Katowice Court of Appeal order
dated 15 December 2016
Case No. V ACz 1309/16
Summary by arbitraz.laszczuk.pl:
A shareholder in a limited-liability company filed an action with the Katowice Regional Court against another shareholder, seeking to exclude the shareholder from the company. The defendant asserted as a defence the arbitration clause in the company’s articles of association, which provided that “any disputes arising between shareholders or between shareholders and the company shall be resolved by an arbitral tribunal selected by the parties to the conflict.” The regional court upheld the defence and dismissed the case accordingly.
On interlocutory appeal to the Katowice Court of Appeal, the plaintiff argued that a dispute over exclusion of a shareholder from a limited-liability company is “indivisible” and could infringe the interests of third parties, and thus, under Civil Procedure Code Art. 1157 (in force from October 2005) the dispute was not arbitrable because it could not be the subject of a judicial settlement.
The court of appeal held that the validity of the arbitration clause should be determined as of the date it was made, and thus (apparently) under the former Art. 697 §1 of the code rather than the current Art. 1157. Under the former provision, for a dispute to be arbitrable the parties had to be able to independently decide on their rights. Under the current provision, for a dispute to be arbitrable it had to be capable of being the subject of a judicial settlement. Despite the difference in wording, the court found that the test for arbitrability under former law and current law was essentially the same. Under the Commercial Companies Code, exclusion of a shareholder from a limited-liability company results in forced sale of the shareholder’s shares at a price determined by the court. This could also be achieved by an independent decision of the parties or by a settlement before the court, and consequently the dispute was arbitrable under either test.
The court of appeal upheld the ruling by the regional court accordingly and denied the interlocutory appeal.
Excerpts from the text of the court’s ruling:
1. The validity of an arbitration agreement is determined by the regulations in force at the time it was made.
2. Under Art. 697 §1 of the Civil Procedure Code, arbitrability meant the capacity of the parties to independently decide on their rights within the given legal relationship, while under Art. 1157 of the Civil Procedure Code the possibility of submitting a dispute to an arbitral tribunal is determined by its “settleability.” The two definitions of arbitrability differ only on a linguistic level, but on the conceptual level they are essentially the same.
3. The condition of arbitrability is the abstract ability of the parties, leaving aside the concrete circumstances and legal conditions, to dispose of the rights arising out of the legal relation between them, not the possibility of their concluding a specific judicial settlement or whether such a settlement would be permissible under Art. 203 §4, in connection with Art. 223 §2, of the Civil Procedure Code, applying Art. 917 and Art. 58 of the Civil Code. This means that certain categories of legal relations are deprived of arbitrability, not certain categories of claims arising out of them. The possibility of submitting a dispute
to arbitration concerns the abstractly defined legal relations, not the claims arising out of them.
4. Arbitrability is determined by the substance of the legal relation and the disputes arising out of it, which the parties may freely dispose of, and not the nature of the claims arising out of those relations. From this perspective, neither the nature of the claims (for performance, for a declaration, or for determination of a legal relation or right), nor the nature of the court’s ruling concerning the given claim (e.g. declarative or constitutive), nor the effects are such ruling are relevant.
5. A dispute concerning exclusion of a shareholder from a limited-liability company may be the subject of an effective arbitration agreement under Art. 1157 in connection with Art. 1163 §1 of the Civil Procedure Code.