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Supreme Court of Poland judgment dated 15 May 2014 Case No. II CSK 557/13

1. The issue of the consistency of the resolution by the arbitration court with the determined state of facts is beyond cassation review in connection with Civil Procedure Code Art. 3983 §3.

2. The arbitration court’s violation of the substantive law governing the case, which generally is connected with Civil Procedure Code Art. 1194 §1, is subject to review by the state court considering a petition to set aside an arbitration award only in terms of application of the public policy clause—at the court’s own initiative or on the basis of an allegation in the petition.

3. The circumstances separately listed in Civil Procedure Code Art. 1206 §1 as grounds for setting aside an arbitration award, proof of which lies primarily in the interests of the party, are excluded from the scope of application of the public policy clause.

4. The arbitration court’s conduct of the proceeding ignoring evidence offered by a party may justify an allegation of violation of Civil Procedure Code Art. 1183 if the evidence was necessary to the resolution of the case.

5. If the evidence raised by the party was ignored as a result of the arbitration court’s interpretation of substantive law, the mere fact that the interpretation may be regarded as erroneous cannot justify granting a petition to set aside the award unless the award also violates fundamental principles of the legal order.

6. The arbitration court’s application of regulations on the limitations period or preclusion may not be regarded as a violation of fundamental principles of the legal order even if this occurred on the basis of an erroneous interpretation of the regulations.

Publication date: 15-05-2014 | Case no.: II CSK 557/13

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

id: 20267

Katowice Appellate Court order dated 8 May 2014 Case No. V ACz 343/14

1. Clause 20.8 of the [FIDIC Conditions of Contract for Plant and Design-Build] could apply in all instances where the parties did not decide for whatever reason to submit a dispute to the Dispute Adjudication Board. This conclusion is also justified by the placement of this provision. After detailed provisions concerning dispute resolution, at the end of the conditions of contract the parties decided to include a kind of savings clause maintaining the arbitration clause
in force regardless of whether the procedures provided for earlier were followed or not.

2. The argument that the arbitration clause gave the party initiating the proceeding the exclusive choice of which court the dispute should be resolved by should not be upheld.

3. The court of appeal did not share the view that the defence [of the arbitration clause] could be asserted at the latest at the stage of the dispute adjudication procedure conducted between the parties.

Publication date: 08-05-2014 | Case no.: V ACz 343/14

Key issues: arbitration agreement, jurisdiction of arbitral tribunal

id: 20148

Kraków Court of Appeal order dated 10 March 2014 Case No. I ACz 315/14

1. The wording of Civil Procedure Code Art. 1215 §2 leaves no doubt that it applies only to an award issued by an arbitration court abroad or a settlement concluded before such court.

2. The mere fact that a party belongs to the employers’ organization where the arbitration court operates is not grounds for finding the arbitration agreement to be invalid.

Publication date: 10-03-2014 | Case no.: I ACz 315/14

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

id: 20411

Katowice Court of Appeal order dated 7 March 2014 Case No. I ACz 121/14

1. The regulations of Title III, Part Five, of the Civil Procedure Code, concerning arbitration, clearly adopt the principle of the priority of the mutual intent of the parties as to the composition of the arbitral tribunal and the manner of appointment of the arbitrators and the presiding arbitrator.

2. Appointment of the presiding arbitrator by the arbitrators may occur after the end of the one-month period following their appointment provided in the act, but before consideration of the application by the state court. … Because the basis for the Civil Procedure Code regulations concerning arbitration is to award priority to the intent of the parties, it would be groundless, irrational and contrary to a purposive interpretation of these regulations to deny the parties the right to decide for themselves on the composition of the arbitral tribunal solely because a court case is already pending concerning this—prior to issuance of a judicial ruling. The one-month period under Civil Procedure Code Art. 1171 §2 should be regarded as establishing the right of a party to file an application to the state court for appointment of an arbitrator or presiding arbitrator, and not as a preclusive period after which the parties lose the right to decide for themselves on whom to appoint as members of the arbitral tribunal.

Publication date: 07-03-2014 | Case no.: I ACz 121/14

Key issues: arbitration procedure, arbitrator

id: 20412

Polish Supreme Court judgment dated 13 February 2014 Case No. V CSK 45/13

1. Application by the arbitration court of the substantive law applicable in the case is subject to review by the common court only insofar as required by the evaluation of the arbitration award, made by the court on its initiative, under the public policy clause set forth in Civil Procedure Code Art. 1206 §2(2), in terms of the award’s possible inconsistency with fundamental principles of the Polish legal system.

2. Alongside the principles of freedom of contract and the enforceability of contracts, the fundamental principles of the Polish legal system also include principles setting the boundaries of the freedom of contract and, in consequence, the limits of application of the principle of enforceability of contracts. These are more specifically the principle of business freedom, the principle of contractual fairness, and the principle of the compensatory nature of liability in damages, interpreted in compliance with the constitutional requirement of proportionality (Constitution Art. 31(3)), opposing inclusion in contracts of monetary consideration as a sanction for violation of an obligation in an amount far removed from the dimension of the loss, so that it becomes primarily a quasi-penal measure and leads to enrichment of the other party.

3. The reduction of the agreed contractual penalty by the arbitration court did not display the features of an arbitrary limitation of the legal consequences of providing for the contractual penalty, but fell within the bounds of statutory authority.

4. Any irregularities in application of Civil Code Art. 484 §2 by the arbitration court not resulting in the inconsistency of the award issued by it with the fundamental principles of the legal system could not be relevant in proceedings to set aside the award.

Publication date: 13-02-2014 | Case no.: V CSK 45/13

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

id: 20381

Gdańsk Appellate Court order dated 11 February 2014 Case No. I ACz 1475/13

1. Because the [New York] Convention exhaustively governs the grounds for recognition and enforcement of a foreign arbitration award (Art. V of the Convention), the Polish court may not resort to Art. 1215 § 2 in connection with Art. 1214 § 3 (2) of the Civil Procedure Code.

2. The arbitrator’s and counsel’s membership in the same barristers’ chambers does not automatically constitute a source of a conflict of interest but should be considered on a case-by-case basis.

3. In a proceeding for enforcement of a foreign arbitration award, the public policy clause cannot take the place of the procedure for appointment of an arbitrator which the party to the arbitration proceeding declined to follow and which served to reduce the risk of abuse of non-meritorious objections concerning the independence and impartiality of the arbitrator after the completion of the arbitration proceeding.

Publication date: 11-02-2014 | Case no.: I ACz 1475/13

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

id: 20190

Polish Supreme Court judgment dated 6 February 2014 Case No. I CSK 191/13

The state court hearing a petition to set aside an arbitration award may consider whether in the specific case there were valid grounds justifying a departure [by the arbitration court] from the rule of being bound by a legally final judgment, and reference to the circumstances permitting reopening of proceedings before a state court should be helpful in this respect. … From the point of view of the grounds for reopening proceedings, there is nothing preventing new factual circumstances from being disclosed as a result of actions conducted by an expert in a different case, after the end of the proceeding that would be reopened. It is essential that they be circumstances that already existed during the course of the completed proceeding.

Publication date: 06-02-2014 | Case no.: I CSK 191/13

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

id: 20384

Warsaw Court of Appeal judgment dated 15 January 2014 Case No. VI ACa 663/13

1. An arbitrator must not be connected to any of the parties to the proceeding; he should be free of any obligations and pressures, and in performing the duties of arbitrator should decide solely in accordance with his own determination, based on the material gathered in the case. Disclosure of such circumstances must be made promptly after the person is appointed as arbitrator or the circumstances arise. [Civil Procedure Code Art. 1174 §1] also refers to circumstances that could raise doubts as to the impartiality or independence of the arbitrator, not circumstances that do raise doubts.

2. The opposing party, and the not the arbitrator, is given the right to make an assessment of whether the circumstances disclosed by the arbitrator raise doubts or not, and potentially to initiate the procedure pursuant to Civil Procedure Code Art. 1176 §§ 3 and 4, including filing of an application to the state court to remove the arbitrator. It must be clearly stressed, however, that the existence of circumstances that could raise a doubt as to the independence or impartiality of an arbitrator is not equivalent to a finding of a lack of impartiality or independence of the person appointed as arbitrator.

3. The right to make a setoff is a subjective right of the holder and cannot be limited in its realization. Asserting this objection is also a procedural form of the respondent’s defence against the claimant, which it cannot be deprived of. In considering the defence of setoff asserted by the respondent as part of the examination of the justification for the principal claim, the arbitration court did not have to condition this examination on the existence of an arbitration clause in this respect.

4. The jurisdiction of the court considering a petition to set aside an arbitration award generally does not include review of the consistency of the award with substantive law or an examination of the correctness of the factual findings, other than a ruling based on a clearly selective and unobjective assessment of the evidence. Here, the grounds for the arbitration award are extensive, multifaceted and based on the indicated evidence, and explain the basis for the finding by the arbitration court that the claim for damages by the principal respondent asserted as a setoff to the claim of the principal claimant existed in the specified amount and the effectiveness of the setoff made, which resulted in denial of the principal claim. Examination of the justification for the petition is therefore not equivalent to substantive review of the award. Moreover, the appellant must remember that in deciding to submit the dispute for resolution by an arbitration court, it must be aware of both the positive and negative consequences. On one hand, the contracting parties are not exposed to the risk of lengthy proceedings, but on the other hand they waive certain procedural guarantees which apply in proceedings before the state court. Nor was there any barrier to the proceedings before the arbitration court being conducted in two instances (Civil Procedure Code Art. 1205 §2).

Publication date: 15-01-2014 | Case no.: VI ACa 663/13

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

id: 20388

Łódź Court of Appeal judgment Dated 12 December 2013 Case No. I ACa 692/13

1. In a situation where the parties did not reach agreement on establishing the rules for the appellate proceedings and how they would be conducted, the arbitration court, in light of the parties’ intent clearly expressed in the arbitration clause, inconsistent with the rules in force at the arbitration court, should have either refused to accept the case for consideration or, pursuant to Civil Procedure Code Art. 1184 §2, conducted the appellate proceedings in the manner it saw fit.

2. In a situation of inconsistency between the arbitration agreement calling for two instances of arbitration proceedings and the rules of the arbitration court calling for one instance, priority should be accorded to the intention of the parties, and thus the arbitration clause. As the parties first mutually agreed on the rule of two instances before the arbitration court they selected, and second, failed only to agree on the rules for procedure at the second instance, the arbitration court was obligated to establish these rules itself.

3. As the parties referred to proceedings at two instances in the arbitration clause, failure to comply with this requirement by the arbitration court must be regarded as a violation of fundamental rules of procedure before the arbitration court (Civil Procedure Code Art. 1206 §1), resulting in granting the petition and setting aside the challenged award.

Publication date: 12-12-2013 | Case no.: I ACa 692/13

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

id: 20404

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