Arbitration, as an alternative to the painfully long court proceedings in Slovakia, is undoubtedly an effective instrument of rights enforcement. However, there is an increasing need for proper protection of consumers in this area. Consumers often do not know what they are actually agreeing to by signing an arbitration clause. They know very little about arbitration or how it works. They sometimes even misunderstand the remit of the arbitration court and consider it to be a regular civil court.
As a result of the increased abuse of arbitration in consumer affairs and following the commitment of the EU to provide consumers with increased legal protection, the Slovak Republic identified a need to amend its Arbitration Act (Act No. 244/2002 Coll. on Arbitration, as amended) (“the Act”). The reform process (inspired by the UNCITRAL model law) began in 2009 and brought some significant changes to the existing arbitration regulation. These included:
- an obligation on an arbitrator to take into account (ex officio) both local and European provisions designed to protect consumers.
- an obligation on an arbitrator to serve impartially and with due professional care in order to ensure equitable protection of rights and legitimate interests of participants and to avoid violations of their rights and legitimate interests;
- grounds to challenge an arbitration award in court if the provisions designed to protect consumers were violated during the decision-making procedure.
Following these changes and the impact of the decision of the European Court of Justice (now the Court of Justice of the European Union) in the Asturcom case 1 , there have been governmental attempts to further amend the existing Act in order to provide more extensive protection for consumers. One of the reasons for this is that pursuant to the current regulation, practically any legal person is entitled to set up a permanent arbitration court and any natural person, with very few limitations, may become an arbitrator. Verification of eligibility and ability to ensure proper dispute resolution is not required. As a result, there are already over one hundred permanent arbitration courts registered in Slovakia. This liberal regulation has already shown its negative aspects in practice. Complaints are that consumers are often signing contracts containing arbitration clauses entrusting the resolution of disputes to an arbitration court set up by the counterparty or entities related to such counterparty. Given that the possibilities to challenge arbitration awards are limited, such an agreement is often proved very disadvantageous to the consumer.
The latest proposed changes to the Act attempted to increase supervision over arbitration courts and prevent abuse of arbitration in disputes arising from consumer contracts. It also suggested the licensing of permanent arbitration courts for deciding consumer disputes. Further changes were envisaged to limit the opportunities to agree on arbitration with consumers by stating that an arbitration clause would be valid only if it was signed after the dispute has arisen. The scope for consumers to challenge arbitral awards would also have been extended as well. Some contemplated a total ban on arbitration for consumer disputes.
Unfortunately this latest attempt to change was unsuccessful, and the draft amendment was not approved in the legislative procedure. However, it can be expected that these changes will sooner or later be introduced into the Act, although probably in a “softer” version. It remains to be seen what the future of arbitration in Slovakia brings for a consumer.