case law

id : 20187

id: 20187

Polish Supreme Court resolution

dated 8 March 2002

Case No. III CZP 8/02

Summary by arbitraz.laszczuk.pl:

The Agricultural Property Agency, the landlord for state-owned agricultural land, moved to set aside an arbitration award in favour of a tenant, Krzysztof K., under an arbitration clause included in the tenancy agreement. The agency alleged that the arbitration clause was invalid because it was made by an attorney-in-fact who held only a general power of attorney and thus was not duly authorized to enter into an arbitration agreement.

On appeal, the appellate court addressed a certified question to the Polish Supreme Court whether for purposes of the Civil Code it is possible for an attorney-in-fact to enter into a valid arbitration agreement only if the attorney holds a specific power of attorney. The Supreme Court held that under the Civil Code, a general power of attorney is insufficient, but a specific power of attorney is not required; it is sufficient if the attorney-in-fact holds a generic power of attorney, authorizing the attorney to conduct acts of a specific type. (The court did not address the specific rules concerning issuance of a power of attorney to represent the agency, set forth in the agency’s statute, promulgated as a government regulation, which were not raised in the certified question.)

Excerpts from the text of the court’s ruling:

1. A submission to arbitration is an agreement to submit a dispute to an arbitration court for resolution (Civil Procedure Code Art. 698 §1), whose most far-reaching consequence is exclusion of the matter from the jurisdiction of the state court (Civil Procedure Code Art. 697 §2). The agreement may concern either a dispute that has already arisen (when it is then referred to as a “compromise”) or disputes that may arise in the future out of a designated legal relationship (in which case it then called an “arbitration clause,” because as a rule it is included in the “main” agreement).

2. The validity of an arbitration clause should be assessed autonomously. A submission to arbitration, even when set forth in the form of a clause in the “main” contract, is not a provision of the bilateral contract, and thus its effectiveness is considered independently. This issue is treated similarly to an agreement on jurisdiction, which is regarded as autonomous regardless of whether it was included in the text of the “main” agreement itself.

3. The assessment of the existence of an attorney's authority to enter into an arbitration agreement should be made separately from the assessment of the existence of the attorney's authority to make the legal act that is the source of the legal relationship which (or, more precisely, disputes arising out of which) is to be submitted to the jurisdiction of the arbitration court. Consequently, assessment of the effectiveness of the power of attorney to enter into the arbitration clause is independent of the assessment of the effectiveness of the power of attorney to enter into the “main” agreement, and a finding that the attorney was duly authorized to conclude the main agreement will not be conclusive on the determination of whether the attorney was also duly authorized by the principal to submit disputes arising out of the agreement to the jurisdiction of the arbitration court, and thus to exclude such disputes definitively from the jurisdiction of the state court.

4. A submission to arbitration is an act exerting direct effect on realization of the legal protection to which a party is entitled. The importance of such submission and its procedural effects are thus serious enough that making a submission to arbitration should be regarded as an act outside the ordinary course of business. The submission has effects under procedural law, shaping the litigation posture of the party bound by the submission. The effect of a submission to arbitration on the manner in which legal protection is pursued is essentially always the same, as it always results in eliminating the jurisdiction of the state court. These characteristics of a submission to arbitration, considering its autonomous nature, justify the holding that a submission to arbitration is an act outside the ordinary course of business. This classification is favourable from the point of view of certainty of legal transactions and clarity of the criteria applied when assessing the effectiveness of powers of attorney.

5. Since a submission to arbitration is an act outside the ordinary course of business, a general power of attorney is not sufficient to enter into it. For the attorney to enter into an agreement submitting a dispute to the arbitration court for resolution thus requires a “generic” power of attorney, defining the type of action covered by the authority, or may be entered into by an attorney holding authority to conduct this specific act.

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