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Polish Supreme Court order dated 2 March 2017 Case No. V CSK 392/16

1. There is no disagreement in the legal literature or the case law concerning the separability of an arbitration clause from the “main” contract. It is consistently accepted that the validity of an arbitration clause should be evaluated autonomously. Even when it is included in the form of a clause in the “main” contract, the arbitration agreement is not a provision of the contract, and thus its effectiveness is examined independently.

2. The assessment of the existence of authorization of an attorney-in-fact to conclude the arbitration agreement should be made independently of the assessment of the existence of the attorney’s authority to conclude the legal act which is the source of the legal relationship out of which disputes are to be submitted to the jurisdiction of the arbitral tribunal. Consequently, the assessment of the effectiveness of the authorization to conclude the arbitration clause is independent of the assessment of the effectiveness of the authorization to conclude the “main” contract, and a determination that the attorney-in-fact was duly authorized to conclude the contract will not be controlling for the assessment of whether he was also duly authorized on behalf of the principal to submit disputes arising out of the contract to the jurisdiction of the arbitral tribunal. In other words, the law governing the arbitration agreement itself does not extend to issues connected with the power of attorney, i.e. issues connected with the authorization to conclude the arbitration agreement do not fall within the scope of the statute of the arbitration agreement.

3. The requirement of a power of attorney to make a specific transaction must arise pursuant to a statute ([Civil Code] Art. 98, end of the second sentence), which means that the requirements for this cannot be imposed if not expressly provided for a given action by any statute. No statute provides for such a requirement with respect to the type of power of attorney in relation to an arbitration agreement. This means that there are no grounds for holding that an arbitration agreement could be concluded only by an attorney holding a power of attorney for this specific action; such a power of attorney is therefore not essential for the effectiveness of the arbitration agreement, although obviously it is sufficient.

4. Generally, an arbitration agreement is an act exerting a direct impact on the manner of realization of the legal protection to which the party is entitled. The rank of an arbitration agreement and its procedural consequences are thus serious enough that concluding an arbitration agreement should be treated as an act outside the ordinary course of business. Its effects are of a procedural law nature, shaping the procedural situation of the party bound
by the agreement.

5. In the field of international arbitration, written form [for an arbitration agreement] understood [as the exchange of documents by email] is indeed sufficient, even if it does not meet the requirements for written form provided by the Civil Code.

Publication date: 02-03-2017 | Case no.: V CSK 392/16

Key issues: arbitration agreement

id: 20439

Katowice Court of Appeal order dated 15 December 2016 Case No. V ACz 1309/16

1. The validity of an arbitration agreement is determined by the regulations in force at the time it was made.

2. Under Art. 697 §1 of the Civil Procedure Code, arbitrability meant the capacity of the parties to independently decide on their rights within the given legal relationship, while under Art. 1157 of the Civil Procedure Code the possibility of submitting a dispute to an arbitral tribunal is determined by its “settleability.” The two definitions of arbitrability differ only on a linguistic level, but on the conceptual level they are essentially the same.

3. The condition of arbitrability is the abstract ability of the parties, leaving aside the concrete circumstances and legal conditions, to dispose of the rights arising out of the legal relation between them, not the possibility of their concluding a specific judicial settlement or whether such a settlement would be permissible under Art. 203 §4, in connection with Art. 223 §2, of the Civil Procedure Code, applying Art. 917 and Art. 58 of the Civil Code. This means that certain categories of legal relations are deprived of arbitrability, not certain categories of claims arising out of them. The possibility of submitting a dispute
to arbitration concerns the abstractly defined legal relations, not the claims arising out of them.

4. Arbitrability is determined by the substance of the legal relation and the disputes arising out of it, which the parties may freely dispose of, and not the nature of the claims arising out of those relations. From this perspective, neither the nature of the claims (for performance, for a declaration, or for determination of a legal relation or right), nor the nature of the court’s ruling concerning the given claim (e.g. declarative or constitutive), nor the effects are such ruling are relevant.

5. A dispute concerning exclusion of a shareholder from a limited-liability company may be the subject of an effective arbitration agreement under Art. 1157 in connection with Art. 1163 §1 of the Civil Procedure Code.

Publication date: 15-12-2016 | Case no.: V ACz 1309/16

Key issues: arbitrability of dispute, arbitration agreement

id: 20434

Kraków Court of Appeal order dated 22 November 2016 Case No. I ACz 1997/16

1. Under Art. 1194 §2 of the Civil Procedure Code, in every instance, and thus also when ruling under general principles of law and equity, the arbitral tribunal shall take into consideration the provisions of the contract and the established customs applicable to the given legal relation. Such established customs include lex mercatoria (autonomous commercial law). Under either field, the basis for the resolution of the validity of the claim by the arbitral tribunal, depending on the procedural stance of the respondent, may be the relevant institution connected with the defence of setoff.

2. The legal construction of setoff may be relevant also for the dispute before the arbitral tribunal. In particular, once the dispute is pending before the tribunal, assertion by the opposing party of an effective defence (under substantive and procedural law) of setoff, depending on the substance of the overall procedural defence by the respondent in that proceeding, may exert the effect of acknowledgement of the debt by the party asserting that defence in the proceeding, and in further consequence lead to a kind of modification of the dispute in the proceeding (depending on the position of the party initiating the proceeding), which becomes an evaluation of the existence of the claim covered by that defence.

3. In a situation in which the existence of the claim determined exclusively by the defence of setoff constitutes the subject of the dispute in another proceeding, there are no grounds for finding that the plaintiff has a legal interest in obtaining a declaration that it was effectively set off. … Given such arrangement of the procedural relations between the parties, the arbitration agreement made by the parties applies to issues covered by the agreement within the meaning of Civil Procedure Code Art. 1161 (as it is connected with the issue of effective performance by the respondent of the obligation covered by the agreement), and it cannot be found that the agreement has ceased to be in force (Art. 1165 §2).

4. The construction of the institution of setoff in the specific conditions of the proceeding before the arbitral tribunal may speak in favour of considering it in that proceeding (if it was connected with acknowledgement of the claim covered by the arbitration agreement), unless the permissibility of asserting such defence (e.g. in a proceeding for an order for payment) is expressly excluded. Analogous reasons may constitute a basis for refusing enforcement of the arbitration award by the state court under Civil Procedure Code Art. 1214 §3(2).

5. After an arbitration award is enforced by issuance of an enforcement clause for the award pursuant to Civil Procedure Code Art. 1214 §2 (also considering the repealed portion of Art. 777 §1(2)) of the code), the award constitutes a writ of enforcement coming from a court, and consequently Art. 840 of the code may be applicable.

6. Leaving to the court the discretion to select the method of security does not mean that the choice can be arbitrary. The court is bound by the demand stated by the party applying for the security as to the method of security, the nature of which may relate only to the purpose of the proceeding, and in consequence may not affect the realm of procedural actions the other party is entitled to by law in terms of its freedom to exercise the legal means afforded to it in another proceeding. There is no justification in the civil procedure regulations in question for obstructing the course of proceedings before an arbitral tribunal.

Publication date: 22-11-2016 | Case no.: I ACz 1997/16

Key issues: interim measures, jurisdiction of arbitral tribunal

id: 20435

Katowice Court of Appeal judgment dated 18 November 2016 Case V ACa 67/16

1. The set of fundamental principles of procedure before the arbitral tribunal includes only the rules arising under the Civil Procedure Code and the rules agreed by the parties, which does not include the custom [under §9(3) of the Code of Best Practice for Permanent Arbitration Courts, providing that a party applying for default appointment of an arbitrator subject to nomination by both parties or by the previously appointed arbitrators should notify the appointment authority of all candidacies considered and rejected by the parties or the arbitrators and none of those persons should be appointed in the default procedure].

2. The legal classification of a contract by the arbitral tribunal is not subject to review on a petition to set aside an arbitration award.

Publication date: 18-11-2016 | Case no.: V ACa 67/16

Key issues: arbitration procedure, arbitrator, petition to set aside arbitration award

id: 20437

Polish Supreme Court order dated 27 October 2016 Case no. V CSK 66/16

The assertion of the impermissibility of the cassation appeal because it does not meet the requirement set forth in Art. 3982 §1 of the Civil Procedure Code concerning the amount in dispute in the cassation appeal is groundless. The requirement set forth in that provision does not apply to a cassation appeal in a proceeding for recognition and enforcement of an arbitration award or a settlement concluded before an arbitral tribunal (Civil Procedure Code Art. 1215 §3), because the permissibility of a cassation appeal is governed in each proceeding in a specific manner, which means that the reference provided in Civil Procedure Code Art. 13 §2 does not apply to the issue of the permissibility of this instrument of review in proceedings other than a civil trial.

Publication date: 27-10-2016 | Case no.: V CSK 66/16

Key issues: arbitration agreement, recognition and enforcement of foreign arbitration award

id: 20438

Katowice Court of Appeal order dated 24 October 2016 Case No. V ACz 1118/16

The rule provided in Art. 5 of the Civil Code cannot be applied to institutions of procedural law. … Thus abuse of a subjective right is not, for example, a procedural act such as filing a statement of claim, but pursuing claims via the courts when this constitutes exercise of a right contrary to principles of social coexistence or the socioeconomic purpose of the right. … In asserting the defence of the arbitration clause, the defendant did not exercise any subjective right arising out of a civil-law relationship, but only a procedural entitlement arising under Art. 1165 §1 of the Civil Procedure Code.

Publication date: 24-10-2016 | Case no.: V ACz 1118/16

Key issues: arbitration agreement

id: 20433

Polish Supreme Court judgment dated 7 October 2016 Case No. I CSK 592/15

1. The essence of an action to set aside an arbitration award is to provide a review mechanism respecting on one hand the separateness and autonomy of arbitration, and on the other hand preventing the functioning in legal circulation of rulings by non-state courts infringing the rule of law. A proceeding to set aside an arbitration award does not lead to reconsideration of the merits of the dispute between the parties, but is intended only to verify the applicant’s allegations of the existence of the grounds raised in the application provided for in Civil Procedure Code Art. 1206 §1, and assess whether any of the grounds provided for in Civil Procedure Code Art. 1206 §2 exist, whether or not asserted by the applicant.

2. Depriving a party of the ability to defend its rights before the arbitral tribunal occurs when the arbitral tribunal for example failed to notify the party of the date of the hearing after which the award was announced, when it did not hear out the party at all or give the party the opportunity to submit statements with respect to the matter in dispute. It does not constitute depriving a party of a defence to fail to admit and consider evidence offered by the party, if the arbitral tribunal justifies that procedural decision duly and in accordance with the accepted rules.

 3. Violation of the fundamental principles of the Polish legal system may occur in the realm of both substantive law and procedural law, which leads to a distinction between the substantive legal system and the procedural legal system. The fundamental principles of the Polish legal system should be understood to mean constitutional principles as well as the leading principles of other fields of substantive and procedural law; the latter undoubtedly include the principle of the equality of the parties.

Publication date: 07-10-2016 | Case no.: I CSK 592/15

Key issues: petition to set aside arbitration award

id: 20432

Polish Supreme Court resolution of 28 September 2016 Case No. III CZP 40/16

1. Enforcement of an arbitration award issued in the Republic of Poland or a settlement concluded before such arbitral tribunal is ruled on by the court of appeal in closed session in a panel of a single judge.

2. A proceeding for recognition or enforcement of an arbitration award issued in Poland or a settlement concluded before an arbitral tribunal in Poland is an auxiliary proceeding, while a proceeding for recognition or enforcement of an arbitration award issued abroad or a settlement concluded before such a foreign arbitral tribunal is analogous to a proceeding on the merits of the case.

3. Art. 12131 §2 of the Civil Procedure Code justifies application as relevant of Art. 390 §1 of the Civil Procedure Code.

4. Recognition and enforcement are treated in the law uniformly, with respect to an arbitration award issued in Poland or a settlement concluded before an arbitral tribunal in Poland, on the one hand, and an arbitration award issued abroad or a settlement concluded before a foreign arbitral tribunal, on the other hand.

5. In proceeding for recognition or enforcement of an arbitration award issued in Poland or a settlement concluded before an arbitral tribunal in Poland, review of the order is provided for through an interlocutory appeal to another panel of the court of appeal (Civil Procedure Code Art. 1214 §4). Such review is conducted in a panel of three judges (Civil Procedure Code Art. 367 §3, first sentence, in connection with Art. 397 §2, first sentence, Art. 3942 §2 and Art. 1214 §4).

Publication date: 28-09-2016 | Case no.: III CZP 40/16

Key issues: recognition and enforcement of domestic arbitration award, recognition and enforcement of foreign arbitration award

id: 20431

Warsaw Court of Appeal order dated 28 September 2016 Case No. I ACa 843/16

1. Art. 9 of [the Act of 10 September 2015 Amending Certain Acts to Encourage Amicable Methods of Dispute Resolution] ensures the continuity of application of the prior regulations of procedural law in cases pursuant to a petition to set an arbitration award which were commenced before the state courts prior to 1 January 2016. In cases in which a petition to set aside an arbitration award is filed with the state court after 31 December 2015, the new regulations apply.

2. Compliance with the deadline for filing a petition to set aside an arbitration award, filed with a state court not authorized to consider cases of this type, is determined by the date on which the unauthorized court (not having subject-matter jurisdiction) forwarded the case to the proper court.

Publication date: 28-09-2016 | Case no.: I ACa 843/16

Key issues: petition to set aside arbitration award

id: 20436

Polish Supreme Court order dated 25 May 2016 Case V CSK 257/15

The term “agreement in writing” referred to in Art. II (1) and (2) of the [New York] Convention also includes an agreement which provides for transfer of the rights covered by the agreement. Submission by a party seeking enforcement of a foreign arbitration award of a written agreement containing an assignment of a claim covered by an arbitration clause thus constitutes a formal requirement for the application identical to the requirement set forth in Art. IV(1)(b) of the convention.

Publication date: 25-05-2016 | Case no.: V CSK 257/15

Key issues: recognition and enforcement of foreign arbitration award

id: 20423

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