Polish Supreme Court ruling
dated 26 October 1936
Case No. C II 1371/36
Summary by arbitraz.laszczuk.pl:
Berisch R. filed a claim against Michał R. in the Horodenka Municipal Court in 1935 seeking co-ownership of real property in that town. In 1933 the parties had agreed to submit the dispute to arbitration, and in 1934 they entered into a settlement before the arbitration court. The court therefore held that the claim was barred by settlement, which is equivalent to res judicata.
The Kołomyja Regional Court denied the plaintiff’s appeal on the same grounds, holding in addition that because of the arbitration clause, only the arbitration court would have jurisdiction to hear the dispute.
On cassation appeal, the Polish Supreme Court held that a settlement before an arbitration court is equivalent to a state court judgment only in terms of its effectiveness and enforceability as an executable writ, while only legally final state court judgments enjoy res judicata effect. Settlement was a substantive defence that could be considered by the court in its ruling on the merits, not as grounds to dismiss the claim. The court further found that the arbitration clause would not be a valid defence, because the settlement before the arbitration court exhausted the arbitration clause, which then merged into the settlement, and thus the arbitration court would no longer have jurisdiction over the matter. In this case, in any event, the regional court had no jurisdiction to rule on the defence of the arbitration clause because the municipal court had dismissed the claim without reaching that defence and thus it was not raised on the plaintiff’s appeal to the regional court, and the regional court could not raise the issue on its own initiative.
The Supreme Court vacated the order of the regional court accordingly and remanded the case to the regional court for reconsideration.
Excerpts from the text of the court’s ruling:
1. A settlement concluded before an arbitration court is equivalent to a state court judgment, but only with respect to its enforceability and effectiveness as an executable writ (Civil Procedure Code Art. 501 §2 and Art. 527(3)). It does not have res judicata effect with respect to the issues determined therein, as the act expressly gives such effect only to legally final judgments, and such effect may not be extended to other writs of enforcement (Civil Procedure Code Art. 382).
2. As the case submitted to the arbitration court for resolution was resolved by settlement, the arbitration clause was exhausted and only the settlement exists.