1. Arbitrability of a dispute depends on its capacity for settlement, in both property and non-property cases, as is clearly provided by Civil Procedure Code Art. 1157.

2. Arbitrability is derived from settlement capacity. Thus it must first be considered whether a judicial settlement is permissible in the case. More precisely, this means the hypothetical possibility of ending the dispute in this manner, and thus a determination of whether the law permits conclusion of a settlement in cases of this category.

3. There are a number of arguments undermining ... the close connection between the subject of a trial and the ability to conclude a judicial settlement. First, a trial is conducted in the interest of the plaintiff, and pursuant to the principle of party initiative [dyspozycyjność] it generally lies within the plaintiff’s discretion to commence or continue prosecuting the action. Thus if the plaintiff concludes that the concessions made by the adversary are satisfactory, and enters into a settlement, the proceeding becomes moot. In such case a settlement has the same effect as withdrawal of the claim upon consent of the defendant. … Second, ... a settlement by definition addresses the legal relationship existing between the parties, and thus always extends beyond the specific claim by one of the parties. Thus it cannot be said that the overall regulation of the given legal relationship as a whole would be detached from the subject of the dispute (determination of the invalidity of the agreement), which is after all an element of this relationship. ... Third, it is accepted that a substantive legal settlement may cover a dispute over the existence of a legal relationship, as well as a legal relationship that in reality does not exist between the parties. ... In consequence, ... a judicial settlement would be permissible that would eliminate the existing dispute, addressing the mutual legal relationship of the parties regardless of whether the agreement were valid or invalid. Therefore, submission of a dispute seeking a declaration of the invalidity of the agreement to arbitration would also be possible.

4. If the arbitration court may determine the validity of an agreement in a proceeding seeking performance, it cannot be accepted that it is not authorized to do so in a proceeding seeking only a declaration of this fact. The competence of the arbitration court in this respect is confirmed by Civil Procedure Code Art. 1180 §1, which, in providing the arbitration court the right to rule on its own jurisdiction, provides that ... invalidity or expiration of the underlying agreement in which the arbitration clause is set forth does not in and of itself mean the invalidity or expiration of the clause. As it is authorized to determine whether, contrary to this presumption, the invalidity of the underlying agreement does render the arbitration clause invalid, the arbitration court may thus review the very issue of the validity of the underlying agreement. It thus follows from these considerations that a finding that disputes involving a declaration of the validity of an agreement are not arbitrable would be inconsistent with the systemic regulation of the institution of arbitration.

5. A finding of the invalidity of an agreement does not present any particular significance with respect to other claims arising out of the relations in force between the parties. Thus there is no reason that this category of cases would be reserved exclusively to the common courts. ... The legislative intent in reforming the arbitration procedure in 2005 was to give the parties the greatest latitude to submit a dispute to arbitration. Exceptions in this respect, particularly concerning property cases, should thus be expressly stated in the act (which follows from the beginning of Civil Procedure Code Art. 1157) or capable of justification based on important grounds. Doubts in this respect should be resolved in favour of arbitration of the dispute. There is no specific regulation excluding disputes of this type [for a declaration of the invalidity of an agreement] from the jurisdiction of the arbitration court, nor are there grounds for stating that the possibility of resolution thereof by an arbitration court would be unacceptable in the Polish legal order. It should finally be pointed out that a sort of “dismembering” of disputes arising out of a given legal relationship from the point of view of their arbitrability would give rise to significant practical complications. This would not only lead to a multiplicity of proceedings, but would also raise the question of the temporal and objective relationship between a state court judgment on declaration of the invalidity of an agreement and an arbitration award in a case involving performance of the agreement, in light of Civil Procedure Code Art. 1206 §1(6).

1. It is accepted that an arbitration clause passes to legal successors under a general succession (the heirs of a party to the agreement) or legal successors under a specific succession (as a result of assignment of a claim). This position is unobjectionable under the assumption that an arbitration clause is a contractual agreement. Only in that case may there be said to be a claim (the subject of the assignment under Civil Code Art. 509 §1). The Appellate Court classifies the arbitration clause in precisely this way.

2. Conclusion of a sale agreement does not automatically mean conclusion also of an arbitration agreement. ... Exercise of a pre-emptive right results in conclusion of an agreement on sale of the item covered by the right. This effect does not apply to agreements concluded between the obligor and a third party, even when the agreements are closely related to the sale agreement....

1. The New York Convention does not contain provisions indicating the form in which the parties should make a choice of law governing the arbitration clause. Art. V(1)[(a)] of the New York Convention does not require that the choice of law governing the arbitration clause be made in writing. The term “indication” should be interpreted to mean behaviour by a person in the form of writing, or any other behaviour that sufficiently reveals the person’s intent. Art. VI(2) of the European Convention on International Commercial Arbitration made at Geneva on 21 April 1961 uses the term “indication” without specifying the form, and thus “indication” should be interpreted as any behaviour by the parties indicating their joint intent.

2. It is not possible to conclude a settlement where, based on the nature of the disputed legal relations, the parties cannot freely dispose of the rights. Thus the appellate court holds that a dispute over the effectiveness of an agreement on sale of shares in a limited-liability company is not arbitrable.

3. The plaintiff determines who is a party when it initiates a dispute. The attribute of being a party is purely formal in nature and is not tied to the existence of a substantive legal claim, nor does it determine the jurisdiction of the arbitration court to decide the merits of the case. In a case where the arbitration court finds that it lacks jurisdiction over a “party,” it cannot be inferred that the ruling on the merits of the dispute is binding on that party. The party was not a party to the dispute on the merits because the arbitration court did not have jurisdiction over it.

4. Assessment of procedural acts of the parties in an arbitration proceeding lies within the power of the arbitration court, and a court ruling on recognition of an award may not make assessments contrary to that of the arbitration court, or assessments under the Polish Civil Procedure Code, which was not applicable in the proceeding before the arbitration court.

5. The state court is bound by the ruling of the arbitration court concerning its lack of jurisdiction to resolve specific disputes, regardless of whether the arbitration court’s interpretation of the scope of the arbitration clause was correct or not. It is clear that the arbitration court is authorized to rule on its own jurisdiction.

6. In order to decide on its jurisdiction, the arbitration court must consider the grounds for or against its jurisdiction. This cannot mean, however, that in cases in which the same issues are decisive of both the jurisdiction of the arbitration and the resolution on the merits the authority to resolve the issue of jurisdiction is also authority to decide the merits of the dispute. Otherwise the party would de facto be deprived of the ability to effectively assert the defence of lack of jurisdiction on the part of the arbitration court.

7. None of the provisions of law providing the arbitration court the authority to decide on its jurisdiction and analyze all factual and legal issues necessary to perform this task provides it a priori authority to decide the merits of the case. If the jurisdictional determination is negative, the arbitration court must refrain from deciding the merits of case. Review of the merits in such instance serves only as a basis for the jurisdictional ruling.

8. It is impermissible that res judicata effect of a ruling by the arbitration court would exert effects in Poland with respect to persons not covered by the legal finality of such ruling in the country of origin.

1. By adopting an arbitration clause, the parties voluntarily restrict their own constitutional ... right to resort to the courts.... Matters are most often entrusted to arbitrators for resolution because of their specialized knowledge, e.g. in the field of construction (in construction cases) or concerning commercial practices (in matters related to international transactions), where specialized knowledge is more important than knowledge of the substantive legal norms of a given legal system. In cases of this type, the arbitrators’ legal intuition may be sufficient. In such instances, it should be accepted that the arbitration court is not bound by regulations of substantive law, given the nature of the matters submitted to the jurisdiction of the arbitration court.

2. Pursuant to Civil Procedure Code Art. 714, the court is bound by the grounds for the petition to set aside the arbitration award, and additionally will consider on its own motion whether the award violates the rule of law or good practice. The allegation that the arbitration award violates the rule of law essentially concerns the issue of the permissible scope of review of the determination by the arbitration court by the common courts. ... Such review authority does not concern the issue of the correctness of the determination in terms of compliance with substantive law, or compliance with procedural regulations. The only basis for such review may be aggravated violations, of particular seriousness and weight, such that they also constitute a violation of the rule of law. The grounds for setting aside an arbitration award are formal in nature, as it is impermissible to examine whether the arbitration court resolved the dispute correctly in factual and legal terms, but only whether there was a violation of the public policy clause.

3. Violation of the rule of law should be understood to mean an offence against fundamental legal institutions. A determination violating the rule of law would include one that offends overriding legal principles and is contrary to the commonly accepted legal order in force in the Republic of Poland. An arbitration award may violate the rule of law if it results in a determination violating the applicable principles of a state governed by the rule of law. It is essential in this respect that when considering the case and ruling, the arbitration court is not bound by provisions of substantive law, but only may not violate the applicable principles of a state governed by the rule of law.

4. There is no catalogue of fundamental principles of the legal order, but they must be inferred from the entirety of legal norms in force.

5. It is a general principle of civil law that damages are due only when the injured party has suffered a loss, the function of damages is to compensate for loss, and damages may not exceed the amount of the loss. It should thus be recognized that an arbitration award violates the public policy clause if the damages awarded do not correspond to the loss suffered.

6. In a situation where the parties failed to specify the rules of procedure, under Civil Procedure Code Art. 705 §2 the arbitration court will apply the rules of procedure it deems appropriate. It is generally not bound by the provisions of the Civil Procedure Code in this respect. For this reason as well, the arbitration court need not lay down a procedure in advance, i.e. at the outset of the proceeding. It may thus do so during the course of the proceeding, including by issuance of separate orders with respect to successive activities. This extensive discretion of the arbitration court is limited, however, by Civil Procedure Code Art. 705 §2, third sentence, by the requirement to thoroughly explore the circumstances necessary to resolve the case. It is clear in this respect that the arbitration court may not violate the principles of the rule of law or social coexistence.

7. The adversary principle, and the principle of the parties’ availability, also apply in a proceeding before an arbitration court, and such court may not omit a thorough exploration of the circumstances necessary to resolve the case. … The “inability to omit a thorough exploration of the circumstances of the case,” as referred to in Civil Procedure Code Art. 705 §2, third sentence, should be understood primarily as a duty to conduct the proceeding before the arbitration court in a manner that assures the parties themselves of the ability to present any allegations and evidence, and, as an aspect of the equal treatment of the parties, to address the allegations and evidence presented by the opposing side.

8. The fundamental principles in force under Polish law with respect to liability for loss caused by non-performance or improper performance of an obligation, as expressed by the Civil Code provisions concerning the effects of non-performance of obligations, are a duty to redress loss by the party to a contract that failed to perform or improperly performed its obligation, and, significantly, an ordinary causal relationship between the party’s action and the loss. The duty to redress loss in this respect may not be determined randomly or arbitrarily, but must correspond to the extent of the loss suffered (even if based on a consideration of all of the circumstances of the case), and default interest is due from the day following the date on which the debtor fell into delay. An arbitration award that was issued in violation of these principles is an award that violates the rule of law.

1. The existence of the “arbitration court” as an institution is an expression of the state’s relinquishment of its sovereign authority—in this instance, its judicial authority. Thus the legislature (the state) provides the parties to certain legal relationships the option of pursuing disputes arising out of such relationships outside of the common (state) court. Whether to submit their disputes to an arbitration court for resolution is left to the decision of the parties, by making a relevant clause giving the arbitration court jurisdiction. It should be pointed out that the state does not definitively relinquish its judicial authority in its entirety, but provides in relevant procedural regulations that despite the existence of a valid arbitration clause, a party to a dispute may nonetheless file a statement of claim (or motion) with the common court, which will consider the dispute on the merits if no objection is made by the opposing litigant (within the applicable time – Civil Procedure Code Art. 1165 §1).

2. The legislature provided for a kind of “review” of arbitration awards, via the institution of the petition to set aside an arbitration award (Civil Procedure Code Art. 1205) and the institution of recognition and enforcement of an arbitration award (or settlement concluded before an arbitration court) – Civil Procedure Code Art. 1212 ff. Thus the court of first instance had no need to conduct an interpretation of the arbitration clause in terms of its compliance with the Polish Constitution. The court does, however, have an obligation to determine whether a given dispute arises out of a legal relationship that is covered by the arbitration clause—but only upon assertion of the defence by the opposing litigant prior to joining issue on the merits of the case.

1. The provisions of the rules of the arbitration court cannot be relevant for determining whether the parties made an arbitration clause in accordance with the rules set forth in the Civil Procedure Code. ... In assessing the validity of an arbitration agreement as a legal act, the common court considers the circumstances resulting in invalidity of legal acts according to the regulations in force, that is, whether actions were taken without complying with requirements as to form provided for by statute or by the parties under pain of invalidity, and whether the substance of the action is contrary to or intended to circumvent a statute, or contrary to principles of social coexistence, and whether there were defects in the declarations of will.

2. A thorough analysis of the substantive justification of the determination by an arbitration court exceeds the bounds of a proceeding commenced upon a petition referred to in Civil Procedure Code Art. 1205 ff. ... The view is stated in the case law that determinations by an arbitration court are binding, and the common court has no right to conduct substantive review of a case concluded in a ruling of an arbitration court, apart from exceptions provided by statute.

1. The issue of the scope of an arbitration clause involves interpretation of the declarations of will of the parties expressed in the document, where the main role is played by rules of linguistic meaning.

2. When considering a petition to set aside an arbitration award, the state court will examine the case only with respect to the grounds listed in Civil Procedure Code Art. 712 §§ 1 and 2. The ruling by the state court is limited in this case either to setting aside the arbitration award in whole or part, or denying the petition. ... The task of the court in a proceeding initiated by a petition to set aside an arbitration award is not to determine the merits of the matter that was previously resolved by the arbitration court, applying provisions of substantive and procedural law, but only to assess the justification for the petition under the grounds set forth in Civil Procedure Code Art. 712 §§ 1 and 2. The court with which a petition to set aside an arbitration award has been filed does not act as a court of second instance, authorized to review the merits of the case applying provisions of substantive law, but reviews the challenged award only from the perspective of the violations indicated in Civil Procedure Code Art. 712 §§ 1 and 2.

3. [Civil Procedure Code Art. 712 §1(2)] refers to the necessity to comply with the principle of the equality of the parties before the arbitration court, to hear them out, and the possibility for a party to address the evidence and allegations presented by the opposing party. As stated by the Supreme Court, only if the arbitration court did not hear the party at all or did not allow it to submit its allegations can it be said that the party was deprived of the opportunity to defend its rights.

4. Pursuant to the rule set forth in Civil Procedure Code Art. 705, in a proceeding before an arbitration court the parties have the right to establish the rules of procedure themselves. Their determination of the procedure may occur in the arbitration agreement or in an additional agreement, but no later than the time the proceeding is commenced. Lack of agreement by the parties means that the right to select the arbitration procedure passes to the arbitrators, as if they were assuming the rights of the parties.

5. A ruling by an arbitration court may not be challenged because of erroneous decision of the case in legal or factual terms. Violation of the law may be grounds for setting aside an arbitration award only if the content of the ruling violates the rule of law or principles of social coexistence. Assessment of whether the ruling violates the rule of law or principles of social coexistence is formulated narrowly, and such conclusion may be reached only if the arbitration award would result in a material violation of such principles.

1. It should be borne in mind that the arbitration court, which is not bound by provisions on procedure before the court (Civil Procedure Code Art. 1184 §2), has greater discretion than in a civil proceeding shaped by the Civil Procedure Code.

2. The arbitration court ... took evidence on its own initiative from the review of the websites and a review of the search capabilities of the Google Internet search engine with respect to the words in dispute ..., without being requested to do by the parties to the proceeding and without citing specific circumstances of the case justifying such initiative by the court, but in the view of the Appellate Court this does not constitute a serious violation of the adversary principle.

3. Taking evidence not in compliance with the rules set forth in Civil Procedure Code Art. 235–237 ... is not equivalent to violation of fundamental rules of procedure within the meaning of Civil Procedure Code Art. 1206 §1(4), which limits the ability to set aside an arbitration award to the principles of a fair trial and procedural violations material enough that they could influence the arbitration award.

4. An arbitration award will also be set aside if the award is contrary to fundamental principles of the legal order of the Republic of Poland. … This does not have to do with internal inconsistency of the form of the ruling, i.e. inconsistency between the specific parts of the ruling. This provision, which is an exception to the rule that when considering a petition to set aside an arbitration award, the state court generally does not review the resolution by the arbitration court on the merits, and in particular does not review whether the award is founded on the facts cited in the justification or whether such facts were correctly determined (as it is undisputed that arbitrators should have greater discretion than a state court in interpreting and applying the law), restricts substantive review of arbitration court rulings only to instances of violation of the principles of the legal order, i.e. instances where the effects of the arbitration court ruling would cause a material violation of such principles, which should be understood to mean the principles of the political and socioeconomic system. This means that the state court proper to consider the petition may not consider the substantive side of the dispute..., and an allegation of violation of specific provisions of substantive law may be effective only insofar as the violation of specific norms also violates the principles of the legal order.

An arbitration agreement is a separate agreement supplemental to the main agreement (in this case a construction contract). The arbitration agreement, even if it is set forth in a clause within the main agreement, is not a provision of such agreement (the underlying contract), and thus its effectiveness is considered separately.

Determination of whether an arbitration award violates fundamental principles of public order must be formulated narrowly, which means that the public policy clause may be successfully invoked only when the arbitration award would result in serious violation of such principles. This is thus an exceptional basis for setting aside an arbitration award and may be applied only in special circumstances, where the effects of the arbitration award would be incompatible with fundamental principles of the legal system. Mere inconsistency of the award with such principles is thus insufficient.