Polish Supreme Court judgment
dated 24 February 2016
Case No. I CSK 173/15
Summary by arbitraz.laszczuk.pl:
In 2000 the legal predecessors of T. sp. z o.o. (lessor) and E. SA (lessee) entered into a lease for a building for 5 years. Subsequently a disputed annex was entered into by the parties extending the lease term to 10 years. The annex included a clause providing for arbitration before the Court of Arbitration at the Polish Chamber of Commerce. In an award issued in 2005, the arbitration court held that the lease was in force between the parties until 2010. A petition to set aside that award was denied with legal finality and recognized by the regional court in 2007.
The lessor T. sp. z o.o. then brought another arbitration claim against the lessee E. SA in 2007 seeking the payment of rent and another arbitration claim in 2009 seeking damages for breach of the lease contract. In 2009 the arbitration court issued awards denying both claims, holding that the annex extending the lease was invalid, and the lease terminated after only 5 years, based on the emergence of new facts following issuance of the first arbitration award (backed by findings in parallel criminal proceedings) showing that when the annex was signed, the signatory for the lessor was not properly authorized to represent the lessor due to the lack of a required corporate resolution. A petition to set aside these awards was denied by the regional court in 2010 and the appeal by denied by the court in 2011.
Then, pursuant to the first of three cassation appeals in the case (I CSK 416/11), the Supreme Court of Poland set aside the judgment of the court of appeal and remanded the case for reconsideration, on the basis that the first award in 2005 had established the existence of the lease through 2010, but recognizing that the lower court could set aside that award on the grounds of relevant new facts or evidence, comparable to the grounds for reopening a civil proceeding.
On remand, the court of appeal issued a judgment in 2012 setting aside both of the 2009 awards, finding that new facts and evidence had not been disclosed that would justify setting aside the 2005 award. In the second cassation appeal (I CSK 191/13), the Supreme Court set aside the judgment of the court of appeal and remanded the case again for reconsideration, on the basis that the court of appeal had erroneously interpreted the grounds for the 2009 awards, ignoring that the “new” facts had existed prior to the issuance of the first award in 2005.
On remand, the court of appeal again set aside the 2009 awards, this time based on the finding that the parties to the lease annex were in fact properly represented, notwithstanding failure to comply with internal corporate rules, under a provision of the Commercial Companies Code providing that violation of corporate rules of representation does not invalidate a legal act. Consequently, the 2009 awards violated public policy because they conflicted with the 2005 award, which enjoyed res judicata effect.
In the present (third) cassation appeal, the lessee (E. SA) argued that the court of appeal had erroneously assumed that reopening of the previous case would require a showing that the new facts “would” affect the result and not merely “could” affect the result. This in turn had led the court to exceed its jurisdiction and intervene in the merits of the arbitration, among other things by attempting to reconstruct hypothetically what the arbitral tribunal would have decided in 2005 if it had been aware of the allegedly new facts concerning the signatory’s authority to represent the lessor in signing the lease annex in 2005. The court of appeal had also allegedly committed error by rejecting the lessee’s allegation that the claimant no longer had standing to seek to set aside the 2009 awards because it had assigned its claims under the lease between the time the 2005 award was issued and the time the 2009 awards were issued.
The Supreme Court rejected the lessee’s attempt to broaden the grounds for reopening proceedings, which is intended to be an extraordinary remedy, to include practically any new evidence related to a closed case. The court also held that despite assignment of its claims, the lessor still had standing to seek to set aside the 2009 awards because it was a party to those arbitration proceedings. The court denied the cassation appeal accordingly.