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Journalof Alternative DisputeResolutionin Kosovo
JOUR
NAL
OF
ALTE
RNAT
IVE
DIS
PUTE
RES
OLU
TIO
N IN
KO
SOVO
Volume 2
June 2016
UDC 341.6(05)347.97/.99(496.51)(05)
AMERICAN CHAMBER OF COMMERCE IN KOSOVO
ARBITRATION CENTER
Journal of Altrenative Dispute Resolution in Kosovo
EDITORIALBOARD
RobertMuharremi,Ph.D
LectureratAmericanUniversityinKosovo
AssociatewithCharteredInstituteofArbitratorsinLondon
ArbitratorwiththeArbitrationCenteratAmericanChamberofCommerceinKosovo
KujtesaNezajShehu,LL.M.
PatentandTrademarkAgent
ArbitratorwiththeArbitrationCenteratAmericanChamberofCommerceinKosovo
AnjezëGojani,LL.M.
SecretaryGeneraloftheArbitrationCenteratAmericanChamberofCommerceinKosovo
*WiththesupportoftheMediationandArbitrationClubattheAmericanUniversityinKosovo
PublishedbytheArbitrationCenteratAmericanChamberofCommerceinKosovo,2016
Thismaterialmaybereproducedorusedfornon‐commercialpurposesifthepublicationisquotedandidentifiedexactlyasthesourceofinformation.TheviewsexpressedinthisnewsletterdonotnecessarilyreflecttheofficialpositionoftheAmericanChamberofCommerceinKosovo.
June2016
Volume 2
TABLEOFCONTENTS:FOREWORD.........................................................................................................................................................................4
AlternativeDisputeResolutionandthe“Kanun”(RobertMuharremi&AlketaBuçaj).......................5
ConfidentialityinArbitration:AnEssential ChangingAttribute?(FisnikSalihu)...............................22
CaseCommentary:NationalIranianOilCompanyvCrescentPetroleumCompanyInternationalLimitedandCrescentGasCorporationLtd(KlentianaMahmutaj)..........................................................35
IntellectualPropertyCasesinArbitration(ArbereshaZogjaniandFlorijeManajZogaj)...............43
RecognitionandEnforcementofKosovomadeArbitralAwardsinNewYorkConventioncountries:AComparativeStudy(AnjezëGojani).............................................................................................68
Journal of Altrenative Dispute Resolution in Kosovo
FOREWORD
The first volumeof the JournalofAlternativeDisputeResolution inKosovowaspublished in
August 2015. Since then, the Arbitration Center of the American Chamber of Commerce is
consistentlyworking in improving the format, thestructure,and theeditorial selectionof the
manuscripts.Backwhenthe firstvolumewasunderway, theCenteroperatedunderonemain
objective: to gather useful information on domestic and international commercial arbitration
andtoprovidethelatestdevelopmentsofthefieldtothelegalcommunityinKosovo.
The target audience consisted of legal practitioners, academics, and students. With this
objectivestillverymuchalive,throughthesecondvolume,theCenterhopestofurtherbuildthis
platformwherebyabalancebetweenanacademicandpracticaldiscussionwillbepresented.
TheCenterisfocusedindevelopingarbitrationinKosovoandalsoconsistentlyimprovingthe
quality of the services that it provides. In addition, the Arbitration Center believes that the
younggenerationoflawyerswillboostthisprocess.Thus,wealsowishtodedicatethisplatform
tothisaudienceandcontributetowardsfosteringtheirdevelopment.
The current volume includes a varietyof topics,whichprovide an overviewof certain issues
within the domestic arbitration state‐of‐affairs, as well as developments in international
commercialarbitration.Fromapracticalstandpoint,a fractionwithinthepaperspublishedin
thisvolumearecomprehensivereadsfornon‐lawyerstoo.
ThereaderswillnoticethatthejournalhasaUniversalDecimalClassificationCode,duetothe
factthatISBNandISSNcodesarenotyetavailableinthecountry.
Wehopethattheworkoftheauthorsfeaturedinthisvolumewillbeagoodadditiontoyourlaw
libraryandberemindedthattheArbitrationCenterisacceptingpapersonarollingbasis.
AnjezëGojani,SecretaryGeneral
ArbitrationCenter
AmericanChamberofCommerceinKosovo
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UDC340.141(=18)
AlternativeDisputeResolutionandthe“Kanun”
RobertMuharremi*andAlketaBuҫaj**
Abstract
Albaniansocietyhasarichtraditioninalternativedisputeresolutionasreflectedinthe“Kanun”.
Latestdevelopmentsinalternativedisputeresolutionlegislationseemtoneglectthisaspectanddo
notconnectlegislationwiththisrichtradition.Thepurposeofthepaperistoexplorethehistorical,
sociologicalandlegalaspectsofdisputesettlementmechanismsinAlbaniantradition.Thispaper
will explore thedevelopmentofAlbanian traditionasmanifested in the “Kanun”drawing from
insightsdevelopedinlegaltheoryandsociologicaljurisprudence.Disputesettlementmechanisms
as developed in pre‐state societies will also be taken into consideration to assess the dispute
settlementmechanismsendorsedbythe“Kanun”.Thepaperwillthenidentifyandanalyzespecific
dispute settlement procedures and mechanisms and compare them with modern alternative
disputeresolutionmethods.
Thepaperwillexploretheapproachesthatwereusedtosolvedisputes,andhowthoseapproaches
resulted from theAlbanian “Kanun”.Considering thathistorically the “Kanun”has functioned in
conjunction with state legal frameworks, its application may supplement state legislation on
alternativedispute resolution.Thepurposeof thepaper isalso to identifygeneralprinciplesof
dispute settlementwhichcouldexplain the individualrulesof the “Kanun” inamore systematic
manner. Itwill furtherexplorehow customarydispute settlementmechanisms couldbeused to
improvealternativedisputeresolution legislationandpracticebasedonexperiences inAlbanian
society. Although modern day arbitration and mediation is conducted mainly in civil and
commercialdisputes,forthepurposeofthispaperseveralaspectspertainingtocriminaldisputes
withintheKanunarealsodiscussed.
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Journal of Altrenative Dispute Resolution in Kosovo
I. Introduction
Weareusedtothefactthatstatecourtshaveprimacyinmattersrelatedtodisputeresolution
andthattheyhavemandatoryjurisdictiontoadjudicatesuchdisputes.Thisistheresultofstate‐
centric approach to dispute resolution in society. However, the view that state courts have
primacywhenitcomestodisputeresolutiondoesnotmeanthatstatecourtshaveamonopoly
in this respect. Alternative Dispute Resolution (ADR) is a recognized set of methods and
arrangementsofdisputeresolutionoutsideofstatecourtsandtypically includesnegotiations,
mediation,conciliation,fact‐finding,andarbitration.1ADRisbasedontheideathatconflictsare
anintegralpartofhumaninteraction,andhumansocietymustthereforelearntomanagethem
andtodealwiththeminawaythatwillpreventescalationanddestruction,andtocomeupwith
innovativeandcreativeideastoresolvethem.2Dealingwithconflicts,or“conflictresolution”,is
thereforeasoldashumanityitself.3
ADRhasgainedmomentuminthelastthreedecadesofthetwentiethcentury.4Itstartedinthe
United States in the 1970s in response to the need to find more efficient and effective
alternativestocourtlitigationandtointegrateADRintothelegalsystem.5Morerecently,ADR,
andparticularlymediation,hasbecomeinstitutionalizedaspartofmanycourtsystemsandthe
justice system as a whole throughout the world.6Kosovo has followed this development by
adopting a Law on Arbitration and a Law on Mediation. Arbitration is a procedure outside
regular courts inwhich a dispute is submitted, by agreement of the parties, to one ormore
arbitrators who make a binding decision on the dispute.7Mediation is also an out‐of‐court
procedurewhereathirdpartyassiststhepartiesindisputetoreachanamicablesettlement.In
2008, it adopted a Law on Arbitration8which follows largely the UNCITRAL Model Law on
InternationalCommercialArbitrationof19859andwhichappliestocommercialdisputesonly.
Inthesameyear,KosovoadoptedaLawonMediationwhichwasdraftedandimplementedwith
* Robert Muharremi, Ph.D, is a lecturer at American University in Kosovo. He is an Associate with the Chartered Institute of Arbitrators in London, and an arbitration with the roster of the Arbitration Center at American Chamber of Commerce in Kosovo. ** Alketa Buçaj, Bachelor of Science in Applied Arts and Sciences at American University in Kosovo. 1 Shamir, Yona. (2003). “Alternative Dispute Resolution Approaches and their Application”, UNESCO. Page 2. 2 Ibid. Page 2. 3 Ibid. Page 2. 4 Ibid. Page 2. 5 Ibid. Page 2. 6 Ibid. Page 9. 7World Intellectual Property Organization, “What is Arbitration?”, available at: http://www.wipo.int/amc/en/arbitration/what-is-arb.html. 8 Law No. 02/L-75 on Arbitration, Official Gazette of the Republic of Kosovo No 37, 2008. 9 United Nations, “UNCITRAL Model Law on International Commercial Arbitration”, (1994). The amendments to the UNCITRAL Model Law on International Commercial Arbitration of 2006 have not been incorporated into the law.
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the assistance of various international donor organizations. Mediation procedure is also
includedintheCodeonCriminalProcedureforcriminalmatters.
ThepossibleroleandinfluenceoftheKanunislessvisibleandrelevantinarbitrationthanitis
perhapsinregardstomediation.Arbitrationisstronglyinfluencedbypositivelaw,mostnotably
commercialandprivatelaw.However,evenwithintheframeworkofpositivelaw,custommay
playarole.TherearemultipleprovisionsintheLawonObligationswhichrefertocustomand
customary practices which may be entry points for Albanian custom. Due to the limited
relevanceoftheKanunforarbitration,thepaperwillprimarilyfocusontraditionalmediation.
WhileKosovo strives to adopt legislation in accordancewith international standards, itmust
not be neglected that dispute resolution is based on norms set by society and as such is
determined by a society’s culture. In order to have a clear understanding of the relationship
betweencultureanddisputeresolution,a fewsociologicalconceptsneedclarification.Culture
may be defined as the beliefs and practiceswhich a society shares.10Culture is a function of
society, which may be defined as a group of people who share a community and culture.11
Community is related to the territory inhabited by a group of people who share a common
cultureandmayincludeanyformofdefinableterritory,rangingfromurbanneighborhoodsto
states.12Thus,acommonterritoryandacommoncultureturnsagroupofpeopleintoasociety.
Cultureitselfiscomposedofmaterialcultureandnon‐materialculture.13Materialculturerefers
to theobjects andartefactsof a society.14Non‐material culture includes the ideas, values and
beliefsofasociety.15Materialandnon‐materialcultureareusuallyinterrelatedsinceasociety’s
material culture represents a society’s ideas, values, beliefs and norms. The key elements of
culture derive from a society’s non‐material culture and are a society’s values and beliefs.
Valuesareasociety’sstandardsaboutwhatisgoodandbad,whatisimportantandwhatisless
important,whilebeliefsreflectasociety’sideasaboutwhatistrueandhowtheworldworks.16
A society materializes its values and beliefs through norms. Norms prescribe and guide
behaviorwhichisinlinewithsociety’svaluesandbeliefs,andsetsanctionsthroughwhichthey
rewardorpunishmembersofsocietyfortheirbehavior.17Thereisadifferencebetweenformal
and informal norms. Formal norms are defined aswritten rules, and include laws and other
10 Little,William. (2013). “Introduction to Sociology”. 1st Canadian Edition. Rice University. Page, 80. 11 Ibid. Page, 79. 12 Ibid. Page, 115. 13 Ibid. Page,81. 14 Ibid. Page,81. 15 Ibid. Page,81. 16 Ibid. Page, 87. 17 Ibid. Page,87.
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Journal of Altrenative Dispute Resolution in Kosovo
formalregulations.18Informalnormsarestandardsandexpectationsofbehaviorwhicharenot
formalizedandwhicharelearnedthroughsocializationorobservation.19Afurtherdistinctionis
madebetweenmoresandfolkways.Whilemoresreflectthemoralviewsofasocietyandmay
also be enforced by formal norms, such as laws, folkways prescribe standards of behavior
withoutamoralcontent.20Sincedisputeresolution insocietyisbasedonnorms, it isnotonly
thesenormsbutalsothedisputeresolutionmechanismsandprocesseswhichreflectasociety’s
culture,i.e.itsvaluesandbeliefs.
However,theremaysometimesbeadifferencebetweentheidealcultureandtherealculturein
agivensociety.Theidealcultureincludesaspiredvaluesofasociety,whereastherealculture
reflects the actual values of a society according towhich the society really lives up to.21The
valuesexpressedintheConstitutionofKosovo,i.e.theprinciplesoffreedom,peace,democracy,
equality, respect for human rights and freedoms and the rule of law, non‐discrimination, the
right to property, the protection of environment, social justice, pluralism, separation of state
powers, and a market economy may be considered ideal values which the Kosovar society
aspiresto.22Therealculturemaybedifferent.InAlbanianculture,honoristheprincipalvalue
whichprevailsoverlifeandliberty.23Honoristhebasisforbesa(wordofhonor)andmikepritja
(hospitality), which together form the traditional worldview of Albanians.24As Tarifa states,
honorrepresentedthesuprememoralvalue,besawastheirtruereligion,andhospitality their
mostsublimevirtue.25
Theculturalaspectsareespecially importantwhen it comes toalternativedisputeresolution,
and in particularwhen it comes tomediation.Mediation is a processwhereby a third party
assists two or more parties, with their consent, to prevent, manage or resolve a conflict by
helpingthemtodevelopmutuallyacceptableagreements.26Thepremiseofmediationisthatin
the right environment, conflict parties can improve their relationships and move towards
cooperation.27Mediation differs from society to society. As stated by Celik and Shkreli, every
socialsystem,whetherasocietyoranorganizationhasaculturewithrulesabouthowconflicts
shouldbemanaged.28Themediationprocess in largeandbureaucratizedsocieties isdifferent
18 Ibid. Page, 62. 19 Ibid. Page,88. 20 Ibid. Page, 200. 21 Ibid. Page, 86. 22 Constitution of the Republic of Kosovo, Article 7.1. 23Tarifa, Fatos (2008). “Of Time, Honor, and Memory: Oral Law in Albania”. Volume 23. Page, 8. 24 Ibid. Page, 8. 25 Ibid. Page, 8. 26 United Nations. (2012). “Guidance for Effective Mediation.” Page, 4. 27 Ibid. Page, 4. 28 Celik, Ayse Betul and Shkreli,Alma. (2010). “An analysis of Reconciliatory Mediation in Northern Albania: the Role of Customary Mediators”. Europe-Asia Studies. Volume 62, Issue 6. Page, 888.
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fromthatinsmallandtraditionalsocieties.29Mediationinbureaucratizedsocietiesisconducted
by impartial and trained professionals who assist in communication and facilitate the
construction of agreeable solutions for the parties.30In traditional societies, mediation is
conducted by individualswho are not necessarily professionals butwho are accepted by the
partiesduetotheirsocialstatusandreputation.31Thepurposeofthemediationisnotonlyto
settlethedisputebetweenthepartiesbutalsotoensurethatcooperativerelationswithinthe
communityaresustainedandthatthereisreconciliationnotonlybetweenthepartiesdirectly
involvedbutalsobetweenthecommunitiestowhichthepartiesbelong.32Thelawsadoptedby
Kosovo certainly reflect international standards, i.e. the ideal culture that Kosovo aspires to
have.Butdotheyalsoreflecttherealcultureofthepeople, therealvalues,beliefsandnorms
whichguideKosovosocietyinthewayhowdisputesaresettled?
II. TraditionalDisputeResolutionandtheKanun
TheKanunofLekeDukagjini,oftenalsocalled“Kanuni iMalesise”(Codeof theHighlands)or
“Kanuni i Maleve” (Code of the Mountains)33is a collection of orally transmitted principles,
norms and ruleswhich have governed the life of Albanians for centuries. Theword “Kanun”
originates from Greek and means “statute” or “law”.34It is attributed to Leke Dukagjini, an
Albanianmedieval ruler inNorthernAlbania, though it is doubtful if this historic personhas
indeedanydirectconnectionwiththeKanun.35InadditiontotheKanunofLekeDukagjini,there
areothersimilarcollectionsofcustomarylaw,suchastheKanunofSkenderbegandtheKanun
ofLaberiinSouthernAlbania.36TheKanunwasputinwritingforthefirsttimebetween1897
and1899anda final editionof thewholeKanunwaspublishedonly in1933.37TheKanun is
divided into 1263 paragraphs and twelve books. It is astonishing in its attention to detail; it
encompasses all facets of life including the church, honor, marriage, pledge, loans etc. Edith
DurhamwhilestudyingtheKanunstatedthat“Wheneverinthemountains[ofAlbania]Iasked
whyanythingwasdone…Iwastold,‘BecauseLekesaidso.”38
Throughout Ottoman rule in Albania, the Kanun was the law of the Albanian highlanders
stretchingfromNorthernAlbaniaintoMontenegroandKosovo,whowereorganizedunderthe
29 Ibid. Page, 889. 30 Ibid. Page, 889. 31 Ibid. Page, 889. 32 Ibid. Page, 889. 33 Tarifa, Fatos (2008). “Of Time, Honor, and Memory: Oral Law in Albania”. Volume 23. Page, 3. 34 Elsie, Robert. (2012). “Northern Albanian Culture and the Kanun.” University of Leiden. Page, 1. 35 Ibid. Page, 1. 36 Tarifa, Fatos (2008). “Of Time, Honor, and Memory: Oral Law in Albania”. Volume 23. Page, 3. 37 Elsie, Robert. (2012). “Northern Albanian Culture and the Kanun.” University of Leiden. Page, 2. 38 Malcolm, Noel. (1999). “Kosovo: A Short History”. Page, 17-18.
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ruleoflocallords(bajraktare).ThisregimecontinuedevenaftertheformationoftheAlbanian
statein1912,althoughKingZogofAlbaniamanagedtoreducethepowerandinfluenceofthe
local lords.39It was only in the 1960s, under communism, that the government managed to
suppresstheKanunanditsinfluenceonthepopulation.40WiththefallofcommunisminAlbania
in1992,and inviewof theensuingcollapseof thestate, theKanunresurrectedandregained
influence as a set of principles and rules that governs the lives ofAlbanians.41InKosovo, the
Kanunmaintaineditsinfluence,thoughindiminishedform,evenduringcommunism.
The Kanun can bewell‐defined as a set of customs and rules deriving from sacred Albanian
notions such as honor, faithfulness, “besa”, respect, hospitability.42The Albanian culture has
historically put emphasis on “honor” as one of themost significant symbols that one has to
protect.TheKanuncarefullyexplainwhathonoris,whatactionsresultintodishonor,andwhat
onehas todowhenhe isdishonored.43Paragraph597of theKanun states thathonor hasno
priceandifoneisdishonored,oneshallneverforgivethatact.TheKanun,whichhasgoverned
all aspects of life in Albanian populated areas for centuries, is still present in some parts of
AlbaniaandKosovo.Themoreyoumove towards thenorthernpartof thecountry, themore
youmoveintotherealmoftheKanun.
The Kanun is very often associatedwith blood feud, i.e.gjakmarrja, which is permitted self‐
justicebykillingapersoninordertoavengeacrimeorviolationofone’shonorandthatofthe
family.44Although the Kanun contains relatively detailed rules on how gjakmarrja should be
practiced, its social and economic implications for Albanian society are devastating as they
resultincyclesofviolence,aswellasemigrationandisolationofindividualsandentirefamilies.
According toaHumanDevelopmentReportpublished in1998,around73%ofallmurders in
Albaniaduring1997resultedfrombloodvengeance.45However,gjakmarrjaisnottheonlyform
of dispute resolution according to the Kanun. The Kanun also recognizes dispute resolution
mechanismswhichresemblethoseofmediationandadjudicationinmoderndisputeresolution
systems.
39 Celik, Ayse Betul and Shkreli,Alma. (2010). “An analysis of Reconciliatory Mediation in Northern Albania: the Role of Customary Mediators”. Europe-Asia Studies. Volume 62, Issue 6. Page, 892. 40 Ibid. Page,, 893. 41 Ibid. Page, 893. 42 Mile, Klementin. (2007). “Blood Feud: between Kanun and State.” Instituti Shqiptar i Studimeve Ndërkombëtare. 43 Kanun of Leke Dukagjini, Paragraph 691. 44 Mustafa, Mentor and Young, Antonia. (2008). “Feud narratives: contemporary deployments of kanun in Shala Valley, northern Albania.” Slovene Anthropological Society. Page, 95; Celik, Ayse Betul and Shkreli, Alma. (2010). “An analysis of Reconciliatory Mediation in Northern Albania: the Role of Customary Mediators”. Europe-Asia Studies. Volume 62, Issue 6. Page, 885. 45 Human development report. (1998). Tirana: United Nations Development Programme.
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Mediation as amethod of settling blood feuds,which in today’smodern society is penalized
under the Criminal Code, is a long established practice in the Albanian society and is an
importantpartofKanun.TheKanunexplicitlystatesthattheonlywaytogainthelosthonoris
throughbloodvengeanceordisputesettlementthroughmediation.46Thus,Kanunprovidedthe
structurethroughwhichdisputescouldberegulated;mainlythroughthecounciloftheelders,
but also through independentmediators and other alternatemeans. A specific section in the
Kanunisdedicatedtomediationanddisputeresolution.
TheKanunstatesthatamediator“maybeamanorawoman,aboyoragirl,orevenapriest,”47
however thisrolehasprincipallybeen takenbyrespectedmaleelders through theCouncilof
Elders. After both parties have carefully chosen an equal number of elders, the feud is then
discussed intheCouncilofElders,withthe intentofresolvingthedispute.Mediationthrough
theCouncilofElders isamoreformalformofmediationconsistingofexperiencedmediators.
This formofmediationwasusuallypaid,andthus it incentivizedelders tosuggest families in
disputetoresolvetheirissuethroughtheirassistance.48
In thedeepmountainousareas and rural areas,dispute resolutionusuallyhappened through
themediation of family friends or religious leaders. Other times, instruments for reaching a
settlement consisted of paying “blood money”, exchanging food valuable tools, clothes, or
women.IntheKanunitisstatedthatonecanresolveissuesthroughmediationbutalsothrough
“bloodmoney”,thisamountofmoneyisusuallypaidtothefamilythathassufferedmostloss;
howeverthiswayofsettlingdisputesisnotseenasanoblewayofsettlement.
Mediationpracticesarenotonlyusedinbloodfeudconflictreconciliation,theyarealsousedto
resolveotherdisputessuchaspropertyissues,familyissues,marriageissues,etc.Theseissues
spreadmore in post‐communist times, as a result of property redistribution and population
movement.49Thegovernmentandthelegalsystematthetimewereweakandittookyearsfor
land ownership certificates to be distributed. In the interim, people started regulating these
issuesthemselveswhich,inaccordancewiththeKanun.
A prominent example is the application of the Kanun to property rights disputes and land
reform following the end of communism in Albania. The rules of the Kanun were used to
46 Kanun of Leke Dukagjini, Paragraph 597. "Ndera e mârrun giobë nuk kà". -Ndera e mârrun s'falet kurr. Paragraph 598. "Ndera e mârrun nuk shperblehet me gjâ, por a me të derdhun të gjakut, a me të falun fisnikisht (permbas ndermjetsis së dashamirve të mirë). 47 Kanun of Leke Dukagjini, Paragraph, 669. 48 Ulqini, Kahreman. (1991). Bajraku në organizimin e vjetër shoqëror. Tiranë: Akademia e Shkencave. Page, 128. 49 Standish, Alex. 20 November (2007); University College London (UCL). (2004). "Blood Feuds."
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Journal of Altrenative Dispute Resolution in Kosovo
decollectivizepropertyandtodistributelandtothehereditaryowners.50AsDeWaalexplains,
as long as the state law lacked force and failed to cover all the legal post‐cooperative
contingencies, the Kanun provided a workable, indeed indispensable, framework for village
authority, filling adangerousvacuum.51The implementationof thosepartsof theKanun that
dealtwithdisputesettlement,propertydivisionandrightsofwaywasan importantpractical
meansofdealingwiththeexistinglegalhiatus.52Disputesarisingfromlaworformallawstood
a chance of being resolved in a face‐to‐face context by applying the Kanun to current
situations.53According to DeWaal, thanks to the Kanun’s exhaustive guidelines on boundary
recognitionandmarking,allthecooperativefarmlandinMirdita(Albania)hadbeenrestored
tothehereditaryownersby1992.54
CelikandShkrelidescribethemediationpracticeaccordingtotheKanunasfollows.Oneofthe
parties,usually theperpetratororhis family, requests themediators to intervene inorder to
avoid further violence.55The purpose of the intervention by the mediators is to achieve
forgiveness, reconciliation between the families and to stop the continuation of violence.56
Mediators, who are required to be impartial, are selected based on their social prestige,
background, family origin, experience and reputation in the community.57A key feature of
Albanian traditional mediation is that it is group mediation.58More mediators with high
reputationareasocial incentiveforthegroupsinvolvedtoacceptamediatedsolution,asthe
familyfeelsmorerespectedandhonouredwhenmanyimportantpeoplecomeandaskthemto
forgiveanoffence.59Agroupofmediatorsisalsoaninsuranceagainstcheatingandrenegingon
commitments by the parties, to which an individual mediator may have a higher risk of
exposure.60Asanexception,individualmediatorsaretherulewhenprivate,sensitiveissuesare
involved,suchasthehonourofawoman.61
Forgivenessisonlyapartialresultoftraditionalmediation,astheultimategoalistoreconcile
thepartiesandtheirfamiliesinordertorestorethesocialrelationshipandestablishpeace.62In
ordertoachievethis,mediatorsusuallyshyawayfrommakingaproperinquiryintothefacts 50 De Waal, Clarissa. (2004). “Post-Socialist Property Rights and Wrongs in Albania: An Ethnography of Agrarian Change”. Conservation & Society 2. Page 24. 51 Ibid. Page 27. 52 Ibid. Page 27. 53 Ibid. Page 27. 54 Ibid. Page 27. 55 Celik, Ayse Betul and Shkreli,Alma. (2010). “An analysis of Reconciliatory Mediation in Northern Albania: the Role of Customary Mediators”. Europe-Asia Studies. Volume 62, Issue 6. Page, 896. 56 Ibid. Page, 896. 57 Ibid. Page, 897. 58 Ibid. Page, 897. 59 Ibid. Page, 897. 60 Ibid. Page, 897. 61 Ibid. Page, 898. 62 Ibid. Page, 905.
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andtodeterminewhoisguiltyandwhonot,whichareconsideredtobecounterproductivefor
restoringsocialrelationships.63
ModernmediationpracticesinAlbaniastillfollowtheserules.Bloodfeudreconciliationisdone
throughneutral intermediaries.When intermediaries conclude their conciliation, theyusually
dosobyagreeingwith theoffendingparty topay “bloodmoney”, i.e. anamountofmoney in
consideration for forgiveness paid to the family which is the victim. This payment, which is
regulated in the Kanun, includes livestock ormoney. Reconciliationmay also be successfully
concluded by arranging formarriage between the two parties. A successfulmediation is still
celebratedwithatraditionalritualstatedintheKanun,named“bukaepajtimit”(mealofpeace),
which is served by the offending family and includes the perpetrator’s family and the
mediators.64Onlyafterall theseritualsandpaymentsaremade,thecrosssign,asrequiredby
theKanun,isputonthedoorasasignofasuccessfulreconciliation.65
TheKanunalsorecognizesauthoritativedisputeresolutionintheformofadjudication.Dispute
settlementthroughtheissuanceofabindingdecisionisconductedbyatribunalconsistingof
elders. 66 The elders are typically the leaders of brotherhoods or tribes, which were
organizational units of the Albanian society, but also men who had a good reputation and
experiencewithdisputeresolutionpractices.67Theeldersdonotonlyadjudicatedisputes,they
also have the authority to make new laws, and thus they combine legislative and judicial
functions.
Acasemaybebroughtbeforetheeldersprovidedthatthepartiessubmittotheeldersapledge,
whichmay traditionally includeaweapon,abullet,awatchora tobaccobox.68Leaving these
itemsasapledge indicates that thepartiesaccept the jurisdictionof theeldersand that they
accept their decision as binding.69A decision issued by elders without such a pledge is not
bindingonthecommunityandundertheKanun.70
When thedispute involvespeople fromdifferent villagesor communities, the tribunal of the
elders must include elders from both communities.71As the Kanun requires elders to be
impartial72they are subject to an oath promising that they will adjudicate impartially and
63 Ibid. Page, 905. 64 Gjeçov, Shtjefën and Fox, Leonard. (1989). Kanuni i Lekë Dukagjinit / The code of Lekë Dukagjini. New York. Gjonlekaj Publishing Company; Kanun of Leke Dukagjini, paragraph 982) 65 Kanun of Leke Dukagjini, paragraph, 983. 66 Ibid, paragraph ,993. 67 Ibid, paragraphs: 992 and 994. 68 Ibid, paragraph, 1022. 69 Ibid, paragraph, 1019. 70 Ibid, paragraph, 1020. 71 Ibid, paragraph, 1004. 72 Ibid, paragraph, 1015.
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Journal of Altrenative Dispute Resolution in Kosovo
strictlyinaccordancewiththerulesoftheKanun.73Thesanctionforabreachofimpartialityis
lossofreputationandrefusaltoincludethispersoninthegroupofelders.Inasocietywhere
honouristhehighestvalue,thissanctioncanbeveryharsh.
Decisionsofeldersareusuallynotsubjecttoappeal.74Itisonlyifthepartiesconsiderthatthe
elders were not impartial that they may request the replacement of the elders.75Such
replacementofeldersmayoccurthreetimes.76Ifthepartiesarestilldissatisfied,thentheirlast
resort is the House of Gjonmarkaj77, which due to its traditional authority and power in
NorthernAlbaniawasconsideredtobetheguarantoroftheKanun.Onceadecisionismadeby
the elders, all tribal and family leaders are required to respect the decision and assist in its
enforcementwhensorequestedbytheelders.78AftertheElderscometoadecisiontheyleaveit
up to the local lords (bajraktars) to enforce theirdecision. If thedecisionof theElders isnot
accepted by the parties, then the lords are responsible to make sure that the decision is
enforced,whichmayincludepunitivemeasures,suchasdestroyingtheoffender’sproperty,or
excludingtheoffenderandhisfamilyfromthecommunity.
AlthoughtheKanunisavailableinapublishedversion,manyofitsrulesareoutdatedandnot
directlyapplicabletopresentrealities,suchastheroleoftheHouseofGjonmarkajwhichtoday
isinfactminimal.TherulesoftheKanunarealsodifficulttounderstandandthereforeopento
interpretation.AsCelikandShkreliobserve,differentinterpretationsoftheKanunaboundfor
several reasons.79Despite the fact that theKanun is valuedhighly, detailed knowledge of the
rulesoftheKanunisrare,evenamongthosewhoapplyitasmediatorsorarbitrators.80Asits
rulesneedtobeadaptedtonewdevelopmentsandcircumstances,andthereisnocentralized
authority to provide guidance, thosewho apply the Kanun have extensive discretion in how
they do this. Interpretation may also be influenced by group interests, which may result in
different interpretations depending on the interests involved.81So despite the existence of a
publishedversion,theactualrulesoftheKanunmaydiffernotonlyintimebutalsofromplace
to place. Thismakes the knowledge of local interpretations of theKanun important and it is
thereforedifficult tospeakofonlyone“Kanun”.After the fallofcommunism,manyAlbanians
livingunder theKanunmovedsouthwardsandbroughtwith them their interpretationof the
Kanun which they passed on to the new local communities. However, these communities 73 Ibid, paragraph, 1031. 74 Ibid, paragraphs: 1001, 1002, 1034, 1036. 75 Ibid, paragraph, 1038, 1039. 76 Ibid, paragraph, 1041. 77 Ibid, paragraph, 1041. 78 Ibid, paragraph, 996. 79 Celik, Ayse Betul and Shkreli,Alma. (2010). “An analysis of Reconciliatory Mediation in Northern Albania: the Role of Customary Mediators”. Europe-Asia Studies. Volume 62, Issue 6. Page, 894. 80 Ibid. Page, 895. 81 Ibid. Page, 895.
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interpretedthenormsoftheKanunintheirownwaywhichresultedindifferentpracticesand
interpretations of the Kanun. For example, the traditional rule states that vengeance is not
permitted against people younger than the age of 16 years old and females, is no longer
respected.82Fischerhas alsonoted that theKanun isbeingmisinterpreted and in somecases
morethanoneliveistakenforrevenge.83
III. Kanun:LaworCustom?
In literature the Kanun is frequently referred to as customary lawwithoutmaking a proper
distinctionbetweenlawandcustom.84Evencourtsandinternationalorganizationsrefertothe
Kanun as a collection of Albanian customary law.85Celik and Shkreli observed that although
there isaMediationLaw inAlbania,mediatorshaveengaged inconflictsbetween familieson
thebasisofcustomarylaw,i.e.theKanun.86Thisimpliesthattheprinciplesandrulescollected
in theKanunhave the forceof lawandare applied inparallel to formal lawenactedby state
authorities. The question to be answered is if the principles and rules codified in the Kanun
constitutelegallybindingcustomarylaworiftheymerelyreflectsocialcustomwhichissubject
tosocialenforcementbutnotnecessarilyenforcementbystateagencies.
Whilebothlawandcustomarepartofasociety’snorms,legalformalismsuggeststhatitisonly
formallawswhichareenforceablebystatecourtsandotherinstitutions.Formallawsarethose
legalactswhicharepassedbytheconstitutionallydeterminedlegislatorinaccordancewiththe
constitutionallyprescribedprocedure. Inaddition to formal laws, legal theoryalsorecognizes
customarylaw,whichhasundercertainconditionstheforceofformallaw.However,thereisa
difference between customary law and custom, as the latter is a social normwhich may be
enforced by social sanctions butwithout possibility for recourse to state enforced sanctions.
Customarylawisusuallydefinedaspracticeaccompaniedbyopinionjuris,i.e.thebeliefthatthe
practice is legally obligatory.87Its relevance is more important in international law than in
82 “Albania: Blood Feuds”. (2008).Research Directorate: Immigration and Refugee Board of Canada.Ottawa. 83 Ibid. 84 Elsie, Robert. (2012). “Northern Albanian Culture and the Kanun.” University of Leiden. Page, 1; Tarifa, Fatos (2008). “Of Time, Honor, and Memory: Oral Law in Albania”. Volume 23. Page,3; Mustafa, Mentor and Young, Antonia. (2008). “Feud narratives: contemporary deployments of kanun in Shala Valley, northern Albania.” Slovene Anthropological Society. Page, 96 85 District Court in Mitrovica, Decision No. Pnr. 43/2010 of 25 May 2012, at 10; OSCE, Manual per Punonjesin e Sherbimit te proves, 2009. Page, 11. 86 Celik, Ayse Betul and Shkreli, Alma. (2010). “An analysis of Reconciliatory Mediation in Northern Albania: the Role of Customary Mediators”. Europe-Asia Studies. Volume 62, Issue 6. Page, 886. 87 Ruthers, Bernd/ Fischer, Christian/ Birk, Axel (2016). “Rechtstheorie”. Page 158.
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national legalsystems,since innational legalsystemscustomary lawacquires for the forceof
formallawonlywhenacceptedandappliedbythecourts.88
Whileitmaysoundcommonsensetorecognizelawonlyasformallawinthesensedescribed
above,jurisprudencetheoriesdiffersubstantiallyastowhatcountsaslaw,andlegalformalism
isonlyoneofthemanyapproachestounderstandingwhatthelawisinsociety.Legalformalism
ispartofamajorschoolof thought in jurisprudence, i.e. legalpositivism,whichprovidesthat
lawisa‘socialfact’,whichmaybefoundintheactualpracticesortheinstitutionsofsociety.89
Legal positivists distinguish law ‘in the legal sense’ from law in the non‐legal sense, such as
custom,etiquette,andmoralnorm.90Theytreatas lawonly thosenormswhichderive froma
lawmakingauthoritythatexistsasapoliticalorsocial fact.91Themost importantadvocateof
legalpositivismisJohnAustinwhopurportsthatlawisthecommandofapoliticalsovereign.92
Customwouldthusbecomelawonlywhensocommandedbythepoliticalsovereign.
Part of legal positivism, thoughwith adifferent approach andunderstandingof law, isH.L.A.
Hart’sanalytical jurisprudence,whichHarthimself calledsoftpositivism.93Hart considers the
customaryruleswhichareobservedbyprimitivesocietiesthathavenolegislaturesorcourtsor
otherauthorityas laws.94Hart’spointofdepartureistheideathatnormscreateobligations.95
Theseobligationsareenforcedbysocietyandmembersofsocietyhaveasenseofobligationto
respect the norms.96A modern legal system emerges when a society displays primary and
secondary rules of obligation. Primary rules of obligation are commonly accepted norms of
conductwhichareconsideredbymembersofsocietytobebindingandwhichareenforcedby
socialsanctions.ForHart,theseprimaryrulesofobligationarelaw.However,inamodernlegal
systemsecondaryrulesofobligationcomplementprimaryrulesofobligation.Secondaryrules
ofobligationprovideruleson(i)recognizingwhichlawsarevalid(ruleofrecognition),(ii)rules
hownormsshouldbechanges(ruleofchange),and(iii)rulesonadjudicationbasedonprimary
rulesofobligation(ruleofadjudication).Itisonlytheunionofprimaryandsecondaryrulesof
obligationwhichcreatealegalsystem.AsHartpointedout,primitivesocietieshaveasetoflaws
(only primary rules of obligation), while modern societies have a system of laws (union of
primaryandsecondaryrulesofobligation).
88 Ibid. Page, 159. 89 Ratnapala, Suri. (2009). “Jurisprudence.” Cambridge University Press. Page, 21. 90 Ibid. Page, 25. 91 Ibid. Page, 25 92 Ibid. Page, 46. 93 Ibid. Page, 48. 94 Ibid. Page, 69. 95 Ibid. Page, 49. 96 Ibid. Page, 50.
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For Hans Kelsen, another representative of legal positivism, law is a coercive order which
attempts to bring about a certain behaviour by attaching to the opposite behaviour socially
organizedcoerciveact.Lawsderivetheirvalidityfromabasicnorm,whichineffectreferstothe
constitutionofacountry.ForKelsen, lawcanalsoconsistofcustomanddoesnotnecessarily
requireformallawspassedbylegislatorsorotherstateauthorities.Eventhebasicnorm,from
which all other laws derive their validity, may be custom, provided that the basic norm is
effective. A basic norm is effectivewhen the norms created in conformitywith it are by and
largeappliedandobeyed.
Anotherjurisprudentialschoolislegalrealism.Likelegalpositivists,legalrealiststrytoexplain
lawasitis,andnothowitshouldbe.Thedifferencebetweenthetwoisthatlegalrealistslookat
thelawasitreallyis,andtheycometotheconclusionthatthelawinreallifeisdifferentfrom
thelawasitiswritteninlawbooks.Lawisnotwhatthelawmakersdeterminetobelaw;lawis
whatthejudgesinterpretinpracticetobethelaw.Forlegalrealists,bestrepresentedbyOliver
WendellHolmesJr.,lawembodiesthestoryofanation’sdevelopmentandisthereforetheresult
of an evolutionary process. Law emerges as the result of human actions even without the
directionofformallawmakers.Lawmaythereforeexistindependentofandeveninopposition
to thewillof thepolitical sovereign.Fromthisperspective,according toHolmes,custommay
havethepoweroflawevenifstatutorylawprovidesthecontrary.Whilelawisgroundedinthe
socialdevelopmentofasociety, it is thecourtswhichdeterminewhat the lawactually is.For
Holmes,lawconsistsonlyinthepredictionsofwhatthecourtswilldoinparticularcases.Karl
Llewellyndevelopedthisideafurtherbysuggestingthatalawyerwhowantstofindoutwhat
thecourtsactuallydomustengageinthesystematicstudyofjudgmentsofcourts.Itwouldnot
beenoughtolookonlyatthelawasitiswritteninastatute;theinterpretationofthelawandits
application in practice by the courtswould bemore important, as this would truly discover
whatthelawactuallyis.
Afundamentallydifferentapproachistakenbythenaturallawjurisprudence.Accordingtothis
school,natural lawisahigherformof lawwhichis independentofhumanwill, it isuniversal
andtimelessanditisbasedonreasonandmorality.Lawsmadebypoliticalsovereignshaveto
bemeasuredagainstsuchnaturallaw.Lawthatisnotinaccordancewithnaturallawwouldbe
unjustlawandwouldthereforenotbelaw.Theconceptofnaturallawthusreferstorulesand
principles deducible from nature, reason, or the idea of justice.97Among the Roman jurists,
natural law was viewed as the law derived from the nature of human beings, and as law
97Orakhelashvili, Alexander. (2008) “The Interpretation of Acts and Rules in Public International Law.” The Oxford University Press. Page, 61.
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expressive of the basic ideas of justice.98In themiddle ages, the divine concept of God‐given
naturallawacquiredincreasingrelevance.99
Sociological jurisprudence has a different approach to understanding the idea of law.
Sociological jurisprudenceisamethodofstudyinglawthatcombinesthelawyer’sviewofthe
law,technicalknowledgeofthelaw,andinsightsproducedbythesociologyoflaw.100Lawyers
limit the term ‘law’ to the formal law of the state, comprising statutes, official commands,
judicialprecedents,andsuchlike.Sociologistshaveamuchbroaderviewofthelaw.Lawinthis
wider sense encompasses all forms of social controls, including customs, moral codes and
internal rules of groups and associations such as tribes, clubs, churches and corporations.101
Formallawisonlyahighlyspecializedformofsocialcontrolinvolvingspecializedagencieslike
legislatures andcourtsbut socialorder ismaintainednotonlyby the formal law,but alsoby
manysocialrules,standardsandpracticesnotfoundin lawbooksandstatutes.102Thelawsof
anassociation, according to lawyers, existbecauseof thevalidity that state lawconfersupon
them.103Customary laws are law because a state organ such as a court or parliament has
recognizedthemaslaw.104Moralrulesandrulesofsocialetiquettearenotlawsinthelawyer’s
sense.105Thesociologistoflaw,incontrast,treatsalltheserulesaspartofthe‘socialreality’that
is law.106Emile Durkheim, an early proponent of sociological jurisprudence, explained that a
societyexistsbecauseofinterdependenceandbondingamongagroupofindividuals,whichhe
calledsocialsolidarity.107Lawwouldbethevisibleevidenceofsocialsolidaritywhichisfound
inthesociety.108Heacknowledgedthatthelawwillnotprovidefullevidenceofsocialsolidarity.
Therearecustomsthatpeopleobservebutwhicharenotrecognizedbyauthoritiesaslaw,orin
factarecontraryto law.Normally,customisnottheoppositeof lawbut isthebasisof law.A
customarises inoppositionto lawonlyinexceptionalcircumstances.This iswhenthe lawno
longercorrespondstothestateoftheexistingsociety.109
ThesevariousviewsonwhatislawprovidedifferentanswerstothequestioniftheKanunislaw
or just social custom. Following Hart’s analytical jurisprudence, the Kanun would reflect
primary rulesof obligationsand thusqualify as law.The sameconclusionwould follow from
98 Ibid. Page, 61. 99 Ibid. Page, 61. 100 Ratnapala, Suri. (2009). “Jurisprudence.” Cambridge University Press. Page, 188 101 Ibid. Page, 188 102 Ibid. Page, 188. 103 Ibid. Page, 188. 104 Ibid. Page, 188. 105 Ibid. Page, 188. 106 Ibid. Page, 188. 107 Ibid. Page, 198. 108 Ibid. Page, 199. 109 Ibid. Page, 199.
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Kelsen’sunderstandingof law,provided thatKanunas custom is largely appliedandobeyed.
From a natural law perspective, it could be argued that the Kanun is law as it reflects the
society’sviewsofmoralityandjustice.SociologicaljurisprudencewouldalsoviewtheKanunas
asocialrealityandaformofsocialcontrolwhichhasthereforethequalityoflaw.
Fromtheperspectiveoflegalformalismandlegalrealism,theKanunwouldonlybeconsidered
lawifsodeterminedbythestatelegislatureorbystatecourts.Inthisrespect,differentpartsof
theKanunmayreceivedifferentlegaltreatment.Ontheonehand,itisevidentthatgjakmarrja
(vendetta) isnotacceptedby formal lawwhichactuallyprescribesmoreseveresanctions for
murder committed for the purpose of revenge.110On the other hand, as Mustafa and Young
observe,therulesoftheKanunonmediationandreconciliationarecompatiblewithstatelaw111
andthereisevidencethatcourtpracticetakesthemintoconsiderationandreferstothem.112
IV. KanuninKosovo’sADRPractice
As already stated, Kosovo adopted a Law on Mediation in 2008 which was drafted with
assistancefrominternationaldonororganizations.Whilethereisnodoubtthatcompliancewith
modern mediation practices is important, this does not prevent the inclusion of traditional
aspectsinordertomakemediationmoreeffectiveandacceptableinpractice.Fourissuesmay
behighlightedinthisregardwhichcouldserveasastartingpointforfurtherdiscussion.
First of all, traditional mediation continues to be practiced in parallel to law‐mandated
mediationbutthereis littletonoconnectionbetweenthetwoformsofmediation.Whilelaw‐
mandated mediation is more or less strictly regulated, traditional regulation is left outside.
However, both formsofmediationhave the same social function, i.e. to settledisputesoutof
courts through reconciliation. The question therefore is why there is no comprehensive and
integratedlegalframeworkcoveringbothtypesofmediation.
The second issue relates to the type of mediation regulated by law. The typical situation
regulatedintheLawonMediationismediationbyonemediator.Whilethelawallowsformore
than one mediator when the parties so agree, the rules are designed to suit one‐mediator
processes.Giventhatmediationistraditionallyconductedingroupsofmediatorswithvarying
degreesofparticipation,itmaybeworthconsideringincludingrulesongroupmediation.
The third issue deals with the qualifications needed to become a mediator. Mediation in
accordancewithcodifiedrulesistypicalforlargeandbureaucraticsocietiesanddoesnotreally 110 Criminal Code of the Republic of Kosovo, Article 179, paragraph 1.8. 111 Mustafa, Mentor and Young, Antonia. (2008). “Feud narratives: contemporary deployments of kanun in Shala Valley, northern Albania.” Slovene Anthropological Society. Page, 102. 112 Judgment of the Supreme Court Kosovo, Pml. Nr. 220/2014 dated 19 November 2014.
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Journal of Altrenative Dispute Resolution in Kosovo
suit traditional societies.While professionalism is a key feature ofmediation in bureaucratic
societies,personalreputationandcredibilityaremoreimportantintraditionalsocieties.Kosovo
LawonMediationrequiresamediatorto(a)haveauniversitydiploma,b)tohavesuccessfully
passedthetrainingcourseformediation,c)tohavemediatedundersupervisionofamediator
atleastinsix(6)sessions,d)tonothavebeenconvictedforaknowinglycriminalactwhichis
punishablewithoversix(6)monthsimprisonment,ande)topossesshighmoralqualities.113A
person who fulfills these criteria will be certified by theMediation Committee and then the
Ministry of Justice issues a license to such person in order to practice as a mediator. These
criteriaandthisprocesseliminateallthosepeoplewhohavegoodreputationandcredibilityin
their community, and who are trusted, as these people do not necessarily have a university
degreeortheyarenotnecessarilywillingtoundergothelicensingprocess.However,theabove
appears to be a necessity for “institutionalized”mediation,which also includes disputes that
requireacertainacademicandprofessionalbackgroundtosolvecomplexcivilorcommercial
disputes.Butwillthelawreallypreventthemfromengagingintraditionalmediation?Certainly
not, but itwill direct them intomediation that is socially desired and accepted butwhich is
legallyinagreyarea.
Thefourthissueisrelatedtothemediatorlicensingprocess.Thelicensingprocessmightbea
problembecausethosewhoarelicensedmaynotnecessarilyenjoythetrustoftheparties.Since
trust in the mediators is essential for successful mediation, a license alone without the
necessarytrustisuseless.Theperverseconsequencemaybethatpartieswhowouldotherwise
be willing to engage in mediation will refuse to do so because they have no recourse to a
mediator they trust. The unintended consequence could be that disputes which could be
resolved bymediationwould either not be resolvedwith a fair chance of escalation or they
would end in litigation and further burden the already overloaded judiciary. Commercial
disputes are especially sensitive to trust in mediators given that confidential business
information and relations will be at stake. It is unlikely that businesses would open up to
mediatorswhotheydonottrustevenifsuchmediatorisprofessionallyqualifiedandlicensed.
The law should therefore allow for thepossibility to permit a person to be amediator if the
partiestothedisputeagreetoselectsuchapersonastheirmediator,evenifthatpersonisnot
licensed.Intheend,theresultofmediationisthatthepartiesagreetoanamicablesettlementof
theirdisputewhichreflectstheprincipleofpartyautonomy.Sowhyshouldthisprinciplenot
alsoapplytotheselectionofthemediatorifbothpartieshavetrustinsuchperson.
113 Law 03/L-057 on Mediation, Article 22.
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V. Conclusion
The traditional Albanian rules and dispute resolution mechanisms codified in the Kanun
providearichsourceornormativematerialwhich,ifappliedwisely,couldcomplementmodern
alternativedisputeresolutionmethodsandmakethemmoreeffectiveandsociallyacceptable.It
is amatter‐of‐fact that daily life in Albania andKosovo is still influenced by the rules of the
Kanun,whichmay,dependingonthedifferentjurisprudentiallenses,evenamounttocustomary
lawandnotonlysocialcustom.TheKanun isasocial realitywhetherone likes itornot. It is
thereforenotusefultodemonizeitasarchaic.Itshouldratherbeusedconstructivelytodesign
andimplementalternativedisputesettlementpolicieswhicharesociallyacceptableandinline
with traditionandcustom.TryingtoavoidtheKanunby ignoring,orevendemonizing it,will
just achieve what past regimes have achieved, namely that it will continue its social life in
paralleltotheformallegalsystemandthatitwillresurrectwithfullforcewhentheformallegal
system shows signs of weaknesses. However, complementing the formal legal system with
traditionalpeacefuldisputeresolutionmethodsmaynotonlyachievebettersocialacceptance
oftheformaldisputesettlementmechanisms.ItmayalsohaveacivilizingeffectontheKanun
itselfas its interpretationandapplicationwouldbebettercontrolledandensuredthat it is in
linewiththemodernvaluesthatKosovoaspiresto.
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Journal of Altrenative Dispute Resolution in Kosovo
UDC34(084.47)
ConfidentialityinArbitration:AnEssentialChangingAttribute?
FisnikSalihu*
Abstract
Thispaperwilldiscusstheissueofconfidentialityinarbitration,andcurrenttrendsthatwere
influencedby latestdevelopments in the field.This topichasbeenaheateddebate formany
years.Consideredasaself‐evidentoranimpliedterminarbitration,thelatestdevelopmentin
arbitrationhascontributedtoamorerelativeviewonthisprinciple.Namely,thedecisionofthe
HighCourtofAustralia inEssov.Plowman case isconsidered tobeofgreat influence in the
forthcomingdevelopments.
The confidentialityprinciplehasbeen regardeddifferentlydependingon the jurisdictionand
the institutional arbitration rules of that particular jurisdiction. Some jurisdictions and
institutional rules recognize confidentiality in arbitration. On the other hand, some other
jurisdictionsare reluctantand, therefore,have imposed exceptions to the application of this
principle.
Inthispaper,Iwillrefertoanddiscussanumberofcases,applyingthecomparativemethod.
Thepaperwillfirstgiveageneraloverviewandadefinitionoftheprincipleofconfidentiality.I
will specifically discuss the main Institutional Arbitration Rules endorsing the duty of
confidentialitytoarbitralinstitutions.Iwillthenfocusonsomenationallawsalignedwiththe
mostimportantcourtdecisionsontheissueofconfidentiality.
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I. Introduction
Arbitrationisanimportanttechniqueusednowadaysbypartiestoresolvetheirdisputes.As
analternativedisputeresolutionmechanism,arbitrationisoneofthemostcommonmethod
used worldwide not only by commercial partners but also by states. Compared to court
litigation, arbitration is considered to have several advantages. The main advantages of
arbitration as an out‐of‐court method for resolving disputes are flexibility of the arbitral
proceedings, one instance process and the confidentiality of proceedings. In general, the
latter advantage is one of themain reasonswhy parties opt for arbitration as opposed to
courtlitigationinwhichcasetheproceedingswouldbeopentothepublic.
Theaimofthispaperistodiscussandaddressthemainissuesoftheconfidentialityprinciple
in international commercial arbitration. The principle is one of themost debatable topics
amongthescholarsandlawpractitionersandthesamehasbeenconsideredinperpetuityby
many arbitral tribunals and state courts. While the classical approach perceived
confidentialityasaself‐evidentprincipleinarbitrationproceedings,currentarbitralawards
and state court decisions have put this topic in a controversial level and thus leading to
differentapproaches.Thequestionthatariseshereiswhethertheprincipleofconfidentiality
isofabsolutenature?Towhatextentdoes theruleapply?Whatare theexceptions, if any,
whichprevail in this case?Thedecisionof theAustralian court inEssov.Plowman caseof
1995,whichrejectedtheprincipleofconfidentiality inarbitralproceedings,has influenced
thischangeinperception.
Some legal instruments such as the United Nations Commission on Trade Law rules
(UNCITRAL)1are silent on this issue. On the contrary, some other sources specifically
provide for the obligation of confidentiality, these being London Court of International
Arbitration (LCIA)2and the World Intellectual Property Organization Arbitration Rules
* Fisnik Salihu is an Attorney at law with several years of experience in the banking sector. He is an arbitrator with American Chamber of Commerce in Kosovo and European Handball Federation Court of Arbitration in Vienna, Austria. Fisnik finished his basic legal studies at University of Prishtina in Kosovo, and he has a master’s degree from the University of Groningen in the Netherlands in International Economic and Business Law. 1 UNCITRAL Arbitration Rules (as revised in 2010). See UNCITRAL Arbitration Rules (as revised in 2010) at:http://www.uncitral.org/pdf/english/texts/arbitration/arb-rules-revised/arb-rules-revised-2010-e.pdf (last accessed 23 April 2016). 2 Article 30 of LCIA Arbitration Rules (2014). See LCIA Arbitration Rules at: http://www.lcia.org/Dispute_Resolution_Services/lcia-arbitration-rules-2014.aspx# (last accessed 05 May 2016).
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Journal of Altrenative Dispute Resolution in Kosovo
(WIPO).3Thesamedistinctionisevidentinthenationallawsofdifferentstatesthatgenerally
usearbitration.Forinstance,thelawsinAustraliaandintheUnitedStatesaresilentonthis
issue. The national laws of England and France, however, recognize the duty of
confidentiality. The paper will also touch upon the importance of the confidentiality
agreementsbetweentheparties.
II. Thenotionofconfidentiality
There isnouniformdefinitionof theconfidentialityprinciple inarbitrationproceedings.A
number of authors, however, have tried to define the principle. For instance, the
distinguishedauthorL.AMistelisindefiningtheconfidentialityprinciplehasconcludedthat
“Confidentiality in its purest formmeans that the existence of the arbitration, the subject
matter,theevidence,thedocumentsarepreparedforandexchangeinthearbitrationandthe
arbitrator’sawardandotherdecisionscannotbedivulgedtoanythirdparties”.4Yet,upuntil
now,nodefinitiononconfidentialityhasbeenprovidedbyanystatutoryprovisionsorcase
laws, not to mention that there is an ongoing debate on this issue, which makes it even
hardertogiveanexactdefinition.
Inorder tohaveabetterunderstandingof the topic, itwouldbeuseful todiscuss the link
betweenprivacyandconfidentiality.Differentinternationalarbitrationrulesprovideforthe
hearingsinarbitrationtobeprivate.Forinstance,Article21(3)oftheICCrulesprovidesthat
“TheArbitralTribunalshallbeinfullchargeofthehearings,atwhichallthepartiesshallbe
entitled to be present. Save with the approval of the Arbitral Tribunal and the parties,
persons not involved in the proceedings shall not be admitted”. The same approach is
endorsedbytheUNCITRALrules,respectivelyArticle26(3)whichstatesthat“Hearingsshall
beheldincameraunlessthepartiesagreeotherwise.Thearbitraltribunalmayrequirethe
retirementofanywitnessorwitnesses,includingexpertwitnesses,duringthetestimonyof
suchotherwitnesses,exceptthatawitness,includinganexpertwitness,whoisapartytothe
arbitrationshallnot, inprinciple,beasked to retire”.Similarprovisions couldbe foundon
WIPO5andLCIA6rulesaswell.
Authors have also discussed the privacy of arbitral proceedings. Redfern and Hunter, for
instance,wrote that “International commercial arbitration is not a public proceeding. It is 3 Article 75-75 of World International Arbitration Rules (Effective from June 1, 2014). World International Arbitration Rules (effective from June 1, 2014) at http://www.wipo.int/amc/en/arbitration/rules/ (last accessed 5 May 2016). 4 See L.A Mistelis, “Confidentiality and Third Party Participation” UPS V. Canada and Methanex Corporation v. United States’ (2005) 21. 5 Article 56 of World International Arbitration Rules (effective from June 1, 2014). 6 Article 20 of LCIA rules (2014).
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essentiallyaprivateprocessandthis isseenasaconsiderableadvantageby thosewhodo
notwantdiscussioninanopencourt,withthepossibilityoffurtherpublicationelsewhere,of
thekindof allegationswhichcananddoarise in commercialdisputes–allegationsofbad
faith, of misrepresentation, of technical or managerial incompetence, of lack of adequate
financialresources,orwhateverthecasemaybe”.7
“Privacy”inanarbitrationhearingisthereforeuncontroversial.Ifthehearingistobeheldin
private,itwouldseemtofollowthatthedocumentsdisclosedandtheevidencepresentedat
thehearingshouldalsobetreatedasprivate.Itwouldbeillogicaltoexcludenon‐participants
from an arbitration hearing if they would later on, become familiar with the case and its
outcome through printed articles or authorized websites. However, a broader duty of
confidentialityininternationalarbitrationisnowfarfromclear.8
III. Privacyandconfidentiality
Althoughcloselyrelated,privacyandconfidentialityinarbitrationaretwodifferentconcepts.
As Dr. Julian D.M Lew says “privacy is concerned with the rights of persons other than
arbitrators, parties andwitnesses to attendmeetings andhearings and to knowabout the
arbitration.Confidentialityistheobligationofthearbitratorsandthepartiesnottodivulge
or give out information relating to the contents of the proceedings, documents or the
award”.9Arbitration is a private and confidential procedure between two ormore parties,
which means that only the involved parties in the arbitration proceedings or their
representativesmayattendthearbitrationproceedingsatanytime.Inthiswaythepublicis
excluded. Privacy is now simply taken for granted as one of the ordinary and necessary
incidentsofarbitration,arisingfromthefact that(saveincasesofstatutoryreferences)an
arbitrationproceeding is theoutcomeofaprivateagreementbetweenpartiestowithdraw
their dispute from the courts, and submit it to the decision of a private tribunal. If the
principleofprivacyisbreached,thearbitrationmaybecompromised.10
Although the privacy of proceedings is taken for granted, parties can expect that the
confidentiality of the arbitration proceedings is respected only if it includes all parties
involved in the process and all parties shall respect the duty of confidentiality. Therefore, 7 Redfern, A and Hunter, M, “Law and Practice of International Commercial Arbitration”, 3rd Edn, 1999, Sweet &Maxwell. 8 Redfern & Hunter, “On International Arbitration”, 5 e druk, 2009, page 137. 9 See Expert Report of Dr. Julian DM Lew in Esso/bhp v. Plowman (1995), International Arbitration l, No.8, page. 285. 10 See Baker v Cotterill (1849) 18 LJQB 345; Giacomo Costa Andrea v British Italian Trading Co Ltd [1961] 2 Lloyd’s Rep 394 at p 402.
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confidentiality in arbitration proceedings consists of two phases: confidentiality prior to
awardandconfidentialityaftertheaward.Whetherpartiesareunderthedutytonotdivulge
any informationfromthearbitrationproceedingsduringanyofthesestages, isamatterof
statutoryprovisionsornationallaws.
Confidentialitymaybearesultofprivacy,butthetwonotionsarenotsynonymous.However,
certainisthefactthatconfidentialitycannotexistintheabsenceofprivacy.Thetwoconcepts
are interrelated; confidentiality canbedefinedonly throughprivacy.Onederives from the
other,althoughitishardtotellwhereoneendsandwhereonestarts.11Thatbeingsaid,we
can assume that there is a wide compromise on the issue of privacy in arbitration
proceedings.However,theprincipleofconfidentialityisnotentirelyaffirmedyet.
IV. Newtrendsofconfidentiality
A. Institutionalrules
Theprincipleofconfidentialityissetoutindifferentrulessuchasinstitutionalrules,lawof
theplaceofarbitration,lawgoverningthecontractorthearbitrationagreementitself.Asfar
asthedutyofconfidentialityisconcerned,therearethreegroupsofinstitutionalrules.12The
first groupof rules is silent on thedutyof confidentiality, e.g.UNCITRAL rules.UNCITRAL
rulesprovideonly for thedutyof confidentiality of the award,whichmaybemadepublic
only with the consent of the parties. The International Centre for the Settlement of
Investment Disputes (ICSID) Convention13is also silent on the topic of confidentiality.
However,theConventionprovidesfortheprotectionofprivacysinceanarbitratormustsign
a trust declaration which reads ‘I shall keep confidential all information coming to my
knowledgeasaresultofmyparticipationinthisproceeding,aswellasthecontentsofany
awardmadebytheTribunal’.14
The secondgroupof rules consistsof institutional rules that include limitedprovisionson
confidentialitysuchastheAmericanArbitrationAssociationrules.15
11 See Katalin Ligeti “Confidentiality of Awards in International Commercial Arbitration”, Central European University, 29 March 2010. 12 See Pryles Michael, “The Leading Arbitrators Guide to Arbitration, Confidentiality”, Juris Publishing, page 416. 13 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, International Centre for Settlement of Investment Disputes, Washington 1965. This convention entered into force on October 14,1966. 14 Article 6 of ICSID Arbitration rules. 15 American Arbitration Association Rules Amended and Effective October 1, 2013.
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Thethirdgroupofrules,suchastheLCIA16rulesandWIPOArbitrationRules,includespecific
provisions on confidentiality. TheWIPO rules provide a broad summary of provisions on
dutyofconfidentiality.Thedutyofconfidentialityinarbitrationproceedingsexistsfromthe
mereexistenceofthearbitrationandshouldbemaintainedaftertheawardaswell.17There
are, however, a few exceptions to this duty, respectively; when parties consent to the
publicityoftheproceedings,whentheissuefallswithinthepublicdomain,orwhenthereisa
needtocomplywithalegalrequirement.18
B. Caselaw
If institutional rules that are applicable to a certain arbitration proceedings are silent to
confidentiality then respective national laws may serve as a source of reference. Many
national courts worldwide, which have considered the duty of confidentiality, have in
principlefollowedtwodifferentapproaches.Asmentionedearlier,nationallawsonthisissue
differsincesomestatesrecognizethedutyofconfidentiality,whilesomeotherdonot.New
Zealand,theUnitedKingdomandFrancebelongtothefirstgroupofstates.
NewZealand isoneof the fewcountries thathavecodified thedutyof confidentiality.The
1996 Arbitration Act of New Zealand19has expressly stipulated the duty of confidentiality
duringthearbitralproceedingsandaftertheaward.20
On the other hand, a number of English courts have recognized an implied obligation of
confidentiality,butdealwithparticularclaimsofconfidentialityonacase‐by‐casebasis.For
instance,inDolling‐Bakerv.Merrettcase,21theEnglishCourtofAppealfoundthatanimplied
obligationofconfidentialityexistedinthearbitrationprocessincludingdocumentsprepared
in contemplation of arbitration or used in the process, transcripts, notes of evidence,
testimonialevidence,andtheaward.22ThecourtruledsimilarlyinHassanehInsurancecoof
Israel & Ors v. Stuart J.Mew case whereby one of the parties discovered and used the
documentsofthearbitration.Thecourtheldthatconfidentialityisimpliedinallarbitration
agreementsandmustbebaseduponcustomaryorbusinessefficacy.23
16 Article 30 of LCIA Arbitration Rules (2014). 17 Articles 75-78 of WIPO Arbitration rules. 18 Article 75 of WIPO Arbitration rules. 19 Arbitration Act of New Zealand of 1996. Date of assent 2 September 1996. 20 See provisions 14I to 14G of Article 14 of the Arbitration act of New Zealand. 21 See Dolling-Baker v Merrett [1991] 2 All ER 890(Eng. C.A. 1991). 22 Ibid, 2 All ER 890. 23 See Hassneh Insurance Co. of Israel v. Mew, 2 Lloyd’s Rep. 243 (Q.B. 1993).
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Courts in France have recognized a similar implied duty.24In Aitav.Ojjeh case the party
whichrequestedannulmentoftheawardbythecourtwasfoundtohavebreachedtheduty
ofconfidentialityandwasorderedtopayafine.25
AmongthecountriesthatdonotrecognizethedutyofconfidentialityareAustralia,Sweden
and the United States. With regards to Australia, the court judgment in Esso Australia
ResourcesLtdv.TheHonourableSidneyJamesPlowmancase26has created uncertainty as to
whatconstitutestheessentialattributeofarbitration.TheHighCourtofAustraliaconcluded
that whilst the privacy of the hearing should be respected, confidentiality was not an
essentialattributeofaprivatearbitration.27Specifically,thecourtfoundthatarequirement
to conduct the proceedings in camera did not translate into an obligation prohibiting
disclosureofdocumentsandinformationprovidedinandforthepurposeofarbitration.The
courtthenconcludedthatalthoughacertaindegreeofconfidentialitymightariseincertain
situations, it was not absolute. In a particular case, the “public’s legitimate interest in
obtaining information about the affairs of public authorities prevailed”.28This case was
considered as a “u‐turn” of the classical approach on confidentiality in arbitration and
showedthatconfidentialityinarbitrationmaynotbeassured.
AsimilarapproachwasconfirmedbytheSwedishCourtofAppealsinthecaseofA.I.Trade
FinanceInc.v.BulgarianForeignTradeBankLtd.(Bulbank).29TheSwedishCourtofAppeals
held that there isnodutyof confidentiality inarbitration implied in law.Rather, the court
substituted a duty of loyalty and good faith, which would restrict disclosure of certain
informationpertainingtothearbitration,dependingonthecircumstancesofthecase.30
The U.S. Federal Arbitration Act31does not include any provision that imposes duty of
confidentiality.Thisattitudewasconfirmedbyjudicialdecisionsinduetime.Inthefamous
caseofUnitedStatesv.PandableEasternCorporation,32theU.S.CourtofAppealsfortheThird
Circuit ruled explicitly that the confidentiality of the arbitration proceedings will not be
necessarilyallowedifthereisnotanyagreementbetweenthepartiesoranyproceduralrules
24 See “Confidentiality in Arbitration: A Valid Assumption? A Proposed Solution!” by Claude R. Thomson and Annie M. K. Finn, Dispute Resolution Journal vol. 62, no.2 (May July 2007). 25Aita v. Ojjeh Cour d'appel de Paris, Aita v. Ojjeh (18 February 1986), 1986 Revue de l'Arbitrage 4. See Also Claude R. Thomson and Annie M. K. Finn, Dispute Resolution Journal vol. 62, no.2 (May July 2007). 26 See Esso Australia Resources Ltd. & Others v. Plowman, 183 C.L.R. 10, 128 A.L.R. 391 (1995). 27 Ibid, 183 CLR 10. 28 Redfern & Hunter, page 138. 29 A.I. Trade Finance Inc. v. Bulgarian Foreign Trade Bank Ltd. (Bulbank), 14 Mealey‟s Int‟‟l Arbitration. Rep. 4. A1(1999) 23 CA Paris. 30 Ibid, Claude R. Thomson and Annie M. K. Finn. 31 United States Federal Arbitration Act, 9 USC 1-16 (2000). 32 See United States of America v. Pandahle Eastern Corp. 868 F.2d 1363 (3d Cir. 1989).
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arbitration.Inaddition,inLawrenceE.JaffePensionPlanv.HouseholdInternationalInc.case33
UnitedStatesDistrictCourtfortheNorthernDistrictofIllinoisalsocompelledtheproduction
of documents from a former arbitration, notwithstanding an explicit confidentiality
agreement between the parties covering all documents disclosed in connection with the
arbitration.Theabovereferencedcasesclearlyshowthattheprincipleofconfidentialityhas
movedfromtheclassicalapproachtoanewtrend,whichconfirmsthatthereisuncertainty
onitsapplication.
V. Confidentialityoftheaward
Asmentionedinthebeginningofthispaper,confidentialityoftheawardortheoutcomeis
the second phase of the duty of confidentiality. Institutional rules such as ICSID34and
UNCITRAL35provide that there should be a prior consent between the parties in order to
make the award public. In the case of Giovanna a Beccara and others v Argentina36the
tribunalheldinteraliathatunlessthepartiesagreedotherwise,therewasnogeneraldutyof
confidentiality in ICSID arbitration rules.37However, the tribunal is entitled to decide the
applicabilityoftheprincipleofconfidentialityonacase‐by‐casebasis.38
Ithasalwaysbeenrecognized,however,thattherearecircumstanceswherebyanawardmay
needtobemadepublic.Oneexamplewouldbethepublicationoftheawardforthepurpose
ofenforcementbyanationalcourt.39TheLCIArules40includesimilarprovisionsonthistopic.
Namely, according to these provisions prior consent between the parties for any possible
disclosureoftheawardisrequired.Inaddition,WIPOrules41clearlystatethatdisclosureof
the award is available only when the parties consent, or when it falls within the public
domainasaresultofanactionbeforethecourtorwhenprotectingthirdparty’slegalrights.
With regards to case law, judicial decisions in France and England have shown that the
confidentiality of the award is respected. The only distinction between these two
33 See Lawrence E. Jaffe Pension Plan, et al. v. Household International, Inc., et al. 02-CV-5893-Final Judgment And Order Of Dismissal With Prejudice As To Arthur Andersen LLP 1 / 9. 34 Article 48 of ICSID Arbitration Rules. 35 Article 34, para.5 of UNCITRAL Arbitration Rules (2013). 36 ICSID Case No ARB/07/05. 37 Ibid, para. 75. 38 Ibid, para. 91. 39 Redfern & Hunter, page 140 40 Article 30, para. 30.1. 41 Article 77 of WIPO Arbitration Rules.
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Journal of Altrenative Dispute Resolution in Kosovo
jurisdictions is that while the confidential duty is unqualified in the former, there are
exceptionalcircumstancesinwhichdisclosuremaybeorderedinthelatter.42
Potter LJ inAlishippingCorporationv.ShipyardTrogircase43mentioned four exceptions to
thedutyofconfidentiality;first,whenapartyconsenttothedisclosure;second,ifthecourt
makesanorderorgrants leaveof thedisclosureofsuchdocuments; third, if is reasonably
necessarytoprotectthelegitimateinterestofthepartytothearbitration;fourth,wherethe
interest of justice requiresdisclosure.44Similarly, in theHassnehInsuranceCo.ofIsraeland
othersvMewcase,45thejudgeheldthattheawardwas‘potentiallyapublicdocumentforthe
purposesofsupervisionbythecourtsorenforcementinthem’46andthereforedecidedthat
the award may be disclosed in circumstances where the disclosure was reasonably and
necessarytoestablishorprotectaparty’slegalrightsvis‐à‐visathirdparty.47Anothercase
insupportofthisviewisnotedintheICSIDrulesappliedinAmcov.TheRepublicofIndonesia
case48where thecourtheld interaliathat: as to the ‘spiritof confidentiality’of thearbitral
procedure,itisrighttosaythattheConventionandtherulesdonotpreventthepartiesfrom
revealingthecase.49
It is understandable that at least the unsatisfied party will not consent easily to the
publication of such an awardwhichmay be critical for that party. The Swedish Supreme
Court award in the caseofBulgarianForeignTradeBank(Bulbank)v.A.ITradeFinanceInc.
(AIT)mayserveasanillustration.
Representatives of AIT provided the decision to the journal Maeley’s International
Arbitration Report for publication. After noticing the publication, Bulbank revoked the
arbitrationagreement claiming fundamental breachof the contract and requested that the
arbitration panel should declare the arbitration agreement invalid. Since the panel was
hesitanttodeclarethearbitrationagreementinvalid,Bulbankcontestedthefinalaward.The
Swedish Appellate Court ruled against the proposal that the publication of the award
42 See Emem Uduak Udobong, “Confidentiality in Arbitration: How valid is this Assumption?”, University of Dundee, Scotland. 43 See Ali Shipping Corp v Shipyard Trogir [1998] 2 All ER 136, [1999] 1 WLR 314, [1998] 1 Lloyd’s Rep 711. 44 Ibid, para. 36. 45 See Hassneh Insurance Co of Israel & Ors v Steuart J Mew [1993] 2 Lloyd’s Rep 243. 46 Ibid, pages 245-248. 47 Redfern, A and Hunter, M, Law and Practice of International Commercial Arbitration, 3rd Edn, 1999, Sweet &Maxwell. 48 Amco Asia Corporation and others v. Republic of Indonesia (ICSID Case No. ARB/81/1), Decision on Annulment , May 16, 1986, ICSID Reports, Vol. 1, 1193, pp. 515-16. 49 Redfern & Hunter, page 142.
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constituted a fundamental breach and did not support the implied concept of
confidentiality.50
In theEuropeancontext it is important tomentionArticle6(1)ofEuropeanConventionof
HumanRights51whichprovides that “Judgmentsshallbepronouncedpubliclyby thepress
andpublicmaybeexcludedfromallorpartofthetrialintheinterestofmorals,publicorder
ornationalsecurityinademocraticsociety,wheretheinterestsofjuvenilesortheprotection
oftheprivatelifeofthepartiessorequire,ortheextentstrictlynecessaryintheopinionof
thecourtinspecialcircumstanceswherepublicitywouldprejudicetheinterestsof justice”.
Althoughthesaidprovisionprovidesforanopenandtransparentoutcomeofthetrials,the
sameprovisionwasaffirmedasnotapplicableinarbitration.InSuovaniemiv.Finlandcase52
the ECHRheld thatwhen parties submit their disputes to arbitration it is considered that
theyhavewaivedthisprovisionfrombeingappliedandagreenottorelyonthisprovision.53
It is evident that parties cannot always expect that the award or the outcome of the
arbitrationwillbeconfidential,astheywouldprefer.Forexample,partiesinarbitrationhave
anoutmostinteresttokeeptheirtradesecretsprotectedasmuchaspossibleduetothefact
that disclosure would cause a significant harm to their business. The above referenced
judicialdecisionshavealreadymadeitclearthattheremaybeafewexemptionswhichwill
prevailtothedutyofconfidentialityincaseofpublishingtheaward.AccordingtoThomson
andKinn,“aconcurrentandsometimesoverridingpublicinteresthastoberecognized.Itis
appropriatetoliftthecloakofconfidentialityinanumberofcircumstances”.Theymention
ninesituationsinwhichthepublicinterestoverridesdisclosure.54
First,thesubjectmatterortheexistenceofthedisputeand/oritsoutcomemustbepublicly
reportedbecauseitmaybeamaterialtothefinancialconditionofapubliccompany.Second,
disclosureofthedisputeandthesurroundingcircumstancesoroutcomemayberequiredby
shareholders, partners, creditors or otherswho have a legitimate business interest in the
affairs of one of the parties to the dispute. Third, one of the partiesmay conclude that its
commercial interestandthe interestsofshareholdersandpotentialshareholderswouldbe
enhancedbypubliclydisclosinginformationaboutthedisputeandanyresultingawardand
that,accordingly,ithasadutytomakesuchadisclosure.Fourth,oneorbothpartiesmaybe
50 See Katalin Ligeti ‘Confidentiality of Awards in International Commercial Arbitration’, Central European University, 29 March 2010. 51 European Convention of Human Rights as amended by Protocols Nos. 11 and 14 supplemented by Protocols
Nos. 1, 4, 6, 7, 12 and 13. The European Convention on Human Rights (ECHR) was drafted in 1950 and entered
into force on 3 September 1953. 52 Suovaniemi v. Finland Case no. 31737/96, February 23, 1999 European Court of Human Rights. 53 See more at: http://hudoc.echr.coe.int/eng?i=001-4942. 54 Ibid, Claude R. Thomson and Annie M. K. Finn.
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Journal of Altrenative Dispute Resolution in Kosovo
subjecttoobligations(e.g.,asafiduciary)todiscloseinformationinspiteofanyexpressor
implied term to the contrary in the arbitration agreement. Fifth, itmaynot bepossible or
propertoshieldthecompany’sauditorsandoutsidevisitorsfromthefactandnatureofthe
dispute,thesurroundingcircumstances,andtheultimateaward,whetherconfidentialornot.
Sixth, the partiesmay be in duty to disclose information to insurers. Seventh, the parties
mustbefreetopresenttheawardandrelevantsurroundingcircumstancesinapubliccourt
toeitherenforceorappealtheaward.Eighth,thepartiesmaybeobligedtodiscloseevidence
fromthearbitration inanotherproceeding.Ninth,evidenceof illegalcriminalconduct that
should be reported to public authorities may be uncovered during the course of the
proceedings. In addition to disclosure of awards when required by law, another type of
disclosure takes place when an arbitral institution, such as the ICC publishes ‘edited and
redacted’copiesofarbitralawards,asaguideforthebenefitoflawyersandarbitrators.55
Considering the above exceptions, onemay legitimately question confidentialitywhen the
publicinterestis inconflictwiththedutyofconfidentiality.Beforethecaseissubmittedto
arbitration, parties expect that confidentialitywill be the starting point of the arbitration.
However,thisisnotentirelycorrectsincepracticeshowsthatsometimespublicinterestwill
prevailand,therefore,thedutyofconfidentialitywillnotbeabsolutebutlimited,judgedona
case‐by‐casebasis.
In arbitration related literature, there are pro and contra arguments with regards to the
confidentialityprinciple.Argumentsinfavourofconfidentialityusuallymentionthefactthat
thedutyofconfidentialityiswhatdistinguishesthisdisputeresolutionmechanismasunique.
On the other side arguments against the duty of confidentiality comprise of the fact that
application of confidentiality in arbitration may encounter and produce inconsistent
decisions.Therefore,non‐disclosureof informationandclosedproceedingswillnothelp in
the development of arbitration practice and training of arbitrators. More transparency is
needed and this may be possible only through open processes which will benefit public
interest.
VI. Conclusion
Confidentiality in arbitration remains one of the advantages of this alternative dispute
resolutionmechanismandthemainreasonwhypartieschoosetoarbitrate.Thedebateover
confidentiality developed during the last decades and there is no consensus in the
55 Redfern & Hunter, page 140.
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international arbitration community. This tendency was challenged and influenced by
judicial decisions which did not consider confidentiality as an essential attribute of
arbitration. Even though, the privacy is widely accepted as an attribute of arbitration,
confidentialityisstillpartofacontroversialdebate.TheEssoAustraliaResourcesLtd.et.al.v.
Plowman case caused a serious oscillation in international arbitration community by not
endorsingtheprincipleofconfidentialityor,endorsingit,onlyundercertaincircumstances.
Institutional arbitration rules are different with regards to this topic. Some institutional
arbitration rules provide specific provisions on confidentiality (e.g. LSIA, WIPO), other
institutional arbitration rules provide limited provisions on confidentiality (AAA), and the
thirdgroupofinstitutionalarbitrationrulesissilentonthisissue(e.g.UNCITRAL,ICC).Ata
nationallevel,therearenationallawprovisionsthatrecognizeconfidentialityexplicitly(e.g.
NewZealand),orthroughcourtdecisions(e.g.UnitedKingdom).Ontheotherside,thereare
national laws thatdonot recognize thisprinciple (e.g.Australia, theUnitedStates).Hence,
thereare legal inconsistenciesacross jurisdictions,where theprincipleofconfidentiality is
treateddifferently.
Consequently, parties in arbitration should be aware of the fact that existence of the
arbitration agreement itself does not automatically provide for the information and the
award tobekept confidential. In this respectparties shoulddraft confidential clauses that
wouldexplicitlyspecifytheconfidentialitytermsintheiragreementoragreeforinstitutional
arbitrationrulesthatsupportconfidentiality.
Confidentiality and public interest may also conflict with each other. In this case, which
principlewould prevailwill depend on the law governing the contract or national court’s
rulings.Thetendencyofconfidentialityshowsthatintherecentdecadestherehavebeena
number of decisions that were justified in favour of the public interest. In EssoAustralia
ResourcesLtd.et.al.v.Plowmancase the court reasoned the public’s legitimate interest in
obtaininginformationabouttheaffairsofpublicauthoritiesshouldprevailovertheprinciple
ofconfidentiality.
Considering the above, the contractual parties are advised to draft explicit provisions on
confidentiality before entering into legal obligations. If parties want to be assured that
arbitration proceedings and the award shall be confidential, then they have to include
confidentiality clauses in their contract. These clauseswill apply if the respective national
lawdoesnotprovideanyconfidentialityprovisions.This isparticularly importantafterthe
decision inEssov.Plowmanm,where in absence of an explicit provision on confidentiality,
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Journal of Altrenative Dispute Resolution in Kosovo
there is always a possibility that a given court will reject confidentiality as an essential
conceptinarbitrationproceedings.
Lawyers will not be certain that the arbitration proceedings and the outcome of the
arbitrationwillbekeptconfidentialastheymayexpect.However,thedutyofconfidentiality
canbe imposedbydraftingaconfidentialclauseaspartof theagreementorbyrelyingon
institutionalprovisionsruleswhichexpresslystipulatetheapplicabilityofconfidentiality.
Asa finalpoint,confidentiality inarbitrationremainsanopen issueandnothingshouldbe
takenforgranted.Balancingbetweentheprivateandpublicinterestseemtobeataskforthe
arbitrationcommunityinthefuture,whichisnotaneasytask.However,theapprovalofthis
standarddoesnotnecessarilymeanthatallunresolvedissuesregardingtheconfidentialityin
arbitrationwillhavetheappropriatesolution.
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UDC343.3
CaseCommentary:NationalIranianOilCompanyvCrescentPetroleumCompanyInternationalLimitedandCrescentGasCorporationLtd[2016]EWHC510(Comm)
KlentianaMahmutaj*
Key words: Bribery and Corruption, International Arbitration, Public Policy,
EnforcementofArbitralAward,NationalLaw.
Introduction
ThiscasewasconsideredbytheHighCourtofJusticeofEnglandandWales,whichfollowinga
three‐dayhearing,gavejudgmenton3March2016.
The Claimant (National Iranian Oil Company, NIOC) and the First Defendant (“Crescent
Petroleum”) entered into a long‐term gas supply and purchase contract (the “GSPC”) on 25
April2001.In2003CrescentPetroleumwishedtoassigntheGSPCtotheSecondDefendant,its
subsidiary(“CrescentGas”).
In July2009theFirstandSecondDefendantscommencedarbitrationbasedonanarbitration
clause included in theContract claiming thatNIOCwas in breachof theGSPCbecause it had
failedtodeliveranygas.NIOCchallengedthejurisdictionoftheTribunal(DrGavanGriffithsQC
(presiding),DrKamalHossainandDrAssadollahNoori)overtheclaimsbybothDefendantson
(amongstothers) thegroundthat theGSPCwasprocuredbycorruption.1TheTribunal issued
an award on jurisdiction (the “Award”) which dismissed NIOC's jurisdictional challenge and
declaredthattheGSPCwasvalidandbindingontheparties.
NIOCbroughtapplicationsunderss.67and68oftheUnitedKingdomArbitrationAct1996in
theEnglishHighCourttoappealand/orsetasidetheawardonvariousgrounds,includingthat
* Klentiana Mahmutaj is a Barrister practicing in London, UK. Klentiana lectures and publishes regularly on
Public International Law, on legal matters pertaining to state immunity, extraterritorial application of the
European Convention of Human Rights and corruption in international arbitration. 1 The Claimant also challenged the jurisdiction of the arbitrators on the basis that Crescent Gas was not a proper
party (see National Iranian Oil Company v Crescent Petroleum Company International Limited and Crescent
Gas Corporation Ltd [2016] EWHC 510 (Comm) (‘Crescent’) at [3]) to the arbitration on the basis that the
assignment was not valid. However, this aspect of the case together with an argument on separability of the
arbitration clause and the applicable law at [7] are not dealt with by this article.
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Journal of Altrenative Dispute Resolution in Kosovo
theGSPChadbeensecuredthroughcorruption.TheCourtrejectedthisandtheothergrounds,
andrefusedtosetasidethetribunal’saward.ThisarticleexaminestheCourt’sreasonsfordoing
soongroundsofpublicpolicyandcorruptionallegations.
Thejudgment
NIOCchallengedtheawardpursuanttos.68oftheArbitrationAct1996onthebasisthatthe
award or the way in which it was procured, was contrary to public policy. The Defendants
appliedtostrikeoutthatclaimonthebasisthatithadnoreasonableprospectofsuccess.
Englishlawandenforcementofanaward
Section68oftheArbitrationAct1996states:
(1)Apartytoarbitralproceedingsmay(uponnoticetotheotherpartiesandtothetribunal)apply
tothecourtchallenginganawardintheproceedingsonthegroundofseriousirregularityaffecting
thetribunal,theproceedingsortheaward.
…
(2)Seriousirregularitymeansanirregularityofoneormoreofthefollowingkindswhichthecourt
considershascausedorwillcausesubstantialinjusticetotheapplicant—
…
(g)the award being obtained by fraud or the award or theway inwhich itwas procured being
contrarytopublicpolicy;
TheArbitralTribunalandtheevidentialfindingsoncorruption
TheissueofwhethertheGSPCwasprocuredbycorruptionwasconsideredbytheTribunalina
30‐dayhearing.Theyexamineddocumentswhichapparentlyshowedanagreementforcorrupt
payments between a Mr Yazdi and a Mr Hashemi. The payments were apparently aimed at
influencing the outcome of the proposed contract negotiations between NIOC and Crescent
Petroleum. The Award set out the explanation advanced by the Defendants including the
assertionthat‘nobodyatCrescent’treated‘theproposedagreement’(bywhichtheyappearto
have meant an agreement for payments between Mr Yazdi and Mr Hashemi) seriously.
Accordingtotheevidence,MrYazdihadalsobeengivenashortpresentationbyCliffordChance
oncorruptionasawaytolethimdownpolitelywithoutcausingoffence.2
However,theTribunalfoundontheevidencethatCrescenthadgivenshiftingexplanationsand
thatithadbeen‘lessthanfrankinitsexplanationthattheDraftAgreementsweremerelya“ploy”
2 Crescent at [34].
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to“test”MrYazdi’3However,theTribunalconcludedthattheywerenotsatisfiedonthebalance
ofprobabilitiesthattheGSPCwasobtainedthroughcorruption.TheTribunalwasunabletofind
thatMrHashemihadaidedCrescentinobtainingtheNIOCBoard’sapprovalfortheGSPC.4Inits
assessment of the facts, the Tribunal found that ‘noallegedcorruptcontractualarrangements
betweenCrescentandMrHashemiwereultimatelyexecuted’ and that therewasnoevidence ‘to
surmise theeffect that theagreement topay confidential third‐party feesmayhavehadon the
GSPC’5.
TheTribunal,however,recognisedthatcorruptionwasdifficult toproveandthatoftendirect
evidence would not be available. Instead inferences could be drawn from circumstantial
evidence.6In this context, they found that therewas no indication that ‘themembersofNIOC
Boardwereeithercorruptor influencedbyanycorruptarrangements’ and no causal link had
been established between any corrupt arrangements and the final terms of the GSPC which
wereapprovedbytheNIOCBoard7.Whilsttherehadbeendiscussionsaboutcorruptpayments,
theyhadnotbeenacteduponandtheTribunalwassatisfiedthatthecorruptplanhadnotany
effecton theoutcome.Therefore theTribunal concluded that theGSPCwasa lawful contract
whichhadnotbeenprocuredbycorruption.ItwentontofindthattheClaimantwasinbreach
oftheGSPCbyfailingtodelivergas.
RevivalofthecorruptionargumentbeforetheEnglishcourt
NIOC did not adduce any new evidence to demonstrate that the GSPC had been procured
through corruption. Instead, they asserted that the contract was “tainted” by the previous
dealingsbetweenMrYazdiandMrHashemiand thiswasof sufficientconcern that theCourt
shouldsetasidetheaward.Whilst thiswasanovelargumentofsome interest, itdidnot find
favourasitlackedsupportinEnglishlaw.
InitsanalysistheCourtconsideredfirstwhetherGSPCwasitselfanillegalcontractand,second,
if not, whether it was procured through bribery. In this context, the court clarified the
3 Crescent at [35]. 4 Ibid. 5 Crescent at [36]. 6 Circumstantial evidence is a fact that can be used to infer another fact. 7 Crescent at [36].
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Journal of Altrenative Dispute Resolution in Kosovo
relationship between public policy, corruption and the enforceability of arbitral awards in
EnglishLaw8.
i) Illegalcontracts
First the Court dealt with illegal contracts and it stated that such contracts, for example a
contracttopayabribe,wouldnotbeenforceableintheEnglishcourts,irrespectiveofwhether
theywouldbeillegalornotundertherelevantforeignlaw.
TheCourt reviewed the relevant case lawand found that a contract to pay abribewould be
unenforceable9andthatanactiontorecoveranamountpaidwhichwasitselfabribewouldbe
barredbecausethecourtwillnotassistawrongdoerwhoreliesonhisownillegalconduct in
order to recover (exturpicausanonorituractio).10In theEnglishHighCourt caseofNayyarv
DentonWildeSapte11the bribe had not occurred but was attempted. The Court held that an
attempted bribe was an ‘actwhich ismore thanpreparatorywhich isdonewith the intent to
bribe’,buttheCourtnotedthatthiswasstillinthecontextofafindingthat‘proofofapayment
whichisintendedtobeacivillawbribeissufficienttoengagetheexturpicausaprinciple.Itisnot
necessarytoestablishtheillegalpurposeasbeingeffectivelycarriedout.’ The decisive factor in
that casewas that the actionwas for recovery of the corrupt payment, so the exturpicausa
principle applied. This wasmaterially different from the potentially corrupt activities in the
instantcase.TheDefendantswerenotseekingtorecoverabribetheyhadpaidandtheTribunal
foundthatthepotentiallycorruptactivitieshad,inanyevent,cometonothing.Theactionhere
was to enforce a contract ‘whichwasunaffectedbyanysuchacts,eveniftheywerepreparatory
acts’(emphasisadded).12
TheCourtthereforeheldthattheGSPCwasnot(andwasnotsuggestedbyNIOCtobe)anillegal
contractandthereforewasnotautomaticallyunenforceableintheEnglishcourts.13
8 Under English law the question of whether to enforce an award on public policy grounds engages public policy
considerations about the enforceability of the underlying contract. 9 Lemenda Trading Co. Ltd v. African Middle East Petroleum Ltd [1986] QB 448. 10 Nayyar v. Denton Wilde Sapte [2010] Lloyd's Law Rep (Prof Neg) 139. For an interesting and more general discussion of the illegality principle in English law see Bilta (UK) Ltd (In Liquidation) v Nazir[2015] UKSC 23; [2016] A.C. 1. 11 Ibid. 12 Crescent at [42]. 13 Crescent at [49(1)].
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ii) Legalcontractsprocuredbybribes
TheCourt then consideredwhether an award regarding a legal contract procuredbybribery
was automatically unenforceable and, if not, in what circumstances a court should refuse to
enforceit.
Itexplainedthatadistinctionexistsbetweenacontractwhichisitselfillegal(e.g.acontractto
payabribe) and thereforeunenforceableonpublicpolicy groundsanda contractwhichwas
legal butwas procured by bribery. The latterwas not unenforceable as long as the innocent
partyhadhadarighttoavoidthecontract.
Insupport for thisproposition, theCourtreiterated14theapproach inHoneywellInternational
MiddleEastLtdv.MeydanGroupLLC.15Inthatcase,RamseyJhadacceptedsubmissionsbythe
partyseekingtoenforcetheawardtotheeffectthat:16
‘evenifMeydan'sallegationsofbriberywereestablished,theywouldnot,asamatterofEnglishlaw,
resultinenforcementbeingcontrarytopublicpolicy.ItsubmitsthereisnoprincipleofEnglishlawto
theeffectthatitiscontrarytoEnglishpublicpolicytoenforceacontractwhichhasbeenprocuredby
bribery. It submits that the distinctionmust be drawn between the enforcement of contracts to
commitfraudorbriberyandcontractswhichareprocuredbybribery.Itsaysthatwhilstcontractsto
commitbriberyare contrary topublicpolicyandwillnotbe enforced, contractswhichhavebeen
procuredbybriberywouldberenderedvoidablebyEnglishlaw,providedthatcounter‐restitutioncan
bemade.…thus,asamatterofEnglishlawpublicpolicy,thecourtswillenforceacontractprocured
bybriberysubjecttotheinnocentpartyhaving,intheappropriatecircumstances,arighttoavoidthe
contract.… [Whilst bribery is clearly contrary to English public policy and contracts to bribe are
unenforceable,asamatterofEnglishpublicpolicy,contractswhichhadbeenprocuredbybribesare
notunenforceable’(emphasisadded).
The Court stated that the lack of fresh evidence beyond that heard during the arbitral
proceedings was a significant factor behind Ramsey J’s decision. Similarly, NIOC had not
adducedanyfreshevidenceinsupportoftheallegationsofbriberyandcorruption.TheCourt
accepted the Tribunal’s findings of fact that the GSPC had not been procured by corruption.
Furthermore, given that there was no fresh evidence to suggest otherwise or any other
exceptional circumstances, theCourtwouldnot interferewith thearbitralaward.17TheCourt
concluded:18
14 Crescent at [43]. 15 Honeywell International Middle East Ltd v. Meydan Group LLC [2014] 2 Lloyd's Law Rep 133. 16 Ibid. at [178]. 17 Crescent at [49]. 18 Crescent at [49(2)].
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Journal of Altrenative Dispute Resolution in Kosovo
‘ThereisnoEnglishpublicpolicyrequiringacourttorefusetoenforceacontractprocuredbybribery.
Acourtmightdecide toenforce thecontractat the instanceofoneof theparties. It isnot thatthe
contractisunenforceablebyreasonofpublicpolicy,butthatthepublicpolicyimpactwouldnotrelate
tothecontractbuttotheconductofonepartyortheother.’
iii) Contracts“tainted”bycorruption
NIOC presented an interesting argument, which did not fall squarely in either of the two
categoriesabove.It invitedthecourttorefusetoenforceanawardonthebasisthattheGSPC
was ‘tainted’bycorruption,inthesensethatithadbeenprecededby,eventhoughunaffected
by, a failedattempt tobribe. In those circumstances,NIOCargued that the contractoroneof
moreofthepartiestoithadbeentaintedbytheprecedingcorruptivebehaviourandinthelight
of recent international Conventions to outlaw bribery, and the increase of legislation to
criminaliseit,theCourtshouldrefusetoenforceit.
The Court found this argument ‘attractive’ but ultimately unarguable. It concluded that the
introductionoftheconceptoftaintingofanotherwiselegalcontractwouldcreateuncertainty,
andinanyeventwhollyunderminedpartyautonomy.19TheCourtcommented:
‘There iscertainlynoEnglishpublicpolicytorefusetoenforceacontractwhichhasbeenpreceded,
andisunaffected,byafailedattempttobribe,onthebasisthatsuchcontract,oroneormoreofthe
partiesto it,haveallegedlybeentaintedbytheprecedentconduct.…Theremaybemanycontracts
whichhavebeenprecededbyundesirableconductononesideorotherorboth–lies,fraud,threats
andworse–buttheCourtwouldnotinterferewithacontractenteredintobysuchparties,evenifone
ormoreofthosepartieshadcommittedcriminalactsforwhichtheycouldbeprosecuted,unlessthe
contract itselfwas illegalandunenforceable,oroneormoreoftheactsofsuchparties inducedthe
contract,inwhichcaseitmightbevoidableattheinstanceofaninnocentpartysoinduced’.20
Discussion
This case offers a valuable contribution to the jurisprudence on the role of corruption in the
enforcementofawardsandcontractsininternationalarbitration.Whilsttherehasbeenarecent
trend in internationalarbitration for losingparties to invoketheiropponents’corruptionasa
basis for resisting enforcement of the award, it has proved difficult to succeed. As far as the
English courts are concerned, this case is a useful illustration of that failing trend and also
19 Crescent at [49(3)]. 20 Crescent at [49(3)].
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provides a clear explanation ofwhy it is difficult to invoke corruption as a valid basis to set
asideanaward.
WhilstEnglishcourtsreadilyrefusetoenforceawardsbasedoncontractswhichareillegalper
se, including those providing for bribery and corruption, their approach to enforcement of
awardswhereotherwiselawfulcontractswereobtainedbycorruptionismorenuanced.Inthis
scenario,thecourtsarelesslikelytointerferewiththeenforcementprocessifthecontractwas
voidableandtherelevantpartieshavehadtheopportunitytoavoidit.21However,itseemsthat
if the parties have not had the opportunity to avoid the contract, therewould still be public
policygroundstorefusetoenforceanotherwiselegalcontract.
In this case, theEnglishCommercial Court had little difficulty indismissingNIOC’s argument
that contracts should be unenforceable even though they were neither illegal nor procured
throughcorruptionbutwheretheywereprecededbycorruptbehaviourwhichhas‘tainted’the
contractoranyofthepartiestoit.TheCourt’sanalysisistechnicallycorrecttotheextentthat
suchcorruptbehaviourisirrelevantbecauseitdoesnotaffectthecontentofthecontractorthe
meansbywhichthecontractwassecured. Italsoreflects thecurrentapproachof theEnglish
courtstokeepinterferencewitharbitralawardstoaminimum,andwhilstupholdingtheruleof
law,theyaimtoprotectpartyautonomyasoneoftheunderpinningprinciplesofarbitration.
However,itcouldbearguedthatthisapproachisalsoatoddswiththeincreasingfightagainst
corruption, which is illustrated by both domestic and international legal instruments,22and
relatedpoliticalinitiatives.23Afterall,publicpolicyshouldbeadynamicconceptwhichreflects
changes in society and its core values rather than a stagnant one that is artificially detached
fromthosechanges.24Thereforeitisarguablethatwhatconstitutesanactwhichiscontraryto
publicpolicyshouldberevisitedinordertoreflectsocietalchangestowardsamoreproactive
fight of corruption. But whilst there is scope for legislative or judicial change, there is one
obvious problem with extending the categories of unenforceable contracts surrounded by
21 For a discussion on voidability of contracts in English law see the expert opinion of Lord Mustill submitted by Kenya in World Duty Free Co. Ltd. v Republic of Kenya ICSID CASE NO. ARB/00/7) at para. 164. In that case, corruption was raised during the arbitral proceedings by the respondent who argued that a claim based on illegality must be dismissed. 22 See for example the UK Bribery Act 2010, the UN Convention Against Corruption (2005), the OECD Anti-Bribery Convention (1999) andthe EU Convention Against Corruption Involving Officials (2005). 23 See for example recent anti-corruption summit held in the UK: http://www.telegraph.co.uk/news/2016/05/12/explained-david-camerons-global-anti-corruption-summit/. 24 See for example, the Singapore Court of Appeal’s decision in AJU v AJT[2011] SGCA 41 in which it reiterated that public policy was a ground on which to set aside and refuse enforcement as per Article 34(2)(b)(ii) the UNCITRAL Model Law on International Commercial Arbitration as set out in the First Schedule to Singapore’s International Arbitration Act but that public policy meant international public policy and it must involve either exceptional circumstances or a violation of the “most basic notions of morality and justice”.See also Hwang and Lim, ‘Corruption in Arbitration: Law and Reality’(2012) 8 Asian International Arbitration Journal, Issue 1, pp. 1–119, para. 133.
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Journal of Altrenative Dispute Resolution in Kosovo
corruption:therewouldbesubstantialdifficultiesindeterminingwhenacontractissufficiently
‘tainted’ by corruption and that itself is unlikely to be conducive to legal certainty.
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UDC347.7
IntellectualPropertyCasesinArbitration
ArbereshaZogjani*andFlorijeManajZogaj**
Abstract
Creating an intellectual property product takes time, efforts and commitment.Why such effort
trying to protect it from being infringedwhen knocking on the right door gives you a quicker
resolution?!IntellectualpropertyandarbitrationarebothnewconceptsinKosovointermsoftheir
implementation.Nevertheless,thesituationisnotthesameasfarasenactmentofthelegislationis
concerned.CombinationofIPandarbitrationoffersatotalnewapproachforthepublic,namely,
fortheauthorsofdifferentworks.Beinganauthor inanenvironmentwhereauthors’rightsare
considered luxury, one cannotafford tohireaprivate lawyer toprotect its rightsall the time;
neitherdotheyhavetimetospendincourt.Therefore,theArbitralTribunalmayeasilybecomethe
“goodpart”ofthedispute.Achievingthisresultconstitutesthepurposeofourpaper.
Throughananalyticalmodel,weaimtoofferan“e‐onestopshop”forauthors,providingthemthe
needed informationaboutarbitrationand itsadvantagescompared tocourt litigation, sincewe
arestronglyconvincedthatifarbitrationbecomesafamiliarwordforIPowners,itwilleventually
becomeapracticethattheywillemployinthefuture.TyinguparbitrationandIPallowsustogain
awin‐winresult,asnotonlytheawarenessonarbitration,butalsothe importanceofenforcing
authors’rights,willberaised.
Inthispaper,authorsencloseinformationonintellectualproperty,alternativedisputeresolutions,
more specifically arbitration, the comparison between arbitration and litigation, legal and
institutionalinfrastructureaswellasanalyzecases.
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Journal of Altrenative Dispute Resolution in Kosovo
Whatisintellectualproperty?
The notion of Intellectual Property Rights (IP rights or IPR) entails the legal rights resulting
from an intellectual activity in the industrial, scientific, literary or artistic fields. The main
purposeofIPistoprotecttheauthorsandotherproducersofintellectualmaterialsandservices,
therebyprovidingthemtherightstocontroltheuseofworks,namely,theirproductswithina
specifiedtimeperiod.1
IPprotectsawiderangeofcreationsof themind thathavean identifiableeconomicvalue. In
general,IPrightsaredividedintotwomaincategories:
1) Copyright(whichprotectsoriginalcreationsembodiedinwhateverformofexpression
such as literary works, musical works, artistic works, photographic works, motion
pictureworksandthelike)2,and
2) Industrial Property (which is subsequently divided into patents, trademarks, trade
secretsandindustrialdesigns).3
This paperwill cover only the first category of IP rights, respectively copyright and how the
ownersofcopyrightedworkscangetuseofarbitrationinresolvingtheirdisputes.Accordingto
theKosovoLawonCopyrightandRelatedRights4,copyrightbelongstotheauthorforher/his
original work in the field of literature, science and art. That is, only the original works of
authorship are protected by copyright. Whilst, the following works, although original, are
expresslyexcludedfromprotection:ideas,guidelines,official laws,bylaws,regulations,official
materialsandpublicationsofparliamentarybodies,officialtranslationsofofficialmaterials,and
* Arberesha Zogjani holds an LL.M Degree in Contracts and Commercial Law from the University of Pristina –
the USAID long distance program. Her short version of the master thesis, titled “Protection of the musical work
as copyright: Kosovo Case” is currently published at the European Union Foreign Affairs Journal, while a more
comprehensive paper of the same topic remains published at Social Scientific Research Network. Her other
related papers were published and presented in various other occasions, including the 3rd International Scientific
Conference “European Integration process of Western Balkan countries”.
** Florije Manaj Zogaj holds a LL.M Degree on International and European Law from Riga Graduate School of
Law in Latvia. Florije is a licensed Trade Marks Agent in Kosovo. Her other research work is to court
management, as she is co-drafter of the Manual on Court Management and Standard Operation Procedure, as
part of the USAID project and research project “Finding our Voices”, regarding the involvement of youth and
female in the Kosovo Justice System. 1 World Intellectual Property Organization, Intellectual Property, Publication No. 895 (E), pages 9-10.
2 Article 1, Law No. 04/L-065 on Copyright and Related Rights 3 World Intellectual Property Organization, What is Intellectual Property, Publication No.450 (E), 2010, page 2. 4 Law No. 04/L-065 on Copyright and Related Rights
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administrative and judicial acts, official materials published for public information, folklore
performancesanddailynews5.
Copyright
The Law on Copyright and other Related Rights provideswhat type ofwork is protected by
copyright.Namely, itspecifies thatcopyrightedworksareoriginalexpressionsrepresented in
anyform,inparticular:
Verbalworks(speeches,lectures,narrativesandsimilar);
Literaryworks (textbooks, brochures, daily newspaper and other texts of the literary
domain,scientificandprofessionalliteratureaswellascomputerprograms);
Musical works with or without text, and regardless if they are presented through
musicalnotesorinanyotherform;
Theatrical works, theatrical musical and puppet theatre works including the radio‐
drama;
Choreographicandpantomimeworks;
Filmicandotheraudiovisualworks;
Photographic works and other works made through a similar process of the
photography such as artistic photography, photo montage, posters, photos of the
reports;
Artworksintheareaofpainting,sculpture,graphicsanddrawings;
Architecturalworks such as charts, plans, templates and the buildings built based on
architecturalandengineeringworks,urbanism,panoramaandinteriordesign;
Stenographyworks;
Applicativeartworksaswellasindustrialandgraphicdesign;
Cartographicworksintheareaofgeographyandtopography;
Scientific,educationalor technicalpresentationssuchas: technicaldrawings,graphics,
charts,expertiseandthree‐dimensionalpresentations.6
Derivativeworksaswellascollectionsofworksarealsoconsideredasworkofauthorship.7
However,whoisconsideredtheauthorofthework?Theanswertothisquestionisnotalways
assimpleasitmaylookinthefirstplace.Inmanycontentiouscases,courtsareaskedtodecide
preciselyon this question, respectively thequestionof ownership.However, the lawsetsout
5 Article 12, Law No. 04/L-065 on Copyright and Related Rights. 6 Article 8, Law No. 04/L-065 on Copyright and Related Rights, Republic of Kosovo. 7 Articles 10 and 11, Law No. 04/L-065 on Copyright and Related Rights, Republic of Kosovo.
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Journal of Altrenative Dispute Resolution in Kosovo
certainrulesastowhoisconsideredtheauthorofthework.Firstofall,theownershipvestsin
thepersonwhosenameor firm, pseudonymormark appears in the copy of thework. If the
workdoesnothaveanyoftheseelementsofauthorship,however,thantherightsremainwith
thepublisher.Ifthepublisherisanonymoustoo,thentherightsshallbeenjoyedbytheperson
disclosingtheworkitself.8
Astheauthorofanoriginalwork,youareentitledtothefollowingrightsprovidedbythelaw:
Theso‐calledmoralrights,9whichareapplicabletoalltypesofworksofauthorshipandinclude:
Therighttofirstpublication;
Therighttorecognitionofauthorship;
Therightoftheintegrityofwork;
Therighttoremorse;
Anothergroupofrightsare theso‐calledeconomicrights10or therightof theauthor toenjoy
the monetary profits from the exploitation or use of their copyrighted work. The most
importanteconomicrightsoftheauthorare:
Therighttoreproducethecopyrightedwork;
Therighttodistributethecopyrightedwork;
Therightofrentalofthecopyrightedwork;
The right to publicly perform, communicate and broadcast the copyrighted
work;
Therightofpublicdisplay;
Therighttodisclosethecopyrightedwork;
Adaptationrights.
Otherrights11providedbythelawsuchas:
Therighttoaccessandexposure;
Therightforresale;
Thepubliclendingright;
Therightforspecialremuneration.
Anothergroupofrightswhichareprotectedbythecopyrightlawbutasaseparatesetofrights
are related rights. Theseworksdonotmeet the original criterion requiredby copyright law.
8 Article 14,Law No. 04/L-065 on Copyright and Related Rights. 9 Sub Chapter D, Law No. 04/L-065 on Copyright and Related Rights, Republic of Kosovo. 10 Sub Chapter E, Law No. 04/L-065 on Copyright and Related Rights, Republic of Kosovo. 11 Chapter III, Law No. 04/L-065 on Copyright and Related Rights, Republic of Kosovo.
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Theseworksare,however,protectedsincetheycontributetomakingtheworksavailabletothe
public.Theserelatedrightsinclude:12
Rightsofperformers;
Rightsofproducersofphonograms;
Rightsoffilmproducers;
Rightsofbroadcasters;
Rightsofproducersofdatabases;
Rightsofpublishers.
Alltheserightsare,however,subjecttotimelimitations.Inprinciple,thecopyrightrunsduring
thewholelifetimeoftheauthorandseventy(70)yearsafterhisdeath.Incaseofco‐authorship
works, the copyright lasts seventy (70) years from the death of the last surviving co‐author.
Whendealingwith anonymous and pseudonymousworks and collectiveworks, on the other
hand,thecopyrightshallrunforseventy(70)yearsafterthelawfuldisclosureofthework.13
Thecopyrightedworkscanbeadministeredintwoways;individually,whichisexercisedbythe
holder personally or through the representative, and collectively through collective societies
authorizedbytheOfficeofAuthorsRightsandRelatedRights.14
AnyoriginalworkofauthorshipenjoysprotectionasprovidedbytheLawfromthemomentof
itscreation.Iftheseworksareinfringed,theauthorcanfileaclaimandaskforcompensation.
Theconfusionoccursexactlyatthispoint:whichproceduretofollow‐LitigationvsAlternative
DisputeResolution!
It is important to mention that in order for authors/parties to enter into an arbitration
procedure,theyshouldagreeamongthemselvestosolvetheirdisputeandhaveanarbitration
clauseintheiragreement.
12 Chapter IX, Law No. 04/L-065 on Copyright and Related Rights, Republic of Kosovo. 13 Article 61, Law No. 04/L-065 on Copyright and Related Rights, Republic of Kosovo. 14 Chapter X, Law No. 04/L-065 on Copyright and Related Rights, Republic of Kosovo.
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Journal of Altrenative Dispute Resolution in Kosovo
AlternativeDisputeResolution
UnderstandingofADRanditshistoryinKosovo
AlternativeDisputeResolution(ADR)meansvariousprocessesofsettlingdisputesoutsidethe
court room, and helping parties resolve disputes without a trial. This is achieved through
mediation, arbitration or negotiation. A few other procedures of ADR are acknowledged
worldwide, these being neutral evaluation and collaborative law. However, these two
proceduresareyetnotapplicableinKosovo.
ADRhasnumerousadvantages,somelistedbelow:
Fastersolutions;
Lessexpensive;
Partiesplayacrucialrole;
Longlastingoutcomes;
Greatersatisfaction;
Improverelationships.
Mediation is an ADR form inwhich a neutral third person calledmediator helps the parties
reach a voluntary resolutionof adispute.As such,mediation ismore informal,more flexible,
less expensive and faster than litigation. It can help people resolve civil, family, juvenile and
othermatters.
ArbitrationisalsoanADRwherebyaneutralpersoncalledarbitrator,selectedbypartieshears
the arguments from both sides and analyzes the evidences submitted and then decides the
outcomeofthedispute,assuchitisawidelyacceptedmechanism.
Lookingbackathistory,arbitrationwasoneofthemostpreferreddisputeresolutionmethods
intheMiddleAges,whilethefirstformalruleswereadoptedinEnglandandtheU.S.inthe15th
and 16th centuries. Western European countries started promoting arbitration in the 20th
century,whereas in the former Yugoslavia, ADRwas introduced during the 1960s and early
1970s15.
Sincearbitrationexpands thephysicalborders, itwasnecessary to set rules for international
arbitration,andthiswasdonebytheUnitedNationsMissiononInternationalTrade(INCITRAL)
which in 1976 adopted rules applicable to international arbitration, including a model 15USAID System for Enforcing Agreements and Decisions Program in Kosovo, Report and Recommendations for developing and implementing and appropriate and effective alternative dispute resolution system, April 2010, Kosovo, page 11.
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arbitration clause, rules for appointment of arbitrators and conduct of arbitral proceedings,
rulesfortheform,effectandinterpretationoftheaward16.
After the Yugoslavia dis‐solvation, Kosovo Chamber of Commerce adopted the regulation on
PermanentArbitrageCourtin1999.Fiveyearslater,respectivelyin2004,theKosovoAssembly
adoptedanewLawontheKosovoChamberofCommercewhich,amongothers,providedforthe
establishmentoftheADRmechanismknownastheCourtofArbitration.
TheUNCITRALModelArbitrationLaw,theEuropeanCommunityDirective93/13.EECaswellas
theexpertiseofdifferentmissions,suchastheUSAID,werecloselyconsultedwhendraftingthe
KosovoLawonArbitrationNo.02/L‐75whichwaspassedbytheAssemblyin2007.Otherthan
theLawonArbitration,theapplicablelegislationinKosovoforthisfieldistobeconsideredthe
LawonEnforcementProcedureNo.03/L‐008,RulesofArbitration inKosovo2011aswellas
theDecisionontheExpensesoftheProcedure.
AstheLawonArbitrationisthemainlegalsource,itisworthmentioningitskeyelements17:
Arbitrationoccursonlyifbothpartiesagreedtosolvetheirdisputethrougharbitration;
Apartymaybeanaturalandalegalperson;
Itisapplicabletodisputesinallcivilandeconomicmatters;
It is required that a court rejects an action if the respondent raised the issue of the
existenceofanarbitrationagreementinhisstatementofdefense;
The arbitral tribunal may consist of one or a panel of arbitrators (odd number
composition);
Eachpartyhastheburdenofprovidingitsclaim;
Ininternationalarbitrationcases,thetribunalappliesthelawdesignatedbytheparties,
in the absence of which, the tribunal applies the law consistent with the private
internationallawprinciples;
Theunsuccessfulpartyshallbearallthecosts,unlessotherwiseagreed;
Thearbitralawardhastheeffectofafinalandbindingcourtdecision.
16 USAID System for Enforcing Agreements and Decisions Program in Kosovo, Report and Recommendations for developing and implementing and appropriate and effective alternative dispute resolution system, April 2010, Kosovo, page 12. 17 Law on Arbitration, No.02/L-75, Republic of Kosovo.
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Journal of Altrenative Dispute Resolution in Kosovo
ArbitrationCenteroftheAmericanChamberofCommerceinKosovo
Another functionalADRCentre inKosovo is theArbitrationCenterwhich functionsunder the
umbrellaoftheAmericanChamberofCommerceinKosovo(hereinafterreferredasAmCham
Arbitration Center). American Chamber of Commerce in Kosovo (herein after referred as
AmCham)isaleadingbusinessassociationinKosovoofficiallyaccreditedbytheUnitedStates
ChamberofCommerceinWashingtonD.C.AmChamisalsoamemberoftheEuropeanCouncil
of American Chambers of Commerce (ECACC). Though established in 2004, it has been fully
operativesince2006.Infurtheranceofitseffortstostrengthenthecountry’sbusinessclimate
and economic growth, AmCham Kosovo has established its Arbitration Center, mandated to
facilitatethealternativeresolutionofdisputesthrougharbitrationandmediation.18
The AmCham Arbitration Center provides its services to its members and to the business
community throughout Kosovo. Resolving disputes through the Center offers several
advantages: fasterresolution; lesscostlyproceedings;closedhearingsandconfidentiality; less
adversarialprocess;professionalarbitratorsandmediators;easierinternationalenforcementof
awardsandfinalandbindingdecisions.19
Arbitration Center is regulated by the Charter of the American Chamber of Commerce in
Kosovo20.AmChamArbitrationCenteroffers to its client’s valuable information regarding the
filingprocedure,anditoffersstepbystepguidelines.ItalsooffersanArbitrationClause,Model
ArbitrationAgreement;Application for InitiationofArbitration; Fee Schedule; Compilationof
ArbitrationRulesandworkshopsandotherforumstodiscussADRissues.
TheAmChamArbitrationCenterconsistsof the followingbodies: SteeringCouncil; Secretary
General;andArbitrationPanels;21andhasarosterof41arbitrators,excellentinternationaland
localexperts,involvinglawyers,professorsandotherlegalprofessionals.Therosterconsistsof
11internationaland30localexperts,9ofwhicharewoman.
KosovoPermanentTribunalofArbitration
KosovoPermanentTribunalofArbitrationfunctionsundertheKosovoChamberofCommerce
umbrella,thoughassuch,itisfullyindependent.TheTribunalsubmitsannualworkingreports
18http://www.amchamksv.org/adr-center.html 19 See above. 20 Charter of the Alternative Dispute Resolution Center, approved in 2014 http://adr-ks.org/introduction/charter-of-the-amcham-adr-center/ 21 Article 4, See above.
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aswellasfinancialannualreportstotheKosovoChamberofCommerce,whichatthesametime
remainsthesigningauthorityofallMemorandumsofUnderstandingsonarbitration22.
ItscompositionconsistsofLeadership(composedoffivemembers:Chair,DeputyChair,General
Secretary and two other members appointed for four years), President and Secretary23.
Currently, theKosovoPermanentTribunal ofArbitration lists 27 arbitrators in its list, out of
which8internationalarbitratorsand19localarbitrators.
The arbitration procedure is governed by the Law Non Arbitration and Kosovo Rules of
Arbitration2011.Alldisputesrelatedtocivil‐judicialandeconomic‐judicialrequestsmaybethe
subjectofanarbitrationagreement,unlessprohibitedbylaw.24
The Law on Arbitration states that no court in Kosovo that may intervene in arbitration
proceedings, and if an action is brought before it concerning a matter that is a subject of
arbitration, should be rejected by court as inadmissible, unless the court finds that the
arbitrationagreementisnullandvoidorthatthedisputedsubjectmatterisnotcoveredbythe
arbitrationagreement.
If for instance,youasanauthorhaveadispute,youcanonlystartanarbitrationprocedureif
you and the other party reach a consensus to solve your dispute through arbitration, and as
suchyoumay choose tobe representedor assistedbyanotherperson,whose contactdetails
shouldbecommunicatedtoallpartiesandthearbitrationtribunal.25
The arbitral tribunal can be composed of one or three members – depending on the
circumstances of the case and the parties’ preferences, though usually it does consist of one
arbitrator.Differently from litigation and courtprocedure, in arbitration, a party can appoint
thearbitratorhim/herself,andthatnotonlyfromthelistofarbitratorsthattheTribunalowns
butalsoanotherpersonoutsidethelist,forwhomthepartyshouldpresentastatementofhis
professionalexperience.26
Inordertoprotecttheparties,theLawonArbitrationandtheRulesofArbitrationforeseethat
anyarbitratormaybechallengedbyeitherpartyifcircumstancesshowthattherearejustifiable
doubtsforthearbitrators’ impartialityorindependence,or ifthearbitratordoesnothavethe
qualificationsagreedtobytheparties.
Similarly to litigation, parties to arbitral proceedings should present the claim and counter
claims.Thoughcontrarytolitigation,inarbitration,thetribunalshalldecidewhethertoholdan 22 The Kosovo Permanent Tribunal of Arbitration Establishment Act, 27.06.2011, Kosovo. 23 The Kosovo Permanent Tribunal of Arbitration Establishment Act, 27.06.2011, Kosovo. 24 Article 5, Law No.02/L-75 o Arbitration. 25 Kosovo Rules of Arbitration 2011. 26 Article 6, Kosovo Rules of Arbitration 2011.
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Journal of Altrenative Dispute Resolution in Kosovo
oralhearingor toproceedwith theprocedurebasedonthedocumentsandwrittenmaterials
presented, or the tribunal may also decide to hold a combination of both, oral hearing and
writtenproceedings.Whereas in either case, eachpartyhave theburdenofproving the facts
reliedtotheclaimordefense.
Article24oftheLawonArbitrationforeseethatpartiescanpresentwitnessestothehearings,
andtodoso,theyshouldinformthearbitraltribunalandtheotherpartyaboutthename,the
addresses,thesubjectaswellasthelanguagethatthetestimonyofthewitnesseswillbegiven,
atleastfifteendaysbeforethehearing.Expertscanalsobeapartofthearbitralprocedureifnot
otherwiseagreedbyparties.
Ifmorethanonearbitratorhasbeenappointedinthearbitralproceedings,theawardshallbe
madebyamajorityofallmembers,whileincaseofquestionsofprocedure,thechairmanmay
decideonhis/herown.
The award shall be made in writing. The award is final and binding for the parties, with
completely thesameeffectas the finalcourtdecision.27Theawardcannotbeappealedbefore
anycourt.However,courtcansetasideanarbitralawardundercertaincircumstancessuchas:
A) Theapplicantprovesthat:
Apartytothearbitrationagreementdidnothavethecapacitytoact;
Thearbitrationagreement isnot validunder the lawdeterminedasapplicableby the
parties or the arbitral tribunal, or in absence of such determination, under the law
applicableinKosovo;
Theapplicantwasnotgivenpropernoticeoftheappointmentofanarbitratororofthe
arbitralproceedingsorwasotherwiseunabletopresenthiscase;
Theawarddealswithanissuenotcontemplatedbyornotfallingwithinthetermsofthe
submission toarbitration,or it containsdecisionsonmattersbeyond the scopeof the
submission to arbitration, provided that, if the decisions on matters submitted to
arbitrationcanbeseparatedfromthosenotsosubmitted,thatpartoftheawardwhich
containsdecisionsonmatterssubmittedtoarbitrationmayberecognizedandenforced;
Thecompositionofthearbitraltribunalorthearbitralprocedurewasnotinaccordance
with the provisions of this Lawor a valid arbitration agreement, under the condition
thatsuchdefecthadanimpactonthearbitralaward.
B) Thecourtfindsthat:
Arbitrationisprohibitedbylaw;
Theenforcementoftheawardleadstoaresultwhichisinconflictwithpublicpolicy28.
27 Article 31 – Form and Effect of the Award, Law No. 02/L-75 on Arbitration.
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RecognitionandEnforcementofthearbitrationtribunalawards
Arbitral award is final and has the same value as the court judgment. One very important
element is that courts cannot abrogate awards issued by an arbitration tribunal. Courts can
analyzeandannulthearbitralawardunderveryfewcircumstancesasforeseenbytheLawon
Arbitration29and as presented above. One of the reasonswhy arbitration is extensively used
worldwide is the easy recognition and enforcement of the arbitration award, especially
comparedtoenforcementprocedureofcourtsjudgments.Ifregularcourtsdonotrecognizeor
enforcearbitrationawards,thenthereisnovaluetothataward.Themainreasonwhyarbitral
awardsareenforceableinasimilarmannerindifferentcountriesisexactlybecauseoftheNew
YorkConventionontheEnforcementofArbitralAwardsof1957andwhichenteredintoforcein
June1959. The said convention is applicablewith regards to recognition and enforcementof
arbitral awards issued in a countrydifferent from theplacewhere theaward is sought tobe
enforced.
Kosovo has not signed, nor ratified the New York Convention. However, the Law on
Arbitration30provides for the recognition and enforcement of arbitral awards, both domestic
andforeignawards.Article38oftheLawonArbitrationstatesthat:
“An arbitral award made by an Arbitral Tribunal in Kosovo shall be enforced when declared
enforceablebythecourt”.
Whereas in caseswhen the arbitration procedureswere held outsideKosovo, but the award
shallbeenforcedinKosovo,courts inKosovoareobligedtoenforcesuchaward.Article39of
theLawonArbitrationstatesthat:
“Kosovo courts shall recognize arbitral awardsmade outside ofKosovo as effective and enforce
themifsuchawardsarerecognizedandarepublishedasenforcedaccordingtoparagraph2till5of
thisArticle”.
Request for the recognition and enforcement of the award should be addressed to the Basic
Court inPristina,CommercialDepartment.Therequest for recognitionshouldalso includeas
enclosures the original decision or a notarized copy of the award, a copy of the arbitration
agreement, and translation thereof if thosedocuments arenotdrafted inoneof theKosovo’s
officiallanguages.31
Ifsuchrequestisapproved,enforcementisthesameasinothercourtcases.
28 Article 36, Law No.02/L-75 on Arbitration. 29 Law on Arbitration No.02/L-75, see above. 30 Law on Arbitration No. 02/L-75, Article 38 – 40. 31 Law on Arbitration, see above.
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Journal of Altrenative Dispute Resolution in Kosovo
Kosovohasasolidlegalframeworkonarbitrationandrecognitionandenforcementofarbitral
awards,beingdomesticorinternational.Existenceofasolidlegalframeworkmeanssecurityfor
thepotentialusersofarbitration inKosovo(artists, creators,writers,etc.).Thequestion is to
what extend is the public and professional community aware of these alternative dispute
resolution mechanisms and to what extend they are using these methods32. Apart from the
backlogofcasesinallcourtinstances,anotherissueisthepublicperceptionaboutthejudiciary
system in general. Courts, however, remain themost popular institution to address disputes.
This is so despite the fact that based on many public polls33judiciary is the least trusted
institution,andjudgesaretheoneswhoarelesstrustedinthejusticesystem.Otherreportsand
researches34showcourtsasoneinstitutionthatisnotdoingtheirjobinaddressingcorruption
andmoreseriouscrimecases35.
Considering all the above, arbitration is certainly the best alternative for dispute resolution,
whichneeds,however,togetmoreattentionandtobeusedmorefrompartiesfacingadispute.
Kosovoinstitutionsneedtohighlighttheimportanceofarbitrationmoreandencourageprivate
persons and legal entities to use arbitrationmore oftenwhen they face with an IP or other
commercialrelateddisputes.Generalpublicandprofessionalsneedtobeeducatedthatsucha
possibilityexistsanditiscertainlymoreeffectiveandquicker,particularlywhenitcomestothe
recognition and enforcement of the arbitral award. To elaborate the recognition and
enforcementofarbitralawards,acasestudyiselaborated.
Casestudy
TheSupremeCourtinKosovorecentlyruledonacaseregardingrecognitionofanarbitration
award36. Claimant in this was a European Union based company, whereas the respondent a
Kosovostateownedentity.Thearbitralawardwasissuedin2013bytheInternationalChamber
ofCommerce/InternationalCourtofArbitration.According to therequest forrecognitionand
enforcement of the arbitration award, the Basic Court in Pristina, Commercial Department,
approved in its entirety the claimant’s request. Respondent appealed the decision before the
Kosovo Court of Appeals.37Court of Appeals refused the appeal of the respondent since,
accordingtotheirreasoning,therewerenogroundfortheappeal,and,therefore,reinforcedthe
decision of the first instance court. The respondent used the so‐called revision procedure to 32 See below responses from questionnaire. 33http://justice.public-communication.net/polling-reports-on-kosovo-criminal-justice-system/ 34http://www.kdi-kosova.org/index.php?fq=6 35http://kli-ks.org/korrupsioni-ne-kosove-luftimi-apo-promovimi-i-korrupsionit-2/ 36 Supreme Court of Kosovo, case No.E.Rev.Nr.28/2015. Since we did not get permission from parties in this case, we cannot mention the names of the Company. 37 Case No. Ae.no.129/2014.
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bringthecasebeforetheSupremeCourt.Therevisionrequestwasbasedontheallegedbreach
of theprocedural andsubstantive lawand, accordingly, respondentasked the court to cancel
thedecisionsofbothinstancesandremandthecaseforreconsideration.TheClaimantcertainly
objectedthisrevisionrequestascompletelyungrounded.
TheSupremeCourtdecidedthattherevisionrequestshouldnotbeallowed.Thedecisionwas
basedontheLawonArbitration,articles38and39,concludingthatthesaidlawdoesnotallow
forappealsagainstdecisionsfortherecognitionandenforcementofarbitralawards,andthat
generalarticlesofthecontestedprocedurearenotapplicabletothisspecificprocedure.
Thedecisionsofallinstancecourtsareabsolutelycorrectandinlinewiththehigheststandards
in the field.TheSupremeCourtdecision is averygoodexample tobe followed in the future.
Thisdecisioncanbeused inthe futureasa judicialpracticeandcanbeusedby lawyers,asa
lesson learned for them,butalso toeducate theirclients in the importanceof therecognition
andenforcementofforeignarbitrationawards.Thiscasecanalsobeusedasagoodexampleto
show investors that Kosovo Courts are reliable and willing to work on recognition and
enforcementofarbitrationawards.
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Journal of Altrenative Dispute Resolution in Kosovo
CourtStructureinKosovo
CommercialDepartmentoftheBasicCourtofPristina38hasthecompetencetohearanddecide
on intellectualproperty relatedcases.This is anewcompetence introduced toKosovo’s legal
system.ThisdepartmentisfacingdifferentchallengesasfarasthehandlingofIPrelatedcases
isconcerned.Basedontheinformationcollectedbyaninterviewwithacommercialdepartment
judge,Mr.Murat Paqarada39, the following are themain challenges that court is facingwhen
handling intellectual property cases: lack of expertise among judges as well as lack of
knowledgeamongthepartiesthemselves.
IntellectualPropertyCasesinArbitration–Benefits
Aspreviouslymentioned,comparedtolitigation,arbitrationhasnumerousbenefits.Oneofthe
firstreasonswhymostofusdonotturntocourtsisthedelayinhavingourcasedecided.Thisis
mostlybecauseof thebacklogthatKosovoCourtshavebeenfacingand“backlog”meansover
400,000casesnotbeingtreatedfortwoyears.
Whenmeasuring court efficiency,we take into consideration the timeframes and the quality
offered, as a result of which we get the number of cases solved per year versus the cases
receivedduringthatsameperiodoftime.Handlingcaseswithanunprecedenteddelaycertainly
damagenotonlythepartiestothedispute,butalsothejudiciaryperformanceasawhole.Asa
party,beingaplaintifforadefendantyouarederivedfromtheprincipleofsolvingacasewithin
areasonabletime,nottomentionthatitisverylikelythatyourevidencesarelostordamaged
bythetimeofdecision.Ontheotherhand,thejudicialsystemwillalwaysbecategorizedasnon‐
efficient.Mostimportantly,citizenswillhavenofaithinjudiciary.
Thetablebelowshowsthestatisticsonthebacklogofcasesintheentirecountry,through1999‐
2015–althoughthe2015casesarenottobeconsideredasbacklog.Thesestatisticshavebeen
collectedbytheStatisticalDepartmentoftheKosovoJudicialCouncil.
38 Article 13, par. 1.5, Law on Court, see above. 39 Interview conducted by authors of this paper as a part of the research, dated: 19th of May 2016.
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SeriousCrimes
Criminal Juvenile Civil Economic Administrative
YEAR 1999 3 0 0 5 0 02000 16 8 2 9 0 02001 27 11 0 30 0 02002 41 14 0 52 0 02003 71 19 0 89 0 02004 88 34 0 538 0 02005 221 141 0 535 0 02006 257 648 5 771 0 02007 312 480 21 1060 0 02008 199 280 4 1316 0 02009 115 307 3 1167 0 12010 128 553 3 1587 0 72011 178 1412 11 2524 0 332012 287 3617 32 4715 10 1732013 1282 6841 65 6254 147 6992014 886 8731 193 8929 440 22142015 1439 15405 367 11354 562 2253TOTAL 5550 38501 706 40935 1159 5380KosovoJudicialCouncil,ReportonBacklogcasesupuntil31.12.2015
Asseenfromtheabovestatisticaltable,therearecommercialrelatedcases,IPcasesbelonging
tothisgroupofcasesthatarefouryearsold.
Whenmeasuringthecourtefficiency,wetookintoconsiderationnotonlythetimeframetohave
a case decision, but also the quality of the decision. What do we intend when we mention
“qualitativejustice”?
Several indicatorscanbepositionedasapuzzle inordertocreatethebig“qualitative justice”
picture.Theseindicatorsare,forinstance:
- Aspecializedlawyer;
- Aspecializedjudge;
- Fewerexpenses.
It is really unfortunate, but intellectual property is still being considered as a new topic in
Kosovo,immediatelygivingtheanswertothequestiononthelevelofspecializationofajudge
orlawyerinIP.
Historicallyseen,however,duringthetimeofYugoslavia,Kosovowaspositionedquitewellin
thisarea.Notonlylawswereinplace,butalsothecollectiveassociationsuchasSokoj(Serbian
OrganizationforMusicianAuthors)wasveryeffectiveinadministeringtheauthors’rights.After
the war of 1999 this regime stopped covering the territory of Kosovo and for several years
afterwards,Kosovodidnothavethelegislativeinfrastructureinplace.
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Journal of Altrenative Dispute Resolution in Kosovo
ThegovernmentofKosovo foryearshadotherpriorities. IPprotectionandenforcementwas
barely seen in thegovernment todo listsbefore itwas raisedas an issue in theEUProgress
Reports. In 2010, the Kosovo government approved the National Strategy in Intellectual
Property,whichprovidedalistofactivitieswiththepurposeofincreasinghumanandtechnical
capacities as well as strengthen the cooperation among the enforcement institutions40.
FollowingtheadoptionoftheStrategy,theKosovogovernmentreachedanagreementwiththe
courtrepresentatives,wherebycourtswouldofferprioritytoIPrelatedcasesandplacethemin
acourseofthreemonthsfromthedateofreceivingthecase.
Withthepurposeofanalyzingthehandlingofcopyrightrelatedcasesbycourts,weperformed
an interviewwitha judge fromthePrishtinaBasicCourt,DepartmentofCommercialMatters,
Mr.MuratPaqarada41.Fromtheinterview,wefoundoutthatthereisonlyonecopyrightrelated
casependingdecisionbeforethecourt.
In the referenced case,42the plaintiff filed a damage claim in the value of 100,000.00 EUR
because of the copyrights infringement against the defendant,which is a publishing/printing
house.Togetmoreinformation,wehavebeenincontactwiththeowneroftheprintinghouse,
inthiscasethedefendant43whoprovideduswiththefactsofthiscase.
The authorized representative of the family of a deceased author approached the
publishing/printinghousein2005andauthorizedthecompilationandpublicationofthework
of the deceased. So, the parties agreed that the printing house publishes the work of the
deceasedauthor.Thepublishinghouseclaimstohaveproperlypaidthefamilyofthedeceased
authorforthetransferofpublishingrightstothem.
On July 11,2013, the family of the deceased author filed a copyright infringement lawsuit
claimingthattheircopyrightsassuccessorshavenotbeenrespected,andassuchtheyaskedthe
courttograntdamagesintheamountof100,000.00EUR.
In the first instance court issued the decision on January 30, 2015 refusing the copyright
infringementclaimonthebasisofArticle1,paragraph2andArticle2oftheLawonInheritance.
Because the decision was found to have breached some procedural rules, the Appeal Court
remandedthecasebacktothefirstinstancecourt,andthecaseispendingaseconddecisionfor
threeyearsnow.
Tounderstandhowthepartiesfeelaboutthehandlingofthecasebythecourt,wecontactedthe
printinghouse,whichwasthedefendantinthiscase.Whenaskedabouttheapproachofjudges 40 National Strategy in Intellectual Property 2010-2014, Republic of Kosovo. 41Interview conducted by authors of this paper as a part of the research, dated: 19th of May 2016. 42 C.Nr.295/2013 43 Because this case is still not closed, we are referring to parties as anonymous.
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towardsthiscaseandIPingeneral,therepresentativeoftheprintinghousesaidthatitwasnot
of themost satisfactory level; however he admitted that judges are trying. In his opinion, it
wouldbeadvisabletohaveaspecializedIPunitwithintheCommercialdepartment.
Withoutanyprejudicewithregardstothehandlinganddecisionintheabovereferencedcase,it
wouldbeunrealistictoexpectmiraclesfromjudgeswhenfacedwithanIPrelatedinfringement
case.Namely, according to aUSAID report44, there is no criterionwhen assigning a case to a
judge.Thecaseisusuallyassignedtoajudgewhoismorecomfortabletohandlethecaseand
basedontheirpreviousexperiencewithsimilarcases.However,beingawarethattherearenot
manycopyrightinfringementcasesorIPinfringementcasesingeneral,onecannotexpectthat
the deciding judge be at a satisfactory level with regards to the knowledge of the law. One
additional factorthatmaycontributetothe lackofexpertiseamongtherelevantenforcement
institutionsisexactlytheuniversitycurricula.IPclasswasputintheuniversitycurriculaonly
recently.
Thesituationisnotthatdifferentamongthelawyers.Tobecomealawyer,oneshouldpassthe
BarExam,whichconsistsof thewrittenandoralpart.However, IP law isnotasked inanyof
these parts, expect as an area of law belonging to commercial law in general. That is, no
particularspecializationisrequiredinordertopracticelawandregisterasanattorneyatlaw
withtheKosovoChamberofAttorneys.
Havingsaidthat,itcaneasilybeconcludedthatthecourtroomisnotthewisestchoicetomake.
Therefore, authors should think of following another, more suitable, alternative dispute
resolution mechanism. From a quick review of the professional background of the 27
Arbitrators listed in the Kosovo Tribunal of Arbitration, 14 of them have Commercial Law
and/orIntellectualPropertylistedastheirfieldsofspecialty45.BasedontheRulesofArbitration
in Kosovo, parties can themselves propose another person as Arbitrator – outside the list of
arbitrators published in the Tribunal, giving authors even more space to have a specialized
persondecidingtheircase.
Another factor that authors should consider when choosing the resolution method, is the
estimatedcoststobeincurred.Inanumberofsituations,arbitrationislessexpensivethancourt
litigation.The tablebelowshows the fees tobe incurred in thecourseofbothprocedures.At
first, both fees are approximately of the same amount. However, the representation fees in
arbitrationareapproximately600EURfordisputesworthabove10,000€.Ontheotherhand,
therepresentationcostsincourtlitigationremain270,40€persession,whichdependingonthe
numberofpartiesandthelawyer’srecognition,canbeincreasedupto811.20€. 44 USAID’s Justice System Strengthening Program, Stocktaking Report. 45 http://www.kosovo-arbitration.com/lista-e-arbitrave
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Journal of Altrenative Dispute Resolution in Kosovo
ThecostsinthearbitrationprocedurearegovernedbytheDecisiononCostsofProceedings46
basedonwhichtheregistrationfeeforarbitrationproceedingsis:
a) 250EURiftheamountofthedisputeislessthan100.000EUR,and
b) 500EURiftheamountofthedisputeismorethan100.000EUR.
Ifthecaseweretobedecidedbyasinglearbitration,thearbitrator’sfeesshallbecalculatedin
accordancewiththefollowing:
EquivalentvalueofthesubjectofthedisputeinEUR
Amountoffees:baseCandpercentageDfortheamountinexcessoverA–inEUR
FromA ToB BaseC %D5,000 600
5,000 20,000 600 720,000 50,000 1,650 550,000 100,000 3,150 3100,000 500,000 4,650 1,5500,000 2,000,000 10,60 1
2,000,000 5,000,00 25,650 0,55,000,000 10,000,000 40,650 0,410,000,000 20,000,000 55,650 0,1
Over20,000,000 65,650 0,05
For comparativepurposes, beloware the feesof an attorney at lawasper the tariffs on civil
procedures47:
Typeofsubmission
Mattervalue Basis Clauseforover50%
Lumpsum30%
Total:
Claim‐Request
Dispute–lowvalue 60€ 18€ 78€
Dispute–bigvalue 80€ 24€ 104€
Representationinlowvaluedisputes(persession)
60€ 118€ 23,40€ 101,40€
Representationindisputesinwhichthevalueofthedisputeexceedsthesmallcontextupto10.000€
80€ 34€ 31,20€ 135,20€
Representationindisputesinwhichthevalueofthedisputeexceedsthevalueof10,000€
160€ 48€ 62,40€ 270,40€
It isworthmentioningthattheabovefeesaretheminimumfees.Hencethepartiescanagree
withtheirrepresentativesthatthesefeestobeincreased,dependingonthequalityofthework
andthevolumeof theengagement.TheTariffActalsospecifies that for therepresentationof 46 Kosovo Permanent Tribunal of Arbitration, Decision on Costs of the Proceedings 47 Extract from the Kosovo Lawyers Tariff
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the second party, the remuneration raises up to 50% for each party – reaching the value of
405.60€andcanalsoreachtheamountof300%specifically811.20€48.
ResearchFindings
Thus,inordertogettheopinionoftheauthorsthemselvesandthatofotherinterestedparties,
wehaveconductedaresearch,thefindingsofwhicharepresentedinthissection.
The respondentsweremostlyof artistic (writers,musicians,producer,photographer, graphic
designers),legalandITprofessionalbackground.Despitethefactthatthemajorityareholders
of authors’ rights, they have only basic knowledge on their rights as authors, mostly gained
throughmediaandtheCopyrightlawinKosovo.Thisoutcomeisalsoevidentfromthemerefact
thatanumberof therespondentswereof theopinion that ideasareprotectedby the lawon
copyright.
Interesting answers were given to our question: “Is there any case where your right as an
author has been infringed, specifically, is there any case where your work has been used
withoutyourpermission?Ifyes,whatwasyourreaction?”Someoftheseanswersarepresented
below:
“Myauthor’srightshavebeeninfringedseveraltimes,andmostofthetimesIhavenot
takenanyactions,as there isnobenefitoutof it.Therehavebeencaseswhere Ihave
raisedmyconcernstotheinfringersthemselves,andreceivednotevenanapology.The
mostbizarreof all is the fact thatwhenmybookwith a topic inPublicRelationshas
beenusedwithoutmypermission, Ihaveconsultedseveral lawyersandnoneof them
were specializedorhadbasic knowledgeon copyrights, therefore, I gaveup frommy
rights.”
“Yes,myauthor’srightshavebeenandarebeingmisused,andthisisdonemostlybythe
mediathemselves,whichshouldbetheonesknowingtheserightsthebest.Sinceafter
thewar,mywritingsandpublications(literaryworks:poetry,poems,analysisetc.)are
being constantly published and re‐published through most of our media with no
permissionfrommyside.Ihaveneverreacted,asIamawareofthefactthatthereisno
legalmechanismtosupportme,henceIdidnothavetimetowaste.”
“My photographs have been used several times by ourweb portals, never asking for
permission. If there is a copyright infringement for a photography used in an
internationalweb‐portal,itmeansthatautomaticallythatphotographywillbeoutofuse
48Extract from the Kosovo Lawyers Tariff
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Journal of Altrenative Dispute Resolution in Kosovo
from that portal, whereas here in Kosovo, such infringements are happening
continuouslydespiteauthors’concernsandnotificationsontheinfringement.”
“Myphotographhasbeenusedbyanauthorasafrontpageofhisbook,andwhenasked
toatleastprovidemewithacopyofabookasapresent,herefusedtodoso.”
o “Mydesignshavenotbeenusedbyotherssofar,atleastasfarasIamconcerned.
Buttothecontrary,Ihaveusedother’sworkandthatbeingfullyconscious,but
for several reasons. Starting from the basics, I use design programs without
paying for a license though I know that this constitutes an infringement, but
thereisnootherwayformetofunction.ThemainreasonwhyIuseaprogram
without a license is that our local standards do not allow us such exclusivity.
BuyingalicensedprogrammaycostmeasmuchasIpayoneortwoemployees
per year, and if I do so, Iwouldhavenever been able to covermy company’s
expensesattheendoftheyear.
o Anotherimportantelementisthewaythattheworkingenvironmenttreatsus,
comparedtomyinternationalcolleaguesof thesameprofession, inwhichcase
usingaprogramwithoutalicenseorusinganotherworkwithoutapermission
orprioragreementisaveryshamefulact,justasinourenvironmentgoingtoa
shopandstealingsomething,theequivalenceisthesame.Iconsiderthatalsothe
wayinwhichprogramsandotherauthors’workshavebeenpresentedtous,has
impacted the way we use them now. In Kosovo we are used to downloading
programsandotherworksandkeepusingthemwithouteventhinkingonhow
togetthelicenseforit,whileinmostofothercountries,itgoeswithoutsaying
thatbeforeusingaprogramyoupayforthelicense.
o Anothersituationwhereweusesomebodyelse’sworkwithoutpermissionare
picturesandfonts,andthishappensbecausewebelievethatKosovoisasmall
country,ourclientsarealsosmall–geographicallyseen,andwebelievethatthe
original (foreign)authorswillneverget to seeourwork.Though Ihadonce a
case when I downloaded a program, and the company that produced it
approachedme,emphasizingtheneedtocompensatethedamagedonetothem
bydownloadingtheprogramandusingitwithoutalicense.Weexchangedalot
ofemailsandattheendbecauseIonlyusedtheprogramtwice(andthatmore
for studies), we reached an agreement based on which I would delete the
programandnotuseitanymorewithoutalicense.”
“Bardhi Guda: I am a publisher of several dictionaries: In cooperation with famous
authorswepublishedtheEnglish‐Albaniandictionaries,whichweresoldatthepriceof
2500 Lek, around 18 EUR, as well as German‐Albanian dictionaries through two
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publishinghouses.Thesedictionariesarearesultofalongandextensivework,andwe
asagroupwerewellawareof intellectualpropertyrightsaswellasobligationsbased
onthe lawofAlbaniaas there isourhometownsince1994‐1995.But,soonthereafter
we started operating in Kosovo andMacedonia also, and that iswherewewere also
interestedinIPLawsofthesecountries.Backonthattime,Kosovowasstillapplyingthe
YugoslavianlawonCopyright.Asapublishinghouse,weweresellingourdictionariesto
Kosovoclientsalso,andatsomepointtheirrequesttobuybooksdroppeddown.This
was themoment thatwe started thinking that there should be somethingwrong and
cameinKosovoforavisit.Whenwecamehere,werealizedthatourbookswerebeing
re‐producedwithoutourpermission,thoughtheylookedthesameinthefirstlook,but
thequalitywasloweraswellasthepricewascheaper.Astheburdenofproofwasonus,
wespentmuchtimetocollectall thefactsandfinallyachievedto filetheclaimbefore
the court.We also engaged a lawyer to help us, but because of the complexity of the
Yugoslavian lawstillapplicableat that time,heresigned.After this,wealsopresented
ourfactstoUNMIK,butneverheardback.”
It’sinterestingtomentionthefactthatonlyoneoftherespondentsconsultedtheCopyright
Office for a case of copyright infringement and the same person is in the process of
registeringhis/herworkwiththeCollectiveRightsAssociation,sothatthemanagementand
theenforcementofhisrightsisdonebytheassociation.
The findings of the research show that there are several grounded reasonswhy authors,
whoarewellawareoftheirrights,havenottakenanyactionsincaseofinfringement,and
thosereasonscanbegroupedasfollows:
Financial Reasons: No financial capacities, as a lot of money are needed to win a
contest.
SocialMentalityReasons:Reactingagainstcopyrightinfringementcancauseenemies;
hencenoactionshavebeentaken.
o “IwrotepoetryforanAlbaniansoldier,whofoughtandlosthislifeinKumanovo.
I found out that this poetrywas being used by one of our famous actors and
singers, as a lyric for his song, without my permission. I have never reacted,
believingthatIwouldbemisunderstoodfromthepublic,especiallyinthattime
whenKumanovo49casewasstillahottopic”.
49 Beg Riza was one of 40 armed Albanians from Kosovo and Macedonia group who clashed with Macedonian
police in 2015 in Kumanovo. The Kumanovo case for Albanian opposition parties in Macedonia was considered
to be "a simulation of Macedonian Security Forces to produce a justification to terrorize Albanian population in
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Journal of Altrenative Dispute Resolution in Kosovo
LegalInfrastructureReasons:Nolegalmechanismsorjudicialwilltofighttheongoing
infringements.
o “Beingawareofthebigamountofcaseswhenbookshavebeenphotocopiedand
sold without authors’ consent and prior agreement, and most importantly
knowingthatsuchcasestookalotofplaceinourmedia,andneveranactionhas
beenundertakenbytheauthorities,Iconsideredthatreactingagainstmyauthor
rights,wouldjustbeawasteoftime”.
Oneof the respondents,whoat the same timeclaims tohavebeendamagedbyanewspaper
which had his photographs of 1999 used and sold to another newspaper without any
consultation,filedaclaimwiththeBasicCourtin2013.However,nodecisionhasbeenrendered
yet.
Respondents’opinionsonaddressingcourtswhenitcomestoanIPrelateddisputegenerallyis
thesame.Mostofthemwouldnotturntocourts,notthattheyarenotawarethatcourtsarethe
appropriate authority to bring justice in disputes, but because courts are not efficient and
endlesstimewouldbeneededtosolveadispute.
Therestofthefindingsshowthatacourtroomwouldbeanoptiononlywhen:
Thereisnoagreementamongthepartiestosolvethedisputethrougharbitration;
There is no possibility to solve the dispute through a mutual agreement among
parties,throughmediation;
Legalconsultantsadvisethatacourtistheonlyplacetoturnto.
Another question raised for the respondents was: “What is your opinion on arbitration
procedure,andwouldyouchoosearbitrationincaseofaneventualdispute?”Incomparisonto
theprevioussection,mostofourrespondentswouldnothesitatetogotoarbitrationtoresolve Macedonia trying to identify them with terrorists", while Macedonian opposition parties considered this case "as
Government's act to buy time for themselves and to avoid early requested elections".
The same time Macedonian Government authorities considered this case "a terrorist attack of Albanians from
Kosovo and Macedonia against security forces of Macedonia aiming to destabilize the state itself". Whereas
internationals never qualified it as a terrorist attack not being sure whether this was a game of Macedonian
secret service related to so called "bomb cases" when Macedonian opposition party published secret tape
recordings of their government high state officials in preparing many similar simulated cases. However there is
not a small number of Kosovo Albanians who believed "That those 40 armed people were invited by Kumanova
Albanians to protect them from prepared Macedonian Secret Service to massacre those Macedonian Albanians
there". Having this in mind many Albanians wrote and devoted to them even artistic stories considering them
as heroes. In such an atmosphere for any author fighting for his copyright could be considered "low level" and
the average society could consider them kind of a people who want to benefit from the National tragedy"...
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theirIPrelateddisputes.Mostofthemcategorizedarbitrationasthemostefficientandflexible
method.IthasbeenconsideredthatevenifpartieswouldfileanIPinfringementclaimbefore
the court, and a judge would render a decision, the unsatisfied party would do everything
possible to find excuses and not obeywith the court decision. Themostly used justifications
wouldbe:
“Thecourthasnotanalyzedwellenoughthefacts,hencethedecisionisnotadequate”;
“The decision has been taken and themeasures have been taken just to complywith
internationalstandardsandnotbecausetheyshouldhavereallybeenapplicable”.
Someoftherespondentswouldchoosearbitrationnotbecauseofthefactthattheyknowmuch
about it but just to avoid courts.Having said that, it isworthmentioning that the awareness
about arbitration and its rules should be in the focus of the Arbitration Tribunal, Kosovo
AuthoritiesandNationalandInternationaldonorprojects.
Inthisregard,itisinterestingtoseethepointofviewofoneoftherespondents,whoistheonly
webdesignerinterviewed.Whenaskedwhetherhewouldaddressarbitrationorcourt,hesaid:
“Arbitration,justbecauseitisnotnamedCourt.”
“CourtwouldbeanoptiononlyandonlyifIwouldhavecloseconnectionswiththelawyersand
judgeswhowouldmakesurethatmytimewouldnotbewasted,otherwise,no.Wastingmuch
timeinfollowingacase isnotawisechoiceforme,neither formycompany,aswhateverthe
compensationwouldbe,itwouldbeimpossibletocoverthelossescausedbyallthetimespent
runninginthecourt.”
Having inmindtheanswersgiventoourquestionnaire, there isaneed forawarenessraising
campaignsandthecampaignshouldfocusinthefollowing:
Whichcasescanbeasubjectofthearbitrationprocedure?
Howdoesanarbitrationprocedurestart?
HowlegitimateandbindingisanArbitrationTribunalaward?
Therewasonlyonesingleopiniondifferentfromallabovedescribedregardingarbitrationand
thatwould be cited as follows: “IconsiderthatinKosovo,Arbitrationisnotfunctional.Iwould
choosearbitrationonlyandonlyinextremedespair.”
TheKosovoIntellectualPropertyOfficeaswellastheKosovoMinistryofCultureseemstobe
consideredasthefaceofthisfieldfromourrespondents.Onlyfewrespondentslistedalsoother
publicinstitutionsastheonesinchargetoprotectcopyright,suchas:KosovoPolice,Customs,
ProsecutionandCourts.
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Kosovohas latelysigned theStabilizationAssociationAgreement(SAA)50,whichhasaspecial
chapterforIntellectualProperty,anditsAnnexVIIlists22internationalagreementsapplicable
inthisfield.WhenaskedwhetherSAAisconsideredtobeagoodinstrumentin“installing”the
obligationtorespecttheauthor’srights,similarresponsesweregiven.Moreover,itcanbeeasily
said that SAA is also being seen as the last hope to make the war against IP infringement
functional, as there is legal adopted and applicable infrastructure, there is also institutional
infrastructureandthereareauthors.
Inordertosummarizewhatwaselaboratedsofar,webringthefocusonthecoreelementsofit:
Litigation ArbitrationOnly4judgesareengagedinIntellectualPropertycases/CommercialDepartmentofPristinaBasicCourt,servingforthewholeKosovoregion.
AmChamADRCenterhasarosterof41arbitrator.27arbitratorsfromthelistofKosovoPermanentArbitrationTribunalcanbeengagedinIntellectualPropertyCases.Newarbitratorscanbeproposedbyparties.
Ajudgeisonlyassignedbythecourttodecideonacase,partiescannotselecthim/her.
Partiescanselectthearbitratortodealwiththeircaseinanarbitrationprocedurethemselves.
Thestatisticsshowsthatthereisabacklogof1159casesintheCommercialDepartment.
Nobacklogatall.
Representationforadisputeof10,000€canreachtheamountof811.20€
Representationforadisputeof10,000€canreachtheamountof600€
Afinalcourtdecisionisbindingforparties.Acourtdecisionhasthesamepowerasanarbitrationaward.
Anarbitrationawardisbindingforparties.Theawardhasthesamepowerasacourtdecision.
Kosovocitizenshavenofaithinjudiciary. Newmechanism,nobadreputation.
50 Stabilization Association Agreement is an international agreement between Kosovo and European Union with a purpose of establishing formal and contractual relations between these two parties which will serve for Kosovo’s membership in EU.
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Conclusion
Whilepreparingthispaper,authorshaveconductednotonlydeskresearchbutalsofieldwork
hence allowing them to realize the state of play better and understand the problems from a
closerperspective.
It is concluded that for arbitration, there is still a need to put efforts on awareness raising
campaigns, though not in the same levelwith the campaign needed for intellectual property
rights.
Based on the interviews conducted, authors strongly believe that Kosovo’s society is easily
accepting and acknowledging arbitration, and not only for the advantages of it, but also as a
meritofthebadreputationofthejudicialsystemingeneral.
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UDC347.7(083.47)
RecognitionandEnforcementofKosovomadeArbitralAwardsinNewYorkConventioncountries:AComparativeStudy
AnjezëGojani*
Abstract
Caught in themidst of consistent efforts towards the development of international commercial
arbitration inKosovo, it is inevitable to talkabout the elephant in the room.Due to its special
statusasacountry,theRepublicofKosovoisnotyeteligibletobecomeacontractingstatetothe
Convention on Recognition and Enforcement of Foreign Arbitral Awards (hereinafter: theNew
YorkConventionorConvention).1Thisstatusquo ispuzzling,andassuch itmay introduce legal
obstaclestotherecognitionandenforcementabroadofthearbitrationawardsrenderedinKosovo.
Theobjectiveofthispaperistoprovideananswertothefollowingquestions:towhatextentare
KosovomadearbitralawardsenforceableinNewYorkConventioncountries;and,fromapractical
viewpointdoestheabsenceofKosovototheNewYorkConventionsignatorylistpresentatangible
problemforchoosingKosovoasaseatofarbitration.
ThepaperwillnotdiscussthelegalstatusoftheRepublicofKosovotowardssigninginternational
treaties,thisbeingthepublicinternationallawaspectofthetopic.Norwillthepaperanalyzethe
issueontheassumptionofahandfulofcountrieswhichmightassessthatKosovohassucceeded
theconventionfromthe formerYugoslavia.Inaddition, inabsenceof legalpractice,thepaper is
confinedtoatheoreticalanalysisonly.
*Anjezë Gojani, LL.M., is the Secretary General of the Arbitration Center at American Chamber of Commerce
in Kosovo. 1 The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), available at
http://www.newyorkconvention.org/english
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I. Introduction
ThedevelopmentofcommercialarbitrationinKosovo,andtheeffortsinpromotingthecountry
as<<arbitrationfriendly>>arenotrarelyperceivedasambiguouswithregardstothelastloop
ofthecycle,namelytherecognitionandenforcementofarbitralawardsrenderedinKosovoasa
seatofarbitrationandwhichseekenforcementabroad.Itisapparentthatthepotentialusersof
arbitrationinKosovohavetheperceptionthattheawardsoriginatingfromthecountrywould
notberecognizedandenforcedinotherjurisdictions.Thisisduetoasetofobstacles:firstly,the
currentnon‐abilityofKosovotobecomeacontractingstate totheNewYorkConvention,and
secondly, due to the non‐recognition of Kosovo statehood. And perhaps rightly so. The legal
certaintyinenforcingarbitralawardsisdistinguishedastheonecrucialelementtobeassessed
bythepartieswhenselectinginternationalarbitrationasadisputeresolutionmechanism.
This paper will first provide a brief overview of the national legislation related to the
recognitionandenforcementofarbitralawards inKosovo,namely the treatmentprovidedby
theapplicablearbitrationlegislationtoforeignarbitralawardsthatseekenforcementinKosovo.
The focus of the paper will be the individual approach of several New York Convention
signatories towards enforcement of arbitral awards rendered in non‐Convention states.
Although a mere review of respective national legal provisions will not allow for a
comprehensiveassessment,itwillcertainlyprovideanestimateofthelevelofrisk(ifsuchrisk
exists at all) in choosing Kosovo as a seat of arbitration, should the award be bound to
enforcementabroad.
II. ArbitrationinKosovo
Kosovo has a Law on Arbitration2that governs arbitration proceedings, including the
recognition and enforcement of arbitration awards. The legislator has chosen to explicitly
mentionEuropeanandinternationalarbitrationstandardswithinthepreamble.3Itcanbesafely
assumed that theadoptionof these standards isobvious for twoof themost celebrated legal
texts of the field, theUNCITRALModel Lawon InternationalCommercialArbitration4and the
NewYorkConvention.
The lawisaseparatepieceof legislationasopposedtomanycountrieswhichhavechosento
regulate this area within their civil procedure codes, and it addresses both, international
2 Kosovo Law on Arbitration No. 02/L-75. 3 Ibid., the preamble to the Law on Arbitration states the following: “…For the purpose of establishing a set of modern rules, that govern arbitration and the recognition and enforcement of arbitration awards made inside and outside of Kosovo, and that are in line with recognized European and international arbitration standards.” 4 UNCITRAL Model Law on International Commercial Arbitration (1985), with amendments as adopted in
2006, available at http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration.html
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commercialarbitrationanddomesticarbitration.Duringthedraftingprocessthelegislatorhas
reliedheavilyontheprovisionscontainedinarbitrationlawsofcountrieswithwell‐developed
commercial arbitration systems, including the German5and Austrian6arbitration acts. Also,
withseveralmodifications,thelawmainlyembracestheprovisionsofthefirstversionofModel
Lawof1985,asasetofrulescommittedtotheentirearbitralprocess.Lastly,thelawhascopied
almost entirely the provisions of the New York Convention, the grounds for refusal of
recognitionandenforcementofarbitralawards,andtheformrequirementstherein.
i) RecognitionandenforcementofdomesticarbitralawardsinKosovo
The last step in the procedure after the arbitral tribunal has rendered a final award is
enforcement.Thisbeingsaid,therecognitionandenforcementprocedurebecomesofparticular
importance when a party does not voluntarily comply with the final arbitral award. The
respectiveprovisions of the lawon recognition and enforcementmake a distinctionbetween
domesticawardsandforeignawards.
Theprocedureforrecognitionandenforcementofdomesticawardsisstraightforward.Thelaw
does not make reference to the recognition itself, thereby implying that the recognition is
immediate and informal, undergoing a non‐contested procedure.7As for the enforceability of
theawardtheprocedureissimple–thereshouldbenogroundsforsettingasidetheawardand
thearbitral awardora certifiedcopyof it shall accompany the request.Todate, thenational
courtshavenotfacedmanysituationsofenforcingdomesticarbitralawards,mainlyduetothe
mechanismbeinganoveltywithinthelegalsystemofthecountry.
Itisalsounfortunatethat,forthepurposesoflegalresearch,theaccesstocourtdocumentsfora
numberofdomesticarbitrationsalreadyconductedisarockyroadtofollow.Theaccesstosuch
decisionsiscrucial inordertocreateanideaofthelevelofunderstandingof judgesandtheir
legalawarenessinreachingdecisionsonrecognitionandenforcement.Theapproachofjudges
towardsdomesticarbitralawardsmay,byreference,presentagoodindicatoroftheirapproach
towardsforeignarbitralawards.
ii) RecognitionandenforcementofforeignarbitralawardsinKosovo
Asidefromdomesticawards,thelawalsoaddressestherecognitionandenforcementofforeign
arbitral awards. Although it does not define a foreign arbitral award, the title of Article 39
5 Code of Civil Procedure (Bundesgesetzblatt (BGBl., Federal Law Gazette), as promulgated on Dec. 5, 2005. 6 Austrian Code of Civil Procedure, RGBl. Nr. 113/1895 as amended by the 2013 Amendment to the Austrian Arbitration Act -“SchiedsRÄG 2013”, BGBl. I Nr. 118/2013 in force as of 1 January 2014. 7 Ibid., Art. 38(1).
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implies that any award made outside Kosovo is considered as foreign. Hence, the legislator
distinguishestheseatofarbitrationasthedeterminingfactorforthenationalityoftheaward.
Article 39 stays entirely within the framework of the New York Convention. The following
paragraphisoneofthepeculiaritiesofthelaw:
“Kosovo courts shall recognize arbitral awardsmade outside ofKosovo as effective and enforce
themifsuchawardsarerecognizedandarepublishedasenforcedaccordingtoparagraph2till5of
thisArticle.”8
It is evident that by enacting the said provision, Kosovo has ensured that all foreign arbitral
awardsarerecognized.Infact,thecontentofthisarticlecaneasilybeconsideredasadefacto
reciprocity clause. While in determining the nationality of the arbitral award the place of
renderingtheawardisconclusive,Kosovodoesnotimposeanyrestrictionswhatsoever.Tothis
end,anyforeignawardwillberecognizedandenforcedprovidedthegroundsfordismissalare
notsatisfied.
Infurtherglaceofthesamearticle,itisevidentthattheArticleIVoftheConventionregarding
provisionsontherequestforrecognitionandenforcement,ArticleV(1)ongroundsforrefusal
ofrecognitionandenforcementwhichmaybeinvokedbytheparties,aswellasArticleV(2)on
exofficiogroundsforrefusalofrecognitionandenforcementhavebeenadoptedwithinArticle
39ofthelaw.
Although the law does not expressly refer to the New York Convention, as for instance the
GermanCodeofCivilProcedure,itbasicallyfollowsthesamegroundsandformrequirements.
With this approach the legislator hasmade adefacto unilateral accession to the convention.
AccordingtoArticle39(4),thegroundsfordismissalofrecognitionandenforcementare:
a) apartytothearbitrationagreement,underthelawapplicabletothisagreement,didnothavethe
capacitytoact;orthearbitrationagreementwasnotvalidunderthelawdeterminedasapplicable
by thepartiesor, in theabsenceof suchdetermination,under theapplicable law in the territory
wheretheawardwasmade;
b) thepartyagainstwhomtheawardisinvokedwasnotgivenpropernoticeoftheappointmentofan
arbitratororofthearbitralproceedingsorwasotherwiseunabletopresentitscase;
c) theawarddealswithanissuenotcontemplatedbyornotfallingwithinthetermsofthesubmission
toarbitration,oritcontainsdecisionsonmattersbeyondthescopeofthesubmissiontoarbitration,
providedthatifthedecisionsonmatterssubmittedtoarbitrationcanbeseparatedfromthosenot
8Ibid., Art. 39(1).
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sosubmitted,thatpartoftheawardwhichcontainsdecisionsonmatterssubmittedtoarbitration
mayberecognizedandenforced;
d) thecompositionofthearbitraltribunalorthearbitralprocedurewasnot inaccordancewiththe
lawapplicabletoit;and
e) the award has not yet become binding on the parties, or has been set aside or suspended by a
competentauthorityoftheterritoryinwhich,orunderthelawofwhich,theawardwasmade.
Based on the above, the onlyminor distinctionwith the language of the convention is to be
found in subparagraph (d), a distinctionwhich is of nomaterial significance. The convention
usesthefollowinglanguagewhendefiningsubparagraph(d):
… thecompositionofthearbitralauthorityorthearbitralprocedurewasnot inaccordancewith
theagreementoftheparties,or,failingsuchagreement,wasnotinaccordancewiththelawofthe
countrywherethearbitrationtookplace.9
Apart from the above grounds for dismissalwhich can only be invoked by the party against
whom the recognition and enforcement is sought, Kosovo local courts may exofficio refuse
recognition and enforcement under two situations: first, if the dispute is not capable of
settlementbyarbitrationunder the lawapplicable inKosovo, andsecond, if such recognition
and enforcementwould be contrary to the public policy ofKosovo.10Again, the local lawhas
adoptedentirelyArticleV(2)oftheConvention.
Furthermoretotheabove,thelawcombinestheprovisionsoftheModelLawandtheprovisions
of theConventionwhensettingthe formrequirementsandtheprocedure forrecognitionand
enforcement.The followingdocumentsshouldbesubmittedwhentherequest forrecognition
andenforcementofanarbitralawardisfiled:
a) theauthenticatedoriginalawardoradulycertifiedcopythereof;
b) theoriginalarbitrationagreementoradulycertifiedcopythereof;and
c) a duly certified translation of thearbitration agreement and thearbitral award intoan official
languageofKosovoiftheawardoragreementisnotmadeinanofficiallanguageofKosovo.11
Inastrictreadingoftheaboveonecanapprisethattherequirementoftheoriginalawardorthe
certifiedcopyofitcorrespondstoboththeModelLawandtheNewYorkConventionwhilethe
requirement of providing the original arbitration agreement corresponds to the New York
Convention.Also,thecertifiedtranslationrequirementisadoptedfromtheModelLaw.Theidea
9 New York Convention, Art. V(1)(d). 10Kosovo Arbitration Law, Art. 39(5). 11 Ibid., Art. 39(3)
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behindthisdistinctionistodemonstratethatthelawdoesnotimposemoreonerousconditions
thanmostdomestic lawsofothercountries, theModelLaw,or theNewYorkConvention, for
partiesseekingrecognitionandenforcementofaforeignawardinKosovo.
III. TheNewYorkConvention
Yearsago,itwasrightfullysaidthattheenforcementofanarbitralawardisthe“weakestlinkin
theentirechainofinternationaldisputeresolution”.12Currently, inaspanof fifty‐sevenyears,
thereare156parties13totheNewYorkConventiononRecognitionandEnforcementofForeign
ArbitralAwards.ThelastcountrytoaccedewasAndorrain2015.14Withthisnumbercovering
the vast majority of independent countries, this weak link is slowly closing down, therefore
continuously contributing to further developing international arbitration into the preferred
disputeresolutionmethod.Nonetheless,therearestillahandfulofcountrieswhichsubjecttoa
rangeofreasonsremainnon‐signatoriestotheConvention,Kosovoisincluded.
The idea behind the New York Convention, back in its drafting days was to facilitate the
recognition and enforcement of arbitral awards, mainly because this process included the
involvementof national courts, thusmaking room forpotential barriers in enforcement.This
legal uncertainty was gradually altered by the number of countries which adhered to the
Convention, thereafter contributing to further development of international commercial
arbitration.
For thepurposeof this discussion, themost relevantpart of theConvention is theprovision,
whichprovides for thescopeof theConvention,andthenationalityofawardsthat fallwithin
the scope of this Convention. According to Article I (1), the Convention applies to all foreign
awards,namelythearbitralawardsmadeintheterritoryofaStateotherthantheStatewhere
therecognitionandenforcementofsuchawardissought.
In terms of its scope, for countries thatwished to limit the application of this Convention, it
providestworeservations,namely:
“When signing, ratifying or acceding to this Convention, or notifying extension under articleⅩ
hereof,anyStatemayon thebasisof reciprocitydeclare that itwillapply theConvention to the
recognitionandenforcementofawardsmadeonlyintheterritoryofanotherContractingState.It
12 Marc Blessing, “The New York Convention: the major problem areas”, New York Convention of 1958, ASA Special Series No. 9, 1996, at p. 20. 13 At the time that this article is being written, the official web page of UNCITRAL available at http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html provides that there are 156 signatory countries. 14 The Convention has entered into force for Andorra on September 17, 2015.
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may also declare that it will apply the Convention only to differences arising out of legal
relationships,whethercontractualornot,whichareconsideredascommercialunderthenational
lawoftheStatemakingsuchdeclaration.”15
Thelatterreservationistheso‐calledthe“commercialreservation”,whichisnotofrelevanceto
the arguments of this paper. The countries that have opted in to this reservationwill refuse
recognitionandenforcementofaforeignarbitralawardifthedisputeisnotcommercialunder
thenationallawofthecountrywhereenforcementissought.16Thus,itallamountstothenature
ofthedispute,makingthisreservationofarathersubstantivekind.
i) Reciprocityreservation
The reciprocity reservation17limits the Convention’s scope of application to foreign arbitral
awardsmadeintheterritoryofoneofthecontractingstatesoftheConvention,therebyruling
outitsapplicationtoforeignawardswhicharerenderedinnon‐signatorystates.Redfernet.al.
havemaintained that this limitation isbecomingarelic, therefore therestrictionsposedby it
shouldnotbeexaggerated.Therationaleof thisstatement liesonthe fact that thenumberof
countriesthatareadoptingtheconventionisgrowingyearbyyear,thereforelinkingthemajor
tradingnationsanddiminishingthesignificanceofthisreservation.18
Forasmuch as the latter displays the reality it is not the reality which applies to awards
renderedinKosovo.ThecountryisnotinapositiontoadheretotheConvention,yetmorethan
halfofthesignatoriestotheNewYorkConventionstillapplythereciprocityreservation.
ThequestionthatariseshereiswhetherunderthesecircumstancesKosovomadeawardswill
risk finding theproperenforcement forumabroad?Ageneralanswercouldpointout the fact
that the non‐application of the New York Convention does not imply a per se refusal of
recognitionandenforcementofanawardofthisorigin.Rather,theenforcingstatewillenforce
theawardbasedon adifferent legal instrument, including thenational lawwhich sometimes
containsmorefavorableprovisionsorothertreatiesandconventions.
ii) Morefavorablenationallawprovisions
15 New York Convention, Article I(3). 16 New York Convention, Art. I(3). 17 Ibid. 18 Alan Redfern; Martin Hunter; Nigel Blackaby; Constantine Partasides “Law and Practice of International Commercial Arbitration” (2004), Ed. 4, at p. 442.
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Inlinewiththepreviousparagraph,partieslookingfortheenforcementofanarbitralawardare
allowed to shop amongst the New York Convention, the national law, or other treaties and
conventions.With the influence of the New York Conventions, thismight be rarely relevant.
Nevertheless, the freedomof choice becomes particularly relevant for awards that cannot be
enforcedundertheconvention.
According to Van den Berg, the rationale of the drafters of the New York Convention went
beyond the establishment of a uniform regime of recognition and enforcement of arbitral
awards, heading towards facilitating recognition and enforcement of foreign arbitral awards
through allowing the application of national law or other treaties which might make this
processeasier.19This isembodiedwithinArticleVII (1)of theConvention, alsoknownas the
morefavorablerightprovision:
… The provisions of the present Convention shall not affect the validity ofmultilateral or
bilateralagreementsconcerning therecognitionandenforcementofarbitralawardsentered
intoby theContractingStatesnordepriveany interestedpartyofany righthemayhave to
availhimselfofanarbitralaward inthemannerandtotheextentallowedbythe laworthe
treatiesofthecountrywheresuchawardissoughttobereliedupon.
Thechoicesofferedbytheprovisionrangebetweenthenationallawoftheenforcingcountryor
othertreatiesinforce,bothbilateralandmultilateraltreaties.Itwillbeassumedherethatfor
themostpart,Kosovomadearbitralawardswillhavetochoosethedomesticlawofthecountry
of enforcement, considering the absence of bilateral treaties of this kind, but also the
controversialapplicabilityofothermultilateraltreaties.
IV. Enforcement of Kosovo‐made arbitral awards in New York Convention
jurisdictions
Inconsiderationofthefactthattherearenoclearprecedents,mainlyduetoalownumberof
arbitrationawardsmadeinKosovoandseekingenforcement,adegreeofuncertaintytotheidea
of arbitrating in Kosovo is certainly present. For this reason, it is of interest to analyze the
approach takenby the legislationregarding thematteratstakeofarangeofcountrieswhich
currentlyareandcouldbepotential tradepartnerswithKosovo,namely theEuropeanUnion
memberstatesandTurkey.
19 Albert Jan van den Berg, “The New York Convention of 1958: An Overview”, p. 21, available at
http://www.arbitration-icca.org/media/0/12125884227980/new_york_convention_of_1958_overview.pdf
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Atthetimeofthispaper,outoftwenty‐eightEUmemberstateswhicharecontractingstatesto
the Convention, eighteen of them still have a reciprocity clause in force. The following
paragraphswillpresentanoverviewoftherelevantlegislationoftwelveEUmemberstatesand
Turkey.Fromapracticalviewpoint, fornineoutof thirteencountriespresentedbelowwhich
have adhered to the reciprocity clause, an interested party will have to assess whether
arbitratinginKosovopresentsariskylegalmove.SaveforGreece,allothercountrieswhichare
presentedbelowhaverecognizedKosovostatehood.
Austria
TheAustrianCodeofCivilprocedureexplicitlyrefers to theNewYorkConventionwhereas it
also cross refers to the relevant provisions on the recognition and enforcement of foreign
arbitralawards,withinExekutionsordnung,theAustrianEnforcementAct.20Thelegislatorhere
wasoriginallyaproreciprocityparty.Nonetheless,in1988itwithdrewfromthisreservation.
Hence,ifhypotheticallythereciprocityreservationwouldstillbeinforce,onehastosearchfor
otherinstrumentswhichprovidesufficientlegalbasisforrecognitionandenforcementofnon‐
convention arbitral awards. In this line, the country is a party to a number of international
treaties and conventions that could eventually provide enough scope for enforceability of a
foreign so callednon‐convention award. Such instruments include theGenevaConvention on
the Execution of Foreign Arbitral Awards,21the European Convention on International
CommercialArbitration,22aswellastheConventionontheSettlementof InvestmentDisputes
betweenStatesandNationalsofotherstates(“theICSIDConvention”).23
Thus, in absence of applying the New York Convention, a common ground for Austria and
Kosovo couldbe the ICSIDConvention. TheRepublic ofKosovo is a party to this convention,
whichhasenteredintoforcein2009.Unsuitably,anarbitralawardmaynotalwaysfallwithin
thescopeofthisconvention,asnoteverydisputecanqualifyasaninvestmentdispute‐bound
tobearbitratedinaccordancewithICSIDarbitrationmechanism.
20 Austrian Code of Civil Procedure, RGBl. Nr. 113/1895 as amended by the 2013 Amendment to the Austrian Arbitration Act -“SchiedsRÄG 2013”, BGBl. I Nr. 118/2013 in force as of 1 January 2014. 21 The entry into force of the New York Convention was intended to replace this convention. Thus, the New
York Convention states which are also signatories to this treaty can no longer apply the Geneva Convention; see
New York Convention, Art. VII(2) 22 European Convention on International Commercial Arbitration (1961), United Nations Treaty Series, Vol. 484, p. 349. 23 Convention on the Settlement of Investment Disputes between States and Nationals of other states (Washington), in force as of October 14, 1966.
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Furthertotheabove,animportanttreatytoberecognizedhereisthebilateralagreementwith
Austria on Promotion and Protection of Investments.24This agreement is commonplace
between countries and does indeed favor arbitration as an alternative dispute resolution
methodintheeventofadisputebetweenthetwo.Nonetheless,thecontentoftheagreement,
oncemore, confirms the importanceof theNewYorkConvention in internationalarbitration.
Article16oftheagreement,whichcanbeperceivedassafeguardrecognitionandenforcement
clause,maintainsthat:
“AnyarbitrationunderthisPartshall,attherequestofanypartytothedispute,beheldinastate
that isparty to theConventionon theRecognitionandEnforcementofForeignArbitralAwards
signed inNew York on 10 June 1958. Claims submitted to arbitration under this Part shall be
consideredtoariseoutofacommercialrelationshiportransactionforpurposesofArticle1ofthe
NewYorkConvention.”
Basedontheabove,onecansafelyconcludethattheriskofrefusalofrecognitionofawardsin
investmentdisputesbetweenthetwocountriescanbeavoided.
Despite the existenceof ICSIDand the aforementionedBIT, thequestionof enforcingKosovo
madearbitralawardsinAustria(excludinginvestmentdisputes)becomeseasierwiththelack
of the reciprocity reservation. This context implies that Kosovo awards will be enforced in
Austriawithin thescopeof theNewYorkConvention,andwillbe treatedasequal toarbitral
awardsfromsignatorycountriestotheConvention.
Belgium
BelgiumhasadoptedoneofthetworeservationsprovidedwithinArticleI(3)oftheConvention.
This country, which has ratified the Convention in 1975, has declared that it will apply the
Convention to the arbitral awards which has been made only in the territory of another
contractingstate.Thus,attheoutset,thereservationmightbeperceivedasaharshlimitationto
enforcementofawardsofadifferentorigin.
Nonetheless,shoulditnotbepossibletoapplytheconvention,therecognitionoftheawardsof
thisdecentshallbebasedontherelevantrulesoftheBelgianJudicialCode.25Therulesofthe
code26on the application of foreign awards have a similar content to the provisions on the
24 Agreement between the Government of the Republic of Kosovo and the Government of the Republic of
Austria on Promotion and Protection of Investments, ratified on February 16, 2010, available at
http://www.mfa-ks.net/repository/docs/Marrveshja_Ks-Aus_(anglisht).pdf 25 Belgian Judicial Code (Code Judiciaire), September 1, 2013. 26 Ibid., Art. 1719 through 1723.
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recognitionandenforcementofdomesticawards.Thus, inconsiderationof the fact thatthese
rulesdonotprovidemoreonerousconditions,thepartiesareinthepositiontochoosethemore
favorableprovisionsforenforcement‐theConventionorthenationallaw.
ApartfrombeingasignatoryoftheNewYorkConventionasthemostfamousinstrumentofthis
kind,27BelgiumandKosovohavesignedabilateral investment treaty in2010.28Similar to the
bilateral treaty between Kosovo and Austria, the provisions of this treaty request that any
arbitration arising out of it should be held in a New York Convention country.29Thus, the
currenttreatieswhichmightseemrelevanttothispaperareclassicBITsbynatureherebynot
remotelysimilartoabilateraltreatyonrecognitionandenforcementofarbitralawards.
Basedon theabove,and inconsiderationofa lackof abilateral treaty for thepurposeof the
recognition and enforcement proceedings, all requests for recognition and enforcement of
Kosovomade arbitral awards inBelgium canbe based on the legal provisions of theBelgian
JudicialCode.
Bulgaria
WhenBulgariabecameaparty to theNewYorkConvention in1962, thecountryadoptedthe
Article I (3) reciprocity reservation. Facing this circumstance, a request for recognition and
enforcementofanon‐conventionawardshallbebasedonadifferentlegalinstrument.Hence,a
party in possession of an arbitral award from a non‐convention country to be enforced in
Bulgaria should request the latter based on the respective provisions of the Private
InternationalLawCode.30
TheseprovisionsaresomewhatsimilartothecontentoftheNewYorkConvention,andrefusal
ofrecognitionandenforcementmaybegrantedonlyifoneoftheconditionswithinArticle118
through120hasbeensatisfied.31
Bulgaria is also aparty to theEuropeanConvention on International CommercialArbitration
andthe ICSIDConvention.The formerdoesnotapply toKosovo,whereas the lattermayonly
applytorecognitionandenforcementofICSIDawardspertainingtoinvestmentdisputes.
27 Belgium is also a party to the European Treaty on International Commercial Arbitration (1961). 28 Agreement between the Government of the Republic of Kosovo and the Belgium-Luxembourg Economic Union on the Reciprocal Promotion and Protection of Investments, available here http://www.mfa-ks.net/repository/docs/Marrveshja_Ks-Belgjike018_(anglisht).pdf 29 Ibid., Art. 12(3). 30 Bulgarian Private International Law Code, in force as of May 17, 2005. 31 Ibid.
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Croatia
Asopposedtothecountriesdiscussedabove,Croatia isoneof the fewsignatoriestotheNew
York Conventionwhich has adhered to both, the reciprocity reservation and the commercial
reservation. This approach may be perceived as hostile to Kosovo made arbitral awards.
However, because the Convention will not apply to the latter awards, the Croatian Law on
Arbitrationprovidesfallbackprovisionsontheenforcementofnon‐conventionawards.
AccordingtoArticle40(1)oftheCroatianArbitrationLaw,therearethreegroundsforrefusalof
recognitionandenforcementof foreignawards,namely1)theopposingpartyisabletoprove
reasonsprescribedintheCroatianArbitrationActforsettingasidetheaward,2)theawardis
stillnotbindingon theparties;or3) thecourtat theseatof thearbitrationhassetaside the
awardorsuspendedtheeffectivenessoftheaward.32
CzechRepublic
CzechRepublictodaycontinuestoapplythereciprocityreservationofArticleI(3),thereafter
strictlyapplyingtheConventiononlytothearbitrationawardsmadeinasignatorycountry.As
the circumstances dictate, if a Kosovomade arbitral awards is seeking enforcement in Czech
Republic,thepartyshouldturntothePrivateInternationalLawAct.33
Inthisregard,incomparisontothenationallegislationofthecountriesdiscussedabove,thisact
ispeculiarinoneaspectofit.Article120readsasfollows:
“Thearbitralawards issued ina foreign countrywillbe recognized in theCzechRepublicas the
Czechand enforcedarbitralawards, if reciprocity is guaranteed.Reciprocity is considered to be
guaranteedalso inthecasethatonestatedeclaresgenerally foreignarbitralawardsenforceable
undertheconditionofreciprocity.”34
Itisevidentthat,Czechlegislationisratherrestrictive,asituses“double‐reciprocity”.Basedon
this,anawardwhichdoesnotfallwithinthescopeoftheConventionmightalsonotbeeligible
for recognition if the country of origin does not declaratively guarantee enforcement of all
foreignawards.Inthissense,Article39oftheKosovoLawonArbitrationcanbeinvokedasthe
reciprocityclauseofthecountryoforiginofthearbitralaward.Absentprecedent,onecanonly
assumethatCzechcourtswillrecognizethelatterasadeclarationofreciprocity.
32 Arbitration in Croatia, by Hrvoje Bardek (CMS), p. 258, available at
https://eguides.cmslegal.com/pdf/arbitration_volume_I/CMS%20GtA_Vol%20I_CROATIA.pdf 33 Czech Private International Law Act, in force as of January 1, 2014. 34 Ibid.
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France
France is one of the countries that have adhered to the reciprocity reservation. Despite this,
through its national legislation, France has decided to offer more favorable provisions on
recognitionandenforcementofforeignawards.Thislegalregimenistheultimatealternativeto
recognitionandenforcementofarbitralawardsrenderedinKosovo.
According to Article 1520 of the Code of Civil Procedure,35an arbitral award can be refused
recognition and enforcement when: (1) the arbitral tribunal wrongly upheld or declined
jurisdiction;or(2)thearbitraltribunalwasnotproperlyconstituted;or(3)thearbitraltribunal
ruledwithoutcomplyingwiththemandateconferreduponit;or(4)dueprocesswasviolated;
or(5)recognitionorenforcementoftheawardiscontrarytointernationalpublicpolicy.These
grounds are less burdensome if compared to the content of Article V of the New York
Convention.
Because of the above, the significance of the reciprocity reservation in France has vastly
diminished, to the extent of being of no practical significance. This stance of the French
legislationanditsapplicationofthenationalcourtsensurethatanarbitralawardrenderedin
Kosovowillnotbedeniedrecognitionandenforcementbecauseofitsorigin.
Germany
Germanywithdrewthereciprocityreservationin1998,therebycommittingitselftorecognizing
and enforcing all foreign arbitral awards regardless of their place of origin. As opposed to
approach of the previous discussed EU member states, the German legislation is
straightforward in the sense that the Code of Civil Procedure solely refers to the New York
Convention,36anddoesnotofferotherprovisionsforthepartiestobeabletochoose.Itseems
that because of the lack of the reciprocity reservation, the German legislator did not see the
needindraftingotherprovisionsfornon‐conventionawards.
The civil procedure code also de facto refers to Article VII of the Convention, by way of
acknowledging that other recognition and enforcement instruments which may be more
favorablewill not be affected by the Convention provisions. Based on the above, the parties
seekingrecognitionandenforcementofKosovomadearbitralawards inGermanywillnotbe
limitedindoingso.
35 French Code of Civil Procedure, Book IV – Arbitration, in force as of May 14, 1981. 36 German Code of Civil Procedure, Art. 1061.
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Greece
Greece, as one of the countries to the New York Convention has made the reciprocity
reservation.TheapplicationoftheConventionhasbeenallowedthroughalegislativedecree,as
animplementinglegislation.37However,inconsiderationofthereservation,thedecreeisofno
relevancetothearbitralawardsoriginatinginKosovo.
Insuchscenario,thepartiesshouldturntotheGreekCodeofCivilProcedure,38whichappliesto
all foreignawardsthatareissuedbythenon‐conventionstates. Inaddition,theexistenceofa
precedentofthiskindwouldbeofmuchimportanceforthepurposesofthisdiscussion,mainly
becauseofthestanceofGreecetowardsthestatehoodofKosovoanditsrecognition.
Italy
Italy has not adhered to any of the reservations offered by the New York Convention. The
implementinglegislationofthelatteristheCodeofCivilProcedure,39withitsrelevantsectionin
arbitration.Facinga lackof thereciprocityreservation, thegrounds for refusalof recognition
andenforcementarethesameforallforeignarbitralawards,includingKosovomadeawards.
TheNetherlands
TheNetherlandsisoneofthecountrieswhichhavedeclaredthatitwillapplytheConventionto
the recognitionandenforcementof awardsmadeonly in the territoryof another contracting
state, thereby embracing the reciprocity reservation. This circumstance guarantees the non‐
applicationoftheConventiontotheawardsoriginatinginKosovo.
Fortheabovereason,oneshouldturntoArticle1076oftheDutchCodeofCivilProcedure.This
provision intendstoregulaterecognitionandenforcementofawards incaseswherenoother
treaty isapplicable.Thegrounds for refusingsucharbitralawardsare the following:novalid
arbitration agreement under the law applicable thereto exists; the arbitral tribunal was
composed in violation of the applicable rules; the arbitral tribunal did not comply with its
mandate; the arbitral award is open to appeal to arbitrators or the courts in the country in
whichtheawardwasmade; thearbitralawardwassetasidebyacompetentauthorityof the
37 Legislative Decree 4220/1961, Art. 36, Statute 2735/1999. 38 See generally Enforcement Of Foreign Judgments And Foreign Arbitral Awards In Greece, by Meidanis
Pagoulatos & Associates Law Office, available at http://www.greeklawdigest.gr/topics/judicial-system/item/19-
enforcement-of-foreign-judgments-and-foreign-arbitral-awards-in-greece 39 Italian Code of Civil Procedure - Book IV, Legislative Decree of February 2, 2006.
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countryinwhichthatawardwasmade.Thecourtcanalsorefuserecognitionandenforcement
ifitiscontrarytopublicpolicy.
Poland
Poland is one of theNewYork Convention signatory countrieswhich havemade both of the
reservationsof theConvention. Thus, similar to theNetherlands and the countriespresented
above, inabsenceofapplicationoftheConvention,onefallsbacktotheprovisionsofnational
lawregardingrecognitionandenforcementofforeignarbitralawards.
In the case of Poland, such provisions are to be found within the Code of Civil Procedure.
According to Article 1214 and 1215 of the code,40the grounds for refusal of recognition and
enforcementare:1)therewasnoarbitrationagreement,theagreementisnotvalid,ineffective,
orhaslostitseffectiveness;2)thepartywasnotgivenpropernoticeoftheappointmentofan
arbitrator,orofthearbitralproceedings,oritwasotherwiseunabletopresentitscasebefore
thearbitral tribunal;3) thearbitralawarddealswithadisputenotcoveredbyorbeyondthe
scopeof thearbitrationagreement;4) the compositionof thearbitral tribunalor thearbitral
procedurewereviolated;or5)thearbitralawardhasnotyetbecomebindingforthepartiesor
hasbeensetasideor theenforceability thereofhasbeensuspendedbythecourt inwhich,or
underthelawofwhich,theawardwasmade.
Slovenia
Slovenia had initially made a reservation with regards to the reciprocal application of the
Convention. However, in 2008 the country withdrew the reciprocity clause reservation. The
SlovenianArbitrationActmakesdirectreferencetotheNewYorkConventionforthepurposes
ofrecognitionandenforcementofarbitralawards.41
Because of the fact that Slovenia opted out of reciprocity, the provisions on recognition and
enforcementapplyequallytoallforeignarbitralawards,regardlessoftheirorigin.42
40 Polish Code of Civil Procedure, Part VII – Arbitration, as amended on October 17, 2005. 41 Slovenian Arbitration Act (2008), Art. 42(2). 42 See generally Recognition and Enforcement of Domestic and Foreign Arbitral Awards in Slovenia, by Aleš Galič, available at http://www.pf.uni-lj.si/media/04.galic.sum.eng_2013.pdf
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Turkey
Turkey is also part of the group of countries that has exercised the reciprocity reservation.
Nonetheless,theTurkishlegislatorhasmadesuretoremoveanystringentrestrictionstowards
foreignarbitralawardsthatarenot fromaNewYorkConventioncountry.TheActonPrivate
InternationalandProceduralLaw43stipulates thatall finalandenforceableorbinding foreign
arbitral awards upon the parties may be subject to enforcement, provided that none of the
grounds for dismissal, which are to a large extent similar to Article V of the Convention,
exist.44Thus, according to the national law, all foreign arbitral awards are subject to
enforcement,ifallpresetconditionsaresatisfied.
V. Conclusion
The New York Convention is the drive behind the success of international commercial
arbitration. In a business world with thousands of cross‐border economic transactions, the
sustainabilityofcommercialarbitrationanditsfurtherdevelopmentiscrucial.
In searching for answers to the thesisof thispaper,unfortunately, auniformresponse isnot
easy to be found. Different countries address the question differently, but alwayswithin the
already allowed contours of international commercial arbitration. The New York Convention
signatories,whoapplythereciprocityreservation,offeraparallellegalregimenforrecognition
and enforcement of non‐convention awards within their respective national legislation. For
countries applying an opt‐out of such reciprocity thereof, the convention is applicable to the
Kosovomadeawardsequallytootherforeignarbitralawards.
Inconsiderationoftheaboveoptions,theideaofarbitratinginKosovoshouldnotbeperceived
wrongly, therefore, as uncertainwith regards to enforcementof arbitral awards abroad.This
beingaccurateforthemainKosovotradingpartners,attheveryleast.
Thus, in assessing the risk of the parties in remaining without a forum for recognition and
enforcementofanawardrenderedinKosovoasaseatofarbitration,wecansafelyassumethat
suchriskisinsignificant(orabsent–herebyavoidingtorunintothedangerofexaggeratingthis
statement).
43 Turkish Act on Private International and Procedural Law No. 5718, in force as of September 12, 2007. 44 Ibid., Art. 60 – 62.
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