id: 20267

Supreme Court of Poland judgment

dated 15 May 2014

Case No. II CSK 557/13

Summary by arbitraz.laszczuk.pl:

In 2007, P.G. SA entered into a contract with P. sp. z o.o. under which P.G. SA was to install an integrated IT system at P. sp. z o.o. and provide it a licence to use the system. The contract included an arbitration clause. The contract was performed in February 2009, for a fee of PLN 150,000, but in March 2011 P. sp. z o.o. served a purported renunciation of the contract, and subsequently commenced arbitration seeking return of the fee. The respondent alleged that the claim was time-barred. The arbitration court held that the renunciation of the contract was made after the two-year preclusion period and therefore was invalid, and consequently the respondent’s defence that the claim was time-barred was moot. The arbitration court accordingly refused to consider the substantive evidence presented by the claimant and issued an award denying the claim.

The claimant filed a petition to set aside the award, which the regional court granted on the grounds that the arbitration court had failed to consider the merits of the case, in violation of the procedure to be followed before the arbitration court and in violation of the public policy clause.

On appeal, the appellate court found that the regional court had essentially disagreed with the arbitration court’s ruling on a matter of substantive law concerning whether the claim was time-barred, which was not grounds to set aside the award under the public policy clause. The appellate court amended the judgment and denied the petition to set aside the award accordingly.

On cassation appeal, the Supreme Court of Poland agreed with the appellate court that the claim that the arbitration court had erroneously decided an issue of substantive law was not grounds for setting aside the arbitration award, and denied the cassation appeal accordingly.

Excerpts from the text of the court’s ruling:

1. The issue of the consistency of the resolution by the arbitration court with the determined state of facts is beyond cassation review in connection with Civil Procedure Code Art. 398³ § 3.

2. The arbitration court’s violation of the substantive law governing the case, which generally is connected with Civil Procedure Code Art. 1194 § 1, is subject to review by the state court considering a petition to set aside an arbitration award only in terms of application of the public policy clause—at the court’s own initiative or on the basis of an allegation in the petition.

3. The circumstances separately listed in Civil Procedure Code Art. 1206 § 1 as grounds for setting aside an arbitration award, proof of which lies primarily in the interests of the party, are excluded from the scope of application of the public policy clause.

4. The arbitration court’s conduct of the proceeding ignoring evidence offered by a party may justify an allegation of violation of Civil Procedure Code Art. 1183 if the evidence was necessary to the resolution of the case.

5. If the evidence raised by the party was ignored as a result of the arbitration court’s interpretation of substantive law, the mere fact that the interpretation may be regarded as erroneous cannot justify granting a petition to set aside the award unless the award also violates fundamental principles of the legal order.

6. The arbitration court’s application of regulations on the limitations period or preclusion may not be regarded as a violation of fundamental principles of the legal order even if this occurred on the basis of an erroneous interpretation of the regulations.