case law

id : 20140

id: 20140

Polish Supreme Court order

dated 28 October 1993

Case No. II CRN 70/93

Summary by arbitraz.laszczuk.pl:

A married couple, Aleksander S. and Ewa-Czesława B., operated several businesses, including a clothing store, a grocery store and a restaurant, and had other assets including two automobiles. The husband had unsatisfied debts of over PLZ 200 million (equivalent to PLN 20,000). On 15 January 1992 the spouses entered into a deed splitting their joint marital estate into separate estates. On 17 January 1992 they entered into an arbitration agreement to resolve the “dispute” of how to divide their assets. On 18 January 1992 an arbitral tribunal rendered an award granting title to all the assets to the wife and requiring her to pay the husband PLZ 120 million as well as liabilities connected with the business, apart from a liability of PLZ 125 million incurred by the husband. The husband had no other assets to cover his liabilities.

The spouses obtained an order from the district court enforcing the award, although it was unclear to the court which party was the applicant and which was the respondent. No appeal was filed.

When the husband’s creditors were unsuccessful in executing over PLZ 200 million in claims against him, they complained to the Minister of Justice. After the deadline for appealing against the order of the district court enforcing the arbitration award, the Minister of Justice applied to the Supreme Court for extraordinary review of the order, which both spouses opposed. The Supreme Court found that the award was collusive, detrimental to creditors, and contrary to public policy. It vacated the order of the district court and remanded the case to the district court for reconsideration.

Excerpts from the text of the court’s ruling:

1. The state court may rely on notorious facts or facts of which it has judicial notice as grounds for finding that an arbitration award or settlement by its content violates the rule of law or principles of social coexistence in the Republic of Poland. These clearly include that parties who are business entities make numerous dispositions or other shifting of their assets, unfavourable to one of them, but the negative effects of such consensual dispositions are essentially borne by the creditors of one or both of the parties voluntarily disposing of the assets they hold.

2. The state court may not ... sanction and assist in enforcement of a ruling that causes incomplete or improper performance of an obligation in the form of payment of a debt.

scroll up