Why Should you prefer settling disputes in the Court of Arbitration?

In business transactions, it is very likely that differences in opinion and disputes occur. The parties have a variety of possibilities to settle such situations. If the parties are unable to reach an agreement, the dispute is settled either in court, court of arbitration or conciliation procedure. Settling a dispute in the court of arbitration may be the most reasonable and fastest solution, because settling a dispute in court may take years.

Important differences between settling a dispute in the court of arbitration and ruling in a national court are the following:

• the proceeding in the court of arbitration and its decisions are confidential and the ruling of the court of arbitration cannot be disclosed to third parties without the written consent of both parties. In court, in order to have an in camera session, a separate application must be filed with reasoning, but all sessions of the court of arbitration are closed;
• forming the arbitration court that settles a dispute takes place with the participation of the parties. Generally, the dispute is settled by a 3-member arbitration court for which each party selects one arbiter and the selected arbiters assign a third arbiter as the chairman. At that, the parties can choose an arbiter whose knowledge, experience and the practice of dealing with practical questions of the respective economic field are known to the party;
• upon settling disputes, the parties can choose the language of settling the disputes, which may be important if the dispute is between partners from abroad;
• in case of potential disputes with foreign partners, neither of the parties might want to have the dispute settled in the court of the country of one or the other party, which may give preference to the party of the respective country. In such case, a good solution might be an arbitration agreement according to which the plaintiff (the party failing the claim) may turn to the court of arbitration of the chamber of commerce and industry of their location, which will give a certain advantage to the party who finds the other party is in default;
• the procedure of the Court of Arbitration is much faster as compared to the court proceedings, because for example, according to the rules of the CA ECCI, the court of arbitration settling the dispute must reach a decision no later than within 6 months from the delivery of the materials of the action to the court of arbitration settling the dispute. In most cases, the ruling of the court of arbitration is made within 4-5 months;
• the ruling of the Court of Arbitration is final, but on certain procedural bases it is possible to apply for the annulment of the decision. The ruling of the Court of Arbitration cannot be annulled on the basis of substantive law or assessment of proof. The ruling may be disputed in the court of appeals as well as court of cassation;
• the ruling made by the court of arbitration in Estonia is recognised and enforceable in foreign countries that have subscribed to the 1958 New York Convention (approximately 140 countries). The rulings of the Estonian courts are now enforceable only in the EU countries and on the basis of bilateral agreements on legal assistance concluded between countries.

What is the Court of Arbitration of the Estonian Chamber of Commerce and Industry?

The Court of Arbitration of the Estonian Chamber of Commerce and Industry (CA ECCI) is a permanent court of arbitration operating at the Estonian Chamber of Commerce that settles disputes arising from contract and other civil law relationships, including foreign trade and other international economic relations. The CA ECCI has settled civil law disputes already since 1993, the parties being legal entities as well as private persons, who do not have to be members of the Estonian Chamber of Commerce and Industry.

The Rules of the Court of Arbitration of the Estonian Chamber of Commerce and Industry were approved with the decision of the Council of the Estonian Chamber of Commerce and Industry dated 3 March 1992. The legal basis for the activities of the Court of Arbitration is the law dated 14 August 1991 on the Court of Arbitration of the Estonian Chamber of Commerce and Industry and this was the only national law regulating arbitration in Estonia until 2006.

The Court of Arbitration of the ECCI receives approximately 15-20 statements of claim per year, but for example in 2002, 2005 and 2009, the court received 30-25 statements of claim. The average amount of financial claims has been approximately 5.5 million euros during the past 10 years. The parties to the process are distributed as follows: on an average one third is international disputes (at least one party is from a foreign country) and two thirds are local disputes (both parties are from Estonia), but there has also been a dispute where all parties were from a foreign country. The parties from foreign countries have been from Latvia, Lithuania, Russian Federation, Finland, Sweden, Poland, Italy, Belarus, France, Germany, Ukraine, Czech, Kazakhstan and Virgin Islands. The disputes have concerned contracts of sale of goods, contracts of sale of shares, contracts on the provision of services (including construction, transport, legal assistance), privatisation agreements, lease agreements, contracts on the rights of superficies, loan agreements, contracts of partnerships, contracts of suretyships and operating agreements.

The courts have satisfied 85-90% of the applications to ensure an action submitted to the council of the CA ECCI before forming the court of arbitration to settle the dispute. This shows that the courts are efficiently assisting in ensuring actions.