id: 20546

Warsaw Court of Appeal judgment

dated 28 November 2018

Case No. VII AGa 1026/18

Summary by arbitraz.laszczuk.pl:

…, a company based in S., has been created by a well-known fashion designer M. The company produces a wide range of luxury goods, including clothes, shoes, accessories and fragrance products, and its business activity includes export, import, sale and distribution of the aforementioned products. The enterprise operates not only in Poland, but also in 73 other countries and manages 470 showrooms (3 in Poland). On the Polish market, all products are branded with the relevant trademark and have been available since 2006. The company registered the word trademark M. C. for goods/services in classes 3, 9, 14, 18, 20, 21, 24, 25 and 35.

Z. S. operates his business activity in the range of, among other things, plumbing and retail sales of cosmetics via the Internet. He registered the disputed domain on 23 January 2008. However, on the relevant website, there was an advertisement of hosting services.

The company filed a lawsuit with the Internet Domains Arbitration Court at the Polish Chamber of Information Technology and Telecommunications in Warsaw (the “Arbitration Court”) stating that, among other things, Art. 9 (1) point b of Council Regulation (EC) No. 207/2009 and Art. 296 (2) point 2 of the Industrial Property Law had been infringed. Additionally, the company claimed that the respondent committed acts of unfair competition.

The Arbitration Court delivered an award of 7 February 2015 according to which the respondent violated the rights of the claimant. Then Z. S. filed a petition to set aside the arbitration award. He stated, for example, that the award was contrary to the fundamental principles of the legal order of the Republic of Poland. He pointed out that the Arbitration Court found that two parties were entrepreneurs, whereas Z. S. had entered into the contract regarding the registration and maintenance of the disputed domain as, pursuant to his stance, a natural person who had not conducted business activity.

The Regional Court in Warsaw pronounced a judgment of 23 January 2017 in which it found the petition meritless. It stressed that when examining a petition to set aside an arbitration award, a state court does not operate as a court of the second instance which is entitled to review the case on the merits, but makes an assessment of the arbitration award only in the light of infringements indicated in Art. 1206 § 1 and 2 of the Polish Civil Procedure Code (the “PCPC”). The public policy within the meaning of Art. 1206 § 2 point 2 includes, among others, the principle of freedom of contracts and the pacta sunt servanda principle. However, the Court found that the arbitration award was not contrary to the public policy clause. Additionally, it cannot be accepted that an award violates the rule of law solely on the grounds that the ruling is not consistent with certain provisions of substantive law. The Court also stressed that the public policy clause should be interpreted restrictively, not widely.

Z. S. filed an appeal in which he alleged that Art. 1206 § 2 point 2 of the PCPC had been infringed because the arbitration award was not deemed contrary to the fundamental principles of the legal order of the Republic of Poland.

The Court of Appeal in Warsaw found the appeal meritless and dismissed it. It made exactly the same factual findings as the Regional Court and, additionally, went along with the legal findings of the lower court.

It is worth noting that in this judgment the Warsaw Court of Appeal made a reference to, among other things, the following rulings of the Polish Supreme Court: dated 8 December 2006, Case No. V CSK 321/06, dated 12 September 2007, Case No. I CSK 192/07, dated 15 May 2014, Case No. II CSK 557/13, dated 26 May 2017, Case No. I CSK 464/16.

Excerpts from the text of the court’s ruling:

1. By entering into an arbitration agreement, the parties revoke the competence of state courts to adjudicate the dispute, entrusting it to a body acting as per the will of the parties. Consequently, the state court control over an arbitration award, as much as it is necessary and statutorily guaranteed, is not instance control and by its nature must be incomplete, limited to the most far-reaching shortcomings and failures of arbitration, which are relevant not only from the point of view of the parties, but also of the general interest … .

2. [I]nfringement of the provisions of substantive law shall be examined in the proceedings initiated by a petition to set aside an arbitration award only when the infringed provisions set principles of the legal order of the Republic of Poland, whereby the public policy clause shall be interpreted restrictively.