Justice goes east

Central and Eastern European countries such as Hungary, Poland and the Czech Republic, are queuing up to join the European Union. But however keen British contractors are to take advantage of the resulting infrastructure and commercial development, they may be put off by these countries' unsophisticated court systems.

The problem is that these courts do not have the resources or experience to tackle some of the more complex commercial disputes that construction can give rise to. In Hungary and the Czech Republic, for example, it can take up to five years to obtain a final judgement – which would be disastrous to a construction project. These problems, which were highlighted by the EU's Agenda 2000 report on enlargement, could prove to be a barrier to accession. Furthermore, the development of Eastern European court systems may be a lengthy and costly process.

But do these risks make the option of being a pioneer and getting in early unacceptable? Not necessarily. Central and Eastern European nations are increasingly familiar with arbitration, which could serve well as a stopgap while the wheels of European integration grind on. It's quicker than the courts: with experienced advice and determined arbitrators, an arbitration award can usually be achieved within six to 12 months, depending on the agreement and the rules adopted.

International arbitration awards are also more widely enforceable than court judgments, because nearly all the world's major trading nations, including a number of former Soviet Union and Eastern Bloc jurisdictions, have joined the New York Convention. This means that international arbitration awards made in those countries can be enforced by the courts in other NYC signatory countries.

Most jurisdictions in the east have their own independent arbitration institutions catering for both domestic and international commercial disputes. But the use of arbitration to resolve disputes in these jurisdictions is still relatively low. Fortunately, western institutions such as the UK's Chartered Institute of Arbitrators are working to raise awareness and understanding of arbitration. Promoting arbitration and ADR can be a challenge, because some legal systems still start from a position of suspicion of any processes that place themselves as alternatives to state-administered courts. Also, lawyers of one jurisdiction can be resistant to ideas thrust upon them by lawyers from another.

To overcome these problems, the emphasis for UK arbitration specialists promoting arbitration in the east is to train local practitioners to be trainers themselves. And this training is not just aimed at lawyers – civil engineers and other construction professionals are being encouraged to qualify as arbitrators too. This will ensure that there is a solid construction base to the fledgling profession of arbitration in the east, where major infrastructure investments are likely to be made for many years to come.

UK expertise is also being used to advise on the drawing up of contracts. This should help UK construction firms win business in the region, as they will be pitching for a form of contract that is already familiar to them.

As a local community of arbitrators emerges, an arbitration system that is appropriate to its local needs can develop and take its place on the world stage. With focused and effective local court procedures to support arbitration and enforce awards, commercial parties will be able to refer their disputes to arbitration with confidence. Meanwhile, the limited resources for investment in their court systems could be directed to the needs of individual citizens and hopefully help towards eastern nations' ultimate accession to the EU.