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Judgment of the Court of Justice of 13 May 2015, Gazprom

Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as not precluding a court of a Member State from recognising and enforcing, or from refusing to recognise and enforce, an arbitral award prohibiting a party from bringing certain claims before a court of that Member State, since that regulation does not govern the recognition and enforcement, in a Member State, of an arbitral award issued by an arbitral tribunal in another Member State.

Publication date: 13-05-2015 | Case no.: C-536/13

Key issues: jurisdiction of arbitral tribunal, New York Convention, recognition and enforcement of foreign arbitration award

id: 20392

Warsaw Court of Appeal judgment dated 7 May 2015 Case I ACa 1557/14

In light of the formalized nature of proceedings on a petition to set aside an arbitration award, as expressed in the exhaustive list of grounds for the petition and the fact that the court is bound by the grounds asserted in the petition, the mere fact that the bounds of the petition extend to the entire arbitration award is insufficient to consider during the appellate proceeding an allegation that was not asserted in the petition.  

It is accepted that an arbitration award is subject to being set aside under the public policy clause if an infringement of substantive law by the arbitration court leads to consequences irreconcilable with the fundamental principles of the Polish legal system, that is, effects that are plainly and grossly contrary to such principles or any one of them.

The principle of the freedom of economic activity is one of the fundamental principles of the Polish legal system.

Publication date: 07-05-2015 | Case no.: I ACa 1557/14

Key issues: petition to set aside arbitration award

id: 20398

Warsaw Court of Appeal order dated 31 March 2015 Case No. I ACz 358/15

1. Rulings of arbitration courts, like rulings of foreign courts, may have content departing from the requirements imposed on such domestic rulings by Polish law.

2. The absence of an express regulation with respect to adjustment of arbitration rulings does not exclude such adjustment if as a result of an indubitable interpretation of the arbitration ruling it is possible to conduct an interpretation of the foreign writ so that it would exert the same effects as a domestic ruling by indentifying the relief and its scope.

2. As Art. 783 §1 of the Civil Procedure Code provides for the possibility of including in the enforcement clause, when needed, information concerning identification of the relief subject to execution and the scope of execution, this means that the possibility of the court making an interpretation of a writ of execution in the form of a ruling of an arbitration court is not excluded if it involves only identification of the relief and its scope.

3. Only in a situation where making an objective interpretation is not possible should the application be denied, because issuance of an enforcement order which the execution authorities cannot execute would conflict with public order. Interpretation does not consist of issuing the court’s own ruling, replacing or amending the ruling of the arbitration court, but should only display or make more understandable the intention of the arbitration court already expressed in the ruling—even if it is set forth imperfectly and inadequately defined for purposes of its enforcement—and in this respect help give effect to that intention.

4. It is incorrect to refuse to issue an enforcement clause solely because the award somewhat less precisely describes the scope of the parties’ settlements with respect to the costs of the proceeding.

Publication date: 31-03-2015 | Case no.: I ACz 358/15

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

id: 20428

Polish Supreme Court judgment dated 20 March 2015 Case No. II CSK 352/14

1. Parties who have submitted a dispute to a permanent arbitration court for resolution in accordance with its rules may in provisions accompanying the arbitration clause or by later agreement modify the provisions of the rules. … Acceptance by the permanent arbitration court (or its authorities) of changes to the rules made by the parties is another issue. The arbitration court may consent to conduct the proceeding in compliance with the rules as modified by the parties, or not accept the changes. However, if it does not accept the changes, the permanent arbitration court can only refuse to accept the case for consideration (Civil Procedure Code Art. 1168 §2), but it cannot conduct the proceeding according to the rules in the version that does not reflect the changes made by the parties if they refuse to give up those changes. If the permanent arbitration court has accepted the case for consideration, then it is required to respect the intent of the parties as manifest in the changes they have made to the rules of the arbitration court.

2. The priority of the intent of the parties over the rules of the permanent arbitration court applies as well when the parties have agreed that the arbitration proceeding is to include two instances, while the rules provide that the proceeding has one instance.

3. If the parties agree that the proceeding before the arbitration court is to include more than one instance (Civil Procedure Code Art. 1205 §2), then the arbitration regulations of the Civil Procedure Code and the principles and rules resulting therefrom also apply to the appellate arbitral tribunal, including establishment of the rules and manner of proceeding before that tribunal and ruling by that tribunal.

4. The rule specified by the parties that the arbitration proceeding is to include the possibility of appealing against the arbitration award issued at the first instance undoubtedly falls within the group of fundamental rules for purposes of Civil Procedure Code Art. 1206 §1(4). Violation of that rule by resolving the dispute at only one instance is a violation that could affect the result in the case, because the appeal could result in a different resolution.

5. Under the circumstances of the case, there was a violation of Civil Procedure Code Art. 1206 §1(4) by considering the dispute and issuing an arbitration award at only one instance, contrary to the rule agreed by the parties of arbitration proceedings at two instances.

Publication date: 20-03-2015 | Case no.: II CSK 352/14

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

id: 20399

Polish Supreme Court judgment dated 19 March 2015 Case No. IV CSK 443/14

1. The FIDIC conditions are a set of procedures and conditions describing the course of construction projects. Among other things, they describe the rights and obligations of the participants in the construction process, including in clause 20 the procedure for disputes and arbitration. … Interpretation of the provisions included in the FIDIC conditions included in the contract in force between the parties is made in accordance with the principles of interpretation of declarations of will (contracts) set forth in Art. 56 and Art. 65 §§ 1 and 2 of the Civil Code.

2. Pursuant to FIDIC clause 20.4, “If a dispute (of any kind whatsoever) arises between the Parties in connection with, or arising out of, the Contract or the execution of the Works, … either Party may refer the dispute in writing to the DAB [dispute adjudication board]”. The use of the word “may” in this clause should be understood only to mean that pursuit of claims is a right and not an obligation of a party. But if the party does decide to pursue the claim, according to FIDIC clause 20 it must submit the claim to a dispute adjudication board.

3. Pursuant to FIDIC clause 20.8, “If a dispute arises between the Parties in connection with, or arising out of, the Contract or the execution of the Works and there is no DAB [dispute adjudication board] in place, whether by reason of the expiry of the DAB’s appointment or otherwise: Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision] and Sub-Clause 20.5 [Amicable Settlement] shall not apply, and the dispute may be referred directly to arbitration under Sub-Clause 20.6 [Arbitration].” Under the circumstances of this case, the possibility of referring the dispute directly to arbitration arose “otherwise,” i.e. by the parties’ failure to agree on the composition of the dispute adjudication board and failure by either of them to apply to the appointing authority to appoint the DAB.

4. The fundamental principles of the legal order are fundamental constitutional principles and the leading principles governing specific fields of substantive and procedural law.

Publication date: 19-03-2015 | Case no.: IV CSK 443/14

Key issues: arbitration award, jurisdiction of arbitral tribunal, petition to set aside arbitration award

id: 20395

Polish Supreme Court order dated 5 February 2015 Case No. V CSK 231/14

1. It is characteristic and results from the nature of a claim for interest and of auxiliary consideration by the party performing such claim in relation to the principal claim that in agreements there is no need to conclude separate provisions concerning such claims and consideration. Because they share the fate of the principal claims and consideration, it is understandable that they are also governed by provisions referring to the principal consideration. This rule also applies in the case of an arbitration clause.

2. If a party seeking an award of payment does not pursue a claim for interest on delay at the same time, including because the delay arises only as a result of failure to make timely performance of an arbitration award, such claim for interest may be pursued in a separate proceeding. This proceeding is subject to the same procedure which pursuit of the principal claim was subject to. For these reasons the appellant incorrectly disputed the coverage by the arbitration clause of the claim for interest and in this case there was no legally unjustified extension of the arbitration clause within the meaning of Civil Procedure Code Art. 1161 § 1.

3. If consideration of the case by the arbitration court in accordance with the arbitration clause proves impossible because of the inability to appoint arbitrators, or due to circumstances preventing consideration of the case before the arbitration court indicated in the clause, or for both reasons as occurred in this case, and there are no other provisions in the parties’ agreement, then under Civil Procedure Code Art. 1168 the arbitration clause lapses by operation of law.

Publication date: 05-02-2015 | Case no.: V CSK 231/14

Key issues: arbitration agreement

id: 20383

Supreme Court of Poland order dated 23 January 2015 Case No. V CSK 672/13

1. Interpretations of Art. IV of the New York Convention must reflect its functional connection with Art. II of the convention, which specifies the requirements for an agreement including an arbitration clause. Art. II(2) of the New York Convention provides that an “agreement in writing” for purposes of Art. I(1) [sic—Art. II(1)] shall include an arbitral clause in a contract or an arbitration agreement for example in the form of an exchange of letters or telegrams. It is beyond dispute that Art. II(2) of the New York Convention contains an autonomous regulation of arbitration agreements. It is commonly accepted in the case law and commentaries that the wording of Art. II(2) of the New York Convention calls for a liberal understanding of the concept of an “agreement in writing” as the requirement for effectiveness of an arbitration clause, and requires an acceptance that the parties have freedom with respect to selection of the form of the agreement in which they submit to the jurisdiction of the arbitration court. It is thus possible to conclude such agreement also using means of reaching agreement at a distance, e.g. by an exchange of faxes or statements by email. Following this line, the view that is aptly presented in the commentaries is that the applicant fulfils the requirement of submission of the agreement in the original if it files a document which constitutes evidence of conclusion of the specific agreement, regardless of its form. Thus it is obvious that to evaluate whether the applicant has filed the required document concerning the agreement containing the arbitration clause, it was necessary to determine whether the form of the document is consistent with the manner in which the agreement was concluded. Written form of the agreement is not excluded, for example, if the respondent in the proceeding sent a fax of the text of the agreement signed by it, and the applicant placed its signature on that.

2. A condition of recognition or enforcement of an arbitration award should be the existence of the arbitration agreement, and not submission of a document confirming its conclusion. For this reason the position is also presented that the applicant’s failure to submit the agreement referred to in Art. IV of the New York Convention does not prevent granting the application if the existence of the clause for arbitration before a foreign arbitration court is undisputed.

Publication date: 23-01-2015 | Case no.: V CSK 672/13

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

id: 20393

Polish Supreme Court order dated 14 January 2015 Case No. I CZ 97/14

1. In a situation where the proceeding before an arbitration court was located abroad and the arbitration award was issued abroad or a settlement was concluded before the arbitration court abroad, it may be said that the proceeding for recognition or enforcement allows legal consequences to be obtained equivalent to those that exist if the proceeding before the arbitration court is located in Poland and an award is issued here or a settlement is concluded here. This proceeding is therefore not limited to the functions fulfilled by a proceeding for recognition or enforcement of an arbitration award issued in Poland or a settlement concluded before an arbitration court in Poland. In effect, a proceeding for recognition or enforcement of an arbitration award issued abroad or a settlement concluded before an arbitration court abroad cannot be reduced to the role of a proceeding of an auxiliary nature, as is the case with a proceeding for recognition or enforcement of an arbitration award issued in Poland or a settlement concluded before an arbitration court in Poland. This conclusion is confirmed by the broader scope of review of an award or settlement by the state court in the case of an arbitration award issued abroad or a settlement concluded before an arbitration court abroad. For these reasons, a proceeding for recognition or enforcement of an arbitration award issued abroad or a settlement concluded before an arbitration court abroad should be treated as the “counterpart” of the proceeding in the case.

2. When amending Civil Procedure Code Art. 1215 via the Act of 22 July 2010 Amending the Civil Code, the Civil Procedure Code and the Bankruptcy and Recovery Law (Journal of Laws Dz.U. 2010 No. 155 item 1037), the Parliament decided the issue of the scope of permissibility of a cassation appeal by permitting it only against an order of the court of second instance on recognition or enforcement of an arbitration award issued abroad or a settlement concluded before an arbitration court abroad. This allows the conclusion a contrario that a cassation appeal is not permitted against an order of the court of second instance on recognition or enforcement of an arbitration award issued in Poland or a settlement concluded before an arbitration court in Poland.

Publication date: 14-01-2015 | Case no.: I CZ 97/14

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

id: 20386

Warsaw Court of Appeal judgment dated 15 December 2014 Case No. VI ACa 311/14

1. It is permissible to seek to set aside an arbitration award in part, if the challenged resolution can be separated from the remaining part of the award.

2. In a proceeding to set aside an arbitration award, the court cannot set aside the award in part if the petitioner applied to set aside the award in its entirety and there are grounds to grant the petition. This is because a demand to set aside an arbitration award in part is not a lesser included demand in a demand to set aside the award in its entirety; it is a different type of demand. Moreover, if the particular parts of the award interlock so that none of the parts can be separated from the other parts without materially deforming the entirety, it is impermissible to set aside the award in part.

3. Informing a party only in the justification of the award that (despite denying the claim in its entirety) one of the party’s demands was not considered because the fee for that claim was not paid, when that demand was the subject of examination during the evidentiary proceeding and was the subject of the response to the statement of claim and pleadings by both parties, while at the same time granting the demands of the opposing party in their entirety, which resolution was dependent on the resolution of the plaintiff’s demands, indicates that the arbitration award is contrary to the public policy clause, depriving the party of the ability to exercise the rights provided by regulations of substantive law and also indirectly depriving the party of a defence against the counterclaims of the opposing party. This method of proceeding before the arbitration court violates the party’s right to a fair and honest trial.

4. Resolving the respondent’s demands in their entirety before resolving the claimant’s complete demand, regardless of whether or not the party could apply for supplementation of the award, is also contrary to fundamental principles of the legal order, including violation of the principle of equal treatment of the parties. Moreover, the arbitration court would already be bound by the award issued by it in the part concerning the counterclaim, and thus it could not issue a ruling with different substantive legal consequences. Undoubtedly the principles of a fair trial require that the party be informed prior to issuance of an award of the possible taking of a procedural decision as to one of the party’s claims, regardless of whether the claimant’s claim is deemed to be an alternative claim (as it was worded, in the event that the main claim is not upheld) or as a separate procedural claim in an accumulation of claims.

5. The defence of the ineffectiveness of an arbitration clause may be asserted not only by the respondent, but also by the claimant. However, it is indicated in the legal literature that in such case, the claimant, as the party initiating the proceeding before the arbitration court, should make a thorough analysis of the factual and legal state of the case, including issues connected with the grounds for commencement of the proceeding before the arbitration court, and if it concludes that the clause is ineffective, it should file the case with the state court, which upon the objection of the respondent will resolve the issue of the effectiveness of the clause. As indicated in the literature, asserting the ineffectiveness of the clause only at this stage violates the principle of due diligence which a professional participant in commercial dealings is required to comply with.

6. An arbitration clause may cease to be in force in the instances set forth in Civil Procedure Code Art. 1168 and 1195 §4 or in the bankruptcy law, or in the occurrence of certain substantive legal events (e.g. repudiation of the legal consequences of a declaration of will), including those indicated by the parties as the reasons for the clause ceasing to be in force. The mere change in the rules of the arbitration court does not result in loss of force of the clause, either under the regulations currently in force or in accordance with the regulations in force on the date of conclusion of the clause.

7. The mere fact that one of the parties to the arbitration participated in creation of the list of arbitrators by nominating candidates for arbitrators from among persons who are authorities in the given field does not mean that there is dependency between the arbitrator and the party or that the party has greater rights. Despite the indirect influence of the banks over a portion of some panels of arbitrators, the rules of the Court of Arbitration at [the Polish Bank Association] ensure the impartially of the arbitration court and do not violate the principle of the equality of the parties in the arbitration proceeding. Because there are numerous arbitrators [on the list], and the party does not know which of them will hear the case and does not select a specific person as presiding arbitrator, it cannot be found that the party had greater rights than its opponent.

8. A petition to set aside an arbitration award may concern issues of the procedure followed only if fundamental principles of procedure before the arbitration court, arising out of a statute or specified by the parties, were not complied with (Civil Procedure Code Art. 1206 §1(4)). In essence this has to do with failure to comply with fundamental principles of civil procedure, but it was not demonstrated that the arbitration court failed to comply with such principles.

Publication date: 15-12-2014 | Case no.: VI ACa 311/14

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

id: 20387

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