id: 20409

Polish Supreme Court judgment

Dated 29 October 2015

Case No. I CSK 922/14

Summary by arbitraz.laszczuk.pl:

In 2001, the agricultural company E.-P. sp. z o.o. brought a claim in ad hoc arbitration against J.Z., an individual farmer, for payment allegedly due under a long-term contract for fieldwork services on a 500-hectare farm owned by the respondent. The respondent asserted counterclaims and setoffs for rent and other amounts. After various modifications of the claims and counterclaims, the claimant withdrew its claim but the respondent did not withdraw his counterclaims. The arbitral tribunal finally issued an award in 2012 denying all claims and counterclaims.

The respondent/counterclaimant applied to set aside the award as issued in violation of public policy, particularly because the arbitral tribunal allegedly applied general principles of equity rather than the strict rules of law allegedly agreed by the parties, e.g. in upholding setoffs made by the claimant’s chief accountant who was not authorized to make setoffs. The regional court denied the application and the court of appeal denied the appeal on its merits.

On cassation appeal the Supreme Court of Poland found that the lower courts had improperly applied the amended version of the arbitration law which went into effect in 2005 rather than the prior law, which was less flexible, but nonetheless, even if the arbitral tribunal followed general principles of equity the respondent had failed to prove that provisions of law allegedly violated by the arbitral tribunal were fundamental principles of the legal order requiring the arbitration award to be set aside. The court denied the cassation appeal accordingly.

Excerpt from the text of the court’s ruling:

Examination of the case with respect to the grounds for setting aside an award under Civil Procedure Code Art. 1206 §2(2) may not proceed beyond aggravated violations of law. This position results directly from the wording of this provision, which authorizes the state court to set aside an arbitration award if it finds that it is contrary to fundamental principles of the legal order of the Republic of Poland, and not if it is inconsistent with just any regulation in force in that system.