A new arbitration system will radically overhaul the way the capital markets in Romania are regulated

The Bucharest Stock Exchange (BSE), the operator of the regulated securities market, has set up the Arbitration Court of the Bucharest Stock Exchange (BSEAC).

It is governed by the 2006 procedure rules, which are approved by the regulatory authority, the National Securities Commission.

Competence of the BSEAC

The BSEAC is a permanent arbitration body for the settlement of disputes resulting from operations carried out on the regulated markets and the alternative trading system operated by the BSE.

They arbitrate when such disputes arise between:

• participants of the BSE trading system and issuers of financial instruments admitted to trading on the regulated markets operated by the BSE;
• issuers of financial instruments admitted to trading on the regulated markets operated by BSE;
• intermediaries, their agents, their clients and employers, resulting from BSE market operations or operations on different markets.

The competence of the BSEAC is not exclusive. The Court of International Commercial Arbitration, which is attached to the Court of Commerce and Industry of Romania, is a well-known alternative.

Arbitration agreement

The parties to a dispute may submit a claim to the BSEAC for arbitration if there is an arbitration clause agreed under the contract existing between such parties; or the parties agree to arbitrate once the dispute has occurred.

The agreement to arbitrate (either in the form of an arbitration clause or a separate agreement) has to be in writing as a condition of validity.

The validity of the arbitration clause is independent of the validity of the contract in which the arbitration clause is included.

Arbitral tribunal

The arbitral tribunal has the authority to rule on its own competence to decide the case.

Should there be no contrary provision in the arbitration clause or in the agreement to arbitrate, it is deemed that the parties will accept the procedure rules applicable to the arbitration by the BSEAC.

Disputes submitted to arbitration by the BSEAC are to be heard and decided by a panel of three arbitrators, or by a sole arbitrator, if the parties so agree.

In the case of a three-member panel, each party shall nominate one member of the panel and one replacement from among the persons recorded on the published list of arbitrators of the BSEAC. The two members nominated by the parties shall nominate the third arbitrator, who will also chair the arbitration panel.

Should one of the parties fail to nominate an arbitrator, or the two arbitrators fail to agree on the person to chair the panel, the claimant may request the chairman of the BSE Arbitral court to proceed with the nomination.

The arbitrator may be recused if their independence or impartiality is called into question.

The party that nominated the respective arbitrator may request their recusal only for causes subsequent to their nomination.

Arbitration proceedings

The request for arbitration has to be filed in writing, identifying the parties, indicating the arbitration clause or agreement, the subject matter and claimed value. De facto and de jure grounds for each of the claims must also be submitted, along with documents and evidence in support, and details of the nominated arbitrator.

The respondent has a 30-day term to submit a statement of defence. Any counter-claims may be filed either with the statement of defence or separately, up until the first hearing of the case.

Once the arbitral tribunal is constituted, the file shall be transmitted to the tribunal (or the sole arbitrator).

Any motion regarding the existence or validity of the arbitration agreement, the constitution of the tribunal, the limits of the arbitrators' competence or the proceedings, may be raised until the first hearing, unless a shorter term has been set by the tribunal. In addition, any written evidence must be submitted by the date of the hearing.

Arbitral decision

The arbitral tribunal has to pass its decision within five months of being selected, unless the parties involved have agreed otherwise.

The tribunal's decision should be based on the main contract, the relevant legal provision, and the prevailing commercial practice. Should the parties expressly agree, the arbitral tribunal may resolve the dispute on the basis of ex aequo et bono – in other words, what is fair and equitable in the case at hand.

The arbitral decision communicated to the parties has the effect of a final court judgment.

The decision may be challenged in court on the basis of several grounds strictly provided by the law. These grounds include scenarios in which the dispute should not have been resolved through arbitration (only private law matters may be submitted to arbitration), and where the arbitral tribunal has decided on the case in the absence of an arbitration clause.

The parties may not waive their right to challenge the arbitral decision until after it has been passed.

Cristina Metea is a partner with Tuca Zbarcea & Asociatii.

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