Polish Supreme Court ruling
dated 8 February 1937
Case No. C III 1254/35
Summary by arbitraz.laszczuk.pl:
In 1922, the landlord leased the estate known as Piątkowo to the tenant until 1934. The tenancy agreement, which was subject at the time to the former German law, included an arbitration clause. In 1933, the heir of the original landlord obtained an arbitration award against the tenant ordering the tenant to restore possession of the estate to the landlord and pay the landlord a sum of money.
The tenant brought an action to set aside the arbitration award, based on two major grounds: that the heir was not a party to the arbitration clause as a successor to the original landlord; and that the tenant was denied a defence, and the award violated public policy, because the arbitrator appointed by the landlord was not impartial. As it turned out, the arbitrator appointed by the landlord, advocate C., was a law partner of advocate B., who spoke for the landlord at one of the hearings (although he was not appointed to represent the landlord). The fact that the two advocates were law partners was allegedly concealed from the tenant at the time.
The regional court granted the petition and set aside the award. The appellate court reversed and denied the petition.
On cassation appeal by the tenant, the Supreme Court held that the current landlord was a party to the arbitration clause as the legal successor to the original landlord from whom the current landlord had inherited the estate. The court also held that the alleged conflict of interest on the part of the arbitrator appointed by the landlord concerned the procedure before the arbitration court, not the substance of the award itself, and therefore could not be grounds for setting aside the award under the public policy clause. The court found that the award itself was objective and reasonably justified. The tenant should have raised the issue of the arbitrator’s conflict of interest first in the arbitration proceeding. This allegation could not be raised for the first time in an action to set aside the award. Even if there were grounds for removal of the arbitrator, the arbitrator could be removed only upon motion by the party; an arbitrator, unlike a state court judge, could not be recused by operation of law. The Supreme Court denied the cassation appeal accordingly.
Excerpts from the text of the court’s ruling:
1. An arbitrator is never recused purely by operation of law, as is the case under Civil Procedure Code Art. 54, but recusal of an arbitrator occurs only via a party, and only Civil Procedure Code Art. 55 may be applicable.
2. Recusal of an arbitrator may not be raised for the first time via a petition under [Civil Procedure Code] Art. 503 §1.
3. Neither the German Civil Procedure Code, under which the arbitration clause was made, nor the Polish Civil Procedure Code defines the relationship under the clause as purely personal and not passing to the general successor by way of universal succession.