polish

case law

id : 20561

id: 20561

Białystok Court of Appeal judgment

dated 29 December 2016

Case No. I ACa 592/16

Summary by arbitraz.laszczuk.pl:

T. M. and …, based in O., entered into a lease agreement on 27 April 1992. The agreement contained an arbitration agreement. A dispute arose between the parties. T. M. sued the other party to the lease agreement for payment of PLN 791,178 with statutory interest and with the incurred costs of the proceedings. The respondent demanded that the lawsuit be dismissed and, additionally, it filed a counterclaim and demanded more than PLN 1,000,000 be paid with statutory interest and with the incurred costs of the proceedings.

An ad hoc Arbitral Tribunal composed of: A. K. (the presiding arbitrator), J. Ł. and W. W. delivered an award of 15 March 2016 in which it conceded the point of the claimant-counterrespondent in full. However, the respondent-counterclaimant filed a petition to set aside the arbitration award to the Regional Court  in Olsztyn. The Regional Court, among other things, set aside the award.

The ad hoc Arbitral Tribunal composed of: A. C. (the presiding arbitrator), M. R. and A. W., after reexamination of the case, delivered an award and, among other things, ordered the respondent-counterclaimant to pay to T. M. PLN 791,178 with statutory interest as from 4 October 2002 up to the day of payment (point 1); ordered T. M. to pay to the respondent-counterclaimant PLN 175,000 with statutory interest as from 1 July 2003 until the day of payment (point 2).

Both parties filed a petition to set aside the arbitration award. The respondent-counterclaimant, whose petition was based on a greater number of prerequisites, alleged: 1) failure to comply with the fundamental principles of the procedure before the arbitral tribunal arising out of the statutory law (Art. 1206 § 1 point 4 of the Polish Civil Procedure Code) (the “PCPC”) by violation of Art. 1197 § 2 of the PCPC which requires an arbitration award to state the reasons for the decision 2) violation of the fundamental principles of the Republic of Poland (Art. 1206 § 2 point 2 of the PCPC) by: a) delivering an award, in respect of the lawsuit of T. M., which was in clear contradiction to the facts of the case, b) delivering an award beyond the limits of the claim; c) failure to consider the essence of the case and failure to state the reasons for the award; d) rejection the defense of limitation. The claimant-counterrespondent alleged that the arbitration award was contrary to the fundamental principles of the Republic of Poland (the public policy clause), as it violated the res iudicata principle.

The Court of Appeal found both petitions meritless. It had no doubts that an arbitration agreement is of a contractual and, additionally, of autonomous character towards the content of the main contract between the parties. The autonomy is characterized not only by the stipulation of the arbitral tribunal’s jurisdiction contained in a separate contract (an arbitration agreement in the strict sense), but also the stipulation in the form of an arbitration clause or a compromise clause inserted into the main contract. In such a situation, termination of the main contract as a result of the denunciation or the withdrawal from the contract, alternatively declaration of its invalidity, ineffectiveness and such like does not automatically affect the binding force of the arbitration agreement.

The Court of Appeal also indicated that under § 18 of the lease agreement of 27 April 1992, the arbitration agreement covered “all disputes which may arise out of conclusion or performance of the agreement”. Literal interpretation of the arbitration agreement makes it possible to cover by it not only claims related to the performance of contractual obligations, but also disputes concerning settlements in the event of termination of the contract or declaration of invalidity thereof.

It is worth noting that in this judgement the Court of Appeal in Białystok made a reference to, among other things, the following rulings of the Polish Supreme Court: dated 15 May 2014, Case No. II CSK 557/13, dated 6 February 2014, Case No. I CSK 191/13, dated 24 October 2012, Case No. III CSK 35/12, dated 9 March 2012, Case No. I CSK 312/11, dated 5 February 2009, Case No. I CSK 311/08, dated 11 May 2007, Case No. I CSK 82/07, dated 31 March 2006, Case No. IV CSK 93/05, dated 21 December 2004, Case No. I CK 405/04, dated 21 December 1973, Case No. I CR 663/73, dated 15 February 1964, Case No. I CR 123/63.

Additionally, the Court of Appeal in Białystok made a reference to the Warsaw Court of Appeal judgments: dated 13 May 2013, Case No. I Aca 1298/12 and dated 29 May 2000, Case No. I Aca 65/00.

Excerpts from the text of the court ruling:

1. The scope of review of an arbitration award is limited only to the prerequisites indicated in Art. 1206 of the Polish Civil Procedure Code and the defectiveness of such an award in terms of facts or law is not generally examined in the proceedings initiated by a petition to set aside an arbitration award. Limitation of the cognition of the state court in such proceedings has its source in the voluntary resignation from the constitutional right to court by the parties to the arbitration agreement… . … the state court is not bound by the grounds for setting aside of an arbitration award invoked in the petition, so ex officio it shall examine only … the prerequisites enumerated in Art. 1206 § 2 of the PCPC … .

2. [A]rt. 365 § 1 of the PCPC is one of the fundamental systemic principles of the Polish law and the violation of this provision shall be assessed as a violation of the fundamental procedural principles of the legal order … .

3. Submission to an arbitral tribunal of disputes under a contractual relationship means in other words that the jurisdiction of the arbitral tribunal includes any and all claims for performance of the contract, claims arising in the event of non-performance or improper performance of the contract, claims to restore undue consideration arising in the event of invalidity of the contract or rescission of the contract, as well as tort claims if they arise out of an event that also constitutes non-performance or improper performance of the contract … .

4. A violation of the provisions of substantive law by an arbitral tribunal only exceptionally may be a basis for setting aside of an arbitration award, namely, when the infringed norm is of ius cogens character and a special role in the domestic legal system is attributed to it, usually in the context of certain constitutional principles. The assessment whether there are grounds for applying the public policy clause shall, however, be formulated ad casum and thus in a restrictive manner … .

5. [T]he arbitration court’s erroneous interpretation or incorrect application of the provisions regarding the limitation periods or preclusion shall not be regarded as violation of fundamental principles of the legal order … .

6. [T]he requirements in terms of the reasons for the arbitration award feature, with reference to the reasoning of the state court’s judgment, some minimalism and to find them fulfilled it is sufficient if it is possible to deduce from them what grounds the arbitral tribunal has based on.

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