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Polish Supreme Court order dated 9 October 2020 Case No. II CSK 37/20

1. [I]n proceedings initiated by a petition to set aside an arbitration award (…) a state court does not examine the accuracy of the assessment of evidence taken by an arbitral tribunal, the correctness of factual findings, the accuracy of interpretation or application of rules of the substantive law; a state court does not assess the accuracy of a specific method of resolving a litigious legal relationship by an arbitral tribunal (…).

2. The essence of a petition to set aside an arbitration award is to create a control mechanism which respects, on the one hand, the distinctiveness and autonomy of arbitration, on the other hand, prevents functioning of arbitration awards which are in breach of the rule of law in the legal order. 

3. The proceedings initiated by a petition to set aside an arbitration award do not lead to a substantive re-examination of the dispute between the parties, (…) but the aim of these proceedings is only to verify the claims of the petitioner concerning the statutory grounds for setting aside an arbitration award cited in the petition.

Publication date: 09-10-2020 | Case no.: II CSK 37/20

Key issues: petition to set aside arbitration award

id: 20580

Gdańsk Court of Appeal judgment dated 16 September 2020 Case No. V ACa 162/20

1. A petition to set aside an arbitration award is a legal remedy combining features of an extraordinary remedy at law, especially a petition for the revival of the proceedings, and an action for the formation of law or a legal relationship in which the claimant (petitioner) demands a state court to render a judgement on setting aside an existing legal relationship established by an arbitration award. A state court’s judgment granting the petition is of quashing nature, as in such a situation the state court can only set aside the arbitration award, and only insofar as demanded by the petitioner (…).

2. A petition to set aside an arbitration award is not intended to be a remedy leading to consideration, by a state court, of the merits of the dispute resolved by an arbitral tribunal. In fact, there is considerable autonomy in arbitration procedure (…) limiting the possibilities of review by the state court. If parties decide to submit a dispute to arbitration, they need to take these circumstances into account, including also little external control of arbitration awards. This does not mean, however, that if a dispute is submitted to arbitration, the parties have to agree to all kinds of procedural and substantive shortcomings of the arbitral tribunal (…).

3. Considering a petition, a state court examines a case only on the grounds set out in the Polish Civil Procedure Code. Art. 1206 of the PCPC exhaustively lists  the grounds on which a petition to set aside an arbitration award may be based. The difference between the grounds of a petition indicated in Art. 1206 § 1 and § 2 of the PCPC is that the grounds set out in § 1 are taken into account by a state court only at the request of a party, the grounds set out in § 2 are taken into account ex officio (…).

4. [I]t is deemed that the case in which an arbitral tribunal rules ultra petita or aliu should not escape the control of the state court. This assumption shall be considered well-founded also in the light of the Polish Civil Procedure Code, with the proviso that the character of arbitration may justify an approach to the assessment of the limits of the claim being more flexible than in the case of state courts.

5. [A]lthough Art. 1188 § 1 of the PCPC does not indicate obligatory elements of a statement of claim in arbitration proceedings, including the exact wording of the claim (cf. Art. 187 § 1 point 1 of the PCPC), nonetheless the necessity to concretize the claim as an element determining the subject matter of the arbitration proceedings may be derived indirectly from Art. 1202 first sentence of the PCPC; it may also result from the rules agreed by the parties or set out in the arbitration rules (…).

6. The principle of equal rights of the parties is a fundamental principle of arbitration proceedings indicated directly in Art. 1183 first sentence of the PCPC.

7. Procedural public policy may be a basis for assessment of an arbitration award in two aspects. First, subject to the assessment is the compliance of the procedure which led to issue of the arbitration award with the fundamental procedural principles of legal order. Second, subject to the assessment are the effects of the award from the point of view of their compliance with the procedural legal order, i.e. whether they are compatible with the procedural legal system, for example, whether they do not infringe res iudicata, the rights of third parties.

8. An arbitration award may be said to be contrary to the fundamental principles of the legal order only with respect to constitutional principles of the socio-economic system or the fundamental principles governing specific fields of substantive law (…).

9. [P]ublic policy within the meaning of Art. 1206 § 2 point 2 of the PCPC includes not only the principle of freedom of contract and the pacta sunt servanda principle, but also principles limiting the freedom of contract and stability of contracts.

10. [A]pplication by an arbitral tribunal of applicable substantive law for resolution of a dispute, which it is generally required to do under Art. 1194 § 1 of the PCPC, is thus subject to review by a state court considering a petition to set aside an arbitration award only insofar as application of such law is required by the public policy clause, which is considered by the court ex officio.

Publication date: 16-09-2020 | Case no.: V ACa 162/20

Key issues: petition to set aside arbitration award

id: 20583

Polish Supreme Court order dated 15 September 2020 Case No. I CSK 182/20

1. Generally, a state court cannot examine whether an award challenged in a petition to set aside was based on properly established facts and how and whether an arbitral tribunal correctly interpreted the norms of substantive law it applied (…).

2. By examination of the grounds and prerequisites set out in Art. 1206 § 1 point 4 of the Polish Civil Procedure Code, what is important is the presence of a failure to meet the requirements in the scope of fundamental principles of arbitration proceedings resulting from a statute or specified by the parties. One of these principles is to base the award on established facts, which takes place after hearing of evidence. (…). Thus, only if the state court found that such hearing of evidence has not been conducted at all, or has been incomplete or obviously faulty, in breach of the principles of logical reasoning, of linking facts together in a cause-and-effect chain, selective admission of evidence in the case, examination of evidence of only one party in groundless omission of the evidence requested by the other party, etc., it would be possible to find that the requirements set out in Art. 1206 § 1 point 4 of the PCPC. (…).

3. [A]n obvious discrepancy between an arbitration award and the facts of the case may demonstrate a violation of the rule of law (…). This means that not every declaration that an award is inconsistent with the factual state may result in setting aside of this award. It is assumed that a conclusion that the rule of law has been violated is justified, if as a result of the arbitration award the fundamental principles of the legal order of the state are infringed (…).

Publication date: 15-09-2020 | Case no.: I CSK 182/20

Key issues: arbitration award, petition to set aside arbitration award

id: 20579

Polish Supreme Court order dated 17 July 2020 Case No. V CSK 109/20

1. Going beyond the limits of the claim may … constitutes a violation of the fundamental principles of procedure before an arbitral tribunal (Art. 1206 § 1 point 4), alternatively, depending on the circumstances of a case, it may result in the defendant being deprived of the ability to defend its rights (Art. 1206 § 1 point 2 of the PCPC). There is also no doubt that a claim to set aside an arbitration award may relate to the entire award or to a part thereof only, and a state court is bound by the scope of the challenge indicated by the party, which does not mean that a state court cannot find a claim to be well-founded in part … .

2. On the other hand, the general view expressed by the adjudicating panel [in the Polish Supreme Court judgment dated 6 May 2016, Case No. I CSK 305/15 – insertion added] that a court is bound by the claim presented in the petition to set aside an arbitration award in full, and the court’s finding that the granting of a claim in part pertains to a claim of another kind that has not been raised by the petitioner, is isolated and has not been followed up in subsequent case-law, also after an amendment of the petition model procedure.

3. The proceedings to set aside an arbitration award are one-instance proceedings and a judgment may only quash or dismiss the petition, which, taking into account the principle of the state court being bound by the scope of the challenge, makes the application of Art. 384 of the PCPC in such proceedings, as a general rule, aimless.

Publication date: 17-07-2020 | Case no.: V CSK 109/20

Key issues: petition to set aside arbitration award

id: 20585

Judgment of the Court of Justice of 2 April 2020, C-480/18, PrivatBank

[I]n accordance with the principle of the procedural autonomy of the Member States, the national legislature may give the competent authority, in the complaints and penalty procedures referred to in Articles 80 to 82 of Directive 2007/64, as amended by Directive 2009/111, the power to take into account the existence and contents of an arbitration ruling settling a dispute between a user and provider of payment services concerned by those procedures, provided that the probative value given to that ruling in those procedures is not liable to undermine the purpose or specific objectives of the procedures, the rights of defence of the persons concerned or the independent exercise of the powers and competencies conferred on that authority, which is a matter for the referring court to ascertain.

Publication date: 02-04-2020 | Case no.: C-480/18

Key issues: arbitration award

id: 20563

Warsaw Court of Appeal judgment dated 18 November 2019 Case No. VII AGa 804/19

1. [I]n the proceedings commenced as a result of a petition to set aside an arbitration award, a state court does not examine the arbitral tribunal’s assessment off the accuracy of evidence, the correctness of factual findings or interpretation and application of substantive law. The legitimacy of particular means by way of which an arbitral tribunal has resolved the disputed legal relationship is not subject to a state court’s assessment either. The essence of a petition to set aside an arbitration award is to create a control mechanism respecting, on the one hand, the separateness and autonomy of arbitration, and on the other hand, preventing non-state court rulings infringing the rule of law from functioning in the legal circulation. Proceedings concerning a petition to set aside an arbitration award do not result in reconsideration of the merits of the dispute between the parties, but are intended only to verify the petitioner’s allegations as to the existence of the grounds raised in the petition, as provided for in Art. 1206 § 1 of the PCPC. The aim of the petition is to prevent only an arbitration award which fails to comply with the elementary formal requirements of dispute resolution from remaining in the legal circulation.

2. The grounds resulting from Art. 1206 § 2 point 2 of the PCPC are legitimate, if the effect of an arbitration award is contrary to the fundamental principles of the legal order of the Republic of Poland. (…) The fundamental principles of the legal order which are the basis for assessment of an arbitration award shall be understood not only as constitutional rules, but also as ground rules in particular areas of law, and examination of a case with respect to the ground for setting aside of an award under Art. 1206 § 2 point 2 PCPC shall not go beyond a qualified infringement of law. The public policy clause covers both the procedural and substantive fundamental principles of the legal order. Procedural public policy may be a ground for assessing an arbitration award in two aspects. First, the procedure which led to issuance of an arbitration award is assessed for its compliance with the fundamental procedural principles of the legal order. Second, the effects of the arbitration award are assessed from the perspective of their consistency with the procedural public policy, i.e. whether they are reconcilable with the system of procedural law. Then, an infringement by an arbitral tribunal of the substantive law applicable to the resolution of the legal relationship from which the dispute referred to arbitration arose, legitimates setting aside of the award, only if it is connected with an infringement of the fundamental principles of the legal order. Simultaneously, in the event of a lack of compliance of an award with the fundamental principles of the legal order, the question is not whether the award is compliant with all absolutely binding provisions of law, but whether the award has had an effect which is irreconcilable with the fundamental principles of the state legal order (…). Indeed, the application of the public policy clause does not serve to remove all irregularities and defects of arbitration awards, but is intended to protect the integrity of the public policy.

3. The right to a fair trial is a pillar of a democratic state of law and for this reason its infringement justifies the conclusion that the rule of law has been infringed. (…) such a situation will occur especially in the event of non-consideration of a set-off allegation raised by a party. The principle of the fair trial dictates consideration of a set-off allegation properly raised by the respondent.

4. [T]he Arbitral Tribunal erroneously refused to hear the set-off allegation, because the mere fact of the respondent’s liability not being covered by the arbitration agreement is not an obstacle to consider such an allegation.

Publication date: 18-11-2019 | Case no.: VII AGa 804/19

Key issues: arbitration procedure, petition to set aside arbitration award

id: 20545

Polish Supreme Court order dated 30 July 2019 Case No. I CSK 107/19

In the case law of the Polish Supreme Court a view prevails that an arbitration award may be set aside only for reasons listed in Art. 1206 of the Polish Civil Procedure Code. A common court cannot substantively consider a dispute between parties to arbitration proceedings in this type of proceedings, it does not examine whether the arbitration award is contrary to substantive law or whether the arbitration award is based on facts quoted therein, or whether these facts had been correctly established.

Publication date: 30-07-2019 | Case no.: I CSK 107/19

Key issues: petition to set aside arbitration award

id: 20536

Polish Supreme Court judgment dated 18 July 2019 Case No. I CSK 323/18

1. The essence of arbitration is the autonomy and freedom of action of the parties and an arbitration tribunal is not bound by the provisions of the Polish Civil Procedure Code on proceedings before a state court (Art. 1184 § 2 of the Polish Civil Procedure Code). It is only bound by the mandatory provisions of the Polish Civil Procedure Code which regulate the arbitration procedure (…).

2. The scope of the final resolution by an arbitration tribunal of a submitted claim shall result from the conclusion of the arbitration award and cannot be derived from the statement of reasons (…).

3. [T]he basis in Art. 1206 § 2 point 2 of the Polish Civil Procedure Code is justified, if the effect of an arbitration award is contrary to the fundamental principles of the legal order of the state. These shall be understood not only as constitutional norms of fundamental importance, but also as the ground rules governing particular areas of substantive and procedural law.

4. A court, in proceedings to set aside an arbitration award, cannot resolve a dispute between the parties of arbitration proceedings as to the merits. Consequently, the court cannot examine, whether the arbitration award is not contrary to substantive law and whether this award is based on the facts given in its statement of reasons and whether these facts have been properly established.

5. The principle of the binding force of final court rulings (Art. 365 § 1 of the Polish Civil Procedure Code) as an element of the values protected constitutionally and in the international order is a part of the fundamental principles of the legal order of the Republic of Poland. This rule also applies to arbitration awards after their recognition or enforcement by a state court. Such an award, thanks to the state court judgment related to it, has the same legal effect as a court judgment (Art. 1212 § 1 of the Polish Civil Procedure Code) (…).

6. A state court shall not allow two rulings between the same parties whose enforcement is guaranteed by the state, but which would resolve the same issue differently, to be present in the legal system, since this would undermine the authority of the justice system and the confidence in the courts, colliding with the principle of the stability of final rulings and the principle of legal certainty (…).

Publication date: 18-07-2019 | Case no.: I CSK 323/18

Key issues: arbitration award, arbitration procedure, petition to set aside arbitration award

id: 20523

Polish Supreme Court order dated 19 June 2019 Case No. I CSK 23/19

1. It was no accident that the lawmaker has used the word “reasons” in Art. 1197 § 2 of the Polish Civil Procedure Code, emphasizing that an arbitration award does not have to fully comply with the requirements of a justification of a state court ruling. As it has already been explained in the case law, if it is possible to infer from an arbitration award what prerequisites guided the arbitration court when it ruled on the demands of the parties, it can be deemed that these requirements have been fulfilled (…).

2. [J]urisdiction of an arbitral tribunal derived from an arbitration agreement does not have the character of a specific pre-jurisdiction – an arbitral resolves a case independently, instead of a state court, therefore it is the arbitral tribunal that is obliged to determine the factual basis and to legally assess the dispute. Control exercised over arbitration by a state court is not tantamount to resolution of a case ex novo, either on the factual or on the legal neveau (…).

3. [A] state court considering a petition to set aside an arbitration award does not interpret the agreement made by a parties to the dispute, and therefore it does not apply the aforementioned provision independently, but it only (…) examines the circumstances indicated in Art. 1206 § 1 of the Polish Civil Procedure Code, if the petitioner relies on them, and ex officio examines the circumstances specified in Art. 1206 § 2 of the Polish Civil Procedure Code.

Publication date: 19-06-2019 | Case no.: I CSK 23/19

Key issues: arbitration award, petition to set aside arbitration award

id: 20524

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