Polish Supreme Court ruling
dated 23 January – 13 February 1931
Case No. C 1783/30
Summary by arbitraz.laszczuk.pl:
The parties to a 1922 agreement for tenancy of a farm included a general arbitration clause in the agreement with respect to disputes that might arise in the future. A dispute arose in 1928 when the landlord terminated the tenancy agreement. The tenant applied to the Zamość Regional Court for an order specifying the terms of the submission to arbitration and appointing the arbitrators, based on the arbitration provisions of the former Russian Civil Procedure Code as amended in 1925. (Prior to the 1925 amendments, the parties had to identify a specific existing dispute and mutually name the specific arbitrators in the arbitration clause.) Over the objection of the landlord, the court issued an order in January 1929 appointing the arbitrators and specifying the terms of the submission to arbitration, under which the arbitrators should determine the amount of damages the landlord should pay the tenant for termination of the tenancy agreement on 1 July 1928 and settle the accounts between the parties by issuing an award in favour of one of the parties reflecting the final balance between them.
The arbitrators issued an award in February 1929 in which they ruled that the tenancy would terminate on 30 June 1929. The award included a settlement of accounts after 1 July 1928, giving the harvest after that date to the tenant and establishing the rent payable to the landlord through 30 June 1929.
The landlord applied to the regional court to set aside the award on the grounds that the provisions of the former Russian Civil Procedure Code as amended in 1925 could not be applied in the case of a general arbitration clause included in a 1922 tenancy agreement, and that the award exceeded the scope of the submission to arbitration. The regional court set aside the award on the grounds that it exceeded the scope of the submission to arbitration.
On appeal by the tenant, the Lublin Appellate Court reversed and issued an order in favour of the tenant enforcing the award.
On cassation appeal to the Supreme Court of Poland, the court agreed with the landlord that it was error for the regional court to apply the amended provisions of the former Russian Civil Procedure Code and establish the terms of the submission to arbitration and appoint the arbitrators, over the landlord’s objection, when this was not provided for in the arbitration clause from 1922, as the 1925 amendment was substantive in this respect. However, the court held that such error was not grounds to set aside the award because under the procedural provisions of the 1925 amendment, an order establishing the terms of the submission to arbitration and appointing the arbitrators was not appealable, and therefore review of this issue was moot.
The Supreme Court nonetheless found that the arbitration court had ruled beyond the specific terms of the submission to arbitration. The court vacated the decision of the appellate court accordingly and remanded the case for reconsideration.
Excerpt from the text of the court’s ruling:
The amended Art. 1367, 1370 and 13701 of the [former Russian] Civil Procedure Code, insofar as they contain substantive legal norms, that is with respect to a compulsory submission to arbitration and appointment of arbitrators without the consent of both parties, may not be applied with respect to general arbitration clauses concluded before entry into force of the act of 16 July 1925 [amending the former Russian Civil Procedure Code].