case law

id : 20023

id: 20023

Polish Supreme Court ruling

dated 21 January 1931

Case No. III 1 Rw 1931/30

Summary by arbitraz.laszczuk.pl:

In an arbitration proceeding, a third party, the assignee of one of the parties, joined the assignor as a co-party, providing a written declaration that it submitted to the determination of the arbitration court. The other parties did not object to the third party’s joining the case.

The other parties subsequently sought to set aside the award on the grounds that there was no arbitration agreement in force between the petitioners and the third party. On review by the Supreme Court of Poland, the court held that there was a valid arbitration agreement in force based on the parties’ implicit consent to the arrangement.

The court rejected the petitioners’ claim that the award was defective because the arbitrators refused to conduct the entire proceeding again after replacement of the presiding arbitrator, but relied on the existing record from the earlier part of the proceeding. Because the parties did not agree otherwise as to the arbitration procedure, the decision by the arbitrators to proceed in this fashion was valid.

The court also rejected the petitioners’ claim that the award was defective with respect to the costs of the proceeding. The court held that the ruling on costs was closely connected with the ruling on the merits of the dispute, and the arbitrators had discretion to award costs to either side.

Excerpts from the text of the court’s ruling:

1. §577 of the [former Austrian] Civil Procedure Code, stating that the arbitration clause is legally effective if the parties are competent to conclude a settlement with respect to the matter in dispute, does not exclude at all the possibility of a third party joining the dispute before the arbitration court, when the parties who prepared the given arbitration clause consent thereto—even if only implicitly—and express their trust in the third party in such implicit manner.

2. The plaintiff’s challenge to the procedure followed by the arbitration court, specifically that despite a change in the composition of the panel because of a new presiding arbitrator, the arbitration court failed to conduct the entire hearing again before the new panel, that it did not hear the witnesses or the parties but limited itself to using the evidence admitted previously, is ineffective, because unless otherwise agreed by the parties the procedure before the arbitration court is designated by the arbitrators themselves, within their free discretion (§587 par. 1 of the [former Austrian] Civil Procedure Code).

3. A ruling on the costs of the dispute does not violate §595(5) of the [former Austrian] Civil Procedure Code because the issue of costs is closely connected with the principal claim and should be covered by the award, and the party on which to impose the obligation to pay the costs depended on the arbitration court’s discretion.

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