Katowice Court of Appeal judgment
dated 25 October 2018
Case No. V AGa 18/18
Summary by arbitraz.laszczuk.pl:
… Public Limited Company, based in Ukraine brought a case against the Institute … based in G. to an arbitration court. The main reason of the dispute was the defect of the wire covered by a contract of 6 January 2012 concluded by the parties. The Tribunal ordered the respondent to pay approx. EUR 50,000 and PLN 27,500 to the claimant.
The Institute filed a petition to set aside the arbitration award. According to its position, the arbitration award was contrary to the fundamental principles of the legal order of the Republic of Poland (public policy clause) and to Art. 1206 § 1 point 4 of the Polish Civil Procedure Code (the ‘PCPC’), as the requirements concerning the composition of the Tribunal or the fundamental principles of the arbitration procedure, provided for by the law or specified by the parties, had not been complied with.
The regional court found that the Tribunal had examined the evidence comprehensively and, on the basis of its findings, had made an appropriate legal assessment.
The Institute filed an appeal in which it alleged, among other things, that Art. 1206 § 2 point 2 of the PCPC had been infringed. In its opinion, one of the fundamental principles of the legal order of Poland, that is the pacta sunt servanda principle, had been violated.
The Court of Appeal in Katowice found the appeal meritless. It also noted that the public policy clause, like any general clause, is not precisely defined, which gives the court considering a specific case a great degree of discretion; nonetheless, review on this basis of the elements comprising the arbitration award cannot be of the dimensions proper to a review of the merits (correctness) of the award.
Excerpts from the text of the court’s ruling:
1. [T]he proceedings initiated by a petition to set aside an arbitration award is not intended at a substantive review of an award corresponding to a review provided for in civil appeal procedure. The substantive review of an arbitration award by the court is limited to the assessment whether the issued award violates the principles of the legal order. The phrase ‘fundamental principles of the legal order’ used by the lawmaker (Art. 1206 § 2 point 2 of the Polish Civil Procedure Code) indicates unequivocally that it concerns such violations of provisions of substantive law that result in violation of the principles of the rule of law, and the award infringes the fundamental legal principles in force in the Republic of Poland and is in conflict with the applicable legal order, that is, it violates the principles of the political and socio-economic system. An assessment made ad casum, whether an arbitration award violates the fundamental principles of the legal order, should be made with caution and the interpretation of the phrase contained in the law should be rather of a constrictive character.
2. [T]he pacta sunt servanda principle should be considered one of the principles of the legal order of the Republic of Poland.