case law

id : 20133

id: 20133

Polish Supreme Court judgment

dated 3 June 1987

Case No. I CR 120/87

Summary by arbitraz.laszczuk.pl:

In 1979, Dutch company N.E.C. BV filed a claim before the Arbitration Board of the Polish Chamber of Foreign Trade against Polish company P.C. sp. z o.o. In its response, P.C. asserted a counterclaim. In 1985, the Arbitration Board rendered an award on the claim and counterclaim.

Meanwhile, in 1982, N.E.C. was declared bankrupt in the Netherlands and a bankruptcy trustee was appointed. The trustee did not notify the Arbitration Board of his appointment or exclude the claim against P.C. from the bankruptcy estate, and he did not participate in the proceeding before the Arbitration Board. P.C. did not file a claim against the bankruptcy estate in the bankruptcy proceeding for the amount pursued in its counterclaim before the Arbitration Board.

P.C. filed a petition with the Warsaw Province Court to set aside the award, on the grounds that the other party was not properly represented before the Arbitration Board because upon appointment of the bankruptcy trustee the bankrupt company lost its legal capacity, and the bankruptcy trustee should have appeared for the bankruptcy estate. (P.C. claimed it did not learn of the bankruptcy until later in 1985, after the arbitration award was rendered.)

The bankruptcy trustee moved to dismiss or deny the petition on the grounds that no action lay to set aside the award because the Arbitration Board of the Polish Chamber of Foreign Trade was not an arbitration court for purposes of the Civil Procedure Code, but rather was a Polish governmental or judicial authority. An arbitration court may be appointed only voluntarily, by the parties, the trustee argued, but the statute of the chamber authorized the Arbitration Board to decide disputes not only on the basis of an arbitration agreement, but also when one of the parties had its registered office outside of Poland and the Arbitration Board’s competence to decide the case was provided for by a treaty binding on the parties.

The province court granted the petition to set aside the award, holding that N.E.C. was not properly represented in the proceeding before the Arbitration Board.

The bankruptcy trustee sought review by the Polish Supreme Court. The court denied the review, holding that N.E.C.’s claim was part of the bankruptcy estate and therefore the bankrupt company had no legal capacity to pursue the claim because the bankruptcy trustee failed to notify the Arbitration Board that he refused to prosecute the claim. Similarly, the bankrupt company had no legal capacity to defend against the counterclaim; it could do so only if the counterclaim were filed as a claim against the bankruptcy estate but denied. The claim was not filed with the bankruptcy estate, and therefore it could not be denied. For these reasons, the award violated the rule of law and was properly set aside.

The Supreme Court further held that the Council of the Polish Chamber of Foreign Trade had established the Arbitration Board as an independent, autonomous body to decide cases in the capacity of an arbitration court. This was not changed by the fact that it was authorized to decide certain cases through a treaty binding on the parties rather than through an arbitration agreement between the parties. Thus, for purposes of Polish law, the Arbitration Board was in every respect an arbitration court.

Excerpts from the text of the court’s ruling:

1. A petition to set aside an arbitration award is not ... an appeal, but a procedural measure with a nature similar to a petition to reopen a proceeding.

2. The statement in the second sentence of Civil Procedure Code Art. 705 §2 that an arbitration court is not bound by civil procedure regulations does not refer to mandatorily applicable regulations set forth in Book Three of the code. Civil Procedure Code Art. 712–715, which have this character, apply in every arbitration proceeding. The lack of any indication to this effect in the rules defining the procedure before the arbitration court therefore does not exclude the permissibility of filing a petition with the state court to set aside an award issued by a permanent arbitration court (Civil Procedure Code Art. 695).

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