Polish Supreme Court ruling
dated 5 July 1929
Case No. III. 2. C. 222/29
Summary by arbitraz.laszczuk.pl:
Adam S. owned an estate in the Lubawa district and Ryszard K. owned real estate in Poznań (both located in former German territory). In 1924 they entered into a contract exchanging their properties. The contract included an arbitration clause.
In 1927, an arbitration court issued an award in Poznań holding that the 1924 contract was dissolved and that the parties should restore the properties in question to their respective previous owners.
Ryszard K. refused to comply with the award voluntarily, so Adam S. sought enforcement of the award in the state court. Ryszard K. filed a counterclaim to set aside the award. He alleged, among other grounds, that the award was invalid because the arbitration court relied on a defective transcript from the land and mortgage register for the property in Poznań, omitting pages of the transcript which contained a notation that the property was to be auctioned off in a forced sale by the bank. He also alleged that he was denied a right to be heard because the arbitration court refused his request to postpone a hearing in order to respond to a written submission by the other party. He further alleged that the arbitration clause covered only disputes related to the performance of the contract, not the existence of the contract as such, and, in essence, that the award was inconsistent because if the contract were held to be dissolved then the arbitration clause in the contract was also dissolved.
Enforcement was granted and the appellate court refused to set aside the award.
On review by the Supreme Court of Poland, the court held that the arbitration clause was a separate agreement from the contract in which it was physically contained, and that the appellate court had properly found that the intention of the parties was to arbitrate any disputes arising out of the contract. The court found that throughout the arbitration proceeding as a whole, the defendant had a real opportunity to present his case. The court also held that reliance on a partial transcript from the land and mortgage register, which omitted reference to the forced sale of the property by the bank, did not constitute a defective or forged document which would provide grounds to set aside the award. The court denied the review accordingly.
Excerpts from the text of the court’s ruling:
1. It cannot be assumed that the parties, when not only certain of their rights and obligations arising out of the legal act in question are challenged, but the legal act as such, did not intend to make use of the assistance of the arbitration court. Therefore, despite the invalidity (not to mention the ineffectiveness) of the deed itself, the arbitration clause, only mechanically connected to the deed, remains in force.
2. Unless otherwise provided by the parties, the arbitration court is not bound by procedural regulations, particularly the provisions of the [former German] Civil Procedure Code, when hearing the case submitted to it.
3. An arbitration award must set forth the reasons; that is, it must contain an objective justification for the operative wording of the award issued. Whether such justification is accurate, exhaustive or consistent with the state of facts cannot be reviewed by the common court under §1041 of the [former German] Civil Procedure Code, because it is not an appellate instance with respect to the arbitration court.