case law

id : 20423

id: 20423

Polish Supreme Court order

dated 25 May 2016

Case No. V CSK 257/15

Summary by arbitraz.laszczuk.pl:

The Polish individual M.S., operating as a sole proprietorship, entered into an agreement with company D. containing a clause calling for arbitration before the International Commercial Arbitration Court at the Russian Federation Chamber of Commerce and Industry. D. subsequently assigned its rights under the agreement to the Russian company A. A. commenced arbitration against M.S. for amounts allegedly due under the agreement, obtaining an award of about EUR 20,000. The arbitral tribunal found that a proper arbitration agreement existed in the agreement between M.S. and D., and that A., as the assignee of D.’s rights under the agreement, had standing to pursue arbitration against M.S.

A. then applied to the regional court in Poland for enforcement of the award, submitting in its support the agreement between M.S. and D. but not the assignment agreement whereby D. allegedly transferred its rights to A. In his defence, M.S. alleged that he had no agreement with A. and did not consent to assignment of D.’s rights to A. as required by the agreement, and also that he had not been notified of commencement of the arbitration and had not joined issue in the arbitration. Consequently the award of the Russian arbitration court was contrary to the facts.

The regional court overruled the respondent’s objections, finding that M.S. had failed to assert any procedural defence against enforcement of the award, and a defence on the merits could not be considered on an application for enforcement of the award. Finding that the applicant had submitted all required documents, the regional court granted the application for enforcement accordingly.

On interlocutory appeal, the court of appeal found that the applicant had duly presented the award and the arbitration agreement. The claimant’s legal succession was a matter of Russian law which was not before the Polish court. The court denied the appeal accordingly.

On cassation appeal, the Supreme Court of Poland found firstly that the lower courts had erroneously applied the Polish Civil Procedure Code instead of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which applied directly and took precedence over national regulations. However, because the Polish regulations were substantially identical to the provisions of the convention, the court could consider the issues raised in the cassation appeal.

The court went on to hold that where the applicant relies on an arbitration clause in an agreement which the applicant has acceded to through an assignment of rights from its legal predecessor, the requirement in the New York Convention to submit the arbitration agreement when seeking enforcement of a foreign arbitration award also includes the requirement to submit the assignment agreement.

Here the applicant had failed to submit the assignment agreement. This was a procedural defect, and the regional court should have first summoned the applicant to cure this defect by submitting the assignment agreement. If instead the court proceeded to consider the merits of the case without first summoning the applicant to cure the procedural defect, this should result in denial of the application.

The Supreme Court upheld the cassation appeal accordingly, set aside the order of the court of appeal, and remanded the case to the court of appeal for reconsideration.

Excerpt from the text of the court’s ruling:

The term “agreement in writing” referred to in Art. II (1) and (2) of the [New York] Convention also includes an agreement which provides for transfer of the rights covered by the agreement. Submission by a party seeking enforcement of a foreign arbitration award of a written agreement containing an assignment of a claim covered by an arbitration clause thus constitutes a formal requirement for the application identical to the requirement set forth in Art. IV(1)(b) of the convention.

scroll up