The Arbitration Court attached to the Economic Chamber of the Czech Republic and Agricultural Chamber of the Czech Republic ("Arbitration Court") is the only arbitration court in the Czech Republic established by law which has general competence to decide arbitration disputes. This makes it a primary "go-to" place when arbitrating in the Czech Republic.
For this reason, it comes as no surprise that an amendment to the Rules of the Arbitration Court ("Rules") caused a bit of an uproar in the Czech arbitration community, especially when the Rules are rarely amended compared to legislative amendments.
Major changes to the rules
The amendment to the Rules came into effect on 1 October 2015. The amendment brought a vast array of changes - 21 in total. Although some of them are purely technical in nature, some changes are of major significance from the perspective of parties to arbitral proceedings. Common to all changes is an effort to clarify certain muddy provisions and ensuing questions of interpretation and to provide for more expedited and efficient proceedings before the Arbitration Court.
Oral hearings at risk?
One significant change concerns oral hearings and their admissibility in the arbitral proceedings before the Arbitration Court. Arbitral proceedings conducted before the Arbitration Court are by default conducted orally. However, the Rules historically allow for the arbitral proceedings to be conducted without oral hearings, only on the basis of written submissions and evidence by the parties to the arbitral proceedings if they agree in writing. The only exception to this rule applies in cases of consumer arbitral proceedings because of a special level of protection consumers enjoy under Czech (and European) law. Such a provision is not in itself harmful to the interests of the parties and similar provisions can be found in arbitral rules of many arbitration venues (such as in the Rules of Arbitration and Mediation of the Vienna International Arbitration Centre).
A major new change to the Rules is that an arbitral tribunal may now invite the parties of the arbitral proceedings to express if they agree that the arbitral proceedings be conducted without oral hearings. The invitation can be made at the sole discretion of the arbitral tribunal (with the only exception being the consumer arbitral proceedings when such an invitation is not available at all) and the parties must be given a time limit by the arbitral tribunal which cannot be less than 10 days to express their position. This amendment changes the landscape of arbitral proceedings since the power to suggest written-only arbitral proceedings is now taken away from the sole discretion of the parties and is newly shared with the arbitral tribunal.
Such a change alone would not be of major significance; however, since it is combined with another change to the Rules, which introduces a presumption of consent with written-only arbitral proceedings when a party does not express otherwise within the time limit, it becomes of great importance. This means that a party to the arbitral proceedings who does not pay close attention to each procedural step of the arbitral proceedings, may easily find themselves in an unwanted position because they did not expressly agree on written-only arbitral proceedings with the opposing party or the arbitral tribunal.
On a par with others?
To ascertain the nature and significance of the above changes to the Rules, we can look at similar provisions of the Rules of Arbitration and Mediation of the Vienna International Arbitral Centre ("VIAC Rules") which represent a benchmark in the CEE region.
The VIAC Rules stipulate that an arbitral tribunal may decide whether the arbitral proceedings would be conducted orally or in writing only if the parties to the proceedings did not agree otherwise. In addition, the VIAC Rules give a strong preference to oral hearings by stipulating that upon a request of only one party, oral hearings will be conducted unless the parties expressly excluded oral hearings in advance.
If we compare the VIAC Rules to the amended Rules, we can clearly see that the former adopt a more party-oriented approach, resting the powers to decide whether the proceedings will be conducted orally or in writing with the parties.
We can conclude that the aim of the changes to the Rules is to make arbitral proceedings more expedited and efficient. This should certainly be welcomed by parties to arbitral proceedings.
However, a different approach between the Rules and the VIAC Rules to conduct writtenonly proceedings has to be noted by the arbitral parties when planning their legal defence. Which approach is better is hard to tell as each of them has its own advantages and pitfalls. Most important is that changes made to the Rules definitely place higher demands on the parties which require them to pay close attention to the arbitral proceedings and respond in a timely manner to every invitation of the arbitral tribunal.