In Slovenia, the prevailing method of dispute resolution is court litigation. Although it still predominantly presents uncharted territory for many lawyers and (commercial) entities, international arbitration appears to be gaining recognition, momentum and popularity. Arbitration is the most common, recognised and accepted method of dispute resolution, as a viable alternative to court litigation, in weightier transactions and contracts, in particular with foreign entities. For example, M&A transactions, EPC contracts, long-term distributorship agreement and similar contracts usually contain an arbitration clause.
In our experience, the parties are inclined to refer their disputes to institutionalised arbitration, most commonly the Ljubljana Arbitration Centre at the Chamber of Commerce and Industry of Slovenia ("Ljubljana Arbitration Centre") and the International Chamber of Commerce (ICC).
In our experience, the COVID-19 pandemic has not significantly affected the conduct of international arbitration proceedings. The ongoing arbitrations ran uninterruptedly, whereas only certain minor procedural adjustments were made to increase the flexibility of tribunals and/or the parties. Most of the in-person meetings and tribunal administered conferences or hearings were moved to remote teleconferencing tools (such as Zoom, Microsoft Teams, etc) with no significant effect on procedural economy, effectiveness, timelines or due process.
Similarly, the Ljubljana Arbitration Centre operated uninterruptedly throughout the COVID-19 pandemic. In particular, all proceedings are reported to have been carried out in a timely manner and completed within the mandatory nine-month time period. The Arbitration Rules of the Ljubljana Arbitration Centre at the Chamber of Commerce and Industry of Slovenia (the "Ljubljana Arbitration Rules") have been flexible enough to enable the conduct of remote proceedings even before the pandemic. At the Ljubljana Arbitration Centre, the use of electronic and online tools is generally accepted for purposes of case management conferences, correspondence and parties' submissions, etc. The use of electronic communication is even mandatory in the expedited proceedings under the Ljubljana Arbitration Rules.
During the COVID-19 pandemic, the arbitral tribunals are reported to have made use of such possibilities and, in agreement or consultation with the parties, also organised hearings by way of electronic means of communication. For example, in a complex international case, with participants from four different countries, a multi-day oral hearing was conducted entirely via videoconference, including witness examination and transcript preparation.
There appears to be an increased number of commercial arbitral proceedings related to corporate and environmental issues. Stronger political presence and increased international environmental regulation is likely the reason for the increased number of environmentally-related issues and disputes.
There are no particular industries that are experiencing decreased international arbitration activity in 2020-21 as a result of the COVID-19 pandemic.
The majority of the domestic parties appear to be most inclined towards the Ljubljana Arbitration Centre and ICC, whereas the Vienna International Arbitral Centre (VIAC) also seems to be recognised by domestic entities.
No new arbitral institutions have been established in Slovenia in 2020-21.
The District Court in Ljubljana has the exclusive competence to hear disputes related to arbitration, in particular:
Arbitration proceedings seated in Slovenia are principally governed by the Slovenian Arbitration Act. The latter is firmly based on the UNCITRAL Model Law (the "Model Law") and does not introduce any major deviation from the Model Law. By virtue of Article 2 of the Slovenian Arbitration Act, the Model Law also serves as an interpretative tool for the Slovenian Arbitration Act. There are, however, some provisions on consumer and labour law disputes which further regulate the competent court, arbitration agreement, language, and a challenge of an arbitral award.
The national arbitration law (ie, the Slovenian Arbitration Act) has not been amended in the past year, nor are there any amendments envisaged in the near future. Moreover, the Republic of Slovenia has not yet ratified the Singapore Convention on Mediation, adopted in 2018 by the United Nations.
An arbitration agreement may be concluded in the form of an arbitration clause within a contract or as a separate agreement.
The arbitration agreement shall be in writing, whereas some authors suggest that the Slovenian Arbitration Act adopts the same concept of a “writing” requirement as the amended 2006 Model Law where “written” means any form of arbitration agreement conclusion, as long as there is a record of the arbitration agreement that is accessible and suitable for subsequent reference (the case law appears to be somewhat divided on the issue). In particular, an arbitration agreement is in writing, and therefore formally valid, if:
Recent case law appears to be very strict with the formal requirements for an arbitration agreement.
For consumer-related disputes, an arbitration agreement can be concluded only for the disputes which have already arisen. Moreover, the arbitration agreement must be concluded in a separate document that is signed by the consumer (only a handwritten signature is recognised). The consumer and the commercial entity must determine the seat of arbitration in the arbitration agreement. Such arbitration agreements are rather rare.
Under the Slovenian Arbitration Act, subject matters that may be referred to arbitration are defined quite broadly, therefore, subject matters that may not be referred to arbitration are rather limited. In general, all claims of material nature are assumed to be arbitrable, whereby certain pecuniary claims with erga omnes effect, such as disputes regarding the validity and/or nullity of the patents, proceedings before the national authorities and similar, are (due to their nature) not arbitrable.
Other (non-material) claims are considered to be arbitrable if the parties are permitted to settle the dispute on their own.
As for the subjective arbitrability, under Slovenian Arbitration Act, the arbitration agreement may be concluded by any natural or legal person, including the Republic of Slovenia and an entity governed by public law.
The Slovenian courts are generally open to arbitration and interpret arbitration agreements broadly and in favour of their validity (in favorem validatis principle). However, recent case law suggests increasing strictness with respect to the formal requirements for an arbitration agreement.
National courts are confident in rejecting their own jurisdiction and upholding the arbitration agreement if a jurisdictional objection is raised in the statement of defence at the latest.
An arbitral clause may be valid even if the rest of the contract in which it is contained is invalid. As explained in 2.1 Governing Law, the Slovenian Arbitration Act is based on the Model Law. The principle of separability is thus also recognised by the Slovenian Arbitration Act, which explicitly provides that an arbitration clause forming a part of the contract shall be treated as an agreement independent from other terms of the contract. Moreover, the Slovenian Arbitration Act explicitly provides that the tribunal’s decision on invalidity of the contract does not necessarily mean that the arbitration agreement is null and void.
Parties are entirely autonomous in their selection of the arbitrators, the number of arbitrators and the method of their appointment. The Slovenian Arbitration Act, however, provides a set of rules used in case the parties have not agreed on the process of the arbitrators’ appointment as well as the rules of court intervention in the process of appointment if necessary; see 4.2 Default Procedures.
If parties agree on the procedure for appointing the arbitrators and (i) a party fails to comply with the agreed procedure; or (ii) the parties or the appointed arbitrators fail to reach an agreement in accordance with the agreed procedure; or (iii) a third party, including an institution, fails to perform any of its functions in accordance with the agreed procedure (ie, does not appoint an arbitrator), either party may request a competent court to take the necessary measures, unless the agreement on the procedure for the appointment of arbitrators provides for another (alternative) method of appointment of arbitrators.
It shall be highlighted that there is no appeal against the court’s decision to appoint arbitrators. When appointing the arbitrator(s), the court shall give due regard to any qualifications required of the arbitrator by the agreement of the parties and to such considerations that are likely to secure the appointment of an independent and impartial arbitrator. The court may appoint an arbitrator of citizenship other than the citizenships of the parties if that is necessary to ensure the independence and impartiality of the arbitral tribunal.
Under the Slovenian Arbitration Act, there is no default procedure that would apply in the case of multi-party arbitration under the Slovenian Arbitration Act.
A court may intervene in the selection of arbitrators when the agreed method of tribunal appointment fails, as described in 4.2 Default Procedures.
Following the Model Law, an arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his or her impartiality or independence, or if he or she does not possess qualifications agreed to by the parties. A party may challenge an arbitrator appointed by him or her, or in whose appointment he or she has participated, only for reasons of which he or she becomes aware after the appointment has been made.
Moreover, the parties are free to agree on the procedure challenging an arbitrator. In the absence of such an agreement, a party who intends to challenge an arbitrator shall, within 15 days of becoming aware of the composition of the arbitration tribunal or after becoming aware of any circumstances that might constitute grounds for the challenge, send a reasoned written request for the challenge to the arbitral tribunal. Unless the challenged arbitrator withdraws from his or her position, or the other party agrees to the challenge, the arbitration tribunal as a whole (ie, including the challenged arbitrator), shall decide on the challenge.
If a challenge is not successful, the challenging party may request, within 30 days of being notified of the decision rejecting the challenge, the District Court of Ljubljana to decide on the challenge. There is no appeal against the decision of a court.
While the requirement of independence and impartiality is not explicit, as mentioned in 4.4 Challenge and Removal of Arbitrators, the circumstances that give rise to justifiable doubts as to an arbitrator's impartiality or independence are reason for the challenge of an arbitrator. Therefore, the requirement of arbitrator impartiality and independence is implied by the law. Consequently, the Slovenian Arbitration Act also provides that a person offered to act as an arbitrator shall disclose all circumstances that could cast reasonable doubt on his or her independence and impartiality. Moreover, an arbitrator must, from the time of the appointment and throughout the arbitration proceedings, disclose any and all such circumstances to the parties without delay, unless the arbitrator has previously made them known to the parties.
The Ljubljana Arbitration Centre, as a principal arbitration institution, has adopted the Arbitrator’s Guidelines (as in force since June 2015) serving as a practical tool and source of information for arbitrators when conducting proceedings under Ljubljana Arbitration Rules. The Arbitrator’s Guidelines describe impartiality, independence and availability of arbitrators in greater detail, referring to IBA Guidelines on Conflicts of Interest in International Arbitration. Amongst others, the Arbitrator’s Guidelines explicitly require the arbitrator to “remain impartial and independent and maintain also an appearance of impartiality and independence” and prohibit, for the duration of the proceedings, any separate contacts with one of the parties or their representatives, which includes meetings, telephone conversations, email messages or any other means of communication in connection with the matter in dispute. The arbitrators may only accept the appointment if they are confident that they will be able to perform their duties impartially, independently and without undue delay.
Please refer to 3.2 Arbitrability.
The Slovenian Arbitration Act adopts the principle of competence-competence. Therefore, an arbitral tribunal may decide on its own jurisdiction, including any objections to the existence and/or validity of the arbitration agreement.
The court can address issues of jurisdiction of an arbitral tribunal if a party brings an action before the District Court in Ljubljana under the following circumstances:
A party may request the District Court in Ljubljana to decide on the jurisdictional objection following the tribunal’s jurisdictional decision (independent from a final award) upholding its own jurisdiction.
The proceedings before the Court following such action or request are considered to be urgent and are conducted as a matter of priority. Under the Slovenian Arbitration Act, the arbitral tribunal may continue the arbitral proceedings and even deliver a final award whilst such judicial proceedings regarding its jurisdictional decision are pending.
The standard of judicial review for questions of admissibility and jurisdiction is a low standard or de novo. The court will form its own judgment in dealing with the matters raised before it and will not be bound by any decision of the tribunal.
If a party commences court proceedings in breach of the arbitration agreement, the court will, following a timely raised jurisdictional objection, declare that it has no jurisdiction, annul any actions taken in the proceedings and dismiss the action without prejudice. If the respondent fails to raise a jurisdictional objection in the statement of defence at the latest, the court will retain its jurisdiction and decide on the merits of the case.
The courts will also consider whether the existing arbitration agreement is null and void, ceased to be valid, or is incapable of being performed.
However, the Slovenian Arbitration Act provides that where the claimant files an action before a competent court and so breaches an arbitration agreement, arbitral proceedings may nevertheless be commenced or continued, and the arbitral tribunal may deliver an award while the issue is pending before the court.
The question of whether or not an arbitral tribunal may assume jurisdiction over individuals or entities that are neither party to an arbitration agreement nor signatories to the contract containing the arbitration agreement is not unambiguously addressed by national law, case law and theory. It appears that based on the national law, in practice, arguments for and against are regularly raised.
Under the Slovenian Arbitration Act, there is no possibility of preliminary relief to be awarded by the arbitral tribunal. However, unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, at any time before the issuance of the final award, issue an interim measure it considers appropriate having regard to the subject matter of the dispute.
Notably, before any such interim measure is issued, the opposing party (or parties) must be afforded the opportunity to present its (or their) case with respect to the request for any such interim measure. In exceptional cases, however, the arbitral tribunal may, if it considers it urgent, issue an interim measure before providing the opposing party with the opportunity to present its case on the request. While such interim measure is binding on the parties, it cannot be enforced through courts.
Once such interim measure is issued, the arbitral tribunal may modify, suspend or terminate it upon application of a party or of its own motion in exceptional circumstances with prior notice to the parties.
Moreover, the tribunal may require the party to provide appropriate security in relation to the issued interim measure.
Please note that only parties to the arbitration agreement may be bound by interim measures issued by the arbitral tribunal (ie, the tribunal may not bind third parties).
If the party fails to comply with the interim order issued by the arbitral tribunal and upon the request of the other party, the court may enforce such interim measure.
However, the courts will reject such enforcement if either the subject matter is not arbitrable or the decision violates public order. The enforcement may be also rejected if the liable party shows that (i) the requesting party has not provided the security related to the interim measure as ordered by the tribunal, or (ii) that the arbitral tribunal subsequently modified, suspended or terminated the interim measure.
The enforcement of an interim measure will also be refused if the court finds, of its own motion, that it is not possible to enforce the interim measure. Instead, and following the request of the party, the court may appropriately reformulate the interim measure to the extent necessary for the purposes of enforcing the measure.
The Slovenian Arbitration Act does not explicitly recognise the category of emergency arbitrator. It thus appears that the emergency arbitrator would be governed by the general rules governing tribunals and arbitrators.
The Ljubljana Arbitration Rules, however, set forth the rules of Emergency Arbitrator Proceedings with the emergency arbitrator having powers to issue interim measures. Emergency Arbitrator Proceedings may be initiated if a party needs an urgent interim measure that cannot await the constitution of an arbitral tribunal.
The Slovenian Arbitration Act does not explicitly provide that the arbitral tribunal can order security for costs. In theory, some authors argue that such order is permitted under the tribunal’s general authority to issue any interim measures it deems appropriate, whereas opposing arguments may also be found.
The Slovenian Arbitration Act provides that, apart from the mandatory rules, the parties are free to agree on the rules of their arbitral proceedings. If there is no such agreement, or if any subject matter is not covered by such agreement, an arbitral tribunal must conduct the arbitration in accordance with the Slovenian Arbitration Act, but it is free to proceed and conduct the proceedings in a way it considers appropriate, including with respect to its power to determine the admissibility, relevance, materiality and weight of any evidence.
Under the Slovenian Arbitration Act, there are no particular procedural steps prescribed. As explained in 7.1 Governing Rules, parties are free to regulate the substance, process and rules of their arbitral proceedings within the limits of mandatory provisions of the Slovenian Arbitration Act.
Arbitrators have various duties under the Slovenian Arbitration Act, including:
Arbitrators have various powers under the Arbitration Act, including:
There are no qualifications or other requirements for parties’ representatives in arbitration proceedings. The Slovenian Arbitration Act provides that the parties may be represented by any domestic or foreign natural person who has the general legal capacity (poslovna sposobnost). Therefore, the representative need not be a (qualified) lawyer. However, in proceedings before national courts, for example to set aside an award, stricter requirements apply, such as the requirement of qualified lawyers acting as representatives.
The Slovenian Arbitration Act does not prescribe any specific approach to the collection and submission of evidence. In practice, however, the tribunals comprised of Slovenian lawyers as arbitrators tend to be guided by the rules prescribed by the Slovenian Civil Procedure Act. For example, if one party requests the documents from the other in the document production phase, some arbitrators will likely be conscious of the Slovenian Civil Procedure Act provisions on the party’s obligation to provide documents (edicijska dolžnost).
The Slovenian Arbitration Act does not prescribe any specific rules of evidence for arbitral proceedings. However, it does prescribe the possibility of a tribunal to appoint an expert.
While the general power to decide on the admissibility of evidence and to determine its relevance and weight is at the arbitrators’ discretion, in practice, the tribunals comprised of Slovenian lawyers as arbitrators tend to be guided by the evidentiary rules prescribed by the Slovenian Civil Procedure Act. It is thus expected that each party state the facts and submit evidence of such a fact and to object, with evidence, to the factual allegations of the opposing party.
Moreover, the tribunal or one of the parties following a prior approval of the tribunal may request the court to assist in the taking of evidence or other action that the arbitral tribunal has not the necessary powers to carry out. The court will assist in the taking of evidence following the general rules of the Slovenian Civil Procedure Act, whereas the arbitrators have the right to participate in any such judicial taking of evidence and to ask questions.
The Slovenian Arbitration Act does not confer any direct power of compulsion to the arbitration tribunal. However, as mentioned in 8.2 Rules of Evidence, arbitrators may request the competent court to take actions that the arbitral tribunal is not empowered to carry out. If the court executes the request, it does so according to its rules of procedure prescribed by the Slovenian Civil Procedure Act.
The Slovenian Arbitration Act does not impose confidentiality duties upon parties and tribunals per se. However, the parties may, and in practice always do, either specifically or through agreement on institutionalised arbitration rules (eg, Article 50 of the Ljubljana Arbitration Rules), agree to keep their arbitration proceeding, including its constituent parts (eg, pleadings, documents, the award) confidential.
In Slovenia, an arbitral award must be issued in writing and signed by the arbitrator. If there is more than one arbitrator, the signatures of the majority of the tribunal members are sufficient to the extent that the reason for the arbitrator’s (or arbitrators’) failure to sign the award is declared. Moreover, the award must state its date and the seat of the arbitration. Unless agreed otherwise by the parties, the award must state reasons for the decision. The award must be handed over to the parties.
The delivery of the award is not subject to any time limits unless the parties have agreed otherwise, either by way of a particular agreement or an agreement on institutionalised rules.
The Slovenian Arbitration Act does not contain any explicit provisions on the types of remedies that an arbitral tribunal may award to the parties. Therefore, in principle, the available remedies are shaped by the law applicable to the substance of dispute. The limits, however, are implied by grounds for annulment of the award. In particular, if the awarded remedies violate public order of the Republic of Slovenia, the court will, of its own motion, annul the award. The Supreme Court of the Republic of Slovenia considers the relevant public order to be, in principle, international public order.
Based on the Slovenian Arbitration Act, unless otherwise agreed by the parties, either specifically or by reference to institutionalised arbitration rules, the tribunal is free to decide on the question of costs, including their allocation, and the tribunal’s fees. While the arbitrator’s fees are in practice almost always governed by the institutionalised rules, the general approach appears to be quite moderate and subject to “costs follow the event” principle.
The Slovenian Arbitration Act does not regulate the right of a party to recover interest. Such right is considered as a substantive right and will thus depend on the law applicable to the substance of the dispute.
There is no possibility to appeal an arbitral award under the Slovenian Arbitration Act. While not seen in practice, there appears to be no reason under the Slovenian Arbitration Act as to why the parties could not agree on arbitration that involves an appellate procedure with a tribunal of second instance.
In any event, a party may file an action before the competent court to annul an award on the basis of the following grounds.
Additional grounds are available to set aside an arbitral award rendered in arbitral proceedings with consumers and employees.
Under the Slovenian Arbitration Act, the parties cannot derogate from the annulment grounds (ie, expand or narrow the annulment grounds) presented in 11.1 Grounds for Appeal.
It is a settled Supreme Court practice that the court may not review the merits of the case (ie, révision au fond), and may only assess the reasons for annulment described in 11.1 Grounds for Appeal.
Former Socialist Federal Republic of Yugoslavia (SFRY) acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards on 26 February 1982 with the following reservations, as subsequently (on 28 June 1982) clarified:
The Republic of Slovenia as the successor state succeeded the New York Convention and, on the basis of Article 1(3), declared that the Republic of Slovenia will apply the Convention on a reciprocal basis only to those arbitral awards which were adopted on the territory of the other state party to the Convention and with respect to the disputes arising from the legal relations, contractual and non-contractual, which, according to Slovenian national legislation are considered as commercial (ie, commercial clause reservation). In 2008, together with adoption of the Slovenian Arbitration Act based on the Model Law, the Republic of Slovenia withdrew both reservations.
The Republic of Slovenia is also a signatory to the 1961 European Convention on International Commercial Arbitration and the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States.
Furthermore, the Republic of Slovenia has also ratified a number of bilateral investment treaties, as well as the Agreement for the termination of Bilateral Investment Treaties between the Member States of the European Union.
A domestic arbitration award may be enforced when a competent court declares it enforceable.
The courts will reject the request to declare an award as enforceable if it finds that (i) the subject matter of the dispute is not arbitrable; or that (ii) the award violates public order of the Republic of Slovenia. Once declared as enforceable, the award may be enforced through the regular means of judicial enforcement (in accordance with the Slovenian Enforcement and Security Act).
However, the courts will not reassess whether (i) the subject matter of the dispute is arbitrable or (ii) the award violates public order of the Republic of Slovenia, if at the time of filing of the request for the exequatur or the enforcement of the award, the request for the annulment of an arbitral award has already been resolved with a final judgment (ie, res judicata).
For a foreign arbitral award to be effective, it will first have to be recognised by the competent court in the Republic of Slovenia. Recognition and enforcement of foreign arbitral award are subject to 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
The sovereign immunity defence may be successfully raised at the enforcement stage in relation to all assets that the state or state entity can prove are functional to the exercise of public powers, as well as in circumstances provided for by international law.
The courts generally interpret the public policy grounds to refuse the enforcement of an award rather restrictively, although in the past a broader interpretation of public policy concerns was applied. In accordance with the recent position of the Supreme Court of the Republic of Slovenia, only international public policy is to be considered in the context of recognition and enforcement of arbitration awards. Therefore, arbitral awards that violate mandatory legal norms and moral rules, jeopardising the legal and moral integrity of the Slovenian legal system, would be considered as contrary to the Slovenian public policy. Furthermore, the courts apply (virtually) the same definition of public policy when assessing domestic and foreign arbitral awards.
The Slovenian Arbitration Act does not regulate class-action arbitration or group arbitration.
Generally, the conduct of qualified attorneys in Slovenia is subject to the ethical code (Kodeks odvetniške poklicne etike). Other representatives are not subject to any professional standards apart from those agreed by the parties, either directly or by choice of institutionalised rules of arbitration. For example, the Ljubljana Arbitration Centre has adopted the Arbitrator’s Guidelines, establishing the professional standards and practical tools applicable to arbitrators in arbitration proceedings.
There are no specific rules regulating third-party funding in arbitration proceedings in Slovenia.
Whilst the Slovenian Arbitration Act does not explicitly provide for rules on consolidating separate arbitral proceedings, the parties are free to agree, either directly or by choice of institutionalised rules of arbitration, on such an option.
For example, the Ljubljana Arbitration Rules allow for a possibility to consolidate two or more separate arbitration proceedings pending under the Ljubljana Arbitration Rules. Such possibility is subject to one of the following:
See 5.7 Third Parties.