Greece passes new bill on international commercial arbitration.

Date: 7th March 2023

Greece is innovative with the issuance of new set of rules on international commercial arbitration. LLF Partner Dr. Sotiris Dempegiotis discusses key takeaways

More than twenty years after the entry into force of Law 2735/1999, Greece modernizes its national rules on international commercial arbitration.

I. Introduction

1. The new Law 5016/2023 (Law) aims at modernizing the national rules on international commercial arbitration, taking into account the 2006 amendments to the UNCITRAL model law (Model Law), the international developments and the contemporary trends in theory and practice of international arbitration, as well as the need for verbal and other relevant improvements to the text of the previous Law 2735/1999.
2. The new law repeals the Law 2735/1999, which is replaced by the former, and interrelates with (as was the case with Law 2735/1999) the New York Convention of 1958 (NYC) (Presidential Decree 4220/1961) in regulating the recognition and enforcement of foreign arbitral awards.
3. The Law regulates the international (from the perspective of the Greek legal order) commercial arbitration, thereby maintaining the existing binary system applicable to the Greek regulatory framework of arbitration. The Law incorporates into Greek legislation nearly all the 2006 amendments of the Model Law, although its modernizing character is not limited thereto.
4. In what follows, the key amendments and innovations introduced by the Law 5016/2023 are briefly discussed. The structure of the following sections reflects the chapters of the Law.

II. Chapters A and B – Objective – Scope – General Provisions

5. Objective and scope of application. The new articles 1 and 2 set out the objective and the scope of application, respectively, of the Law.
6. Agreement for international arbitration. Article 3.2.c explicitly provides that the parties may agree on the applicability of the Law, irrespective of whether the other conditions (which particularize the principle of territoriality) set forth in paragraph 3.2 are fulfilled. In any case, the requirement that the seat of arbitration must be in Greece remains.
7. Arbitrability. Article 3.4 establishes the rule of arbitrability of the disputes, absent any express prohibition by law. Therefore, an important (rebuttable) presumption in favor of arbitrability is established for all kinds of disputes.
8. Importance of the principle of good faith. The new provisions of article 5 incorporate into Greek law the respective provisions of the Model Law. These guiding provisions point out the international origin and the unifying role of the Model Law on international arbitration and highlight the principle of good faith, not only as an interpretation principle applicable in the context of implementing the Law, but also as a general duty of those involved in the arbitration proceedings.
9. Three-Member Court of Appeals. Article 9.2 clarifies that the Three-Member Court of Appeals is competent to hear any application for setting aside an arbitral award issued in Greece and provides that the applicable procedure thereof is the one stipulated in articles 614 – 622B of the Greek Civil Procedure Code (GCCP).

III. Chapter C – Arbitration Agreement

10. Arbitration agreement to be in writing serving evidentiary purposes. The new provisions of article 10 – following the global trend and contemporary practice – dictate that the arbitration agreement has to be in writing. However, this requirement only serves evidentiary purposes. The term document is defined in a quite modern and flexible manner, which does not fall short of legal certainty. Paragraph 4 provides that the parties’ unconditional participation in the arbitration proceedings constitutes evidence of the existence of an arbitration agreement.
11. Substantive validity of the arbitration agreement. While the formal validity of the arbitration agreement is regulated in article 10, the new article 11 paragraph 1 regulates the substantive validity of the arbitration agreement, establishing a specific conflict-of-law rule. The introduction of this provision of article 11 is also reflected in the conflict-of-law rule stipulated by article 43.2.a.aa of the Law. Paragraph 2 of article 11 establishes the rule that bankruptcy and other insolvency proceedings do not affect the arbitration agreement, unless otherwise provided by law, which is a rule of a great practical importance in the arbitration practice.

IV. Chapter D – Composition of the Arbitral Tribunal

12. Uneven number of arbitrators. Paragraph 1 of article 14 expressly provides for the number of arbitrators which has to be uneven.
13. Multi-member arbitral tribunals. The new article 16 regulates the appointment of the members of a multi-member arbitral tribunal in case of a multi-party arbitration. The provisions of article 16 are subject to parties’ contrary agreement and aim at ensuring the progress of the arbitration proceedings in cases where more than one claimants or respondents do not agree on the joint appointment of an arbitrator, each for their side. In such cases, the solution is to be given (upon a party’s request) by the national court of article 9.1 of the Law, having wide power to decide on the confirmation or the repeal of already appointed arbitrators, a decision which is not subject to any legal remedy.
14. Overcoming the deadlock regarding the constitution of the arbitral tribunal. In the same direction (to safeguard the progress of the arbitration proceedings), the new article 17 includes provisions of last recourse in any case of impossibility of constitution of the (single or multi-member) arbitral tribunal. These provisions refer to the national court of article 9.1 of the Law (and its aforementioned wide powers) and are subject to any contrary agreement by the parties.
15. Decision on a challenge of an arbitrator. Article 19.2 dictates that the decision regarding the challenge of an arbitrator, which is submitted to the arbitral tribunal, is rendered by the latter, without the participation of the challenged arbitrator, who however retains the right to present his/her position on the challenge.
16. Replacement of an arbitrator. In order to deal with relevant guerilla tactics which often appear in arbitration, article 21.1 repeals – as regards the replacement of an arbitrator – the requirement of the unanimous decision of the arbitral tribunal, under its new composition, regarding the stage as from which they must resume the arbitration proceedings that were discontinued due to the reason that resulted in the need of replacement.
17. Arbitrators’ and secretary’s liability. For the sake of clarity, article 22 introduces a provision regarding the arbitrators’ (and the secretary’s if applicable – see, article 27.4) liability, which is limited to willful misconduct and gross negligence.

V Chapter E – Jurisdiction of the Arbitral Tribunal

18. Challenge of an arbitral award on jurisdiction. Article 23.4 of the Law provides for the challenge of a partial award on jurisdiction, upon agreement of the parties or further to the arbitral tribunal’s consent. In practice, the second case (consent of the arbitral tribunal) would apply in rare borderline cases, in which the issue of the jurisdiction of the arbitral tribunal is indeed doubtful, thus an early relevant determination fosters the arbitration proceedings in terms of time efficiency, for the benefit of all those involved. A relevant critical issue, in case of such tribunal’s consent, is the influence of the consent on the progress of the arbitral proceedings (postponement, delay, progress). From the combination of this provision with the one in article 43.2.a.aa of the Law, it follows that both an award confirming and an award denying jurisdiction can be subject to the challenge at hand. The time limit to challenge a partial arbitral on jurisdiction, following the arbitral tribunal’s consent, is thirty (30) days from the tribunal’s consent or the service of the award (whichever occurs last).
19. Regulation of multi-party arbitrations. The new article 24, which does not reflect provisions of the Model Law, regulates multi-party arbitrations. Paragraph 1 provides the possible forms of expansion of the ratione personae scope of the arbitral proceedings (participation of an additional or a main party in the arbitration) and it regulates the manner in which such an expansion may be achieved. Following acceptance of such an expansion, the new parties have the same rights and obligations as the initial parties to the arbitration. Any new party to the arbitration accepts the already constituted arbitral tribunal. Paragraph 2 regulates the consolidation of arbitral proceedings provided that such proceedings are grounded on the same arbitration agreement, as well as that the consolidation promotes the principles of legal certainty and expedition of the arbitration proceedings and is deemed to ensure a uniform determination of relevant issues and disputes. The arbitral tribunal has the power to determine all cases covered by article 24, following consideration of the factual and legal background of each case and after all the parties concerned or any other arbitral tribunal, that happens to be involved, have taken the opportunity to express their position. The last paragraph of this article clarifies that its provisions are subject to any contrary agreement by the parties.
20. Interim measures granted by the arbitral tribunal. Article 25 is one of the most important articles of the Law and concerns the crucial issue of the arbitral tribunal’s power to order interim measures. Paragraph 1 provides for such power, unless otherwise agreed by the parties. The arbitrators’ discretion in choosing the appropriate – according to the circumstances – interim measure is significant and wide.  Likewise, their discretion to amend, suspend or terminate an interim measure already granted by them. Paragraph 2 sets forth the requirements for granting interim measures (urgent circumstances or prevention of imminent danger and presumption of the existence of a right to be secured), as well as the principles governing the tribunal’s relevant determination, in particular the principle of proportionality. Paragraph 3 provides that in extremely urgent circumstances, the arbitral tribunal may grant a preliminary order for the arrangement of a situation until its decision on the request for an interim measure is issued. In principle, providing to the party against whom a preliminary order is directed the opportunity to present its position constitutes a prerequisite for the granting of any preliminary order, unless doing so would undermine the effectiveness of the preliminary order. In this exceptional case, the arbitral tribunal shall provide, after the lapse of 24 hours, an opportunity to the party against whom a preliminary order is directed to present its case during a dedicated hearing. A preliminary order automatically expires after twenty (20) days from the date on which it was granted, unless otherwise ordered by the arbitral tribunal in exceptional circumstances. Reflecting the international arbitration practice, paragraph 4 sets out the binding effect of the interim measures and the preliminary order as well as their temporary validity, given that they do not affect the arbitral tribunal’s judgment on the merits of the case. The provisions of paragraph 5 deviate from the – problematic in practice – system of Law 2735/1999 regarding the ratification of the interim measures ordered by the arbitral tribunal by the national courts and they adopt the system of the Model Law on the recognition and enforcement (within the Greek territory) of the interim measures. Article 25 does not adopt all the grounds for refusing recognition or enforcement set out in article 17 I of the Model Law. However, the recognition or enforcement of the interim measures shall be refused on grounds of public policy, within the meaning of Article 43.2.b.bb, and in cases where the national courts would have already been seized, upon relevant request, to order a similar interim measure. Paragraph 6 provides for the liability of the requesting party, expressly establishing the duty of good faith throughout the arbitral proceedings. This paragraph provides that the requesting party may be condemned to reasonable damages (violation of the duty of good faith or ex post finding that the interim measure was unjustified). The claim for reasonable damages/compensation may be brought either before the arbitral tribunal itself or before the competent national court.

VI. Chapter F – Conduct of the arbitration proceedings

21. Confidentiality and (administrative) secretary. Article 27 contains two new provisions. Paragraph 3 provides that the issue of confidentiality (with respect to the existence of the arbitration, the arbitration proceedings and the arbitral award) is subject to the parties’ or the arbitrators’ autonomy. Paragraph 4 regulates the issue of the administrative secretary to the arbitral tribunal, clarifying the secretary’s obligations and responsibility and referring to the relevant order of the tribunal, which regulates the secretary’s duties, remuneration and any other relevant issue.
22. Initial submissions/pleadings. Article 29 provides for the initial submissions of the arbitral proceedings, namely the Request for Arbitration and the Answer to such Request. These submissions are in principle short and brief, reflecting the spirit and logic of articles 4 and 5 of the ICC Arbitration Rules.
23. Main submissions/pleadings. Article 31 provides for the Statement of Claim, which is the main memorial in which the claimant sets out the subject matter of the dispute, its requests and the facts supporting its case. Respectively, respondent’s main memorial is the Statement of Defense. Both claimant and respondent must rely on evidence, irrespective of whether or not such evidence is produced along with the relevant statement. Therefore, the distinction between the initial submissions, which in principle are short and brief (Request for Arbitration and Answer to the Request), and the main submissions, which in principle are more detailed and analytical (Statement of Claim and Statement of Defense), is clear. The parties and the arbitrators may structure the arbitral proceedings in any other suitable manner (more submissions, simultaneous rather than sequential submissions, etc.). Pursuant to paragraph 2 of Article 31, each party may, upon request to the arbitral tribunal, amend or supplement its claim or its answer during the arbitral proceedings, subject to the permission of the tribunal, particularly in case of a belated submission of such a request.
24. Production of documentary evidence. The new provisions of article 35, not included in the Model Law, relate to the methods of document production and submission of any other piece of evidence. These provisions focus on the relevant power of the arbitral tribunal to order the parties – under certain conditions and at any stage of the arbitral proceedings it deems appropriate – to produce certain documents or other concrete evidence. These provisions does not relate to the document production procedure following a party’s respective requests, a procedural step which is typically agreed by the parties or ordered by the arbitral tribunal and takes place in a (pre-)determined manner.

VII. Chapter G – Rendering the award and termination of the arbitral proceedings

25. Service of the award. Paragraph 4 of article 40 clarifies that the (informal) receipt of a copy of the original award by each party shall not be deemed as a service for the purposes of commencing the time limit set out in article 43.3 of the Law.
26. Additional award. Paragraph 3 of article 42 introduces the Model Law provisions on the arbitral tribunal’s power to issue, upon a party’s request, an additional award as to claims presented in the arbitral proceedings but omitted from the arbitral award.

VII. Chapter G – Rendering the award and termination of the arbitral proceedings

27. Exceeding the power of the arbitral tribunal. Point ac of Article 43.2.a clarifies that a case of exceeding the arbitral tribunal’s power also occurs when the arbitral award contains determinations on matters beyond the parties’ requests (ultra petita).
28. Grounds of appeal for reconsideration as grounds for setting aside the arbitral award. In the same article a new case (e) is added according to which the grounds for the bringing of an appeal (for reconsideration [αναψηλάφηση]), under article 544 paras. 6 and 10 of the GCCP, constitute grounds for the application for the setting aside of the arbitral award. In this regard, the time limit for the bringing an application for the setting aside is determined pursuant to the provision of article 545 GCCP (see article 43.3 of the Law).
29. Contradiction with public policy. Pursuant to point bb of article 43.2.b, for the setting aside of the award where the award is in conflict with international public policy, the said public policy ground applies regardless of whether the arbitrators applied domestic or foreign law on the merits of the case. The clarification at issue aims to correct previous relevant case law (Supreme Court’s Judgment No. 2111/2017).
30. Starting point of the time limit for a setting aside application. Paragraph 3 of article 43 clarifies that the starting point of the time limit for the filing of an application for the setting aside of the award is the date of service of the arbitral award, as opposed to the date of the (informal) receipt of the award contemplated under article 40.4 of the Law.
31. No ground for setting aside the award by own acts or omissions. The new paragraph 4 of article 43 provides that no person may create a ground for the setting aside of an arbitral award by his/her own acts or omissions.
32. Application for setting aside referred to the arbitral tribunal. The new paragraph 5 of article 43 provides that the Court of Appeal, hearing the application for the setting aside of the arbitral award, may refer the dispute, under certain conditions, to the arbitral tribunal that issued the arbitral award in order [for the latter] to correct the defect found by the Court of Appeal. If for any reason the arbitral tribunal which issued the arbitral award cannot be reconstituted, the relevant provision may not be applied.
33. Revival of the arbitration agreement. The new paragraph 6 of article 43 provides for the revival of the arbitration agreement in respect of the adjudicated dispute in case the arbitral award is set aside.
34. Waiver of the right to apply for the setting aside of the arbitral award. The new paragraph 7 of article 43 provides for the parties’ possibility to waive at any time – by written, express and specific agreement to that effect – their right to apply for the setting aside of the arbitral award. In this case, the parties retain the right to raise such grounds in the context of the enforcement/execution proceedings (as grounds for opposition to such enforcement/execution).

IX. Chapter I – Recognition and Enforcement of Awards

35. Res Judicata and Enforceability of the arbitral awards. Paragraph 2 of article 44 contains three new provisions. The first concerns a direct reference to the provisions of the GCCP on the res judicata effect of court judgments. The second provides that the res judicata of arbitral awards also covers preliminary questions determined by the arbitral tribunal and covered by the arbitration agreement. The third sets out that an arbitral award is effective against third parties only if such parties are bound by the arbitration agreement.
36. Incorporation of articles 35.1 and 35.2 of the Model Law. Despite the reference to the NYC contained in paragraph 1 of article 45 of the Law, paragraphs 2 and 3 of article 45 incorporate in Greece the provisions of Articles 35.1 and 35.2, respectively, of the Model Law.

X. Chapter J – Arbitration Institutions

37. Article 46 contains provisions for the establishment and operation of arbitration institutions in Greece.

XI. Chapter K – Authorizing, Transitional and Repealed Provisions

38. Articles 47-49 of the (new) Law contain the relevant provisions. It is provided that upon the entry into force of the (new) Law, Law 2735/1999 is repealed and a transitional provision is introduced for arbitrations initiated before the entry into force of the (new) Law. According to article 48.1 of the Law, arbitrations initiated before the entry into force of the Law shall continue to be governed by Law 2735/1999. For these arbitrations, the time (and manner) of commencement will be considered in accordance with the provisions of Law 2735/1999.