polish

case law

id : 20400

id: 20400

Rzeszów Court of Appeal judgment

dated 28 October 2010

Case No. I ACa 304/10

Summary by arbitraz.laszczuk.pl:

In July 2006, F.P.N. sp. z o.o. submitted an order for goods to Edward B., a sole trader doing business as Przedsiębiorstwo Handlu Zagranicznego “B.” In August 2006, the parties signed a broader, long-term contract covering the July order. The contract included a clause calling for arbitration before the Court of Arbitration at the Polish Chamber of Commerce.

In April 2007, the parties signed another contract for sale of goods, under which F.P.N. made an advance payment of PLN 319,000. That contract also included an clause calling for arbitration before the Court of Arbitration at the Polish Chamber of Commerce.

Edward B. subsequently sued F.P.N. in regional court for breach of the August 2006 contract. F.P.N. successfully moved to dismiss the case on the grounds that the dispute was subject to arbitration.

F.P.N. brought a claim in arbitration against Edward B. under the April 2007 contract. Edward B. counterclaimed for PLN 319,000 as a setoff, in the form of partial damages for F.P.N.’s alleged breach of the August 2006 contract. The Court of Arbitration at the Polish Chamber of Commerce issued an award in 2009 upholding the respondent’s setoff and denying the relief sought by the claimant.

F.P.N. applied to the regional court to set aside the award on the grounds that the arbitration clause was set forth in the April 2007 contract, while the respondent’s counterclaim arose out of the order from July 2006, and it had not been determined whether the contract from August 2006 was duly concluded, and therefore the counterclaim was not covered by the arbitration clause. F.P.N. also alleged that the arbitral tribunal had improperly dismissed its claim without ruling on the merits.

The regional court held that the Court of Arbitration at the Polish Chamber of Commerce clearly had jurisdiction over the dispute, and moreover the claimant had failed to object to jurisdiction over the counterclaim at the time it was asserted. The award also did not violate fundamental rules of procedure, because it was clear from the award and the justification for the award that the arbitral tribunal had set off the claims on both sides. The court denied the petition to set aside the award accordingly.

On appeal by F.P.N. sp. z o.o., the Rzeszów Court of Appeal held that it was clear from the evidence and the claimant’s admissions that the parties had entered into the August 2006 contract and therefore the arbitration court had jurisdiction over the dispute. It was also clear from the arbitration award, including the justification for the award, that the arbitral tribunal had finally resolved the claims and counterclaims. The court denied the appeal accordingly.

Excerpts from the text of the court’s ruling:

1. The grounds for setting aside an arbitration award in the form of failure to comply with fundamental rules of procedure cannot be equated with the grounds set forth in Civil Procedure Code Art. 1206 §2(2) arising out of the public policy clause, and the latter constitute separate grounds for setting aside an award.

2. The mandatorily applicable Civil Procedure Code Art. 1197 §2 provides that the statement of the reasons which guided the arbitral tribunal in issuing the award constitutes an inseparable part of the award. The reasons stated essentially constitute an integral part of the award. … The reasons for the resolution included in the justification may also prove relevant for determining the binding force of the legally final award, and thus the bounds of its substantive legal finality, even though this generally involves the binding force of the operative wording of the award. The reasons for the resolution are also covered by res judicata in situations where they must be referred to in order to determine precisely the substance of the resolution.

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