Polish Supreme Court judgment
dated 21 January 2016
Case No. III CSK 429/15
Summary by arbitraz.laszczuk.pl:
In 2013, a company called Agencja Handlowa G. sp. z o.o., in bankruptcy, brought a claim in the regional court against T. sp. z o.o. seeking a declaratory judgment that the arbitration clause included in the parties’ commercial cooperation agreement of 2010 was not binding because it was invalid, ineffective or had lapsed. The regional court denied the claim, holding that the plaintiff had no legal interest in obtaining such a ruling because if it objected to the jurisdiction of the arbitration court it could assert its objection as a defence in the arbitration proceeding.
On appeal, the court of appeal held that the use of the general provision on declaratory judgments, Civil Procedure Code Art. 189, was excluded here by Art. 1159 §1, which provides that the state courts have jurisdiction to intervene in arbitration only when expressly permitted by statute, because there was no provision in the Polish arbitration law (Part Five of the Civil Procedure Code) permitting the state court to issue a declaratory judgment on whether an arbitration clause was binding. The court of appeal also agreed with the regional court that the claimant had no legal interest in seeking a ruling on this matter. The court of appeal denied the appeal accordingly.
On cassation appeal, the Supreme Court of Poland found that the statutory basis permitting the state court to intervene in an arbitration matter does not necessarily have to be found in the arbitration law as such. However, it was unnecessary to determine whether Art. 189 of the code constituted a statutory basis for intervention by the state court in an arbitration matter because in any event a party to an arbitration agreement lacks a legal interest in seeking a declaratory judgment under Art. 189 on the validity of the arbitration agreement. This is because the state court will rule on the existence of an arbitration agreement if this is asserted as a defence to an action in state court; or, if the lack of an arbitration agreement is asserted as a defence in an arbitration proceeding, Art. 1180 of the code vests jurisdiction in the arbitration court to rule on its own jurisdiction. The court denied the cassation appeal accordingly.
Excerpts from the text of the court’s ruling:
1. A petition to set aside an arbitration award is a claim to establish a legal relationship, in which the plaintiff (the petitioner) demands that the state court issue a judgment setting aside (vacating) the existing legal relationship established by the arbitration award. A judgment by the state court granting the petition is of a quashing nature, as in such situation the state court can only set aside the arbitration award, and only insofar as demanded by the petitioner.
2. Even though the relief stated in a petition to set aside an arbitration award may involve setting aside the entirety of the arbitration award or part of the award, the state court is bound by the scope of the petition against by the award by the petitioner, and thus the bounds of the petitioner’s application.
3. Exceptionally, it is possible to grant a demand to set aside an arbitration court in part, but only when the challenged part of the ruling can be entirely separated from the rest of the award.