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Polish Supreme Court order dated 23 January 2013 Case No. I CSK 186/12

1. Pursuant to Civil Procedure Code Art. 1215 §1, the court shall rule on recognition or enforcement of an arbitration award issued abroad or a settlement concluded before an arbitration court abroad after conducting a hearing. This provision confirms the rule provided for adversarial proceedings in Civil Procedure Code Art. 148 §1 that cases are considered at a hearing. A departure from this rule should be interpreted narrowly. Therefore, if a provision specifies the type of cases that are considered at a hearing, this method of consideration applies regardless of whether the court upholds the claim (or application) or denies it.

2. The [New York] Convention sets forth the material conditions for recognition (primarily in Art. IV and V), and therefore a proceeding for recognition of a foreign arbitration award should be conducted primarily in accordance with the provisions set forth in the Convention, and on the basis of the Civil Procedure Code in other respects not governed there.

3. The requirements with respect to the form of conclusion of an arbitration agreement should be assessed according to the [New York] Convention, and not according to Civil Procedure Code Art. 1162.

4. A liberal interpretation of [New York Convention Art. II(2)] is accepted in practice, recognizing that the enumeration therein of methods of concluding an agreement is not exhaustive, but also includes other techniques used for reaching agreement at a distance.

5. It should be accepted that the law of the state in which an arbitration award was issued should decide on the issue of certification of the contents of the award.

6. The view that failure to enclose the documents specified in Civil Procedure Code Art. 1213 with an application for recognition does not constitute a formal defect that is subject to supplementation pursuant to Civil Procedure Code Art. 130 §1 in connection with Art. 13 §2 is incorrect.

7. The respondent was not named in the arbitration award, but only the business name under which he trades was stated. The correctness and effectiveness of such identification should be decided by the law of the state of origin of the award.

Publication date: 23-01-2013 | Case no.: I CSK 186/12

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

id: 20269

Katowice Court of Appeal order dated 12 December 2012 Case No. V ACz 914/12

1. The ineffectiveness of an arbitration clause results from events arising after the clause is made which nonetheless do not affect its validity. It must be stressed in this respect that the arbitration clause itself is treated as an act of a dual nature, that is, of both substantive and procedural law. This leads to the conclusion that when making an arbitration clause, the parties can condition its effectiveness, as with any other contract, on the passage of a certain time or fulfilment of a certain suspensory condition. The Convention on the Recognition and Enforcement of [Foreign] Arbitral Awards, in particular Art. II, does not provide for limitations in this respect. On the contrary, Art. II(2) indicates a broad interpretation of the concept of “agreement in writing under which the parties undertake to submit to arbitration all or any differences”, which justifies the conclusion that this wording is not infringed by introduction into the agreement of regulations prior to the arbitration proceeding.

2. The essence of the New York Convention is the requirement for the parties to proceed in accordance with good faith and fair practice, and thus a prohibition against acting contrary to these principles. This interpretation stands in the way of actions disloyal to the other participants and the arbitration court, and deprives of justification objections by a party to the proceeding of the non-existence or invalidity of the arbitration clause in a proceeding for recognition or enforcement of an arbitration award in Poland, even though preclusion of such an objection is not expressly provided for in the regulations of the convention, if the party joined issue on the merits of the dispute before the arbitration court without asserting the court’s lack of jurisdiction.

Publication date: 12-12-2012 | Case no.: V ACz 914/12

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

id: 20414

Polish Supreme Court order dated 24 October 2012 Case No. III CSK 35/12

1. The claim for restitution of unjust enrichment pursued in this case fits within the catalogue of disputes covered by the arbitration clause, as it was stated in the agreement for provision of promotional services that the arbitration clause covers, inter alia, “claims for return of consideration provided without due grounds or not owed, arising in the event of invalidity of the agreement.” Thus if the subject of the agreement was factual activities allegedly constituting a tortious act (charging fees other than a commercial margin), the validity of such agreement should be considered in the light of Civil Code Art. 58 §1 or 2. If however the very conclusion of the agreement for provision of promotional services alongside the agreement of sale allegedly constituted an act of unfair competition, the claim stated in the statement of claim fits within the category of “tort claims, if they arise out of a legal event connected with performance of the agreement of sale or also constituting non-performance or improper performance of the agreement.” The tort claim undoubtedly arises out of a legal event (an act of unfair competition) connected with performance of the agreement of sale.

2. The mere fact of submission of a dispute for resolution by an arbitration court cannot demonstrate the inconsistency of such agreement with principles of social coexistence, because this method of dispute resolution is permissible by law. Moreover, alternative methods of resolving disputes often result in faster resolution of the dispute, which is thus less expensive and more beneficial for parties conducting business activity. Civil Procedure Code Art. 1161 §2 serves to eliminate irregularities in arbitration clauses violating the equality of the parties.

Publication date: 24-10-2012 | Case no.: III CSK 35/12

Key issues: arbitration agreement

id: 20379

Polish Supreme Court order dated 19 October 2012 Case No. V CSK 503/11

1. Violation of the principle of the equality of the parties may also occur through adoption of the specific wording of the rules of an arbitration court (Civil Procedure Code Art. 1161 §3). … Under the Civil Procedure Code provisions on arbitration, the equality of the parties means—generally speaking—awarding the parties equal rights, both within the main arbitration clause itself and in the rules of the permanent arbitration court, creating equal opportunities for the parties in the definitive resolution of the dispute covered by the agreement.

2. In determining whether the principle [of the equality of the parties] is complied with in the arbitration agreement, a clear distinction should be made between the content of the arbitration agreement itself (also including the provisions of the rules of the permanent arbitration court) and the general rules of operation of the permanent arbitration court. … The principle of the equality of the parties within the meaning of Civil Procedure Code Art. 1161 should be addressed to the content of the arbitration agreement itself, and not to such elements of an organizational nature, which only establish the necessary and proper legal and organizational infrastructure to assure the parties the ability to establish the appropriate panel of arbitrators within the individual legal dispute.

3. Organizational ties between permanent arbitration courts and various professional associations or business organizations are not determinative of a specific dependence on the organizations where the arbitration courts operate or a lack of impartiality of specific arbitrators.

Publication date: 19-10-2012 | Case no.: V CSK 503/11

Key issues: arbitration agreement, arbitration procedure, arbitrator

id: 20278

Polish Supreme Court order dated 17 October 2012 Case No. I CSK 119/12

1. The demand pursued by the plaintiff on the basis of Art. 18(1)(5) in connection with Art. 15(1)(4) of the Act on Combating Unfair Competition, as a property claim, could be submitted to an arbitration court for resolution pursuant to Civil Procedure Code Art. 1157.

2. The wording that the jurisdiction of the arbitration court should extend to “any and all disputes between the parties arising out of the prior commercial cooperation of the parties on the basis of commercial contracts concluded previously…” leads to the conclusion that it covers the broadest possible category of disputes arising out of the commercial cooperation conducted on the basis of prior contracts. Use of the linguistic rules of interpretation does not allow elimination from this category of disputes arising out of the defendant’s commission of the act of unfair competition defined in Art. 15(1)(4) of the Act on Combating Unfair Competition, if it was connected with the commercial cooperation between the parties conducted on the basis of prior contracts between the parties.

3. Under the circumstances as determined, the arbitration clause adequately identified the legal relationship out of which the dispute arose, by indicating that it concerns any and all claims connected with the parties’ previous cooperation on the basis of contracts concluded by the parties, which also included claims connected with the defendant’s commission of the act of unfair competition referred to in Art. 15(1)(4).

4. This agreement [the arbitration clause] may also be assessed pursuant to the Civil Code, including in accordance with the criteria set forth in Civil Code Art. 58 §2.

5. It cannot be accepted that it was contrary to principles of social coexistence to submit to the arbitration court for resolution a future dispute caused by the lack of acceptance by a party or the parties to a contract containing an arbitration clause of a line of precedent of the state courts concerning the method of resolution of specific types of disputes and motivated by the hope for a different result from the resolution of the dispute before the arbitration court.

Publication date: 17-10-2012 | Case no.: I CSK 119/12

Key issues: arbitrability of dispute, arbitration agreement

id: 20283

Polish Supreme Court judgment dated 12 October 2012 Case No. IV CSK 82/12

1. The essence of establishment of an “arbitration clause by reference” is that the intention to submit a dispute to an arbitration court for resolution is not stated in the agreement signed by the parties or documents exchanged by the parties, but in a separate document which is not signed by the parties but which the parties only refer to through another document, i.e. the main (basic) agreement. The condition for making an arbitration clause in this manner is fulfilled if the following conditions are all met. First, the main (basic) agreement itself, in connection with which the document containing the arbitration clause is to be applied, must be made in writing. Second, such agreement must contain an express reference to the document in which there is a provision on submission of disputes that may arise out of the agreement to an arbitration court for resolution, where the reference is of a type that makes the clause an integral part of the agreement.

2. From the point of view of the form of an arbitration clause, the solution adopted [in Civil Procedure Code Art. 1163] is a specific form of an “arbitration clause by reference,” where an arbitration clause is set forth only in the articles of association or statute of a company, or the statute of a cooperative or association, and the act or deed of joining the company, cooperative or association includes only submission to the articles of association or statute, including the arbitration clause contained therein. The scope of the binding force of such arbitration clause is limited in terms of entities: It binds the company and its shareholders, or the cooperative or association and its members. Moreover, this regulation expressly provides that the binding force of an arbitration clause contained in the articles of association or statute of a company or the statute of a cooperative or association applies to disputes arising out of the corporate relationship or disputes arising out of the relationship of membership in the cooperative or association.

Publication date: 12-10-2012 | Case no.: IV CSK 82/12

Key issues: arbitration agreement

id: 20293

Polish Supreme Court order dated 13 September 2012 Case No. V CSK 323/11

1. A proceeding for recognition and enforcement of foreign rulings is a proceeding on the merits of the case, which is based on substantive law…. The court of appeal could therefore apply the law of the [New York] Convention as the applicable substantive law.

2. Art. II(2) [of the New York Convention] is more liberal, also permitting conclusion of an arbitration clause by electronic means, even without the signatures of the parties. This is also a fundamental provision, determining the permissible form of the agreement, while the requirements connected with submission of the arbitration agreement included in Art. IV( 1) should be considered in light of the form in which the agreement could be concluded. Consequently, Art. IV is derivative in nature and thus cannot undermine the rationale of the rule set forth in Art. II of the convention.

3. A party which joined issue on the merits of the dispute before the arbitration court without alleging the lack of jurisdiction of such court (e.g. because of the ineffectiveness of the clause) loses such allegation in the proceeding for recognition or enforcement of the arbitration award before the national court. … The essence of the New York Convention is a requirement for the parties to act in accordance with principles of good faith and fair dealing, and hence a prohibition against acting in violation of such principles. Such interpretation frustrates actions disloyal to the other parties and the arbitration court, causing unnecessary costs and a waste of time. There is no concern in this respect that the party’s procedural rights will be limited, because the party decides on the arbitration clause autonomously.

Publication date: 13-09-2012 | Case no.: V CSK 323/11

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

id: 20270

Warsaw Court of Appeal judgment dated 23 August 2012 Case nos. I ACa 46/11 and I ACa 578/12

1. Review of an arbitration award by the state court cannot turn into a full consideration of the merits of the dispute submitted to arbitration for resolution. Nonetheless, the obligation to examine whether the challenged award violates fundamental principles of the legal order usually cannot be conducted properly without the state court’s reference to the case file. Sticking only to the wording of the arbitration award itself would render such review illusory.

2. Unlike the state court, the arbitration court is not bound to apply the law strictly, even if the parties have not authorized it to resolve the dispute under principles of equity. The only limitation on the arbitration court in this respect is the fundamental principles of the legal order (for example the principle of the compensatory nature of liability in damages and the principle of protection of property rights). Not every violation of substantive law by an arbitration court, nor every erroneous interpretation or improper application or failure to apply a legal norm may be held to be a violation of fundamental principles of the legal order.

3. The rule expressed in Civil Code Art. 379 §1 of the separateness of performance is not one of the rules whose violation would conflict with the foundations of the legal order of the Republic of Poland. It suffices to point out that the parties to the agreement may exclude this rule by providing for solidarity among the creditors (Civil Code Art. 369 in connection with Art. 367 §1).

4. An objection of the lack of jurisdiction of the arbitration court is subject to preclusion if it is not asserted within the time indicated in Civil Procedure Code Art. 1180 §2. In that case, a petition to set aside the arbitration award can no longer effectively rely on the basis set forth in Civil Procedure Code Art. 1206 §1(1). In the event of assertion of the objection of lack of jurisdiction, the arbitration court may rule on its own jurisdiction in a separate order, but that is left to its discretion. If the arbitration court is convinced of the existence of a valid arbitration agreement, it may also consider the case on the merits without first issuing an order concerning the asserted objections to its jurisdiction. In the latter case, it is obvious that a party may base its petition to set aside the arbitration award on the allegation of violation of Civil Procedure Code Art. 1206 §1(1), because it did not previously have any possibility of presenting this objection to the state court for its review. It is different in the case of issuance by the arbitration court of an order overruling the objection of its lack of jurisdiction. Then the parties may seek a ruling by the state court within 14 days after service of the order on them. The judicial proceedings in this respect are at two instances (Civil Procedure Code Art. 1180 §3).

5. A party which has exhausted the procedure specified in Civil Procedure Code Art. 1180 §3 cannot later, in a petition to set aside the award, again assert the objection of the absence of an arbitration agreement or its invalidity or ineffectiveness. This conclusion may be drawn from Civil Procedure Code Art. 365 §1 in connection with Art. 1207 §2 or in connection with Art. 13 §2. … Referring the order of the arbitration court to the court of first instance, and then the party’s failure to file an interlocutory appeal against an order against it, also closes the path to reassertion of the objection of the lack of jurisdiction of the arbitration court on the grounds indicated in Civil Procedure Code Art. 1206 §1(1). There are no grounds for distinguishing the litigation stance of a party which exhausted the recourse to both instances and a party which did not file an interlocutory appeal against the order of the court of first instance, and in consequence the order obtained finality. In both cases the legally final orders are binding on the parties and the courts pursuant to Civil Procedure Code Art. 365 §1.

6. A party that sought a ruling on jurisdiction pursuant to Civil Procedure Code Art. 1180 §3 and obtained an unfavourable order from the state court cannot assert the same objections under Civil Procedure Code Art. 1206 §1(1), regardless of whether the state court ruled at one or both instances.

7. The law essentially equalizes—in terms of legal consequences—the failure to assert the objection of lack of jurisdiction of the arbitration court within the time indicated in Civil Procedure Code Art. 1180 §2 with the respondent’s inclination (consent) to consideration of the case by the arbitration court. An interpretation accepting the preclusion specified in Art. 1180 §2 but at the same time permitting non-recourse to the procedure for judicial review set forth in Art. 1180 §3 and accepting the possibility of not disputing the jurisdictional order of the arbitration court until the petition to set aside the award would be an inconsistent interpretation and largely eliminate the benefits for both parties to the arbitration proceeding flowing from the 2005 amendment to the Civil Procedure Code.

8. In its review, the state court cannot re-evaluate the evidence to determine whether it would have made the same factual findings as those presented in the arbitration award under review. Disputing the arbitration award in this respect would be possibly only if the defects founds were so fundamental that they would qualify as a violation of fundamental principles of civil procedure. Evaluation of the award in terms of the fundamental principles of substantive law must not be turned into appellate review.

Publication date: 23-08-2012 | Case no.: I ACa 46/11 and I ACa 578/12

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

id: 20403

Warsaw Regional Court judgment dated 19 July 2012 Case No. XXVI GC 516/12

1. A petition to set aside an arbitration award is a legal instrument combining the features of extraordinary means of review, i.e. a petition to reopen the proceedings, and a proceeding to determine a right or legal relationship. The petition is not a means leading to substantive consideration by the state court of the dispute resolved by the arbitration court.

2. Pursuant to §32(3) of the Rules [of the Court of Arbitration at the Polish Chamber of Commerce] signatures are placed on the ruling by the panel and by the President and the Secretary of the Court of Arbitration. This provision does not specify that it must be the Secretary’s personal signature, but only requires signing by the Secretary, and thus as well by his Deputy duly authorized for temporary performance of his duties. Interpreting this provision otherwise would lead to the absurd conclusion that the Court of Arbitration could not issue rulings at all during the temporary absence of the Secretary General due to illness or holiday.

3. It indisputably follows from §32(2) of the Rules [of the Court of Arbitration at the Polish Chamber of Commerce] that the ruling of the arbitration court consists of the resolution (operative wording) and the justification, which constitutes an integral part of the award. Similarly, Art. 1197 §2 of the Civil Procedure Code indicates that an arbitration award must contain the grounds for the resolution. Thus an award without such justification will not be introduced into legal circulation. Since that is the case, the resolution by itself would have no reason for being and for this reason the resolution and the justification should be treated as a formal and substantive whole. … Thus there are no reasons to deem the absence of the signatures of the arbitration panel under the operative wording of the award to mean the non-existence of the ruling and to raise arguments applicable only to the state courts.

4. The requirement to indicate an [arbitration] agreement in writing is also fulfilled when the party presents a certified copy of the document in which the agreement was concluded. A written copy in the form of a certified transcript from the document, i.e. the agreement, indicates that the original of the document constitutes a document referred to in Art. 1162 §1 of the Civil Procedure Code. The form of the [arbitration] agreement indicated by this provision means that the agreement must be made in writing. … Subsequent destruction or other loss of the document as the medium in which the agreement was recorded does not eliminate the relevance of the fact that it was previously made in written form. It should be indicated in this respect that the Parliament did not use the phrase “in written form” here but only “in writing,” which suggests that this may be any confirmation of the agreement made in writing, including a copy of the document containing the agreement, somehow referring to it in its content.

5. The state court considering a petition to set aside an arbitration award does not have the competence for a substantive assessment of the findings made by the arbitration court. This means that the state court cannot make its own findings on classification of an agreement, but can only assess the propriety, logical argumentation and conclusions dawn, and in this context confirm that it does or does not suffer from errors of logical reasoning.

Publication date: 19-07-2012 | Case no.: XXVI GC 516/12

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

id: 20430

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