Polish Supreme Court ruling
dated 10/16 December 1953
Case No. II C 316/53
Summary by arbitraz.laszczuk.pl:
The State Treasury (in the person of the local municipality) commenced an action in the province court against the tenant of a hotel (partially owned by the state), pursuant to a 1948 tenancy agreement, seeking back rent and a declaratory judgment concerning the amount of rent due for the tenancy. The basis for the claim was a clause in the tenancy agreement providing that the rent could be adjusted based on changes in the economy, as well as a rent regulation issued by the communist government in 1950.
The defendant moved to dismiss or deny the claim based on an arbitration clause in the tenancy agreement and on other grounds. The province court issued an order denying the defence of the arbitration clause, and subsequently issued a declaratory judgment establishing the amount of the rent.
The defendant sought review from the Polish Supreme Court. The court upheld the ruling of the province court dismissing the defence of the arbitration clause, reasoning that an arbitration court might rule contrary to the substantive law and against the interests of the socialist state, to the detriment of state assets, and thus the arbitration clause must be regarded as invalid. The court went on to set aside the ruling of the province court in part, on other grounds.
Excerpts from the text of the court’s ruling:
1. In the system of the People’s Democratic State, where protection of social property is one of the overriding duties of citizens, contractual provisions which submit final resolution of disputes concerning property rights of the State Treasury to the discretion of other actors than the courts or other institutions appointed to do so by law cannot be regarded as permissible and valid.
2. A clause appointing an arbitration court whose erroneous ruling on the relief sought by the parties may be set aside pursuant to a petition to set aside an arbitration award only if the award is unintelligible or inconsistent, exceeds the bounds of the submission, or by its substance violates the rule of law or principles of social coexistence in the People’s Democratic State (Civil Procedure Code Art. 510 §1(4)), may cause a diminution of social assets if the arbitration court in issuing its ruling is not guided by governing law, and more specifically by regulations of substantive law. Therefore, submission of such a dispute to an arbitration court for resolution cannot be reconciled with due protection of state property, for which the authorities of the State are appointed.