Arbitration in the Case Law of the Constitutional Court of the Czech Republic with Regard to the Nature and Purpose of Arbitration

Arbitration is defined in the Czech Republic in Act No. 216/1994 Coll. of 1 November 1994 on Arbitration and on Enforcement of Arbitration Rulings, as amended (ArbAct [CZE]). According to Section 2, paragraph 1 of ArbAct [CZE], parties may agree that matrimonial disputes between them, with the exception of disputes arising in connection with the execution of a judgment in incidental disputes, the hearing and settlement of which would otherwise be in the jurisdiction of a court, is to be decided by one or several arbitrators or a permanent court of arbitration (arbitration agreement).Defining and approaching arbitration this way suggests that the law entrusts/delegates to private entities, under the applicable regulations, the exercise of some of its powers relating to the settlement of disputes. Incidentally, this conclusion is accepted by the majority (save for exceptions) of professionals in the Czech Republic. Some authors do not deny the effects of the role and function of the state on arbitration in the Czech Republic, but they lean toward a mixed theory of arbitration, mainly pointing out that even though the appointment of an arbitrator or an arbitration tribunal has a private nature and arbitration may only be initiated and conducted based on an existing agreement of the parties, arbitration itself retains its public-law character. The state on the one hand exercises its oversight powers vis-a-vis arbitration courts and helps through state courts wherever arbitrators are unable to complete certain tasks, and, on the other hand, it confers the same effects, subject to certain conditions, to arbitration rulings as to judgments delivered by courts.Despite the above mentioned relatively intensive discussions about the prospects of instituting greater control over arbitration, it needs to be said that the official case law of Czech courts attributes clearly contractual nature to arbitration (as of yet). According to the rulings (referred to in the published paper), activities conducted by arbitrators cannot be classified as law finding; they consist of clarifying/rectifying an existing contractual relationship in representation and based on the free will of the parties. As regards this issue, however, the Constitutional Court of the Czech Republic failed in 2002 to determine whether on this basis, a simple agreement between parties may gain the status of an enforceable ruling (the Czech law does not require any exequatur decision).The authors believe that no matter what effort is used to separate in any way arbitration from state power, it is always state power (public authority) that defines the legal framework within which it is willing to accept arbitration. Attempts to portray arbitration as a sort of denationalized process are chimerical. Although the authors do not consider this trend positive, it is necessary to acknowledge the actual state of the legal and commercial environment on the global scale, where it may be somewhat upsetting to conclude that the willingness to fulfill one's obligations in today's world is very distant from the model state of affairs. For this reason, it is difficult to imagine that a claimant would initiate formal action (whether court litigation or arbitration) without a guarantee that a decision in the matter in question will be enforced by the public power for the needs of [the possible] future enforcement (execution) of such a decision. It is only public authority that, through a country's legal system, determines whether and under what conditions the powers of arbitrators are recognized and, more importantly, whether and under what conditions the enforcement of rulings delivered by arbitrators is accepted. Such a legal framework, which derives exclusively from national laws (i.e. a country's lawmaking power and the political and legal standpoint of every individual state as regards the enforcement of justice and law finding, is often of fundamental importance for deciding the country where international arbitration is to take place in the sense of the seat of arbitration.