case law

id : 20138

id: 20138

Polish Supreme Court order

dated 18 February 1993

Case No. I CRN 6/93

Summary by arbitraz.laszczuk.pl:

Under a 1991 agreement, a New York-based fund made a loan of USD 340,000 to two Polish individuals, Zbigniew B. and Roman M., who operated an agricultural processing plant in the form of an ordinary partnership. The loan agreement included a clause calling for arbitration in Zurich under ICC rules. In 1992 the lender found the borrowers to be in breach and gave notice of cancellation of the loan agreement and acceleration of the loan repayment. The lender then applied to the province court in Poland for an interim injunction against disposal of the borrowers’ assets, in order to secure the claim for repayment of the loan. The court granted the injunction by order dated 26 May 1992, giving the lender two weeks to commence the main action seeking repayment of the loan. The lender then notified the court that it had commenced arbitration under the loan agreement on 5 June 1992.

The borrowers filed an interlocutory appeal against the order, alleging lack of jurisdiction of the Polish courts. The appellate court upheld the appeal and, in October 1992, vacated the order granting the interim injunction.

The First President of the Polish Supreme Court, on his own motion, applied to the Supreme Court for extraordinary review of the order of the appellate court, on the grounds that the Polish court had jurisdiction to grant interim relief to secure the claim even if the Polish courts did not have jurisdiction to hear the principal case on the merits. The Supreme Court agreed, and vacated the order of the appellate court and denied the interlocutory appeal against the order of the province court granting the interim injunction.

Excerpts from the text of the court’s ruling:

1. The provisions of Civil Procedure Code Part II concerning interim relief to secure a claim are applicable in a case with a “foreign element”. ... The existence of domestic jurisdiction for the proceeding on the merits is not a necessary condition for the proceeding seeking interim relief.

2. Pursuant to Civil Procedure Code Art. 734, when issuing an interim order prior to commencement of the proceeding in the case, the court will set a deadline by which the case shall be commenced or the security will lapse. Following the doctrine, in considering the matter the Supreme Court took the view that filing a claim before a foreign arbitration court before such deadline meets the conditions of this provision.

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