Warsaw Appellate Court judgment
dated 14 January 2009
Case No. VI ACa 785/08
Summary by arbitraż.laszczuk.pl:
The petitioner filed an action with the Warsaw Regional Court to set aside a preliminary award by a panel of arbitrators at the Court of Arbitration at the Polish Chamber of Commerce on a dispute over a contractual penalty of USD 2 million. In the award, the arbitrators upheld the contractual penalty, rejecting the argument by the petitioner that the parties intended to eliminate the contractual penalty in an annex to the contract rather than merely amend it. The petitioner alleged violation of the requirements for composition of the panel, violation of fundamental rules of procedure before the arbitration court and requirements for an award, and violation of public policy in the form of misinterpretation of the contract provisions concerning the contractual penalty. The regional court refused to admit evidence to demonstrate that one of the arbitrators was hospitalized at the time the award was issued, offered by the petitioner to demonstrate that the arbitrator could not have participated in the consultation of arbitrators or signing the award. Under the rules of the arbitration court, the panel could confer at any place, including the hospital if necessary, and thus the evidence was irrelevant. The court also found that the arbitration court had properly applied the Civil Code provisions on contract interpretation, and even if it had not, that would not justify setting aside the award on the basis of a violation of public policy. The regional court denied the petition accordingly.
On appeal, the Warsaw Appellate Court found that the regional court had properly interpreted the Civil Code provisions in question, in a manner consistent with the interpretation by the arbitration court, although the regional court had no duty to interpret the substantive law but only to determine whether the grounds for setting aside the award were met. The appellate court also found that the evidence offered to show that one of the arbitrators was in the hospital when the award was issued, and therefore could not have participated in the consultation among arbitrators or signed the award, was irrelevant because the arbitrator could have participated in the consultation even in the hospital, and the petitioner offered no other evidence to demonstrate that the arbitrator did not participate in issuing or signing the award. The appellate court denied the appeal accordingly.
Excerpts from the text of the court’s ruling:
1. Violation by the arbitration court of regulations of substantive law or erroneous interpretation thereof, even if resulting in an erroneous ruling, does not in itself—even if it really did occur—constitute a violation of the fundamental principles of the legal system.
2. Civil Procedure Code Art. 1185 indicates that the consultation among the arbitrators may occur at any place (and thus even in a hospital).
3. Drawing up and signing the award is not an act that requires the preparation of minutes. As provided in §31 of the Rules [of the Court of Arbitration at the Polish Chamber of Commerce], minutes are prepared of a hearing and any act of the arbitration court. The mere physical drawing up of the text of the award is not an act of the arbitration court; it is a technical, auxiliary act, which may be performed by only one person at a time. Signing of the award, which is an act addressed to the members of the panel of arbitrators, should be analyzed similarly. Placement of a signature by each of the arbitrators is the act of the arbitrator alone, not of the panel of arbitrators. It thus does not require the preparation of minutes, which is reserved for an act of the entire arbitration court.
4. Only a violation of the “fundamental” rules of procedure before the arbitration court (Civil Procedure Code Art. 1206 §1(4)) may be grounds for setting aside an arbitration award. … Issues connected with drawing up the minutes of the consultation among the arbitrators and issuance of the award cannot be regarded as belonging to this group. Even if minutes of these actions actually should have been prepared, the lack thereof would not mean that a “fundamental” rule of procedure had been violated, but only a rule of order.