case law

id : 20430

id: 20430

Warsaw Regional Court judgment

dated 19 July 2012

Case No. XXVI GC 516/12

Summary by arbitraz.laszczuk.pl:

The landowner (a joint-stock company) commenced arbitration at the Court of Arbitration at the Polish Chamber of Commerce in 2009 against the possessor of the land (a limited-liability company) for a fixed term, pursuant to cooperation agreements of 1997 and 2007 under which the possessor used the land as a location for conducting its business of billboard advertising. The landowner issued a notice of termination of the agreement and demanded that the possessor remove its billboards from the land, which it refused to do. The landowner sought declaratory relief, including a declaration that the possessor’s interest was one of lease (najem) rather than tenancy (dzierżawa), and thus under applicable law was automatically converted after 10 years into a lease for an indefinite term which could be terminated upon notice by either party (and had been duly terminated by the landlord).

In the meantime, the landlord had sold an interest in the property to a third party, who was not a party to the arbitration. Previously, in a separate case in 2005, the possessor had won an arbitration award against the landlord requiring the landlord to remove other billboards from the property.

The possessor objected to the jurisdiction of the arbitration court. The arbitral tribunal held that the objection to its jurisdiction was filed late, and its jurisdiction was properly based on an arbitration clause in the parties’ cooperation agreement, which was undisputed by the parties and moreover was relied on by the possessor when it won its earlier arbitration award against the landlord in 2005.

On the merits, the tribunal held that the relationship between the parties was one of lease rather than tenancy, and thus after 10 years the lease became terminable upon notice. The intervening sale of an interest in the property to a third party did not make that party the landlord by operation of law because it did not acquire the entirety of the ownership. Consequently, the acquirer was not a necessary party to the proceeding. The award was signed for the Court of Arbitration by the deputy secretary general, under authority of the secretary general who was not present to sign the award himself.

The tenant filed an application with the Warsaw Regional Court to set aside the award, alleging inter alia that the award was invalid because it was based on a copy of the arbitration clause, and the tribunal had not required the original to be submitted; the operative portion of the award was not signed by the arbitrators; and the award violated public policy in holding that there was no tenancy agreement between the parties and because the acquirer of the property was not a party to the arbitration.

The regional court held that a copy of the cooperation agreement containing the arbitration clause was sufficient to prove that the agreement was made in writing, and it was irrelevant for purposes of issuing the award or ruling on an application to set aside the award that failure to produce the original arbitration agreement might be a barrier in proceedings to enforce the award. The award was properly signed at the end of the justification and did not have to be signed immediately below the operative wording of the award. The finding that there was a lease in force between the parties, instead of tenancy, did not violate public policy, and the earlier arbitration award did not establish a binding ruling under principles of res judicata that the agreement was one of tenancy rather than lease. The regional court denied the application to set aside the award accordingly.

Excerpts from the text of the court’s ruling:

1. A petition to set aside an arbitration award is a legal instrument combining the features of extraordinary means of review, i.e. a petition to reopen the proceedings, and a proceeding to determine a right or legal relationship. The petition is not a means leading to substantive consideration by the state court of the dispute resolved by the arbitration court.

2. Pursuant to §32(3) of the Rules [of the Court of Arbitration at the Polish Chamber of Commerce] signatures are placed on the ruling by the panel and by the President and the Secretary of the Court of Arbitration. This provision does not specify that it must be the Secretary’s personal signature, but only requires signing by the Secretary, and thus as well by his Deputy duly authorized for temporary performance of his duties. Interpreting this provision otherwise would lead to the absurd conclusion that the Court of Arbitration could not issue rulings at all during the temporary absence of the Secretary General due to illness or holiday.

3. It indisputably follows from §32(2) of the Rules [of the Court of Arbitration at the Polish Chamber of Commerce] that the ruling of the arbitration court consists of the resolution (operative wording) and the justification, which constitutes an integral part of the award. Similarly, Art. 1197 §2 of the Civil Procedure Code indicates that an arbitration award must contain the grounds for the resolution. Thus an award without such justification will not be introduced into legal circulation. Since that is the case, the resolution by itself would have no reason for being and for this reason the resolution and the justification should be treated as a formal and substantive whole. … Thus there are no reasons to deem the absence of the signatures of the arbitration panel under the operative wording of the award to mean the non-existence of the ruling and to raise arguments applicable only to the state courts.

4. The requirement to indicate an [arbitration] agreement in writing is also fulfilled when the party presents a certified copy of the document in which the agreement was concluded. A written copy in the form of a certified transcript from the document, i.e. the agreement, indicates that the original of the document constitutes a document referred to in Art. 1162 §1 of the Civil Procedure Code. The form of the [arbitration] agreement indicated by this provision means that the agreement must be made in writing. … Subsequent destruction or other loss of the document as the medium in which the agreement was recorded does not eliminate the relevance of the fact that it was previously made in written form. It should be indicated in this respect that the Parliament did not use the phrase “in written form” here but only “in writing,” which suggests that this may be any confirmation of the agreement made in writing, including a copy of the document containing the agreement, somehow referring to it in its content.

5. The state court considering a petition to set aside an arbitration award does not have the competence for a substantive assessment of the findings made by the arbitration court. This means that the state court cannot make its own findings on classification of an agreement, but can only assess the propriety, logical argumentation and conclusions dawn, and in this context confirm that it does or does not suffer from errors of logical reasoning.

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