When entering into a business relationship it is crucial to cover all important aspects through the written agreement between the parties. Precise, well-written and structured agreement will save you a headache if and in the event of business disagreements regarding the contractual relationship in question. Contractual parties often disregard clause regarding the jurisdiction and governing law, considering that such clause would not be activated due to the good business relations at the beginning of the cooperation.
However, especially in contractual relationships with a foreign element it is of utmost importance to carefully draft dispute resolution clause. The parties may opt for the court or arbitration, but one party may believe it is in a better position if it is agreed that the court of the country where it is headquartered has jurisdiction for dispute resolution rather than courts in Serbia, where the debtor is located. But have in mind, that is not always the case. In such a situation, that contracting party will be obligated to initiate the process of recognition and enforcement of a foreign court decision or foreign arbitral award in Serbia in order to enforce its rights under the judgment.
In the following lines we will in detail explain the process of recognition and enforcement of the foreign judicial or arbitral award and clear up any doubts you may have had.
What is recognition of the foreign judicial award in Serbia
Recognition of the foreign judicial award in Serbia is a process by which it is equated with a decision of the court of the Republic of Serbia. Having that said, such decision produces legal effects within the Republic of Serbia only if it is recognized by the court of the Republic of Serbia. Therefore, the product of the recognition of foreign judicial award is its equating with the award issued by the Serbian court. By conducting the procedure of recognition of foreign judicial award, such award produces legal effects in the Republic of Serbia.
Among the procedure for recognition of foreign judicial award, the interested party may initiate also a procedure for recognition of foreign arbitral award. As it is the with the foreign judicial award, also foreign arbitral award has the same effect as a final domestic court decision once it is recognized by the competent court of the Republic of Serbia.
What is considered under foreign award which may be recognized in Serbia
Foreign judicial award is a decision, i.e. judgement issued by the court of another state. A foreign court decision is also considered a settlement concluded before a court (court settlement). Besides court judgement and court settlement, a party may initiate also a procedure for recognition of foreign decision that is not issued by the court, but by another authority that, in the country where it was issued, is equated with a court decision or court settlement.
A foreign arbitral award is a decision made by an arbitral tribunal whose seat is outside the Republic of Serbia, as well as a decision made by an arbitral tribunal in the Republic of Serbia if foreign law was applied to the arbitration proceedings.
How to initiate a procedure for recognition of foreign judicial award in Serbia
Procedure for recognition of foreign judicial award in Serbia is initiated by submitting the request for recognition to the competent court. Competent courts that are deciding on the recognition are Higher Court or Commercial Court, depending on the subject matter, while the local jurisdiction of the court is determined by the area where the recognition or enforcement procedure is to be carried out.
With the request for recognition, the party initiating the proceedings need to submit also:
- Foreign award whose recognition is being sought;
- A confirmation from the competent foreign court, or another authority, regarding the finality of the decision under the law of the country where it was issued.
If a party does not initiate a proceedings for recognition of foreign judicial award, and therefore a separate decision on the recognition of the foreign judgment has not been made, any court may decide on the recognition of that judgment as a preliminary issue. However, such recognition would only have effect for that specific procedure.
Requirements for recognition of the foreign award
Serbian law sets these conditions in negative ways, determining the situations when the court will deny the recognition of the foreign judicial award.
Therefore, the court of the Republic of Serbia shall deny the request for recognition of the foreign court award if:
- if, in response to the objection of the person against whom the decision was made, it is determined that the person was unable to participate in the proceedings due to procedural irregularities;
- if there is exclusive jurisdiction of the court or another authority of the Republic of Serbia, in the matter at question;
- if, in the same matter, a final decision has been made by a court or other authority of the Republic of Serbia, or if another foreign court decision made in the same matter has been recognized in the Republic of Serbia;
- if it is contrary to the constitutional principles of the social order established by the Constitution of the Republic of Serbia;
- if there is no reciprocity.
When it comes to the reciprocity, the existence of reciprocity regarding the recognition of foreign court decisions is presumed until proven otherwise, and in case of doubt about the existence of such reciprocity, clarification is provided by the Ministry of justice. Also, the Ministry of justice published a list of the countries with which the Republic of Serbia has established reciprocity for recognition of the foreign awards. Therefore, if the state in which the decision was made is not on the list, it is necessary to submit the request to the Ministry of justice in order to obtain opinion on the existence of the factual reciprocity.
However, there is an exemption regarding the recognition of the foreign award even in the absence of the reciprocity. Namely, the absence of reciprocity is not an obstacle to recognizing a foreign court decision rendered in a marital dispute or in a dispute to establish or contest paternity or maternity, nor if the recognition or enforcement of the foreign court decision is sought by a Serbian citizen. Furthermore, foreign court decisions concerning the personal status of a citizen of the state issuing the decision are recognized in the Republic of Serbia without examining the existence of reciprocity.
Execution of a Foreign Enforceable Document That Has Not Been Recognized in the Republic of Serbia
Although a regular procedure would include submitting the request for recognition of the foreign court award and conducting the whole procedure, in order to be able to enforce such decision in the Republic of Serbia, there is, however, a case when a creditor can file a direct motion for enforcement, without prior conducting the procedure for recognition.
Namely, as a general rule, a foreign enforceable document is executed in the same manner as a domestic one if it pertains to a private legal claim and has been recognized by a domestic court. However, the creditor may submit a motion for the execution of a foreign enforceable document that has not been recognized by a domestic court. In such a case, the court competent to issue the execution order will decide on the recognition of the foreign enforceable document as a preliminary issue. Such an execution order may be appealed on the grounds that the legal requirements for recognizing the foreign enforceable document were not met. However, it is important to note that such recognition on which it is decided as a preliminary issue is valid only for that concrete enforcement proceeding.
Although it may be efficient in terms of duration of the proceedings to conduct the recognition of the foreign award as a preliminary issue, it is important to bear in mind that such recognition is valid only within those proceedings.
Recognition of the foreign arbitral award in Serbia
The proceeding for recognition of foreign arbitral award is prescribed by Law on arbitration. In that sense, Law on arbitration determines a foreign arbitral award as a decision rendered by an arbitral tribunal seated outside the Republic of Serbia, as well as a decision made by an arbitral tribunal within the Republic of Serbia if foreign law was applied to the arbitration proceedings. A foreign arbitral award has the same effect as a final domestic court decision once it is recognized by the competent court of the Republic of Serbia.
With respect to the recognition of foreign arbitral award, the court may decide on the recognition of a foreign arbitral award as a preliminary issue in the enforcement procedure, as it is the case with the enforcement of foreign court award, as previously mentioned. However, in this case also when the recognition of an arbitral award is decided as a preliminary issue in the enforcement procedure, the recognition is valid only in that enforcement procedure.
The procedure for recognition and enforcement is initiated before the court by submitting a request along with the following documents:
- The original arbitral award or a certified copy of it;
- The arbitration agreement or the document confirming its acceptance, in the original or a certified copy; and
- A certified translation of the foreign arbitral award and the arbitration agreement into the language that is in official use before the competent court.
Moreover, the recognition and enforcement of a foreign arbitral award may be refused, at the request of the party against whom it is sought, only if that party provides evidence that:
- The arbitration agreement is not valid under the law that the parties have chosen, or under the law of the country where the decision was made;
- The party against whom the arbitral award was made was not properly notified of the appointment of the arbitrator or of the arbitration proceedings, or for another reason could not present its case;
- The decision relates to a dispute that was not covered by the arbitration agreement, or the decision exceeds the scope of that agreement. If it is determined that the part of the decision exceeding the scope of the arbitration agreement can be separated from the rest of the decision, partial refusal of recognition and enforcement of that decision may be possible;
- The arbitral tribunal or the arbitration procedure was not in accordance with the arbitration agreement, or if there is no such agreement, in accordance with the law of the country where the seat of arbitration is located;
- The award has not yet become binding on the parties, or it has been annulled or suspended from enforcement by the court of the country in which, or under whose law, the award was made.
The competent court will refuse recognition and enforcement of the arbitral award if it determines that:
- Under the law of the Republic of Serbia, the subject matter of the dispute is not suitable for arbitration; or
- The effects of the arbitral award are contrary to the public order of the Republic of Serbia.
Conclusion on the recognition of foreign court or arbitral decisions in Serbia
The process of recognition of foreign court or arbitral decision is essential step in exercising rights from such decision. By conducting the procedure of recognition of foreign award, such decision is equated with a decision of a domestic court. By conducting the procedure of recognition of foreign judicial award, such award produces legal effects in the Republic of Serbia. The procedure can be conducted by initiating separate proceedings for recognition, which provides legal certainty or it can be conduced as a preliminary issue, which is more time efficient, yet the effects of the recognition are only limited to that certain proceedings.
Our experienced team from NCR lawyers can provide you full legal support in exercising your rights through the process of recognition and enforcement of foreign court or arbitral award, as well as with the other legal problems – such as establishing company in Belgrade and Serbia.
This article is for informational purposes only and does not constitute legal advice. If you need additional information regarding the topic in question, please feel free to contact us by email at office@ncrlawyers.com or by phone at +381677049551.
