actions) also allow victoriousplaintiffs to collect their attorney’s fees from defendants.

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1.6 Are there any particular rules about funding litigation inthe USA? Are there any contingency/conditional feearrangements? Are there rules on security for costs?

There are no particular rules for funding U.S. litigation.Contingency and conditional fee arrangements are permitted,except for criminal cases. In some legal practices - particularlypersonal injury - contingency and/or conditional fee arrangementsare commonplace. While each party generally bears its own attorney’s fees, a plaintiffcould obtain an order for security for its fees where such damages arelikely to be granted, and where the losing party cannot or will not pay.


2.1 Are there any pre-action procedures in place in the USA?What is their scope?

There are no required pre-action procedures prior to the filing acomplaint, except for those established by contract between theparties.


Statutes of limitations are considered substantive rather thanprocedural, and are therefore governed by the state law thatotherwise governs the substance of the case, rather than by theFRCP. The statutes of limitations vary by state; as an example, thefollowing are some of the New York statutes of limitations:

20 years: enforcement of a money judgment. 10 years: recovery of real property, redemption of mortgage.6 years: breach of contract, fraud, corporate misconduct.3 years: personal injury, products liability.1 year: defamation, libel, slander.

N.Y. C.P.L.R. § 201 et seq. Under New York law, the statute oflimitations is computed “from the time the cause of action accruedto the time the claim is interposed.” N.Y. C.P.L.R. § 203(a).


3.1 How are civil proceedings commenced (issued and served)in the USA? What various means of service are there?What is the deemed date of service? How is serviceeffected outside the USA? Is there a preferred method ofservice of foreign proceedings in the USA?

The United States deems an action commenced when a complaint isfiled with the court. FRCP 3. A judge is assigned to the case soonthereafter.For U.S. defendants, if the defendant does not waive service of thecomplaint, the plaintiff must serve the defendant with a summonsand copy of the complaint within 120 days. FRCP 4(c)(1), (m).Such service may be effected:

according to the law of the state in which the court sits orwhere service is made;by personal delivery to defendant;by delivery to a person of “suitable age and discretion” atdefendant’s home; or

by delivery to defendant’s authorised agent.FRCP 4(e). Service is deemed effective on the date the summonsand complaint are delivered. If the defendant is outside the U.S., the plaintiff must attemptservice reasonably calculated to give actual notice of the lawsuit.This may be accomplished by:

internationally agreed means;means prescribed by authority of the country in whichservice is effected;personal delivery or delivery via mail requiring the recipientto sign, if permitted by local law; orother means as directed by the court.

FRCP 4(f). There is no time limit for service on a foreigndefendant. FRCP 4(m). The United States is a signatory to the Hague Service Conventionand the Inter-American Convention on Letters Rogatory. Bothtreaties provide for service on U.S. defendants in foreignproceedings through the U.S. Central Authority, a division of theU.S. State Department.

3.2 Are any pre-action interim remedies available in the USA?How do you apply for them? What are the main criteria forobtaining these?

A district court cannot issue any order unless an action is pendingbefore it. However, once an action is commenced, the court maygrant any remedy that, under the law of the state where the courtsits, provides for seizing a person or property to secure satisfactionof the potential judgment. FRCP 64. Courts may also grant preliminary injunctions - requiring a party todo or refrain from doing a specific act - after notice and a hearing,if the moving party can demonstrate: “(1) a substantial likelihood ofsuccess on the merits; (2) irreparable harm to the movant if theinjunction is denied; (3) the threatened injury outweighs the harmsthat the preliminary injunction may cause the opposing party; and(4) the injunction, if issued, will not adversely affect the publicinterest.” Wilderness Workshop v. U.S. Bureau of LandManagement, 531 F.3d 1220, 1224 (10th Cir. 2008). If the fearedinjury would occur immediately - before opportunity for notice anda hearing - the court may grant a temporary restraining order(“TRO”) on an ex parte basis. FRCP 65(b).


U.S. courts require “notice pleading.” In other words, a complaintneed only be sufficient to put the defendant on notice of the lawsuitand the basic allegations supporting it. The complaint should include:

a statement of the grounds for jurisdiction;a statement of the grounds for relief; anda demand for the relief sought.

FRCP 8(a). The allegations must be “simple, concise, and direct” (FRCP 8(d)(1));however, conclusory legal assertions without factual support areinsufficient. Allegations of fraud or contractual mistake and claimsfor special damages (out-of-pocket expenses resulting from thebreach of contract) must be specifically pleaded. FRCP 9(b), (g).


A plaintiff may amend the complaint once before the defendant

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serves an answer. Otherwise, pleadings may be amended by leaveof the court - which leave is to be given “when justice so requires”- or with the adverse party’s consent. FRCP 15(a).If the evidence presented at trial does not conform to the issues inthe pleadings, the court may allow the parties to amend thepleadings, and should freely do so unless the adverse party (1)objects and (2) satisfies the court that it would be prejudiced by thelate amendment and admission of new evidence. FRCP 15(b);Brandon v. Holt, 469 U.S. 464, 471 n. 19, 105 S. Ct. 873, 83 L. Ed.2d 878 (1985).A party may join any additional claim against an opposing party inits amendment; the additional claim need not be related to theoriginal action. FRCP 18(a).

4 Defending a Claim


In its answer, the defendant must (1) state its defences to each legalclaim asserted against it, and (2) respond to each allegation in thecomplaint with an admission or denial. FRCP 8(b)(1). A good-faithstatement that the party lacks knowledge sufficient to respond to anallegation has the effect of a denial. FRCP 8(b)(5). The defendant must set forth all affirmative defences in the answer;however, if the plaintiff is otherwise on notice that the defendantwill litigate an affirmative defence and will suffer no prejudice, afailure to plead it is not fatal. FRCP 8(c); Williams v. Ashland Eng’gCo., 45 F.3d 588, 593 (1st Cir. 1995). Further, certain defences maybe raised by a separate motion to dismiss, prior to serving theanswer. Those defences include:

lack of subject-matter jurisdiction;lack of personal jurisdiction;improper venue;insufficient process;insufficient service of process;failure to state a claim upon which relief can be granted; andfailure to join an indispensable party (see question 5.1,below).

FRCP 12(b). Any counterclaim or set-off that arises out of the same transactionor occurrence as the complaint and does not require adding a partyover whom the court does not have jurisdiction must be included inthe answer. FRCP 13(a). A defendant may also include in itsanswer any claims against the plaintiff unrelated to the originalaction in its answer. FRCP 13(b).


A defendant must answer within 20 days of being served. If thedefendant has waived service, the answer should be served 60 daysfrom the time the waiver request was sent for a domestic defendant,and 90 days for a defendant outside the U.S. FRCP 12(a)(1).


A defendant can join a third party, alleging the party is liable to the

defendant for part or all of the claim against it. If the defendantdoes so more than 10 days after serving its original answer, it mustfirst obtain leave of the court. FRCP 14(a)(1).


If a party “fail[s] to plead or otherwise defend,” the court must entera default judgment against that party. FRCP 55(a). The courtretains discretion to set aside an entry of default for “any otherreason that justifies relief.” FRCP 55(c), 60(b)(6). However, somecourts have limited setting aside default judgments to“extraordinary circumstances.” Budget Blinds, Inc. v. White, 536F.3d 244 (3rd Cir. 2008).


A defendant can challenge the court’s jurisdiction over either thedefendant’s person or the subject matter of the suit (arguing, e.g.,that the suit does not meet the standard for a lawsuit in federal courtdiscussed in question 1.1, above). If a challenge to personal jurisdiction does not appear in thedefendant’s answer, it is generally deemed waived. FRCP 12(g),(h)(1); Swaim v. Moltan Co., 73 F.3d 711, 718 (7th Cir. 1996).However, the defendant may challenge the court’s subject matterjurisdiction by motion at any time. FRCP 12(h)(3); Laughlin v.Kmart Corp., 50 F.3d 871, 873-874 (10th Cir. 1995).



A defendant may join a third-party defendant as discussed inquestion 4.3, above. The court may add parties at any time. FRCP 19-21. If a third partyis necessary to the action - i.e., the third party’s absence makes itimpossible to accord complete relief, the third party’s interest in theaction would be impaired, or an existing party might be injured bydisposition of the action in the person’s absence - the third partymust be joined if feasible. FRCP 19(a). If such joinder is notfeasible, and if the action cannot fairly proceed without the thirdparty, the court may dismiss the action. FRCP 19(b); Yashenko v.Harrah’s N.C. Casino Co., 446 F.3d 541 (4th Cir. 2006).Additional parties may be joined if (1) a question of law or fact willarise in the action that is common to all parties and the additionalparty, and (2) the same transaction or occurrence gives rise to theright to relief asserted on behalf of each plaintiff/additional partyand against each defendant/additional party. FRCP 20(a). Theplaintiff may join parties at the outset, or by amending thecomplaint. See question 3.4, above. A defendant who files a cross-claim or counterclaim (see question 4.1 above) is treated as aplaintiff for these purposes.If the joinder of all interested plaintiffs to an action would beimpracticable due to the large number of plaintiffs, a class action maybe filed. In a class action, one representative plaintiff litigates the suiton behalf of all similarly situated plaintiffs, and the judgment willreflect the total amount due to all plaintiffs. FRCP 23.A third party has a right to intervene in an action when it has aninterest in the action that will be damaged if the action is decided inits absence. FRCP 24(a). The court has discretion to permit a third



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party to intervene who has a claim or defence that shares a commonquestion of law or fact with the action. FRCP 24(b). In eithercircumstance, the third party must “timely” move to intervene(although there is no specific deadline), and must serve its motionon all parties. FRCP 24(a)-(c).


When two separate actions involving a common question of law orfact are pending, they may be consolidated. FRCP 42(a). In addition,the district court has the discretion, without consolidating the actions,to order “a joint hearing or trial of any or all the matters in issue inthe actions,” or to “make such orders concerning proceedings thereinas may tend to avoid unnecessary costs or delay.” Id.


In the interests of efficiency, convenience, or avoiding prejudice,the court may order a separate trial of any issue or issues, or anyclaim, cross- or counterclaim, or third party claim, on motion of aparty or sua sponte. FRCP 42(b); Chlopek v. Federal InsuranceCo., 499 F.3d 692, 700-701 (7th Cir. 2007). The court also has thepower to order a claim against a party to be severed, resulting in twoor more lawsuits where there previously was one. FRCP 21.


6.1 Is there any particular case allocation system before thecivil courts in the USA? How are cases allocated?

The federal courts do not have a formal case allocation system,except that cases will be diverted where appropriate to thebankruptcy or other specialty court. See question 1.2, above. Forcases falling under the general jurisdiction of the district court, anyavailable district court judge can be assigned. On occasion, thecourt may assign one judge to hear all cases with particular facts orlegal issues in common. For example, all cases against airlinesarising from the September 11, 2001 terrorist attacks filed in theSouthern District of New York are heard by a single judge. Allcases filed in the Southern District of New York against theRepublic of Argentina arising from its 2002 debt default aresimilarly assigned to one judge.

6.2 Do the courts in the USA have any particular casemanagement powers? What interim applications can theparties make? What are the cost consequences?

The FRCP gives the federal courts broad discretion to managecases, including the power to:

expedite the disposition of the action; establish control over the case by limiting the amount of timeto file motions and complete discovery; discourage wasteful pre-trial procedures; improve the quality of the trial through more thoroughpreparation; and facilitate the settlement of the case, through court-orderedmediation or otherwise.

FRCP 16(a).The parties may file a wide range of interim applications, includingapplications for preliminary injunctions and security/attachment

(see question 3.2, above), motions to dismiss all or part of the action(see question 6.4, below), motions for full or partial summaryjudgment (see question 6.5, below), motions to compel discovery(see question 7.4, below), and motions for sanctions for failure toabide by the FRCP. Aside from attorney’s fees for the preparationof these motions - which, depending on the motion, could besubstantial - there is no additional cost associated with them.

6.3 What sanctions are the courts in the USA empowered toimpose on a party that disobeys the court’s orders ordirections?

A district court may impose monetary or non-monetary sanctionsagainst a party that disobeys its orders. FRCP 11; FRCP 37. Courtshave broad discretion to fashion sanctions to fit the specificcircumstances of the abuse. Design Strategy, Inc. v. Davis, 469 F.3d284, 294 (2nd. Cir. 2006).

6.4 Do the courts in the USA have the power to strike out partof a statement of case? If so, in what circumstances?

Under the FRCP, a district court has the power to dismiss the wholecase or one or more of the claims within a case, on a variety of basesrelated to a deficiency in the court’s jurisdiction or the merits of thecase. See question 4.1, above. In extreme cases, a court may issuea sanction order dismissing a case for a party’s failure to complywith a rule, practice, direction, or court order. John’s Insulation,Inc. v. L. Addison & Assoc., 156 F.3d 101, 110 (1st Cir. 1998).

6.5 Can the civil courts in the USA enter summary judgment?

The FRCP allows a court to enter summary judgment for a plaintiff ordefendant without trial. FRCP 56. It may grant summary judgmentdispensing with the whole case, or partial summary judgmentdispensing with certain claims. FRCP 56(d). The court may grantsummary judgment on the motion of either party or sua sponte. FRCP56(a)-(b); Celotex Corp. v. Catrett 477 U.S. 317, 325-326 (1986). The summary judgment procedure is intended to dispose of cases orclaims where no material facts are in dispute, or where the courtneeds only to resolve a question of law, thereby obviating the needfor a trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475U.S. 574, 587-88 (1986).

6.6 Do the courts in the USA have any powers to discontinueor stay the proceedings? If so, in what circumstances?

A plaintiff may voluntarily dismiss an entire case, without a courtorder, by filing a notice of dismissal before the defendant has filedan answer or a motion for summary judgment. FRCP 41(a)(1).After this time period elapses, an order of the court is necessary todismiss the entire case. FRCP 41(a)(2). A plaintiff may dismiss certain claims, without a court order, byamending the pleadings anytime before the defendant serves aresponsive pleading. FRCP 15(a). After this period, a plaintiff maydismiss certain claims against a party only with court permission orwith permission of the adverse party. Id. The district courts retain broad discretion to manage caseproceedings (see question 6.2, above), which includes the power tostay proceedings pending the resolution of other related litigation orarbitration. A court also has the power to stay the effect of itsjudgments. FRCP 62.

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7 Disclosure

7.1 What are the basic rules of disclosure in civil proceedingsin the USA? Are there any classes of documents that donot require disclosure?

The disclosure process is referred to as “discovery” in the FRCP. TheFRCP requires certain initial and pre-trial disclosures, including:

the identities of any individuals who may possessdiscoverable information; copies of documents that the disclosing party may use tosupport its claims or defences;the identities of witnesses the parties plan to use at trial; andan identification of documents the disclosing party plans topresent as exhibits at trial.

FRCP 26(a)(1)-(3).In addition to these required disclosures, parties may requestadditional information from each other, as long as the informationrequested appears reasonably calculated to lead to the discovery ofevidence admissible at trial. FRCP 26(b)(1). These requests mayinclude demands for witness depositions, written interrogatories,and requests for the production of documents or other material. Id.Once a party has received discovery requests, it is required tocomply with those requests unless they are overly burdensome orcompliance would require the disclosure of privileged information.FRCP 26(b)(2).

7.2 What are the rules on privilege in civil proceedings in theUSA?

The scope of privilege in the federal courts depends on theunderlying substantive law of the claim presented. For claimsarising under federal law, courts use federal common law rules ofprivilege. EEOC v. Ill. Dep’t. of Employment Security, 995 F.2d106, 107 (7th Cir. 1993). If the district court is hearing a state lawclaim, it will apply that state’s privilege law. Id. In general,privileged information is not admissible at trial and may bewithheld from discovery. Examples of leading categories of privilege under state and federallaw include the attorney-client privilege, the work-productprivilege, the privilege against self-incrimination, the doctor-patientprivilege, and the spousal privilege. The FRCP requires the party asserting the privilege to sufficientlydescribe the documents or other evidence it is refusing to produce.FRCP 26(b)(5). Ultimately, it is within the court’s discretion todetermine whether a piece of evidence is privileged, and the courtcan demand to see the allegedly privileged evidence in camerabefore ruling.

7.3 What are the rules in the USA with respect to disclosureby third parties?

The FRCP allows parties to seek discovery from third parties.FRCP 30, 31. In order to procure discovery from a third party, therequesting party should issue a subpoena to the third partycompelling the deposition or production of evidence. Attorneys areauthorised to issue such subpoenas directly without assistance bythe court, but the subpoena has the power of a court order. Thesubpoena must include information about the issuing court, thecase, and the third party ordered to appear. FRCP 45.

7.4 What is the court’s role in disclosure in civil proceedingsin the USA?

The federal courts are not directly involved in the discoveryprocess, but can issue discovery orders to compel a party to producerequested information, and can rule on challenges to requesteddiscovery. FRCP 37(a). Additionally, the court has the authority,under its case management discretion, to set deadlines for thecompletion of discovery. A court may enforce its discovery orders by imposing sanctions andexpenses against disobeying parties. FRCP 37(a)(3), (b).Ultimately, a court could order that adverse inferences be drawn attrial against the disobeying party, and could even dismiss the actionif the plaintiff is the disobeying party.

7.5 Are there any restrictions on the use of documentsobtained by disclosure in the USA?

There are no restrictions on the use of documents obtained throughdiscovery. However, the FRCP allows district courts, in theirdiscretion, to issue protective orders to ensure that parties do not useinformation received through discovery in any way other than forthe purpose of the litigation. FRCP 26(c). On rare occasions, acourt will seal evidence, pleadings, and testimony to ensure thatthey are not made available to the public.

8 Evidence

8.1 What are the basic rules of evidence in the USA?

The federal courts use the Federal Rules of Evidence (“FRE”),which is - like the FRCP - a federal statute. These rules govern (1)relevancy of evidence, (2) privileges, (3) testimony from factwitnesses, (4) opinion and expert testimony, (5) hearsay, (6)authentication and identification of documentary or other tangibleevidence, and (7) the admissibility of the contents of writings,recordings, and photographs.


Types of admissible evidence include testimony from fact andexpert witnesses, writings and recordings, and photographs; theselatter categories are broadly defined to include electronically storedinformation. FRE 1001. Evidence in whatever form will only beadmitted if it is relevant to the proceedings, not unduly prejudicial,authentic, and not hearsay (testimony based on second-handinformation). FRE 402, 403.The court may admit testimony from an expert in a relevant scientific,technical or otherwise specialised field. FRE 702. The expert’stestimony must be based on facts or procedures normally relied uponby experts in the given field, but does not necessarily have to be basedsolely on otherwise admissible evidence. FRE 703.


Any party or the court may call fact witnesses, who can testify tomatters for which they are deemed competent. FRE 601, 614. Inparticular, a fact witness can only testify as to events for which hehas direct knowledge. FRE 602. The opposing party has the right



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to cross-examine any witness called. Douglas v. Owens, 50 F.3d1226, 1230-31 n. 6 (3rd Cir. 1995). The FRCP permits pre-trial depositions of witnesses. FRCP 30, 31.However, deposition testimony will be admitted at trial only underlimited circumstances, particularly for impeachment of thewitness’s trial testimony. FRE 613. Deposition testimony may alsobe admitted where the deponent is unable to testify at trial due todeath or grave illness. FRE 804. In general, witness statements from fact witnesses are disfavouredin U.S. courts, which prefer live testimony and cross-examination attrial. However, when submitting a pre-trial motion (particularly amotion to dismiss or a motion for summary judgment), it iscommon to submit a witness statement describing facts relevant tothe motion. Also, courts will often require expert witnessstatements to be exchanged in advance of trial, to put the opposingparty on notice of the expert’s planned testimony.

8.4 What is the court’s role in the parties’ provision ofevidence in civil proceedings in the USA?

The courts have the power to issue orders compelling the disclosureof requested discovery (see question 7.4, above), and attorney-issued subpoenas bear the force of a court order.


9.1 What different types of judgments and orders are the civilcourts in the USA empowered to issue and in whatcircumstances?

District courts are empowered to issue judgments for moneydamages, specific performance, and declaratory relief. A districtcourt may issue such judgments after trial, or at any point upon amotion for summary judgment. District courts also have wide discretion to issue a variety of ordersin law or equity, including but not limited to orders for:

injunction;security;restraint;attachment;execution;discovery compliance;subpoena (of witnesses or documents);dismissal;scheduling; and/ormediation.


District courts have full power to render judgments for damages,including, in some cases, punitive, speculative or special damages.Punitive damages are generally available as punishment foroutrageous conduct by the defendant, or where otherwise specifiedby statute. Speculative damages, such as lost profits, aredisfavoured, but may be issued where they can be reliablyestablished and where no other measure of damages is appropriate. Costs are generally left to each party, but may be awarded in selectcircumstances. See questions 1.5 and 1.6, above. For federal lawsuits, the rate of post-judgment interest is governed

by statute and varies depending on the weekly average one-yearconstant maturity U.S. Treasury security yield for the calendar weekpreceding the judgment. 28 U.S.C. § 1961. Judges retain discretionto award pre-judgment interest in an amount appropriate to the case.


Enforcement of district court judgments is governed by the statelaw where the district court sits or where enforcement is sought.FRCP 64. Generally, when the losing party refuses to pay a moneyjudgment, the judgment creditor can execute on property of thelosing party (whereby the property is seized by a sheriff ormarshal), establish a lien on real property, or garnish paymentsowed to the judgment debtor. There are no treaties between the U.S. and any other countries forthe enforcement of foreign judgments. A party seeking to enforce aforeign judgment must file an action in a state or federal districtcourt seeking recognition of that judgment. The enforcement offoreign judgments is governed by state law, which will generallytake into account international comity, reciprocity and res judicata.

9.4 What are the rules of appeal against a judgment of a civilcourt of the USA?

All district court judgments and final orders can be appealed as ofright to the Court of Appeals. In addition, any interim order can bereferred to the Court of Appeals if it involves a “controllingquestion of law as to which there is substantial ground fordifference of opinion” and where “an immediate appeal from theorder may materially advance the ultimate termination of thelitigation.” 28 U.S.C. § 1292(b). When reviewing district court judgments and orders, the Court ofAppeals will apply one of two standards. The Court of Appeals canreview any legal determination by the district court de novo,meaning that the Court of Appeals does not have to give anydeference to the district court’s decision. However, where thedistrict court has resolved a factual dispute, the Court of Appealswill only overturn that determination upon a showing of clear error. Civil procedure in the Court of Appeals is governed by the FederalRules of Appellate Procedure.Review of Court of Appeals’ decisions can be sought through apetition for a writ of certiorari to the Supreme Court. However, theSupreme Court grants only a small number of the petitions for writof certiorari submitted to it, meaning that, practically, most casescannot be appealed beyond the Court of Appeals.


1 Preliminaries

1.1 What methods of dispute resolution are available andfrequently used in the USA?Arbitration/Mediation/Tribunals/Ombudsman? (Pleaseprovide a brief overview of each available method.)

The most commonly used methods of alternative dispute resolution(“ADR”) in the U.S. are arbitration and mediation.Arbitration has a long tradition in the U.S. The Federal ArbitrationAct (“FAA”) was created in 1925 to overcome judicial hostilitytowards arbitration, and U.S. courts have since routinely upheld andenforced arbitration agreements and awards. The FAA requires that

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any doubts as to the arbitrability of certain issues under a legitimatearbitration clause be resolved in favour of arbitration. Moses H.Cone Mem’l Hosp.l v. Mercury Constr. Corp., 460 U.S. 1, 24-25(1983). In 1970, the United States adopted the New YorkConvention on the Recognition and Enforcement of ForeignArbitral Awards, which further facilitated the use of arbitration inthe resolution of transnational disputes.Mediation is also widely accepted in the U.S., and many districtcourts and state courts maintain courthouse mediation services toresolve disputes without trial. Mediation is usually confidentialand, unless a final agreement is reached, proceeds without prejudiceto the parties’ respective positions. Unlike arbitration, mediation isnon-binding until a final agreement is recorded with the court.U.S. litigants may also use a hybrid form of mediation andarbitration, “Med-Arb.” Med-Arb parties can agree to settle someissues through mediation and others through arbitration, or canagree to use mediation as a precursor to arbitration where, if themediation fails, unresolved issues will be determined by anarbitrator.


Arbitration statutes have been enacted at both the federal and statelevels. The FAA creates substantive federal law that is binding onboth federal and state courts, pre-empting any inconsistent statelaws, but it does not occupy the entire field of arbitration law.States may, therefore, fill in the gaps left by the FAA with their ownlegislation, particularly with regard to whether and how courts canassist in arbitral procedures. Volt Info. Scis. v. Bd. of Trs., 489 U.S.468, 477 (1989). Under the FAA, domestic arbitral awards will only be vacatedwhere the award was procured by fraud or corruption, where anarbitrator exhibited “evident partiality,” where the arbitratorscommitted severe misconduct in managing the arbitration, or wherethe arbitrators exceeded the scope of their powers. 9 U.S.C. § 10(a).There are similarly limited bases for vacating or refusing to enforcean award under the New York Convention. New York ConventionArt. V. Notably, mistake of fact or law is not a basis fordisregarding an arbitral award under either the FAA or the NewYork Convention.

1.3 Are there any areas of law in the USA that cannot usearbitration/mediation/tribunals/Ombudsman as a means ofdispute resolution?

Given that arbitration is a creature of contract between parties,several categories of legal proceedings cannot be subject toarbitration, including criminal and family law cases. On the otherhand, family law cases may be subject to mediation.


2.1 What are the major dispute resolution institutions in theUSA?

For private arbitrations or mediations relating to commercial,consumer, or labour and employment disputes, the AmericanArbitration Association (“AAA”) is the most widely usedinstitution. The AAA maintains a division for internationalarbitration, the International Centre for Dispute Resolution(“ICDR”). Another major American ADR institution, covering bothmediation and arbitration, is JAMS, the Judicial Arbitration and

Mediation Services. The International Institute for ConflictPrevention and Resolution (CPR) assists parties in non-administered arbitration and mediation.There are also several specialised, industry-specific arbitralinstitutions, such as the International Film and Television Alliance(“IFTA”) Arbitration. The New York Stock Exchange and NationalAssociation of Securities Dealers (“NASD”) similarly maintaintheir own arbitration services for certain kinds of investmentdisputes.


Arbitration awards are binding and enforceable under both the NewYork Convention and the FAA.Mediation, on the other hand, does not generally result inenforceable awards. However, if the parties so desire, they canregister a mediated agreement with a court to make it legallybinding. Otherwise, a mediated settlement agreement can beenforced as a contract.



There is a widely-held perception that U.S.-style discovery isbecoming more prevalent in arbitrations, and that measures must betaken to curb the use of such discovery in order to preserve theefficiency of arbitration. The issue has become more critical inrecent years due to the heavy use of electronic means ofcommunication by parties. Electronic discovery - whether in courtor in arbitration - can bog the parties down in expensive and time-consuming document review. Thus, in 2008, the AAA’s ICDR issued guidelines for the exchangeof information in international arbitration, with a focus onelectronic information. The guidelines give arbitrators discretion tofocus and narrow document requests submitted by parties to limitthe time and expense required for electronic discovery. Otherarbitral institutions (in the U.S. and elsewhere) are similarlyaddressing the issue of electronic document exchange in arbitration.It seems likely that as electronic discovery continues to grow morecumbersome, arbitrators and arbitral institutions will seek ways tominimise its impact on the efficiency of arbitration.

3.2 Please provide, in no more than 300 words, a summary ofany current issues or proceedings affecting the use ofthose dispute resolution methods in the USA?

A major question pending before U.S. courts is whether anarbitrator’s “manifest disregard of the law” provides a basis forvacating an arbitral award. As discussed above, the FAA providesfour bases for vacatur, none of which include disregard of the law.However, federal courts have long held that if an arbitrator exhibitsa “manifest disregard of the law,” the award could be vacated.Some courts held that the “manifest disregard” standard providedan additional common-law basis for vacatur outside of the FAA,while others argued that the standard developed from the FAA’sstated bases for vacatur, particularly those that apply where thearbitrator has committed severe misconduct or exceeded the scopeof her powers. Compare McCarthy v. Citigroup Global Markets,Inc., 463 F.3d 87, 91 (1st Cir. 2006) (“manifest disregard” isadditional basis for vacatur) to Kyocera Corp. v. Prudential-Bache



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Trade Servs., Inc., 341 F.3d 987, 997 (9th Cir. 2003) (“manifestdisregard” is shorthand for FAA §§ 10(a)(3) and (4)). In Hall Street Assoc. L.L.C. v. Mattel Inc., 128 S. Ct. 1396, decidedin March 2008, the U.S. Supreme Court held that under federal law,the FAA’s four statutory provisions are the only bases for vacatingan arbitration award. In dicta, the Supreme Court took note of thelower court split about whether “manifest disregard” was anadditional basis for vacatur or shorthand for the FAA’s standards,without resolving the issue. U.S. federal and state courts have issued widely disparate decisionson “manifest disregard” since Hall Street. A number of courts haveheld that, because the FAA does not mention “manifest disregard,”

the Hall Street decision eliminated “manifest disregard” as a basisfor vacatur. See, e.g., Robert Lewis Rosen Assoc. Ltd. v .Webb, 566F. Supp. 2d 228 (S.D.N.Y. 2008). Other courts have adopted theposition that that “manifest disregard” continues to be a basis forvacatur, as a shorthand method for applying the FAA standards.See, e.g., Eastern Seaboard Concrete Construction Co. v. GrayConstruction Inc., 2008 U.S. Dist. LEXIS 33256 (D. Maine 2008).A few courts have even held that “manifest disregard” continues tobe a basis for vacatur as an additional basis outside the FAA,regardless of the holding of Hall Street. See, e.g., Jimmy John’sFranchise, LLC v. Kelsey, 549 F. Supp. 2d 1034 (C.D. Ill. 2008). Itremains to be seen how this issue will ultimately be resolved.

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Robert A. Cohen

Dechert LLP30 Rockefeller PlazaNew York, New York 10112USA

Tel: +1 212 698 3501Fax: +1 212 698 3599Email: [email protected]: www.dechert.com

Robert A. Cohen is a partner in Dechert’s commercial litigationgroup and head of the litigation practice in the firm’s New Yorkoffice. He has served several times on the firm’s Policy Committee.Mr. Cohen’s more than 30 years of dispute resolution experienceincludes the litigation (including jury trials), arbitration, andmediation of complex commercial matters, including a wide varietyof business disputes. He also focuses on matters in the areas ofantitrust, intellectual property, products liability, white-collar crime,securities, banking, and international finance. Mr. Cohen has alsoconducted numerous internal corporate investigations, a topic onwhich he is also a frequent lecturer. A principal focus of Mr. Cohen’spractice in recent years has been litigation, arbitration andenforcement proceedings against foreign governments andgovernment instrumentalities. Professional ActivitiesMr. Cohen is a former chair of the Subcommittee on Litigation of theInternational Dispute Resolution Committee of the New York StateBar Association’s International Law and Practice Section and amember of the Litigation and Antitrust Law Sections of the AmericanBar Association.Bar and Court AdmissionsMember, New York Bar.Admitted to practice before the United States District Courts for theNorthern District of California and the Eastern and SouthernDistricts of New York, U.S. Court of Appeals, Second and NinthCircuits, and the United States Supreme Court. EducationLake Forest College, B.A., 1967. Washington University School of Law, J.D., 1970.Attended the graduate programme in International Law at theUniversity of London (King’s College, London School of Economics)from 1970 to 1971.

David M. Bigge

Dechert LLP30 Rockefeller PlazaNew York, New York 10112USA

Tel: +1 212 698 3661Fax: +1 212 698 3599Email: [email protected]: www.dechert.com

David M. Bigge is an associate in the litigation group. He focuseshis practice on international dispute resolution, includinginternational commercial arbitration and litigation for and againstforeign sovereigns. Mr. Bigge has participated in proceedings beforeU.S. state and federal courts, the International Chamber ofCommerce (ICC), and the American Arbitration Association (AAA).He has experience with clients from a variety of industries, includingthe emerging markets investment sector, the global steel industry,and the telecommunications industry.Professional ActivitiesMr. Bigge is a member of the International Bar Association, theAmerican Bar Association, and the Association of the Bar of the Cityof New York, where he served as a member of the Foreign andComparative Law Committee. Mr. Bigge is a member of the AAAInternational Centre for Dispute Resolution “Young & International”group. Mr. Bigge also serves as coach for the Harvard Law SchoolWillem C. Vis International Arbitration Competition Team, and is onthe College of Arbitrators and Judges of the Foreign DirectInvestment Moot.Bar and Court AdmissionsMember, New York Bar.Admitted to practice before the United States District Court for theSouthern and Eastern Districts of New York.EducationRutgers College, B.A., summa cum laude, June 1998, Phi BetaKappa.Harvard Law School, J.D., cum laude, 2001.

Dechert LLP is an international law firm of more than 1,100 lawyers with top-ranked practices in litigation, corporateand securities, finance and real estate, and financial services and asset management.

The firm’s core practices are: litigation, emphasising business-related disputes, antitrust, intellectual property, productliability, and white collar and securities defence; corporate and securities, with an emphasis on mergers andacquisitions, private equity, and corporate finance; finance and real estate, with a focus on mortgage finance, structuredfinance, securitisation, and investment; financial services, focusing on mutual funds, hedge funds, variable products,broker-dealer, commodities, derivatives, and investment advisers; and intellectual property, emphasising patentlitigation and IP prosecution and licensing.

The firm also has well-established practices in tax, bankruptcy, employment, health, and environmental law.

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