Polish Supreme Court judgment
dated 24 September 1999
Case No. I CKN 141/98
Summary by arbitraz.laszczuk.pl:
Piotr C. entered into contracts with the Agricultural Property Agency in 1993 and 1994 containing arbitration clauses under which each party would appoint one arbitrator and the two arbitrators would appoint a third arbitrator as presiding arbitrator. The agency terminated the agreements, and Piotr C. commenced an arbitration seeking a declaration that the termination was invalid. The person appointed as presiding arbitrator was a former employee of the agency, but Piotr C. failed to challenge the arbitrator in the arbitration proceeding. In the award, Piotr C.’s claim was denied.
Piotr C. filed a petition to set aside the award, alleging that the award ruled on a matter that was outside the scope of the arbitration clause and that the presiding arbitrator was barred from the panel by operation of law. The province court denied the motion on both grounds, and the appellate court denied the appeal.
On cassation appeal, the Supreme Court held that an ineligible arbitrator must be challenged by a party, and the provisions concerning recusal by operation of law (and invalidity of the proceeding) with respect to judges do not apply in arbitration. Similarly, an award may be set aside on the grounds that it rules on matters beyond the scope of the arbitration clause only if the party objected to consideration of the matter, but in this case the claimant not only did not object, but in fact himself filed the claim seeking a ruling on the matter ruled on by the arbitration court. The Supreme Court denied the cassation appeal accordingly.
Excerpts from the text of the court’s ruling:
1. The institution of recusal of a judge is provided for by the Civil Procedure Code in a proceeding before the state court as well as in a proceeding before an arbitration court. There are differences in how this institution is governed by the code for the two types of proceedings. The fundamental difference is that in a proceeding before an arbitration court, the code does not provide for recusal of an arbitrator or presiding arbitrator by operation of law, as is the case with a judge in a proceeding before the state court (Civil Procedure Code Art. 48).
2. In a proceeding before the arbitration court, an arbitrator or presiding arbitrator may be challenged only upon motion of a party, on the same grounds that would justify recusal of a state judge.
3. If a party challenged an arbitrator or presiding arbitrator in the arbitration, and the challenge was not sustained despite the existence of grounds for the challenge, the party may challenge the arbitration award using a petition to set aside the award under Civil Procedure Code Art. 712 §1(3). If the party did not challenge the arbitrator or presiding arbitrator, it has no legal grounds to challenge the arbitration award. Exceptionally, only participation in the arbitration panel by an arbitrator or presiding arbitrator whose rights and obligations could be affected by the result in the case could serve as a basis for setting aside the arbitration award.
4. The wording of Civil Procedure Code Art. 712 §2 indicates without Any doubt that if the decision by the arbitration court exceeds the bounds of the arbitration clause, a party may seek to set aside the award only in the portion exceeding the arbitration clause, and only in a situation in which a party that actively participated in the proceeding before the arbitration court objected to consideration of the claims exceeding the bounds of the arbitration clause.