Polish Supreme Court order
dated 19 October 2012
Case No. V CSK 503/11
Summary by arbitraz.laszczuk.pl:
T. SA, a corporate bank customer, brought an action in the regional court against the bank I. SA. The defendant moved to dismiss the action on the basis of an arbitration clause in the parties’ framework agreement of 2007. The clause provided for arbitration of disputes before a panel of three arbitrators pursuant to the rules of the Court of Arbitration at the Polish Bank Association. The plaintiff alleged that the arbitration clause was ineffective because it violated the principle of the equality of the parties, particularly because the rules authorized the president of the Court of Arbitration to appoint the presiding arbitrator if not appointed by the other arbitrators, when, institutionally, the Court of Arbitration was controlled by the Polish Bank Association, whose members were banks. Thus, allegedly, the rules were systematically biased against the non-bank party to an arbitration before the Court of Arbitration.
The regional court granted the bank’s motion to dismiss the action, and the court of appeal denied the plaintiff’s appeal.
On cassation appeal, the Supreme Court held that an arbitration clause incorporating the rules of a permanent arbitration court could violate the principle of the equality of the parties. However, the mere fact that the arbitration court was organized and controlled by a professional association or business organization did not necessarily mean that the rules as such violated the principle of the equality of the parties. The court found that in the cassation appeal, the plaintiff had failed to indicate any factual findings concerning objectionable practices by the president of the Court of Arbitration at the Polish Bank Association in the appointment of presiding arbitrators.
The court distinguished an earlier case (No. II CSK 291/10), also involving the Court of Arbitration at the Polish Bank Association, in which the Supreme Court had held that the principle of the equality of the parties could be violated by specific rules of the arbitration court. In that case it was not determined whether the rules of the Court of Arbitration on appointment of arbitrators in fact violated the principle of the equality of the parties, but the case was only remanded to the court of appeal for reconsideration of that issue.
The cassation appeal was denied accordingly.
Excerpts from the text of the court’s ruling:
1. Violation of the principle of the equality of the parties may also occur through adoption of the specific wording of the rules of an arbitration court (Civil Procedure Code Art. 1161 §3). … Under the Civil Procedure Code provisions on arbitration, the equality of the parties means—generally speaking—awarding the parties equal rights, both within the main arbitration clause itself and in the rules of the permanent arbitration court, creating equal opportunities for the parties in the definitive resolution of the dispute covered by the agreement.
2. In determining whether the principle [of the equality of the parties] is complied with in the arbitration agreement, a clear distinction should be made between the content of the arbitration agreement itself (also including the provisions of the rules of the permanent arbitration court) and the general rules of operation of the permanent arbitration court. … The principle of the equality of the parties within the meaning of Civil Procedure Code Art. 1161 should be addressed to the content of the arbitration agreement itself, and not to such elements of an organizational nature, which only establish the necessary and proper legal and organizational infrastructure to assure the parties the ability to establish the appropriate panel of arbitrators within the individual legal dispute.
3. Organizational ties between permanent arbitration courts and various professional associations or business organizations are not determinative of a specific dependence on the organizations where the arbitration courts operate or a lack of impartiality of specific arbitrators.