Polish Supreme Court ruling
dated 18 March 1938
Case No. C II 2989/37
Summary by arbitraz.laszczuk.pl:
An arbitration was commenced between two individuals pursuant to an arbitration clause from 1928, which provided that each party would appoint one arbitrator. The two arbitrators decided to appoint a third, presiding arbitrator, but as they could not agree on the appointment they applied to the state court to appoint the presiding arbitrator. Subsequently the claimant withdrew and released his claim. The arbitrators nonetheless proceeded to issue an award denying the claim and awarding costs against the claimant.
The regional court set aside the award, holding that issuing an award after the claimant had withdrawn and released his claim violated public policy. The Katowice Court of Appeal affirmed, holding further that under the Civil Procedure Code, withdrawal and release of the claim resulted in extinguishment of the claim as a matter of substantive law.
On cassation appeal, the Polish Supreme Court held that because it was undisputed that there was a valid arbitration clause, whether the arbitration court correctly or incorrectly issued an award despite withdrawal and release of the claim was an issue that had to do with the merits of the case and was therefore unreviewable by the state court. The court also held that the arbitrators were properly appointed. The Supreme Court amended the judgment of the court of appeal accordingly and denied the petition to set aside the award.
Excerpts from the text of the court’s ruling:
1. Arbitrators are not bound by provisions of procedural law, as they may specify the procedure to be followed within their own discretion (Civil Procedure Code Art. 494 §2), nor are they bound by provisions of substantive law in deciding the case.
2. An arbitration court rules in accordance with general principles of equity and fair commercial practice, and may not be constrained by provisions of substantive or procedural law, and thus the Parliament provides in Civil Procedure Code Art. 503 for the ability to set aside an arbitration award only in exceptional instances, and such provisions are subject to a strict interpretation, not an expansive interpretation.
3. The state court is not competent to delve into allegations of violation of provisions of substantive law or general provisions of procedural law applicable in a judicial proceeding, nor does it have the right to enter into the merits of the resolution by the arbitration court....