PSEAC Practice Note No. 1-2021 on arbitration clauses concerning arbitration conducted before Prague Stock Exchange Arbitration Court
The Prague Stock Exchange Arbitration Court attached to Burza cenných papírů Praha, a.s. (Prague Stock Exchange), ID No.: 471 15 629, with its registered office at Rybná 14/682, 110 05 Prague 1 (hereinafter referred to as “PSEAC”) hereby provides the interested parties with a practice note on PSEAC’s authority to decide property disputes or to administer such disputes pursuant to the PSEAC Rules, and offers comments on arbitration clauses.
PSEAC is a permanent court of arbitration established pursuant to Section 54 of Act No. 256/2004 Coll., on carrying out business activities in the capital markets (hereinafter referred to as the “Capital Markets Act”). Accordingly, the parties may authorise PSEAC to decide disputes arising out of the business activities carried out by Burza cenných papírů Praha, a.s. (hereinafter referred to as the “Prague Stock Exchange”), including disputes concerning transactions on the regulated market, transactions in financial instruments or commodities and business transactions in the capital market, the money market or the insurance market. The scope of disputes relating to the business activities of the Prague Stock Exchange is specified in Section 54 para. 2 of the Capital Markets Act.
In addition to the disputes relating to the business activities of the Prague Stock Exchange, it is also possible to have other disputes decided pursuant to the PSEAC Rules (i.e. disputes not related to the Prague Stock Exchange, such as disputes arising out of a lease or a purchase agreement). However, this is possible only on the condition that the parties to the dispute agree that their dispute, although unrelated to the Prague Stock Exchange, shall be decided in arbitration conducted pursuant to the PSEAC Rules.
All such disputes will not be resolved by the civil courts of any country but they will be finally settled by an arbitral award issued by arbitrators under the PSEAC Rules standing for a final and enforceable decision. During the course of arbitration, PSEAC provides the parties with assistance, facilities and support.
However, arbitrators are not authorised to decide any disputes or to conduct arbitration proceedings pursuant to the PSEAC Rules unless the parties agree to that effect. Consequently, parties wishing to have their dispute decided in arbitration under the PSEAC Rules must enter into a written agreement that expressly authorises one or more arbitrators to resolve the dispute pursuant to the PSEAC Rules (hereinafter referred to as “arbitration agreement”).
Such an arbitration agreement is governed by Act No. 216/1994 Coll., on arbitration proceedings and on the enforcement of arbitral awards (hereinafter referred to as the “Arbitration Act”). Pursuant to the Arbitration Act, parties (other than consumers) may conclude an arbitration agreement in cases where their dispute relates to property rights and the parties are free to settle the dispute amicably. The arbitration agreement may concern a specific dispute that has already arisen or all disputes that have not yet arisen but may arise in the future out of a certain arrangement entered into between the parties (such as a purchase contract). The arbitration agreement concluded with respect to all potential future disputes arising out of a specific agreement is called ‘arbitration clause’, a model of which is provided below.
Model arbitration clauses
PSEAC recommends that parties conclude arbitration clauses following the model below so that the clause encompasses both disputes specified in Section 54 para. 2 of the Capital Markets Act (disputes related to the Prague Stock Exchange) and disputes not specified therein (disputes not related to the Prague Stock Exchange):
„All disputes arising from or in connection with this agreement (including its formation, termination or validity) shall be finally decided by one or three arbitrators according to the Rules of the Prague Stock Exchange Court of Arbitration (PSEAC) in the version attached to this agreement. The place of the arbitration shall be Prague; the language of the arbitration shall be [English].”
In line with the published legal opinions on interpretation of Section 19 para. 4 of the Arbitration Act, it is recommended practice to attach the PSEAC Rules as an annex to the agreement in cases in which disputes not specified in Section 54 para. 2 of the Capital Markets Act are to be arbitrated. However, it is possible that a more liberal approach ultimately prevails according to which, for example, a reference to the PSEAC website or the Commercial Gazette where the PSEAC Rules have been published suffices.
Comments on the number of arbitrators and the language of the arbitration in the arbitration clause
Pursuant to Section 20 para. 2 of the PSEAC Rules, unless the parties agree otherwise, a sole arbitrator decides disputes of a value not exceeding CZK 10,000,000 and an arbitral tribunal consisting of three arbitrators decides disputes of a value exceeding CZK 10,000,000. The value of a dispute is the sum of all claims and counter-claims raised in the arbitration, without appurtenances.
This is also recognised in the model arbitration clause which leaves the choice of number of arbitrators to the PSEAC Rules. Nonetheless, if the parties wish that all of their disputes are decided either by a sole arbitrator or by a three-member arbitral tribunal, they may state so in the arbitration clause and amend its wording accordingly.
The parties should also consider the language of the arbitration which the model arbitration clause specifies as Czech or English, respectively. The parties may choose any other language. However, if they do so, the parties should also consider the prospective costs of interpretation and translation. If the language of arbitration is Czech, documents and oral statements in Slovak are accepted without any requirements on translation or interpretation.
Finally, it should be noted that it is possible to agree that a law other than the law governing the agreement shall govern the arbitration clause. This matter should be considered in particular where the arbitration is seated outside of the Czech Republic.
PSEAC’s model arbitration clauses are available on PSEAC’s website in Czech and English under the following link: https://www.pseac.org/rozhodci-dolozky.
Recommended arbitration clauses in English, Czech and French in overview
Recommended arbitration clause:
“All disputes arising from or in connection with this agreement (including its formation, termination or validity) shall be finally decided by one or three arbitrators according to the Rules of the Prague Stock Exchange Court of Arbitration (PSEAC) in the version attached to this agreement. The place of the arbitration shall be Prague; the language of the arbitration shall be English.”
Doporučená rozhodčí doložka:
„Všechny spory vznikající z této smlouvy nebo v souvislosti s ní (včetně otázek jejího vzniku, zániku či platnosti) budou rozhodovány s konečnou platností jedním rozhodcem či třemi rozhodci podle Řádu Burzovního rozhodčího soudu při Burze cenných papírů Praha, a.s. (BRS), ve znění, které je v příloze této smlouvy. Místem rozhodčího řízení bude Praha, jazykem rozhodčího řízení bude čeština.“
Clause compromissoire recommandée:
“Tous différends découlant du présent contrat ou en relation avec celui-ci (y compris sa formation, terminaison et validité) seront tranchés définitivement par un ou trois arbitres suivant le Règlement et le Statut de la Cour d’Arbitrage de la Bourse des Valeurs de Prague (CABVP) dans sa version annexée au présent contrat. Le lieu de l’arbitrage sera à Prague, la langue de l’arbitrage sera le français.”