case law

id : 20531

id: 20531

Polish Supreme Court order

 dated 24 May 2018

Case No. V CSK 6/18

Summary by arbitraz.laszczuk.pl:

‘P…’ S.A., a joint-stock company, based in W. entered into a contract with ‘A…’ S.A., a joint-stock company, based in C. and ‘A…” S. p. A., a joint-stock company, based in S. The parties established an arbitration procedure in § 8 of the contract of 30 May 2011.

A dispute arose between the parties. Therefore P. decided to file a claim before the arbitral tribunal. P., such as its trading partners, referred the dispute to arbitration. Consequently, the arbitral tribunal issued an award.

The petition to set aside the arbitration award was brought to the Appeal Court in K. The Appeal Court delivered a judgment on 31 July 2017. ‘A…’ S.A. and ‘C…’ S. p. A. (the ‘respondents-counterclaimants’) filed a cassation appeal. They argued that important legal issues are present in this situation. They also referred to the need to interpret Art. 1206 § 2 (2) of the Polish Civil Procedure Code (the ‘PCPC’) to answer the question whether the concept of ‘fundamental principles of legal order’ covers the following principles of the civil law: the principle of freedom to shape the content of a contractual relation, the principle of not benefiting from one’s own unlawful actions, the principle of restitution and the principle of full damages (Art. 361 of the Polish Civil Code) and the related principle of the compensatory nature of liability for damages.

The Polish Supreme Court decided to deny the cassation appeal and award PLN 1,200 to ‘P…’ S.A. It stated that, according to the established case law, a reference to an occurrence in the case of an important legal issue as a ground for acceptance of a cassation appeal to be heard requires an indication of an abstract problem, which is unresolved in the jurisprudence and requires an in-depth interpretation. This issue should also be ‘relevant’ for the legal system due to the significance of the interpretation problem presented by respondents. However, since the cassation appeal was filed in a specific case, both the nature of the claim made therein and the factual state which had been established by the courts must relate to the legal issue at hand and allow it to be resolved. Moreover, the Polish Supreme Court is bound by the established factual state.  

The reference to the condition of acceptance of a cassation appeal for consideration, referred to in Art. 3989 § 1 (2) of the PCPC, requires an indication that a specific legal provision, although it raises serious doubts (with an indication what these doubts consist in), has not been interpreted, or its inconsistent interpretation causes discrepancies (which should be quoted) in the case law of the courts. If the Polish Supreme Court has expressed its view on a certain point in earlier case law and circumstances which may justify the change of this view do not exist, there is no need for another interpretation of the legal provisions.

Art. 1206 § 2 (2) of the PCPC has been repeatedly interpreted by the Polish Supreme Court. For example, in the judgment of 9 March 2012, Case No. I CSK 312/11 it was explained that the public policy clause, like any general clause, is not precisely defined, which leaves great discretion for the court ruling on a specific case, but nonetheless, on the basis of this clause, the review of the constitutive elements of an arbitration award may not take on the dimensions proper to a review of the merits (correctness) of the award.

The principles alleged by ‘A…’ S.A. and ‘C…’ S. p. A. exist in the legal order of the Republic of Poland. However, they are so general that numerous exceptions can be found in the system of substantive law regulations and the implementation of these principles or alternatively the degree to which they have been implemented in a particular factual state requires a casu ad casum assessment.    

Excerpt from the text of the court’s ruling:

Prohibition of substantive control (of legitimacy) of an arbitration award is related to the essence of the application of the public policy clause. When the clause is used, it is not the point that the award which is subject to the 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 the national legal order. Procedural public policy may be a basis for assessment of an award in two respects. Firstly, subject to assessment is the compliance of the procedure which has led to issue of the arbitration award with the fundamental procedural principles of legal order, and secondly, subject to assessment are the effects of the award from the point of view of their compliance with the procedural legal order, i.e. whether they are compatible with the procedural law system.   

scroll up