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case law

id : 20410

id: 20410

Kraków Court of Appeal order

dated 24 September 2013

Case No. I ACz 1427/13

Summary by arbitraz.laszczuk.pl:

A limited-liability company commenced arbitration against individual J.K. and won an award against J.K. in December 2012 – January 2013. The company applied to the Kraków Regional Court for enforcement of the award. Meanwhile, J.K. filed a petition with the Kraków Regional Court to set aside the award. J.K. then requested the court to stay the proceeding for enforcement of the award because a proceeding to set aside the award was pending. The court found that the result in the proceeding for enforcement of the award depended on the result in the proceeding to set aside the award because if the award were set aside the award could not be enforced, and issued an order in April 2013 staying the proceeding for enforcement of the award accordingly.

The company filed an interlocutory appeal with the Kraków Court of Appeal, alleging that as of issuance of the order in question and filing of the interlocutory appeal, it had not been served with the petition to set aside the award, and as of May 2013 the fee for the petition had not yet been paid, so there was no proceeding pending on which the result in the proceeding to enforce the award could depend. It also argued that the regional court had the power to rule on the application to enforce the award without waiting for a ruling on the petition to set aside the award.

The court of appeal found that the two proceedings were independent and based on different legal grounds, and thus the decision in one case did not depend on the result in the other case. While the regional court could stay the proceeding for enforcement of the award pending a ruling in the proceeding to set aside the award, it was not required to, and also could for example require security from the respondent as a condition for granting the stay. The court of appeal set aside the order of the regional court granting the stay accordingly.

Excerpts from the text of the court’s ruling:

1. The mere filing of a petition to set aside an arbitration award (Civil Procedure Code Art. 1206 §1) is not a barrier to issuance of an [enforcement] clause under Civil Procedure Code Art. 1214, but may lead to postponement of consideration of the case seeking enforcement by way of issuance of an [enforcement] clause (Civil Procedure Code Art. 1216 §1). Similarly, issuance of an enforcement clause for an arbitration award is not a barrier to subsequent setting aside of the award through a petition, as under Civil Procedure Code Art. 1210 the court in closed session may stay enforcement of the arbitration award.

2. In a proceeding for recognition or enforcement of an arbitration award, the subject of examination is not the correctness of the claim or the substantive basis for its existence, or formal issues concerning the course of the arbitration proceeding. But this does not mean that the proceeding on the petition to set aside the arbitration award is a predicate in relation to the proceeding for recognition or enforcement of the arbitration award. On the contrary, both of these proceedings are independent of one another and based on different grounds. If the proceedings on the petition to set aside the arbitration award and on the application for recognition or enforcement of the award coincide, the consequences of this coincidence for the latter proceeding are governed by Civil Procedure Code Art. 1216.

3. The fact of issuance of an enforcement clause by the state court for a ruling by an arbitration court does not affect in any way the ability to file a petition to set aside the arbitration award. After all, stay of enforcement of the arbitration award as a result of filing of the petition to set aside the award may occur if and only if the award was also held to be enforceable under Civil Procedure Code Art. 1212 and following. Before that the arbitration award does not have legal force and is not subject to enforcement. … Therefore, considering that both proceedings are regulated in Part Five of the Civil Procedure Code, and the legal situation of the coincidence of the two proceedings, application of Civil Procedure Code Art. 177 §1(1) should be approached cautiously, as pursuant to Civil Procedure Code Art. 13 §2 this provision is applicable to both of these proceedings only by analogy.

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