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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

Warsaw Court of Appeal judgment dated 21 November 2014 Case No. VI ACa 199/14

1. The arbitration court’s ignoring evidence offered by a party because it deemed the evidence to be unnecessary cannot be regarded as depriving the party of the possibility of defending its rights, and examination of the correctness of ignoring of the evidence by the arbitration court is impermissible because that would encroach on the merits of the case. … A party is deprived of the possibility of acting only when it has been totally deprived of the ability to defend its rights, and thus when it has found itself in a situation that prevents, and not only hinders or limits the support before the arbitration court of the demands asserted by the party.

2. Since the parties voluntarily submitted disputes arising out of the contract agreed between them to the judgment of the arbitral tribunal, aware of the limitations flowing therefrom, the petitioner cannot effective accuse the arbitral tribunal of not admitting evidence it raised, particularly in a situation where the arbitral tribunal exhaustively explained the reasons for denying the application.

3. Denial of an evidentiary application cannot be grounds for alleging that an award is inconsistent with the fundamental principles of the legal order of the Republic of Poland. It should be stressed that the public policy clause, like any general clause, is indefinite, which leaves to the court considering a specific case a great degree of discretion; nonetheless, review on this basis of the elements comprising the ruling of the arbitral tribunal cannot assume the dimensions proper to a review of the merits (correctness) of the ruling. The prohibition of the review of the merits (correctness) of such ruling is connected with the essence of application of the public policy clause. In applying the clause, the point is not that the ruling being evaluated was consistent with all of the mandatorily applicable provisions of law entering into play, but that it did not exert an effect inconsistent with the fundamental principles of the national legal order.

Publication date: 21-11-2014 | Case no.: VI ACa 199/14

Key issues: petition to set aside arbitration award

id: 20416

Łódź Court of Appeal judgment dated 14 November 2014 Case No. I ACa 1084/14

1. It cannot be concluded from the principle of the autonomous will of the parties that the parties may freely depart from their earlier arrangements concerning the conditions for effective conclusion of transactions. This conclusion would actually result in violation of the autonomy of the parties and failure to respect their will. … A finding that currency hedging transactions were effectively concluded despite violation of the telephone identification procedure established by the parties’ contract could in fact violate another fundamental principle of civil law, namely the principle of the enforceability of contracts.

2. A petition to set aside an arbitration award is not an appellate instrument, but a type of extraordinary judicial review by the state court of the activity of the arbitration court. It follows that in the proceeding to set aside an arbitration award the state court cannot consider the dispute between the parties to the arbitration proceeding on the merits.

3. Violation of provisions of substantive law are subject to review in the proceeding initiated by a petition to set aside an arbitration award only the provisions violated establish principles of the public policy of the Republic of Poland, and the public policy clause should be interpreted narrowly.

Publication date: 14-11-2014 | Case no.: I ACa 1084/14

Key issues: petition to set aside arbitration award

id: 20390

Polish Supreme Court order dated 16 October 2014 Case No. III CZ 39/14

1. The subject of a ruling ending the proceedings in the case is the resolution of the dispute defined by the statement of claim or the conclusion of the proceedings with respect to that dispute. The dispute pending before the arbitration court in which an application was filed to remove an arbitrator will end before the state court with a ruling on the petition to set aside the arbitration award. It thus cannot be said that the route to consideration of the application was closed as a result of rejection of the applicant’s cassation appeal.

2. Issuance of an award by the arbitration court does not render moot a proceeding before the state court to remove an arbitrator, which proceeding will continue until the application is decided. Granting of the application could provide possible grounds for setting aside the arbitration award. Even if the application to remove an arbitrator has not been ruled on, a party which complied with the deadline for filing such application does not lose the right to rely on the existence of grounds to remove the arbitrator in the petition to set aside the award.

Publication date: 16-10-2014 | Case no.: III CZ 39/14

Key issues: arbitrator, petition to set aside arbitration award

id: 20385

Kraków Court of Appeal judgment dated 3 October 2014 Case No. I ACa 881/14

1. The state court considering a case seeking to set aside an arbitration award cannot re-examine the merits of the dispute. … Treating the scope of review by the state court differently would undermine the autonomy of arbitration, which would place it in a kind of protectorate of the state court system, thus distorting not only the ideals on which the functioning of arbitration is based but also the intention of the Parliament, which in modifying the rules for its functioning limits the scope of intervention by the state court system to exceptional instances expressly stated in the law.

2. The state court is not entitled to review whether the arbitration court properly determined the facts and properly evaluated the evidence. This falls within the bounds of the resolution on the merits of the asserted claims.

Publication date: 03-10-2014 | Case no.: I ACa 881/14

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

id: 20406

Warsaw Court of Appeal judgment dated 24 July 2014 Case No. I ACa 154/14

1. The fact that two arbitrators, constituting a majority of the panel, had already signed drafts of the awards was certainly not valid grounds for the presiding arbitrator to refuse to continue deliberations over the awards. This was not equivalent to the act of voting, not to mention equivalent to deliberations on the resolution and the grounds for the resolution. Refusal to continue the deliberations in order to discuss the comments means that it cannot be said that the deliberations were completed and voting was held on the awards. … As pointed out in the legal literature, the list of examples of violations with respect to regulations on voting, removal of an arbitrator and the award which were set forth in Civil Procedure Code Art. 712 §1(3) (in force through 16 October 2005) were not expressly carried over to the wording of Civil Procedure Code Art. 1206 §1(4). There is no doubt, however, that a violation of these rules should generally be treated as a violation of fundamental rules of procedure.

2. Ignoring evidence offered by a party because the arbitration court found the evidence to be unnecessary will not qualify as depriving the party of the ability to present a defence. Examination by the state court of whether the arbitration court correctly found such evidence to be unnecessary would constitute impermissible encroachment into the merits of the case. If the arbitration court ignored a certain portion of the defence presented by the party, while including in the grounds for the award a substantive explanation of the reasons it found the defence to be irrelevant, then the party’s allegation with respect to ignoring its defence is in reality directed against the substantive defence of the dispute and as such is impermissible.

Publication date: 24-07-2014 | Case no.: I ACa 154/14

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

id: 20389

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