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Warsaw Court of Appeal judgment dated 30 January 2020 Case No. VII AGa 1508/18

1. [T]he fundamental principles of the legal order are the constitutional principles and the principles of other fields of law including civil, family, labour and procedural law. However, it cannot be assumed that an arbitration award violates the rule of law only on the basis of the arbitration award not being complaint with, for example, certain provisions of substantive law… .

2. Depriving a party of the ability to defend its rights before an arbitral tribunal occurs, if the arbitral tribunal fails to notify the party of the date of the hearing after which the award is announced, if it does not hear out a party at all or fails to give a party the opportunity to submit statements with respect to the matter in dispute, if the principle of equal treatment of the parties or the right of the party to be heard and submit evidence is infringed, if a party is prevented from getting familiar with the opposing party’s position, evidence submitted by the opposing party, if a party is prevented from addressing them, if a party is prevented from presenting and proving their arguments… . A party is no deprived of its defences, if evidence offered by that party is not admitted or examined… .  

3. The petitioner had… at least 3 weeks to authorize a new attorney [in the arbitration proceedings in the case – insertion added]. The fact that it decided to do so only one day before the hearing… cannot be a basis for setting aside of the arbitration award.

4. [A]pplication of Art. 1193 of the PCPC cannot be limited to shortcomings which took place in the course of arbitration proceedings, it should also cover the activities taken at the stage of appointment of the arbitrator, including at the stage of the petition set out in Art. 1206 § 1 point 2 of the PCPC submitted due to violation of the principles of arbitrator appointment.

5. [I]f, during the examination of a case by an arbitral tribunal, a party represented by a professional attorney took part in the activities of the arbitral tribunal and did not demonstrate at that time any procedural violations which were indicated by this party in the petition to set aside the arbitration award as the grounds for setting aside of the arbitration award indicated in Art. 1206 § 1 point 4 of the PCPC, the recourse to a procedural defect identified in such a way cannot take effect… .

6. In connection with the above, in the assessment of the Court of Appeal hearing the case, there are no grounds to find that the disputed arbitration award… violates the fundamental principles of the legal order of the Republic of Poland. In particular, this cannot be demonstrated by the circumstance, relied upon by the petitioner, that the Court of Arbitration recognized the activities of advocate R. D. taken before initiation of the arbitration proceedings to be the activities of an attorney-in-fact, in the situation when in the files of the case there was no power of attorney for an attorney-in-fact, granted to advocate R. D. by the petitioner, which would specify the scope of authorization of the attorney.    

7. [P]roceedings 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 their purpose is to verify the petitioner’s pleadings presented in the petition as to existence of the grounds referred to in Art. 1206 § 1 of the PCPC, and to assess if any of the conditions referred to in Art. 1206 § 2 of the PCPC exist, regardless of whether the petitioner relied thereon… .

8. [I]t cannot be accepted that an arbitration award violates the public policy clause solely on the ground that the award is not consistent with certain provisions of substantive law… .

9. A party cannot effectively raise [in the proceedings initiated by a petition to set aside an arbitration award – insertion added] that the composition of the arbitral tribunal was incorrect when during the proceedings before such a tribunal the party did request that a particular arbitrator be excluded… .

Publication date: 30-01-2020 | Case no.: VII AGa 1508/18

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

id: 20598

Warsaw Court of Appeal judgment dated 12 December 2019 Case No. VII AGa 1503/18

1. The essence of the petition to set aside an arbitration award is to create a review mechanism respecting, on the one hand, the separateness and autonomy of arbitration, and on the other hand, preventing non-state court rulings violating the rule of law from functioning in the legal circulation. Proceedings initiated by 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 at verification of 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 an arbitration award that is non-compliant the elementary formal requirements of dispute resolution from remaining in the legal circulation… .

2. [The legal doctrine – insertion added] raises that the possibility of conducting arbitration proceedings [before the Internet Domains Arbitration Court at the Polish Chamber of Information Technology and Telecommunications – insertion added] is not excluded by the fact that after filing of the lawsuit, in order to avoid liability for infringements, the content of the website in the disputed domain has been changed in a way which does not allow to determine whether there is an infringement of a third party’s rights at the time.

3. Purposive, functional and comparative interpretation confirms that Art. 2 of the Arbitration Rules of the Internet Domains Arbitration Court at the Polish Chamber of Information Technology and Telecommunications should be interpreted in such a way that the jurisdiction of the Arbitration Court includes examining of legal effects connected with the fact of registration, as well as the effects of registration occurring after the conclusion of the domain maintenance contract, with the proviso that the way in which the domain is used, not the mere fact of registration, usually allows for the assessment whether there has been such an infringement… .

4. 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 rendering of an arbitration award is assessed for its compliance with the fundamental 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.

5. [A]rbitration awards after their recognition or enforcement enjoy also the substantive legal finality within the meaning of Art. 365 and 366 of the PCPC… .

6. Submission of a dispute existing between the parties to arbitration does not justify the conclusion that the parties have resigned from the right to reliable and insightful procedure ensuring the possibility of satisfaction of the legal interest of the parties that deserves to be protected.

Publication date: 12-12-2019 | Case no.: VII AGa 1503/18

Key issues: arbitration award, arbitration procedure, jurisdiction of arbitral tribunal

id: 20597

Kraków Court of Appeal judgment dated 12 December 2019 Case No. I ACa 917/18

1. The deformalized character of arbitration manifests itself both in the manner in which a hearing is conducted, as well as in more liberal procedural rules than before a state court. What is especially important, the speed of the arbitration procedure is increased not only by the manner in which proceedings before an arbitral tribunal are conducted, but also by the limitation of judicial review of arbitration awards.

2. The fact that not all arguments and evidence were deemed by the arbitral tribunal well-founded and sufficiently significant for the outcome of the case does not mean that a party has been deprived of the possibility to defend its rights or that the principle of equality of the parties has been violated. For these reasons, every instance in which an arbitral tribunal refuses to admit evidence sought by a party cannot be equated with that party being deprived of the right to a defence… . It should be emphasized that in arbitration proceedings, an arbitral tribunal has… the right to disregard evidence motions of the parties, if the tribunal finds they are not necessary to examine the case… .

3. Setting aside of an arbitration award is justified… only by such an offence to the substantive law that it would also bring the ruling into conflict with the overriding legal principles in force in the Republic of Poland. In other words, an arbitration award may be unlawful if it results in a ruling that violates the controlling principles of the rule of law… .

4. According to the well-established case law, state court review of arbitration awards does not include the verification of the accuracy of determination of the factual state. Different perception of state court jurisdiction would lead to contestation of the independence of arbitration, distorting not only the concepts underlying its functioning, but also the intention of the lawmaker, who has limited the scope of interference of state courts to exceptional circumstances, expressly indicated in the Act. 

Publication date: 12-12-2019 | Case no.: I ACa 917/18

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

id: 20575

Warsaw Court of Appeal judgment dated 26 November 2019 Case No. I ACa 457/18

1. [P]rovisions in force at the time when an arbitration agreement was concluded decide on the validity and effectiveness thereof.

2. The provisions of the European Union law are a part of the Polish legal order, which is examined ex officio under Art. 1206 § 2 point 2 of the PCPC . The case law of the European Court of Justice/the Court of Justice of the European Union has determined unequivocally that the EU competition law regulations are a part of the legal order which must be taken into account by state courts in the course of their review of arbitration awards according to the principle of equivalence.

3. According to the established case-law of the European Court of Justice/the Court of Justice of the European Union, the principle of equivalence of the European Union law requires that if domestic procedural principles require a state court to grant the claim to set aside an arbitration award based on an allegation of violation of the domestic principles of the legal order, such a court is also obliged to grant the claim to set aside such an award, if it is based on an allegation of violation of the European Union principles of the same kind… .

4. [O]bligations imposed on the state court in connection with the application of Art. 108 (3) of the Treaty on the Functioning of the European Union shall also extend to arbitral tribunals.

Publication date: 26-11-2019 | Case no.: I ACa 457/18

Key issues: arbitrability of dispute, arbitration agreement, petition to set aside arbitration award

id: 20593

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

Polish Supreme Court order dated 7 June 2019 Case No. I CSK 76/19

1. [P]roceedings initiated by a petition to set aside an arbitration award do not lead to a repeated substantive consideration of the dispute, but their purpose is only to verify the applicant’s pleadings presented in the petition as to existence of grounds referred to in Art. 1206 § 1 of the Polish Civil Procedure Code, and to assess if any of the conditions referred to in Art. Art. 1206 § 2 of the Polish Civil Procedure Code exist, regardless of whether the applicant relied thereon (…).

2. Application by an arbitral tribunal of the substantive law applicable in the case is subject to control by a common court, only inasmuch as it is required to assess the award in terms of compliance with the public policy clause specified in Art. 1206 § 2 (2) of the Polish Civil Procedure Code (…).

3. An arbitration award may be set aside pursuant to the public policy clause, only if violation of substantive law by an arbitral tribunal has consequences which are impossible to be consistent with the fundamental principles of Polish legal order, i.e. which are clearly and grossly contrary to these principles (…). An ad casum assessment whether an award violates the fundamental principles of legal order shall be made with caution, with a preference for restrictive interpretation of its wording (…).

4. Abstractedly speaking, there are no doubts that an assessment of an arbitral tribunal under Art. 1206 § 1 and 2 of the Polish Civil Procedure Code requires – to a smaller or larger extent – determination of the course of broadly understood arbitration proceedings (procedural actions of the parties, procedural decisions of the arbitration tribunal, examination of evidence, factual findings and interpretation, as well as application by the arbitral tribunal of relevant provisions of substantive law (…)), which also applies to the appellate court.   

Publication date: 07-06-2019 | Case no.: I CSK 76/19

Key issues: petition to set aside arbitration award

id: 20525

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