id: 20258

Polish Supreme Court resolution

dated 21 January 2009

Case No. III CZP 136/08

Summary by arbitraz.laszczuk.pl:

A construction company filed a claim against a residential cooperative with the arbitration court at the Polish Chamber of Commerce under a construction contract, and on 5 October 2005 an award was entered for about PLN 2 million on the main claim and a small amount under part of a counterclaim. The respondent filed a petition to set aside the award, including an allegation that there was no arbitration clause because the attorney-in-fact who signed the agreement did not hold a specific power of attorney to enter into an arbitration clause. The regional court found otherwise and denied the petition. The objection that there was no arbitration clause had not been raised before the arbitration court. On 17 October 2005, between the issuance of the award and filing of the petition to set aside the award, , amendments to the arbitration provisions of the Polish Civil Procedure Code went into effect (Act of 28 July 2005 Amending the Civil Procedure Code, Journal of Laws Dz.U. No. 178 item 1478). The new law required an objection that there was no arbitration clause to be asserted before the arbitration court before the respondent joined issue, or the objection would be precluded, but the prior law did not include this express preclusion. The new law had interim provisions stating that the new law would apply to proceedings to set aside an arbitration award filed after the effective date of the new law. On appeal, the appellate court was unsure whether the new preclusion rule should apply in a proceeding where the award was issued prior to the effective date of the amendment, and if not, whether the respondent was allowed to assert the lack of an arbitration clause for the first time in a petition to set aside the award. In response to these certified questions to the Polish Supreme Court, the court held that the issue was governed by prior law, and the respondent was not precluded from raising the objection of lack of an arbitration clause in the petition to set aside the award even though it failed to raise the objection before the arbitration court.

Excerpts from the text of the court’s ruling:

1. The provisions of the Civil Procedure Code governing arbitration are not all of the same nature, but are divided into two main groups. One set of provisions governs issues related to the permissibility of a petition [to set aside an award], the formal requirements for the petition and the course of the proceeding, and thus are strictly procedural provisions. The other set of provisions includes those specifying the grounds of a petition to set aside an arbitration award, functionally analogous to provisions of substantive law and setting forth the grounds for the substantive determination by the court on the merits of the dispute and the justification for the petition. The differentiation among provisions of the Civil Procedure Code concerning a petition to set aside an arbitration award is reflected by the fact that in the event of filing of a cassation appeal in such a case, allegations of violation by the court of provisions of the Civil Procedure Code governing the permissibility of a petition and the course of the proceeding on the petition should be asserted as part of the second basis for a cassation appeal, that is, violation of procedural regulations, while allegations with respect to the grounds of the petition should be asserted as part of the first basis for a cassation appeal, that is, violation of substantive law.

2. The provisions of the Civil Procedure Code governing the grounds for a petition to set aside an arbitration award should thus be treated as analogous to provisions of substantive law, which is also essential for interpretation of interim provisions. From the point of view of principles for interim law, provisions governing the grounds for a petition to set aside an arbitration award should be treated analogously to provisions of substantive law, and are thus subject to the interim rules for substantive law and not procedural law.

3. The literal wording of Art. 2 of the amending act should be understood to mean that the regulation refers only to provisions concerning arbitration that are strictly procedural in nature, and thus concern the proceeding in a case upon a petition [to set aside an arbitration award]. It does not include provisions specifying the grounds for the petition, which should be governed by interim rules for provisions of substantive law.

4. Where an arbitration award was issued under the prior regulations of the Civil Procedure Code, but the case seeking to set aside the award was commenced under a petition filed after entry into force of the amending act, under Art. 2 of the amending act the new provisions should apply to the proceeding pursuant to the petition with respect to permissibility of the petition and the course of the proceeding, but the grounds for the petition to set aside the arbitration award should be determined and assessed in accordance with the former provisions in force prior to 17 October 2005.

5. In a case pursuant to a petition to set aside an arbitration award issued prior to the effective date of the Act of 28 July 2005 Amending the Civil Procedure Code (Journal of Laws Dz.U. No. 178 item 1478), commenced after the effective date of the act, the prior regulations of the Civil Procedure Code apply to an allegation of lack or invalidity of an arbitration clause stated as the grounds for the petition. The petitioner may assert such grounds for the petition even if it did not raise such objection in the proceeding before the arbitration court.

6. The rule set forth in Civil Procedure Code Art. 712 §2 clearly demonstrates that the legislative intent was to limit preclusion to an objection of exceeding the scope of an arbitration clause, and the intent was not to introduce such preclusion for an objection of lack of an arbitration clause.