Polish Supreme Court ruling
dated 9 January 1935
Case No. C II 2194/34
Summary by arbitraz.laszczuk.pl:
In an arbitration proceeding, one of the parties, Mieczysław P., appointed Ludwik T. as an arbitrator. Subsequently, Mieczysław P. lost confidence in Ludwik T. and urged him to resign from the arbitration panel. Upon receiving assurances that he would not be responsible for any resulting injury, Ludwik T. resigned from the panel accordingly.
The other party to the arbitration proceeding, the firm W. St., obtained a judgment before the Cracow Regional Court against Ludwik T., Mieczysław P., and another party, Szymon K., for the loss suffered due to Ludwik T.’s allegedly wrongful withdrawal from the arbitration panel. The judgment was affirmed by the Cracow Appellate Court with respect to Ludwik T. and amended with respect to the other defendants.
On review by the Supreme Court of Poland, the court affirmed the judgment against the arbitrator Ludwik T., holding that as an arbitrator he was bound to be impartial. Loss of confidence in him by the party that appointed him was not valid cause to resign from the panel, and he should not have given in to pressure from the party that appointed him. Resigning from the panel without valid cause violated his contractual duty to the other party and was proper grounds for liability.
With respect to the judgment against the other defendants, however, the court held that the pressure they exerted on the arbitrator, urging him to resign without valid cause, did not constitute grounds for liability to the plaintiff in tort or contract. The court amended the judgment against them accordingly and dismissed the action against them.
Excerpts from the text of the court’s ruling:
1. A party’s lack of confidence in an arbitrator may not constitute grounds for the arbitrator to decline to perform the duties. The arguments in the petition for review seeking to demonstrate that an arbitrator is a decision-maker
and at the same time the trusted confidante of the party that appointed
him are erroneous.
A party does demonstrate its confidence by choosing someone as an arbitrator in its case, but in the sense that the selected arbitrator will resolve the dispute impartially, not looking only to the interests of the party appointing him as an arbitrator. The arbitrator is not a judge only of that
party, but of both parties, and the duty of impartiality arises out of his
character as a judge.
2. Regardless of whether it is a matter of non-justiciability or lack of jurisdiction of the court, the arbitration court may not hold an arbitrator liable for payment of costs, but only one of the parties conducting the dispute, for costs caused by conducting the dispute itself.