case law

id : 20197

id: 20197

Polish Supreme Court order

dated 8 August 2003

Case No. V CK 486/02

Summary by arbitraz.laszczuk.pl:

The general conditions for sale in a contract for sale and installation of equipment between a Polish seller and a Polish buyer incorporated by reference the Orgalime SE94 Conditions of the European Engineering Industries Association, providing that disputes arising under the contract would be decided by arbitrators appointed in accordance with the rules of the ICC International Court of Arbitration (which is based in Paris).

The seller, P.-P. sp. z o.o., filed a claim for payment against the buyer, Stanisław P., in the Polish regional court. The court dismissed the claim, holding that the parties had effectively incorporated an arbitration clause into their contract and the claim was arbitrable. The appellate court denied the appeal.

On cassation appeal, the plaintiff alleged that the contract as interpreted violated Polish forum selection regulations, under which the jurisdiction of the Polish courts could not be excluded in favour of a foreign court (including an arbitration court) when the Polish courts had exclusive jurisdiction, including in a case where both parties to the agreement were Polish.

The Supreme Court held that the appellate court had failed to determine whether the arbitration clause excluded the jurisdiction of the Polish courts in favour of a foreign arbitration court (i.e. the ICC International Court of Arbitration in Paris) or called for arbitration in Poland, but only according to the ICC Rules, which issue was crucial to the effectiveness of the forum selection provision. The court thus granted the cassation appeal and remanded the case for reconsideration by the appellate court.

Excerpts from the text of the court’s ruling:

1. The condition for the effectiveness of an arbitration clause under [Civil Procedure Code Art. 1105 §2] of the “foreign status” of at least one of the parties refers to the stage of conclusion of the forum selection agreement, and thus has to do with the parties to that agreement and not the parties to the dispute covered by the arbitration clause. The purpose of the forum selection clause is to submit future property disputes to an arbitration court (Civil Procedure Code Art. 697 in connection with Art. 1105 §2), and thus the effectiveness of the clause referring to an arbitration court operating abroad is determined by the forum selection agreement establishing such clause, so long as the limiting conditions listed in Civil Procedure Code Art. 1105 §2 are met at the time of conclusion of the agreement.

2. The necessity to examine the legal force and effectiveness of an arbitration clause, but according to the state of facts as of the date of conclusion of the forum selection agreement, may lead to a situation in which a foreign arbitration court will be proper to decide the dispute even though as of the date of commencement of the dispute the parties to the dispute no longer meet any of the characteristics of “foreignness” listed in Civil Procedure Code Art. 1105 §2, i.e. having a registered office abroad or operating an enterprise abroad which is connected with the dispute....

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