case law

id : 20235

id: 20235

Polish Supreme Court order

dated 22 February 2007

Case No. IV CSK 200/06

Summary by arbitraz.laszczuk.pl:

In December 2003 a Polish individual entered into a brokerage agreement for speculative foreign exchange trading with a US corporation in the state of Michigan, by setting up an Internet trading account and accepting the terms of use for the Internet trading site. The terms included a clause excluding the jurisdiction of the Polish courts and giving the brokerage the option to submit disputes to arbitration before an arbitration court in Michigan or to the state court in Chicago, Illinois.

The Polish individual subsequently gave notice of repudiation of the agreement, allegedly because the brokerage did not hold a required Polish license to conduct forex trading, and commenced a proceeding against the brokerage at the Bydgoszcz Regional Court for refund of USD 14,000 paid into the trading account.

The defendant asserted the defence of the arbitration clause and exclusion of jurisdiction of the Polish courts. The plaintiff moved to dismiss the defence, asserting that the parties failed to enter into a written agreement in this respect and that the clauses in question were void as unfair contract terms under EU law (Océano Grupo Editorial SA v Roció Murciano Quintero, Case C-240/98 and combined cases, European Court of Justice judgment dated 27 June 2000).

The regional court held that the parties had validly entered into the agreement in this respect through an implied declaration of intent, and dismissed the claim.

The appellate court denied the appeal, holding that while entering into an implied agreement in this respect was impermissible under Polish law in 2003, it was nonetheless permissible under a superseding 2005 amendment. The court also held that the validity of the arbitration clause between a Polish individual and a US brokerage could not be examined under EU law, but under the New York Convention, under which it was valid.

On cassation appeal, the Polish Supreme Court reversed and reinstated the plaintiff’s claim before the Bydgoszcz Regional Court. The Supreme Court held that the validity of the arbitration clause should be assessed under the New York Convention, but under Art. II(3) of the convention, a claim in a state court would not be dismissed if the arbitration clause were found to be “null and void, inoperative or incapable of being performed.” That was the case here because, as the court held, the clause was impermissible under EU law and related Polish law. The court also held that the arbitration clause was invalid because concluding an agreement by acceptance of terms of use on a website did not meet the requirement for written form.

Excerpts from the text of the court’s ruling:

1. If a proceeding in which Civil Procedure Code Art. 1162 §2 may be applicable was commenced after entry into force of the amending act, then under Art. 2 [of the Act dated 28 July 2005 Amending the Civil Procedure Code] it is permissible to apply it, and the complex nature of an arbitration clause, combining properties of a substantive and a procedural legal agreement, does not prevent application of the interim regulation set forth in the code. Art. 2, being later and specific, excludes Art. XV §2 of the Regulations Introducing the Civil Procedure Code and the prohibition on retroactive application of the law set forth in Art. XXVI of the Regulations Introducing the Civil Code (Act dated 23 April 1964, Journal of Laws Dz.U. No. 16 item 94, as amended).

2. The constitutional order of priority of legal acts (Polish Constitution Art. 91(1)) requires an assessment of requirements as to form first and foremost under the New York Convention, which sets forth in Art. II (1) and (2) the requirement of written form, understood broadly to include an exchange of letters or telegrams.

3. An arbitration agreement that is dependent on an election left up to the professional, the defendant company, without indicating the rules on which the decisions of the American Arbitration Association are based, imposing on the customer foreign law that differs substantially from European law, additional difficulties in enforcing claims because of the different system of law, distance and costs, and the commonly known difficulties in obtaining a visitor’s visa to the United States, creates a situation that must be regarded as an impermissible clause for purposes of Directive 93/13 (EEC). The arbitration clause imposed on the plaintiff constitutes an impermissible contract clause which results in a situation inconsistent with Art. 6(2) of the directive and justifies renunciation of the obligation to submit the case to arbitration.

4. An interpretation of [New York Convention] Art. II (1) and (2) does not allow for the conclusion that conclusion of an agreement in an implicit manner meets the requirement for ordinary written form, without departing from the sense of the rule. Nor is there any reason for finding that acceptance of content on a website is in written form, particularly since the convention is silent on specific issues, i.e. concerning the time, place and manner of acceptance of a form available on the Internet.

5. According to [Civil Procedure Code Art. 1162 §2], the form of an arbitration clause is fulfilled also when the clause is included in correspondence or statements submitted using telecommunications in a manner that enables the content to be fixed, or a written agreement incorporating a separate document containing a provision on submission of a dispute to resolution by an arbitration court. Entering a webpage containing a form of agreement addressed to an indefinite set of readers, and online confirmation of one’s intent to conclude an agreement, does not constitute a declaration enabling the content to be fixed. In particular, a factual computer action of “confirmation,” unlike a typical electronic signature of basic, i.e. lower reliability, does not provide a basis for identifying or reconstructing the content of the declaration. This requirement would be fulfilled, however, by a declaration transmitted by e-mail enabling identification of the sender.

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