ArbitrationUNCITRAL Model Law
Is the arbitration law based on the UNCITRAL Model Law?
The Liechtenstein arbitration legislation generally follows the Austrian model, which is based upon the Model Law on International Arbitration (UNCITRAL Model Law). However, Liechtenstein arbitration law departs in certain aspects from the model to make it more attractive and effective. It permits the submission of practically all types of disputes in relation to trusts, foundations or companies to arbitration, including in particular:
- the removal of trustees (or foundation council members);
- the challenging of resolutions of trustees (or the foundation council); and
- the appointment of extraordinary auditors.
Excepted from arbitration are matters falling within the public supervision of foundations and generally proceedings that are initiated ex officio or by a public authority (ie, the LG, the Foundation Supervision Authority STIFA or the Attorney General) based on mandatory law (eg, removal of trustees in cases of gross breach of duty or incapacity).
In general, all claims arising from rights involving an economic interest that are usually decided by domestic courts are arbitrable. All other claims are arbitrable if the parties are capable of reaching a settlement on the subject matter of the dispute.Arbitration agreements
What are the formal requirements for an enforceable arbitration agreement?
The arbitration agreement needs to be in writing and must be contained either in a written document signed by both parties or in letters, telefaxes and emails or other means of transmitting messages between the parties, which provide a record of the agreement. The reference in a contract complying with these formal requirements to a document containing an arbitration agreement (eg, in general terms and conditions) constitutes an arbitration agreement, provided that the reference is such as to make that arbitration agreement part of the contract.Choice of arbitrator
If the arbitration agreement and any relevant rules are silent on the matter, how many arbitrators will be appointed and how will they be appointed? Are there restrictions on the right to challenge the appointment of an arbitrator?
Unless otherwise provided in the arbitration agreement, the number of arbitrators shall be three (section 603(2) Civil Procedure Act (ZPO)). Each party shall appoint one arbitrator. The two arbitrators so appointed shall appoint a third arbitrator, acting as chairman of the arbitral tribunal. If a party fails to appoint an arbitrator within four weeks of receipt of a written request to do so from the other party or if the parties do not receive notification by the arbitrators regarding the arbitrator to be appointed by them within four weeks of their appointment, the arbitrator shall, upon request by either party, be appointed by the court (section 604(2)(4) ZPO).
The appointment of an arbitrator can be challenged only if circumstances exist that give rise to justifiable doubts as to his or her impartiality or independence, or if he or she does not possess the qualifications agreed upon by the parties (section 605(2) ZPO).Arbitrator options
What are the options when choosing an arbitrator or arbitrators?
With the exception that full-time judges of the Liechtenstein courts may not become arbitrators during their tenure of office (section 605(3) ZPO), the parties may freely determine the composition of the arbitral tribunal and the appointment of its members. This means that the parties are free to agree on the number of arbitrators and to define the procedure for appointing the arbitrators. If the parties have, however, agreed on an even number of arbitrators, then these have to appoint a further person as chairman (section 603(1) ZPO).
A person being approached in connection with a possible appointment as arbitrator must disclose any circumstances that may likely give rise to doubts as to his or her impartiality or independence, or are in conflict with the agreement of the parties. After being appointed and throughout the arbitral proceedings, an arbitrator has to disclose any such circumstances to the parties without delay, unless they have already been informed of them and consented to the continuation of his or her mandate as arbitrator (section 605(1) ZPO).
When choosing an arbitrator, parties should select a candidate with the requisite legal and professional expertise that mirrors the nature of the specific dispute who shall also have sufficient management skills to deal with people and handle the process. In Liechtenstein practice, there is a tendency to choose lawyers as arbitrators. A formal legal education is, however, not required to be eligible as arbitrator. A large number of Liechtenstein lawyers are members of the Liechtenstein Arbitration Association, which provides a large pool of candidates who are able to meet the needs of complex arbitration.Arbitral procedure
Does the domestic law contain substantive requirements for the procedure to be followed?
The arbitral tribunal adjudicates the dispute pursuant to the statutory provisions or rules of law as agreed upon by the parties. Unless the parties have expressly agreed otherwise, any agreement as to the law or the legal system of a given state shall be construed as directly referring to the substantive law of that state and not to its conflict of laws rules (section 620(1) ZPO). In the absence of a choice of law, the arbitral tribunal will apply the statutory provisions or rules of law it considers appropriate; that is, the provisions that have the closest connection to the dispute (section 620(2) ZPO).
Subject to the mandatory provisions of section 611 et seq ZPO, the parties are free to agree on the rules of procedure. Section 611 para 2, which provides that the parties are to be treated fairly and that each party shall be granted the right to be heard, is mandatory, for example.
The parties may also refer to other rules of procedure. Failing such agreement, the arbitral tribunal, subject to the provisions of the applicable law, must conduct the arbitration in such manner as it considers appropriate (section 611(1) ZPO).Court intervention
On what grounds can the court intervene during an arbitration?
The court may only intervene in arbitral proceedings if this is so provided in section 594 et seq ZPO. This provides, inter alia, that the court is competent to decide if one of the parties:
- files a request for interim measures (section 602 ZPO)
- files a request for appointment, recusal or early dismissal of an arbitrator (section 604 et seq ZPO);
- files a request to enforce provisional measures ordered by the arbitral tribunal (section 610 ZPO); or
- files a suit to set the arbitration award aside (section 628 ZPO).
These powers of the court cannot be overridden by agreement.
If a court is approached with an action that is subject to an arbitration agreement, it must reject such claim, provided the defendant does not submit a pleading in the matter or does not orally plead before the court without making a notification of objection in this respect. However, this does not apply if the court establishes that the arbitration agreement does not exist or is incapable of being performed. In this case, the court may continue its proceedings. Nevertheless, even while such proceedings are pending, arbitral proceedings may be commenced or continued and an award rendered (section 601(1) ZPO).
As a rule, during arbitral proceedings no further action may be brought before a court or an arbitral tribunal concerning the asserted claim. Any action filed on the grounds of the same claim must be rejected. This, however, does not apply if an objection to jurisdiction of the arbitral tribunal was raised with the arbitral tribunal, at the latest when entering into argument on the substance of the dispute, and a decision of the arbitral tribunal thereon cannot be obtained within a reasonable period of time (section 601(3) ZPO).Interim relief
Do arbitrators have powers to grant interim relief?
If the parties have not agreed otherwise, the arbitral tribunal may, upon request of a party and after hearing the other party, order any interim or protective measures it deems necessary in respect of the subject matter in dispute, if it considers the enforcement of the claim were otherwise frustrated or significantly impeded, or there was a risk of irreparable harm. Before imposing such measure, the arbitral tribunal may request any party to provide appropriate security in connection with such measure (section 610(1) ZPO).
An interim relief granted by arbitrators can only be enforced by the Princely Court of Justice (section 610(3) ZPO).Award
When and in what form must the award be delivered?
Once the arbitral tribunal is satisfied and finds that the factual basis of the case is duly presented and the matter ready for taking a decision, it will close the proceedings and render the arbitral award.
The award has to be made in writing and must be signed by the arbitrator or arbitrators. Unless otherwise agreed by the parties, in arbitral proceedings with more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal suffice, provided that the reason for any omitted signature is stated on the arbitral award. If the parties have not agreed otherwise, the award needs to give the reasons that form the basis of the decision. Furthermore, the award must state the date on which it was rendered and the seat of the arbitral tribunal as determined in section 612(1) ZPO.
A signed copy of the award needs to be served to each party. The award and the documentation on its service are joint documents of the parties and the arbitrators. The arbitral tribunal has to discuss possible safekeeping of the award and the documentation of its service with the parties. Upon request of a party, the chairperson (or, in case of his or her inability, another arbitrator) is obliged to confirm the res judicata effect and the enforceability of the award (section 623 ZPO).Appeal
On what grounds can an award be appealed to the court?
An appeal to a court against an arbitral award (including arbitral awards by which the arbitral tribunal has ruled on its own jurisdiction) may only be made in the form of an action for setting aside pursuant to section 628 ZPO. Such action has to be brought to the Princely Court of Appeals within four weeks. The time period begins on the day on which the claimant receives the award.
For actions for setting aside arbitral awards, the Princely Court of Appeals has jurisdiction as first and last instance, notwithstanding the possibility of an extraordinary appeal to the Constitutional Court for alleged violation of constitutional rights.
The grounds for setting aside an arbitral award are:
- a valid arbitration agreement does not exist, or the arbitral tribunal has denied its jurisdiction despite the existence of a valid arbitration agreement, or a party was incapable of concluding a valid arbitration agreement under the law governing its personal status;
- a party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was for other reasons unable to present its case;
- the award deals with a dispute not covered by the arbitration agreement, or contains decisions on matters beyond the scope of the arbitration agreement or the plea of the parties for legal protection; if the default concerns only a part of the award that can be separated, only that part of the award shall be set aside;
- the constitution of the arbitral tribunal was not in accordance with a provision of section 594 et seq ZPO or with an admissible agreement of the parties;
- the arbitral proceedings were conducted in a manner that conflicts with the fundamental values of the Liechtenstein legal system (public policy);
- the requirements according to which a court judgment can be appealed by an action for revision under section 498(1) numbers 1 to 5 ZPO have been met;
- the subject matter of the dispute is not arbitrable under Liechtenstein law; and
- the arbitral award conflicts with the fundamental values of the Liechtenstein legal system (public policy).
What procedures exist for enforcement of foreign and domestic awards?
Since Liechtenstein adopted the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (New York Convention), arbitral awards that have been obtained before arbitration panels and in proceedings in accordance with the New York Convention constitute executory titles and can be enforced in Liechtenstein without re-examination of the merits of the case.Costs
Can a successful party recover its costs?
Where the arbitral proceedings are terminated, the arbitral tribunal decides upon the obligation to reimburse the costs of the proceedings, unless the parties have agreed otherwise.
In exercise of its discretion, the arbitral tribunal takes into consideration the circumstances of the case, in particular the outcome of the proceedings. The obligation to reimburse may include any and all reasonable costs for bringing the action or defence. If the parties agree on the termination of the proceedings and communicate this to the arbitral tribunal, a decision on costs is made only where a party applies for that decision together with the notification of the agreement to terminate the proceedings.
Together with the decision upon the liability to pay the costs of the proceedings, the arbitral tribunal, as far as this is possible and provided that the costs are not set off against each other, determines the amount of costs to be reimbursed (section 626 ZPO).
Law stated dateCorrect on
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10 April 2020