Polish Supreme Court order
dated 30 July 2019
Case No. I CSK 107/19
Summary by arbitraz.laszczuk.pl:
On 17 October 2018, an Appeal Court delivered a judgment in which it dismissed a petition filed by the respondent “S.” sp. z o.o., a limited liability company, to set aside an arbitration award of 10 July 2017 issued by the Court of Arbitration at the Polish Chamber of Commerce in W. According to the arbitration award, the respondent was obliged to pay R.B., the claimant, over PLN 80,000 as commission under an agency contract concluded between the parties.
The respondent decided to file a cassation appeal to the Polish Supreme Court. “S.” argued that the cassation appeal was clearly justified, since the Appeal Court found that the arbitration award had not been contrary to the fundamental principles of legal order of the Republic of Poland. “S.” claimed that such contradiction occurred, because the Court of Arbitration had infringed the principle of equality before the law, the principle of confidence and security of transaction, the pacta sunt servanda principle, the principle of freedom of will of the parties to commercial contracts, the principle of the right to fair examination and reliable resolution of the case, and the principle of social justice.
The Polish Supreme Court refused to hear the cassation appeal. It found that this kind of appeal is an extraordinary remedy at law. The Polish Supreme Court hears a cassation appeal, if this is justified by circumstances of particular importance which go beyond the individual interest of the applicant and have their source in public interest. Art. 3989 § 1 of the Polish Civil Procedure Code (the “PCPC”) stipulates under what circumstances a case is heard by the Polish Supreme Court.
In accordance with the established view of the Polish Supreme Court, evident admissibility of a cassation appeal (Art. 3989 § 1 point 4 of the PCPC), should be understood as a situation in which the appeal is plainly justified, since it indicates gross and serious defects of the contested ruling, which are ascertainable without a more complex reasoning. Only in such case the control of a valid ruling of a court of the second instance in cassation proceedings is admissible. If such ruling has an obvious and significant defect, removal thereof from the legal system is in the public interest, and therefore the purpose of the cassation appeal, as an extraordinary remedy at law, may be achieved.
Prohibition of substantive control of an arbitration award is related to the essence of the public policy clause. When the clause is used, it is not the point that the award which is subject to assessment must be consistent with all relevant absolutely binding provisions of law. The point is whether the award has had an effect contrary to the fundamental principles of national legal order which are of constitutional character or are guiding principles for specific areas of substantive or procedural law.
It resulted from the reasoning of the contested ruling that the Appeal Court, when dismissing the petition to set aside the arbitration award, had been influenced by criteria resulting from the case law of the Polish Supreme Court which exclude the possibility of qualifying such a petition as clearly justified.
It is also impossible to agree with the thesis that the Appeal Court, by its ad casum substantive control as to whether the arbitration award had been in breach of the rules of the public order, misunderstood the essence of the public policy clause (cf. among others, the Polish Supreme Court judgments dated: 13 February 2014, Case No. V CSK 45/13, 9 March 2012, Case No. I CSK 312/11, 15 March 2012, Case No. I CSK 286/11, 11 March 2011, Case No. II CSK 385/10, 11 August 2005, Case No. V CSK 86/05).
It was also found that ”S.” expected the Polish Supreme Court to assess grounds of the cassation appeal within the institution of ”pre-court”, which is unacceptable. What is more, ”S.” treated the cassation appeal as a substitute of a petition to set aside an arbitration award, not as an extraordinary remedy at law.
Excerpt from the text of the court’s ruling:
In the case law of the Polish Supreme Court a view prevails that an arbitration award may be set aside only for reasons listed in Art. 1206 of the Polish Civil Procedure Code. A common court cannot substantively consider a dispute between parties to arbitration proceedings in this type of proceedings, it does not examine whether the arbitration award is contrary to substantive law or whether the arbitration award is based on facts quoted therein, or whether these facts had been correctly established.