Warsaw Court of Appeal judgment
dated 13 June 2017
Case No. VI ACa 1387/16
Summary by arbitraz.laszczuk.pl:
The Permanent Arbitration Court administered by (…), a limited liability company, based in Ł., rendered an award of 6 June 2016 in which it rejected an action of (…) against (…) and found that the claim had become time barred.
(…), a limited liability company, based in P. filed a petition to set aside the arbitration award and alleged that the award infringed Art. 1206 § 2 of the Polish Civil Procedure Code (the ‘PCPC’), i.e. that the award was contrary to the fundamental principles of the legal order of the Republic of Poland (public policy clause), in particular to the principle of two-instance court proceedings (Art. 176 of the Constitution of the Republic of Poland) and the principle of equality of the parties in court proceedings.
The Association (…), a joint-stock company, based in W. demanded the petition to be dismissed and the cost of the proceedings to be awarded thereto.
The Court of Appeal in Warsaw found that the petition was meritless.
According to Art. 1206 § 2 (2) of the PCPC an arbitration award shall be set aside if a court finds that the arbitration award is contrary to fundamental principles of the legal order of the Republic of Poland.
The Court of Appeal found that if the parties had decided that the proceedings were to consist of only one instance, it was impossible to allege that such one-instance proceedings before an arbitral tribunal infringed the principle of two-instance proceedings specified in Art. 176 of the Constitution of the Republic of Poland. In such a situation, only limited control of a state court remained applicable.
The wording of the Arbitration Rules could not be the object of assessment of the Court of Appeal. The binding regulations did not provide for such scope of interference of a state court in activities of an arbitral tribunal. Only if the circumstances specified in Art. 1206 of the PCPC had occurred, for example, in the Arbitration Rules, it would have been possible to set aside the award.
Taking everything into consideration, the Court of Appeal in Warsaw dismissed the petition and obliged the petitioner to pay the Association (…) in W. PLN 2,400 as the cost of the proceedings.
Excerpts from the text of the court’s ruling:
1. [T]he proceedings before an arbitral tribunal do not have to consist of two instances. It depends only on the choice of the parties. So unless the parties agree otherwise, the proceedings before an arbitral tribunal consist of one instance (…).
2. [A]n arbitration award issued in the Republic of Poland may be set aside by a state court solely in proceedings initiated by filing of a petition to set aside the award. Therefore, it is not possible to control other verdicts of an arbitral tribunal, unless a special provision provides otherwise (…).
3. [O]nly such absolutely binding norms (…) which are deemed to be of fundamental (special) importance in a particular legal order, may justify a reference to the public policy clause. After all, application of the public policy clause is not intended to correct all shortcomings of an arbitration award. This results from the autonomy granted to arbitration. Certainly, a wrong settlement of the case in terms of facts or law is generally not sufficient to consider that an arbitration award is contrary to public policy clause. A state court is not entitled to examine the substantive legitimacy of an arbitration award.
4. [A]rt. 123 of the Polish Civil Code shall not be considered as a fundamental (basic) norm of the legal order. (…). Therefore, a possible infringement of Art. 123 of the Polish Civil Code cannot constitute an effective basis for a petition to set aside an arbitration award.