case law

id : 20360

id: 20360

Polish Supreme Court order

dated 24 November 2010

(Case No. II CSK 291/10)

Summary by arbitraz.laszczuk.pl:

E. sp. z o.o. maintained a bank account at bank B. SA, governed by a bank account agreement, and also entered into a currency hedging agreement (cross-currency interest rate swap or CIRS) with the bank. The CIRS agreement contained an arbitration clause calling for arbitration of disputes related to the CIRS agreement before the Court of Conciliation at the Polish Bank Association.

The bank deducted alleged CIRS losses from E. sp. z o.o.’s bank account. The customer filed suit in state court for repayment of the funds, which it alleged were unlawfully deducted from the account. The bank asserted the arbitration clause as a defence, and the regional court dismissed the action accordingly.

The appellate court denied the appeal, also rejecting the plaintiff’s argument that the arbitration clause was unenforceable because it violated the principle of equality of the parties. The rules of the Court of Conciliation called for the parties to appoint the presiding arbitrator in a three-member panel from the court’s list of arbitrators, or if they failed to do so the presiding arbitrator would be appointed by the executive committee of the association. (The members of the association are banks, including B. SA.)

On cassation appeal, the Supreme Court held that the claim did fall within the arbitration clause, but the appellate court failed to give due consideration to whether the rules for appointment of the presiding arbitrator violated the principle of equality of the parties. The order below was reversed and the case remanded to the appellate court for reconsideration.

Excerpts from the text of the court’s ruling:

1. The impermissibility of the common court’s hearing a case because of a binding arbitration clause (absent the grounds set forth in Civil Procedure Code Art. 1165 §2) also occurs when resolution of the matter presented for determination by the common court is not possible without resolving a dispute subject to the arbitration clause.

2. The principle of equality expressed in [Civil Procedure Code] Art. 1161 §2 requires ... that neither of the parties to a dispute to be decided by an arbitration court enjoy special rights in the proceeding before such court. This plainly applies to the manner in which arbitrators are selected. This is expressly stated in Art. 1169 §3, which provides that provisions of an agreement awarding one of the parties greater rights in appointment of the arbitration court shall be ineffective. This should be applied as relevant to a situation in which a provision of this type is contained in the rules of the permanent arbitration court selected by the parties.

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