id: 20231

Supreme Court judgment

dated 8 December 2006

Case No. V CSK 321/06

Summary by arbitraz.laszczuk.pl:

Michał C., a professional football player on the Odra team in Wodzisław Śląski, filed a claim in arbitration against the team for about PLN 118,000 in bonuses for matches played. The amount of the bonus was apparently not disputed, but the arbitration court awarded him only about PLN 68,000, rejecting the remaining amount (about PLN 50,000, or 42%) based on a finding that the team was in dire financial straits because of a sudden change in the terms for televising matches in force between the Polish Football Association and a TV broadcaster. (In a show of solidarity, the other players on the team had voluntarily agreed to waive about 42% of their bonuses.)

The district court set aside the portion of the award denying the claimant PLN 50,000, finding that the arbitration court had violated public policy by arbitrarily refusing to award the full amount. On appeal, the regional court affirmed.

On cassation appeal, the Polish Supreme Court held that the arbitration court was not strictly bound by substantive law, but was entitled to rule on the basis of equity and good faith. Thus the lower court had exceeded its permissible scope of review of the award. The judgment of the regional court was set aside and the case was remanded for reconsideration.

Excerpts from the text of the court’s ruling:

1. Setting aside an arbitration award is justified ... only by such an offence to substantive law that it would result in a determination that undermines the rule of law. A violation of the rule of law should be understood to mean an offence against fundamental legal institutions. Thus a ruling that violates the rule of law would be one, for example, that contradicts overriding legal principles and is contrary to the generally accepted legal order in force in the Republic of Poland. In other words, an arbitration award may violate the rule of law if it results in a ruling that violates the principles of the rule of law in force.

2. The state court thus does not examine whether an arbitration award is contrary to substantive law or is founded on the facts determined in the award, or whether the facts were properly determined. The state court considers the case only from the point of view of the grounds for setting aside an award, which are exhaustively set forth in Civil Procedure Code Art. 712 (now Art. 1206 §2).