case law

id : 20080

id: 20080

Polish Supreme Court ruling

dated 21 May 1946

Case No. C III 879/46

Summary by arbitraz.laszczuk.pl:

Gerhard C. obtained an arbitration award in 1937 against Emil and Katarzyna B. The B.’s filed a petition with the Ostrów Regional Court to set aside the award. Among the grounds, they alleged that when they applied to the arbitral tribunal to recuse the presiding arbitrator, the presiding arbitrator participated in the consideration of the motion for his own recusal, which was denied by the tribunal. The tribunal had also declared that in its own procedure it would follow the rules of the Civil Procedure Code, but instead of “announcing” the award as the court would announce a judgment under the code, the tribunal served copies of the award on the parties. The petitioners also alleged that the arbitration clause had lapsed because of failure to appoint the presiding arbitrator properly.

On appeal, in 1938, the Poznań Court of Appeal reversed and issued an order setting aside the award. The Supreme Court denied the cassation appeal on the grounds that the arbitration clause had lapsed.

The arbitration clause provided that each party would appoint one arbitrator, and the two arbitrators would jointly select the presiding arbitrator. If they failed to agree on such appointment within 7 days, they would apply to the Wielkopolska Agricultural Chamber to appoint the presiding arbitrator. In this case, after 7 days, the arbitrators applied to the chamber to appoint the presiding arbitrator but the chamber refused to do so. The presiding arbitrator was then appointed by the state court, which the court of appeal found proper because, in its view, if the method for appointing the presiding arbitrator provided for by the parties fails, the authority to appoint the presiding arbitrator passes to the state court.

The Supreme Court ultimately ruled that the authority to appoint the presiding arbitrator in such situation would pass to the state court only if not otherwise provided in the arbitration clause. Here the presiding arbitrator was not appointed according to the procedure agreed by the parties. Because the arbitral tribunal could not be properly empanelled, due to no fault of the parties, the arbitration clause ceased to be in force.

Excerpts from the text of the court’s ruling:

1. It cannot be accepted ... that since the arbitration court decided to apply the regulations of the Civil Procedure Code in its proceedings, any failure to apply such regulations calls for setting aside the arbitration award. ... Requirements may not be imposed on the arbitration court that are stricter than those imposed on the state court.

2. Recusal is ruled on by the arbitration court, in which the presiding arbitrator or other arbitrator whose recusal is sought cannot be replaced by another judge, as in the state court; in the case of removal of the presiding arbitrator or one of the other arbitrators, the arbitration court would not be able to function at all.

3. Since the parties agreed to arbitration, and the arbitration agreement is binding on them, one party may not do anything by act or omission to prevent arbitration. Thus if a party refuses to appoint an arbitrator, the other party may apply to the state court to appoint an arbitrator, and if the arbitrators appointed by the parties, who may act in this respect in accordance with the wishes of the parties, do not reach agreement on appointment of a presiding arbitrator, a party may apply to the state court to appoint a presiding arbitrator.

4. The matter is different if the arbitration court cannot be empanelled or the arbitration cannot be held, without fault of the parties, or if the arbitration court cannot be empanelled in the composition or manner to which the parties agreed and expressed their intent in the arbitration clause. If, for example, the clause provides that the presiding arbitrator is to be selected mutually by the parties, but such agreement cannot be reached, the state court may not appoint the presiding arbitrator, as this would violate the clause, which in such case lapses and ceases to be in force. Similarly, if the clause provides that in the event of a lack of agreement by the arbitrators on selection of the presiding arbitrator, the presiding arbitrator is to be appointed not by the state court but by another institution or person, and such person or institution cannot appoint or refuses to appoint the presiding arbitrator, the arbitration court cannot be empanelled, without fault of the parties, and the parties may not be forced to submit the case to an arbitration court empanelled in a manner other than provided for in the clause. The Civil Procedure Code does not contain any provision under which in such case the state court could take the place of the institution or third party indicated in the clause. The clause thus lapses in this case as well. Of course, both parties may mutually amend the clause in the manner provided by law.

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