Polish Supreme Court judgment
dated 27 November 2008
Case No. IV CSK 292/08
Summary by arbitraz.laszczuk.pl:
In 1994 an individual farmer entered into a 10-year tenancy agreement for farmland with the Polish Agricultural Property Agency. The tenancy agreement contained an ad hoc arbitration clause in which each party would appoint one arbitrator and the two arbitrators would then agree on a super-arbitrator. At the end of the tenancy term, the parties could not agree on terms for a new tenancy period and the landlord issued a demand for arbitration. The arbitrators appointed by the parties could not agree on a super-arbitrator, who was thus appointed by the district court (on 16 October 2005). Subsequently the arbitrator appointed by the landlord resigned, and the landlord appointed a new arbitrator to take her place. Then, in January 2006, the landlord filed a demand with the arbitration court for an award of possession of the farmland, which the arbitration court subsequently granted. The tenant filed a petition to set aside the award on the grounds that the arbitration clause had lost force because the underlying tenancy agreement had expired, the replacement arbitrator was improperly appointed, and the arbitration court did not apply the correct procedure. The objections were overruled by the regional court, the appellate court on appeal, and the Supreme Court on cassation.
Excerpts from the text of the court’s ruling:
1. A judicial proceeding to set aside an arbitration award should be conducted through to the end in accordance with the provisions in force upon commencement of the proceeding, that is, applying Civil Procedure Code Art. 165 §1, at the time of filing of the petition to set aside the award with the proper court. Thus if the petition was filed prior to 17 October 2005 [when the law was amended], the proceeding thereby initiated should be conducted thereafter in accordance with Civil Procedure Code Art. 712–715, but a proceeding commenced by a petition filed on that date or later, in accordance with Civil Procedure Code Art. 1205–1211. Similarly, a proceeding before an arbitration court should be conducted through to the end in accordance with provisions in force upon commencement of the proceeding. However, in light of the rule set forth in Civil Procedure Code Art. 1186, the date of commencement of a proceeding before an arbitration court will generally be the date of service on the respondent of the document containing the demand for arbitration.
2. In instances in which arbitrators are appointed by each party independently, a new arbitrator appointed by one of the parties has the same status as the former arbitrator. Since the former arbitrator was unable to reach agreement on selection of a super-arbitrator and it was necessary for the super-arbitrator to be appointed by the court, the decision of the court in this respect could hardly be questioned just because of the appearance of a new arbitrator. There is no need to assure him an influence over appointment of the super-arbitrator, since his predecessor with an analogous status failed to make use of his opportunity in this respect.
3. There may be various reasons for loss of force of an arbitration clause. In addition to the procedural grounds listed in Civil Procedure Code Art. 1168 (previously Art. 702 §1) and Art. 1195 §4 (previously Art. 707 §2), it could also involve such events as dissolution of the arbitration agreement, occurrence of a suspensory condition, or lapse of the deadline by which an arbitration award should have been issued. Termination of the agreement containing the clause does not in and of itself constitute such grounds, however. This rule is now stated clearly by Civil Procedure Code Art. 1180, but should not have been in doubt prior to adoption of that provision.