case law

id : 20383

id: 20383

Polish Supreme Court order

dated 5 February 2015

Case No. V CSK 231/14

Summary by arbitration.laszczuk.pl:

A construction company obtained an arbitration award for over PLN 750,000 against a local commune for construction work. The commune paid the award 9 months after it was issued. The contractor subsequently filed a claim in the regional court against the commune for interest on the arbitration award. The regional court granted the defendant’s motion to dismiss based on an arbitration clause in the construction contract. The court of appeal denied the plaintiff’s appeal.

On cassation appeal to the Supreme Court of Poland, the plaintiff argued that the claim for interest was separate from the principal claim (which it was undisputed was subject to arbitration), and therefore the lower courts had improperly extended the arbitration clause to cover the claim for interest. The plaintiff also alleged that the arbitration procedure provided for in the contract (apparently based on FIDIC conditions) could not be followed because it required the dispute to be raised with the contract engineer for referral to a dispute adjudication board in the first instance. Only if a party were dissatisfied with the determination of the dispute adjudication board would the dispute be submitted to arbitration. At the time the contractor filed its claim for interest on the award, the contract had already been performed and there was no longer a contract engineer appointed with whom the dispute could be raised, and the arbitration procedure was therefore moot.

The Supreme Court held that a claim for interest is auxiliary to the principal claim and therefore would also be covered by the arbitration clause. If, however, as the plaintiff alleged, the arbitral tribunal could no longer be empanelled, then the arbitration clause would be deemed to have lapsed and would no longer be a defence to pursuit of the claim for interest in state court. Because the court of appeal had failed to consider this issue, the Supreme Court issued an order setting aside the judgment of the court of appeal and remanding the case to the court of appeal for reconsideration.

Excerpts from the text of the court’s ruling:

1. It is characteristic and results from the nature of a claim for interest and of auxiliary consideration by the party performing such claim in relation to the principal claim that in agreements there is no need to conclude separate provisions concerning such claims and consideration. Because they share the fate of the principal claims and consideration, it is understandable that they are also governed by provisions referring to the principal consideration. This rule also applies in the case of an arbitration clause.

2. If a party seeking an award of payment does not pursue a claim for interest on delay at the same time, including because the delay arises only as a result of failure to make timely performance of an arbitration award, such claim for interest may be pursued in a separate proceeding. This proceeding is subject to the same procedure which pursuit of the principal claim was subject to. For these reasons the appellant incorrectly disputed the coverage by the arbitration clause of the claim for interest and in this case there was no legally unjustified extension of the arbitration clause within the meaning of Civil Procedure Code Art. 1161 § 1.

3. If consideration of the case by the arbitration court in accordance with the arbitration clause proves impossible because of the inability to appoint arbitrators, or due to circumstances preventing consideration of the case before the arbitration court indicated in the clause, or for both reasons as occurred in this case, and there are no other provisions in the parties’ agreement, then under Civil Procedure Code Art. 1168 the arbitration clause lapses by operation of law.

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