Polish Supreme Court ruling
dated 19 November 1937
Case No. C I 2960/36
Summary by arbitraz.laszczuk.pl:
An arbitration clause between a banking cooperative (C.B.S.) and its CEO (Andrzej B.) provided for a panel of three arbitrators. Each party would appoint one arbitrator and then both parties would agree on the appointment of the third, presiding arbitrator. When the parties could not agree on the third arbitrator, Andrzej B. applied to the regional court to appoint the presiding arbitrator.
The regional court denied the application and the appellate court affirmed. The appellate court held that under the Civil Procedure Code, it had jurisdiction to appoint a presiding arbitrator only if the presiding arbitrator was to be appointed by the two other arbitrators. It also held that because of the inability to empanel the arbitrators, the arbitration clause ceased to be in force.
The Supreme Court denied the cassation appeal, holding that when the arbitration clause provided that the parties should agree on the presiding arbitrator, the court could not act for them and appoint the presiding arbitrator if the parties could not agree. The court also held that under the Civil Procedure Code, the arbitration clause ceased to be in force if the parties were unable to appoint an arbitrator who was to be appointed by the parties jointly, regardless of whether the appointment involved the sole arbitrator of a single-member panel or the presiding arbitrator of a three-member panel.
Excerpts from the text of the court’s ruling:
1. Interference in arbitration by the state courts must be limited to instances strictly provided for by statute. Thus, as Civil Procedure Code Art 485 §1 provides for appointment of the presiding arbitrator by the state court upon application of a party only when the arbitrators have failed to agree on the selection, that court may not intervene in a case where the parties have failed to agreement on the selection of the presiding arbitrator who was to be appointed upon their mutual agreement.
2. [Civil Procedure Code] Art. 491 §1(4), which provides that an arbitration clause shall cease to be in force “if the parties cannot agree on an arbitrator whom under the clause they were to appoint jointly,” does not draw any distinction as to whether the parties failed to agree on selection of an arbitrator for a single-member panel or a three-member panel, or whether the person who was to be selected upon mutual agreement was intended to be a presiding arbitrator; thus what is fundamentally important is that the manner in which the parties agreed that the court would be empanelled proved impossible because of lack of agreement on selection of an arbitrator.