Mihai Ionescu-Balea, Attorney-at-law
Abstract
This study offers a comprehensive analysis of the legal framework and procedural mechanisms governing the challenge of arbitral awards in Romania, as regulated by the Romanian Civil Procedure Code (RCPC). It highlights the exclusive nature of the “action to set aside” as the only judicial remedy available against arbitral awards, emphasizing its role in safeguarding the fundamental principles of arbitration without allowing a review on the merits. The paper explores both national and international arbitral awards, examining the grounds for annulment such as lack of arbitrability, invalid or inoperative arbitration agreements, improper constitution of the tribunal, procedural irregularities, and violations of public order. The author further analyses procedural aspects of setting aside actions, including jurisdiction, deadlines, suspension of enforcement, and the possibility of appeal. The study concludes that while Romanian courts maintain minimal intervention in arbitration, the action to set aside remains a vital mechanism for ensuring procedural fairness and the integrity of arbitral proceedings.
I. Preliminary considerations
1. The action to set aside
The action to set aside is the legal remedy for parties to seek annulment of an arbitral award before state courts. In Romania, it is the sole means to challenge an award. Following the UNCITRAL Model Law[1], the Romanian Civil Procedure Code („RCPC”) establishes this as the exclusive judicial recourse.
Romanian law is based on the principle of minimal court intervention in arbitration. The action to set aside acts as a safeguard against errors undermining the arbitration’s fundamental principles and is regarded as a ‘form of review’[2], available only on specific legal grounds.
To preserve its binding effect, a national arbitral award cannot be reviewed on its merits[3].
2. The request for interpretation, correction or supplementation
Besides the action to set aside, parties may use other procedural mechanisms. According to Article 604 RCPC, parties can request the arbitral tribunal (not the courts) to:
- Interpret the award in case of uncertainty;
- Correct administrative or calculation errors;
- Supplement the award if it omitted a claim (infra petita).
Such a request must be submitted within ten days of receiving the award. Missing this deadline prevents the parties from remedying these deficiencies later in annulment proceedings.
II. The categories of arbitral awards that can be challenged
1. National awards and international awards
National arbitral awards, or ‘domestic arbitral awards’, are decisions made within a state’s territory and concern entirely national issues[4]. An example is a dispute between two Romanian companies under Romanian law.
International arbitral awards, defined in Article 1124 RCPC, are rendered in a state other than where recognition is sought. An award rendered in Romania can be considered foreign if it contains sufficient external elements.
This distinction affects enforcement: a national award requires only an enforcement procedure in Romania, while an international award requires a separate procedure for recognition and enforcement[5].
1.1. Requirements for national awards
a. The award must be final
Setting aside is only permitted against the tribunal’s final decision, regardless of its name (‘award’, ‘decision’, etc.). Romanian law lacks a definition of award. The UNCITRAL Working Group proposed this clarification:
‘Award means a final award which disposes of all issues submitted to the arbitral tribunal and any other decision of the arbitral tribunal which finally determine any question of substance or the question of its competence or any other question of procedure’[6].
b. Conditions provided for in article 603 RCPC
Article 603 RCPC lists the requirements for an award, including that it must be in writing, specify the arbitrators and parties, indicate the arbitration agreement, describe the dispute and the parties’ arguments, contain the tribunal’s reasoning, include the relief granted, and be signed by all arbitrators (unless there is a dissent).
1.2. Requirements for international awards
a. Determining the international nature of the award
An award’s international character is determined by its territoriality (the legal ‘seat of arbitration’) and its legal qualification.
- The territoriality of the arbitral award
The ‘seat of arbitration’[7] is a legal concept, distinct from the physical location of hearings, and determines the legal framework for challenges.
- The criterion of legal qualification
An award can be considered foreign based on legal criteria, such as being governed by the arbitration law of another state (e.g., a Romanian-seated arbitration applying French law), or containing elements of extraneity (e.g., foreign parties and performance). An award can also be deemed foreign if the parties excluded national law, applying only international commercial practices.
b. The legal regime applicable to the action set aside international awards
Articles 1121(3) and 1123 RCPC subject international awards to judicial review under Romanian law for setting aside.
The parties’ chosen law governs only the procedure, not matters like arbitrability or grounds for annulment.
The literature[8] states that `matters relating to the arbitrability of the dispute, the review of the award by national courts, the grounds for setting aside the award and the effects of the award are excluded from the conventional sphere` and therefore cannot be the subject of an arbitration agreement.
Thus, international awards are reviewed under the lex fori. If the seat is in Romania, the RCPC’s annulment provisions apply[9].
III. Grounds for annulment of arbitral awards
1. Introductory remarks
The legal nature of the action to set aside is debated, with some viewing it as a form of recourse or appeal, and others as an autonomous legal remedy or judicial review. The prevailing view considers it a specific procedural instrument of dual nature—both contractual and judicial.
Its objectives are to verify the award’s conformity with the arbitration agreement and to assess compliance with the fundamental principles of civil procedure under Article 575 of the RCPC.
The action is limited to the exhaustive list in Article 608 RCPC and can only be based on the award’s illegality, not on errors in assessing evidence. The literature classifies the grounds as relating to: the arbitration agreement, the arbitration procedure, the arbitral award itself, issues outside the procedure, and procedural issues.
2. Grounds for annulment, according to article 608 paragraph 1 RCPC
a. The dispute is not arbitrable
An award may be set aside if the dispute was not capable of being settled by arbitration.
Under Romanian law, ‘disputes relating to personal status, legal capacity, inheritance, family relations and rights over which the parties do not have control may not be submitted to arbitration’[10]. Other excluded areas include consumer, administrative, tax, criminal, and insolvency law. The State and public authorities may only enter into arbitration agreements where permitted by law or international agreements. Courts examine ‘the patrimonial nature of the claims… and the transactional nature of these claims’[11].
For international disputes, Romanian courts can assess arbitrability based on foreign law. Per Article 1111 RCPC[12], an international dispute is arbitrable if it has a pecuniary nature, the parties can freely dispose of the rights involved, and the dispute is not under the exclusive jurisdiction of the courts per the lex fori.
For mixed claims, jurisdiction is transferred to a court only if the claims are inseparably connected. Parties must raise arbitrability objections during the arbitration proceedings or risk waiving this ground for annulment.
b. Absence of a valid arbitration agreement
The award can be annulled if the tribunal resolved the dispute without an arbitration agreement or based on a null or inoperative one.
The Supreme Court has emphasized that a written arbitration agreement is essential. The two forms are the arbitration clause (for future disputes) and the submission agreement/compromise (for existing disputes).
An arbitration clause must meet substantive validity requirements and the ad validitatem formal requirement of written form, which can be satisfied by an exchange of correspondence. A submission agreement has stricter requirements under Article 551 RCPC, including specifying the dispute’s subject matter and the arbitrators’ names.
The arbitration agreement must also meet general contract conditions under Romanian law. An inoperative agreement is valid but cannot produce effects for an objective reason, such as the chosen institution no longer existing. A party must raise validity issues during the arbitral proceedings to later invoke them for annulment.
c. The arbitral tribunal was not constituted in accordance with the arbitration agreement
This ground covers any failure to comply with the agreed rules on the tribunal’s composition, including the number, nationality, or qualifications of arbitrators, and rules on challenging arbitrators for lack of independence or impartiality.
It also applies if the award was rendered by an institution not specified in the agreement. The competent institution is identified by either an express designation in the agreement or a reference to specific institutional rules. A challenge concerning the tribunal’s constitution must be lodged before the first arbitral session.
d. The party was not present at oral hearings and the notification was not legally completed
A party’s absence due to improper summoning is a ground for annulment, upholding the right to be heard. This irregularity is deemed remedied if the party attends the hearing despite improper notice. Jurisprudence requires the cumulative fulfilment of two conditions: the party’s absence and the lack of proper summoning.
e. The award was rendered after the expiry of the time limit
The default time limit is six months from the tribunal’s constitution, but parties can agree to modify this. For international arbitrations with an “element of extraneity,” the period doubles to 12 months.
Three conditions must be met for annulment on this ground:
- The award was rendered after the agreed or legal term expired.
- At least one party declared its intent to invoke the termination of the proceedings. There is debate on whether this declaration must be made at the first hearing or can be submitted in writing beforehand.
- The parties did not agree to continue the procedure. A waiver of termination can be made orally before the tribunal.
f. The arbitral tribunal dealt with matters not requested or awarded more than requested (ultra petita)
The tribunal must strictly rule only on the issues submitted by the parties. Annulment may follow if it decides on matters not claimed (e.g., terminating a contract nobody sought to terminate) or grants relief beyond what was requested.
The parties’ claims are identified from the request for arbitration and the counterclaim. This ground does not apply to practical adaptations, such as converting a foreign currency claim, nor can it be used to challenge the merits of the dispute. Failure to rule on a claim (infra petita) is remedied by requesting a supplementary award, not annulment.
g. The arbitral award lacks essential elements
The award must contain:
- The ruling (dispositive part): Its complete absence is a major flaw, but deficiencies can be corrected.
- The reasoning: Sufficient factual and legal arguments must be provided to inform the parties how the decision was reached.
- The date: This is crucial for verifying compliance with time limits.
- The place of issuance (seat): Its absence is a ground for annulment, though some case law requires proof of unrepairable damage.
- The arbitrators’ signatures: Signatures from all arbitrators are required, except where there is a dissent or an objective reason for an arbitrator’s absence is stated.
h. The arbitral award infringes public order, good morals or mandatory provisions of the law
This ground is narrow, applying only when the award violates the fundamental principles of Romanian law. It focuses on the conformity of the award with essential legal norms, not on the tribunal’s substantive judgment.
i. A subsequent Constitutional Court decision on unconstitutionality
If the Constitutional Court later declares a law or ordinance used in the case unconstitutional, this is a ground for annulment. The arbitral tribunal itself can request such a review. The action to set aside must be filed within three months of the Constitutional Court’s decision being published.
IV. Procedure for challenging the award
1. Who can challenge the award?
The right to challenge an award (locus standi) is generally reserved for the signatories to the arbitration agreement—the parties who directly participated in the proceedings. Third parties may also challenge the award if they can demonstrate a legitimate and direct interest in its outcome.
2. The competent court
Jurisdiction lies with the Court of Appeal in the region where the arbitral tribunal was seated (Article 610 NCPC). The seat of arbitration, chosen by the parties, serves as the legal ‘centre of gravity’, determining the applicable procedural law. For example, an award seated in Bucharest is challenged at the Bucharest Court of Appeal.
3. The time limit for challenging the award
The standard deadline to apply for annulment is 30 days from the date the award is served on the parties. An exception exists for annulments based on unconstitutionality (Article 608(1)(i) RCPC), where the deadline is extended to 3 months from the publication of the Constitutional Court’s decision in the Official Gazette.
4. Suspension of the enforcement of the award
Filing an annulment action does not automatically suspend enforcement. However, the Court of Appeal may grant a stay under Article 612 RCPC at its discretion. The party seeking suspension must provide specific reasons demonstrating its necessity to prevent potential harm.
Suspension is not granted ex officio and requires a request from the party seeking annulment. This request can be filed together with the annulment application or separately, but it must always be accompanied by proof of a security deposit calculated per Article 719 RCPC. This deposit safeguards the creditor against potential damages from the suspension. If suspension is granted, the deposit is refunded to the debtor; if rejected, the creditor receives it as compensation. The court rules on the suspension request confidentially within twelve days. This decision is final but can be revisited if circumstances change.
5. The procedure before the Court of Appeal
According to Article 613 RCPC:
- The court adjudicates in a randomly selected panel for first-instance judgments, observing the principle of continuity (no judge substitutions between hearings).
- The submission of a statement of defense is mandatory. This pleading ensures equal procedural treatment and facilitates the case’s prompt resolution.
6. Ruling on the action to set aside
The Court of Appeal can either grant or reject the action.
6.1. Situations where the Court will grant the action
- If the award is annulled due to non-arbitrability, absence of a valid arbitration agreement, or because it was rendered after the time limit (Art. 608(1)(a), (b), or (e)), the court refers the case to the competent national court for a decision on the merits.
- For all other annulment grounds, the court sends the case back to the same arbitral tribunal for a re-hearing. This is akin to a reversal and retrial and typically requires a party’s request.
- If neither party requests referral to arbitration, the Court of Appeal itself can decide the merits, admitting new evidence if necessary. If the original arbitration was ex aequo et bono, the court will also rule on this basis.
6.2. Situations where the Court will dismiss the action
The action is dismissed if it is filed late (per Article 611 RCPC) or is inadmissible (per Article 608(2)).
7. The possibility of recourse
Recourse is an extraordinary legal remedy against the appellate court’s judgment. A controversial 2015 Supreme Court ruling held that recourse is only available if the annulment action was granted. Consequently, only the defendant can appeal, and no recourse is possible if the annulment is dismissed.
This interpretation is heavily criticized in legal literature for being rigid and for potentially violating the principles of free access to justice and a fair trial. A preferable view is that the right to recourse should be available regardless of the annulment’s outcome to ensure consistent and predictable legal proceedings.
[1] It is important to note that Romania didn’t formally adopt the principles enacted in the UNCITRAL Model Law on International Commercial Arbitration but follows some of its general principles.
[2] C. Leaua, Fl. A. Baias, Arbitration in Romania, ed. Wolter Kluwer, 2016, p.213.
[4] H. James, Awards : Form, content, effect
[5] A. Marin, D.Bidica, loc. cit.
[6] Fifth Working Group Report, A/CN. 9/246, para. 192 apud. C. Leaua, Fl. A. Baias, op.cit., pp.213.
[8] Tr. C. Briciu în V.M. Ciobanu, M. Nicolae (coord.), Noul Cod de procedură civilă comentat şi adnotat Vol. II – art. 527-1.134, ed. Universul Juridic, Bucureşti, 2016, p. 79., apud. A. Dan, M. Soltan, Reţinerea competenţei în arbitrajul internaţional. Inadmisibilitatea atacării pe cale separată în dreptul român, Revista Română de Arbitraj Nr. 2, 2022.
[9] A. Dan, M. Soltan, loc. cit.
[11] Arbitral award No 113/1996 in M. Tabarca, G. Buta, Codul de Procedură Civilă comentat și adnotat, Universul Juridic, 2007, pp.994-995 apud. C. Leaua, Fl. A. Baias, Arbitration in Romania, ed. Wolter Kluwer, 2016, p.218.
[12] C.I. Nagy, Legea aplicabilă arbitrabilităţii şi executarea sentinţelor arbitrale: este timpul să depăşim principiul ordinii publice?, Revista Dreptul Nr. 1, 2022.