case law

id : 20568

id: 20568

Warsaw Court of Appeal judgment

dated 5 June 2017

Case No. I ACa 518/16

Summary by arbitraz.laszczuk.pl:

…, a limited liability company, based in R., and …, a joint-stock company, based in W. entered into an arbitration agreement in § 4 and 5 of Annex no. 3 to a contract regarding the storage of obligatory stocks of liquid fuels. The contract was concluded on 1 March 2004. The arbitration agreement provided that in case of disputes which may arise in the course of the performance of the contracts “in the event of a lack of understanding concerning the appointment of an arbitral tribunal, the disputes shall be adjudicated by the Court of Arbitration at the Polish Chamber of Commerce in Warsaw and the arbitration shall be conduct in Polish language.”

On 30 July 2014, the limited liability company filed a lawsuit with the Court of Arbitration. Then the joint-stock company filed a counterclaim. The Court of Arbitration delivered an award of 23 December 2015 which was subsequently corrected on 2 February 2016 in which the joint-stock company was ordered to pay the limited liability company approx. PLN 535,000.00 with statutory interest from 15 May 2015 until the date of payment, and the limited liability company was ordered to hand over 3,000 m3 of gas oil 100 ppm storage in one of fuel depots to the joint-stock company.

The limited liability company filed a petition to set aside the arbitration award. It alleged that Art. 1206 § 2 point 2 of the Polish Civil Procedure Code (the “PCPC”), Art. 1206 § 1 point 2 of the PCPC and Art. 1206 § 1 point 4 of the PCPC had been infringed.

The Court of Appeal in Warsaw found the petition meritless. It stated that the proceedings initiated by a petition to set aside an arbitration award were not an appropriate stage to gather evidence, as the petitioner had demanded. The Court of Appeal also stressed that a party is deprived of the opportunity to defend its rights before the arbitral tribunal when the principles of equality of the parties is violated, and one of the parties is not heard or does not have the opportunity to address the evidence and arguments presented by the opposing party, or to present its own evidence motions, or the proceedings or a significant part thereof are conducted in the absence of a party. However, such situations did not occur in the course of the proceedings before the arbitral tribunal. It was also found that the Court of Arbitration adopted a primacy of the linguistic interpretation of the text of the concluded contract, but in the light of the case, this could not be deemed contrary to the fundamental principles of the legal order. It was also obvious that when the parties had not taken sufficient care of proper formulation of contractual provisions regarding the conditions of termination of the contract, it had been necessary to make an interpretation of the actual will of the parties contained in the statements made, with reference to the criteria indicated in Art. 60 and 65 of the Polish Civil Code. Therefore, the arbitral tribunal had not failed to interpret the declarations of will of the parties.

It is worth noting that in this judgment the Warsaw Court of Appeal made a reference to the following rulings of the Polish Supreme Court: dated 6 January 1961, Case No. 2 CR 532/59, dated 13 December 1967, Case No. I CR 445/67, dated 27 June 1984, Case No. II CZ 67/84, dated 3 September 1998, Case No. I CKN 822/97, dated 28 April 2000, Case No. II CKN 267/00, dated 11 July 2002, Case No. IV CKN 1211/00, dated 21 December 2004, Case No. I CK 405/04, dated 11 August 2005, Case No. V CK 86/05, dated 11 March 2011, Case No. II CSK 385/10, dated 9 March 2012, Case No. I CSK 312/11, dated 15 March 2012, Case No. I CSK 286/11, dated 13 February 2014, Case No. V CSK 45/13, dated 7 October 2016, Case No. I CSK 592/15.

Excerpts from the text of the court ruling:

1. Art. 1206 of the PCPC stipulates grounds for a petition to set aside an arbitration award and this enumeration is of exhaustive character … . A state court hearing a petition is in principle bound by the grounds cited by the petitioner, however, the grounds for setting aside an award indicated in Art. 1206 § 2 of the PCPC shall be examined ex officio.

2. [A] petition [to set aside an arbitration award] is of quashing nature, as a state court can only set aside the arbitration award in full, in part or reject the petition, but the state court cannot rule on the merits of the case.

3. According to Art. 1207 of the PCPC, Art. 368 of the PCPC shall apply accordingly to a petition to set aside an arbitration award and the provisions governing an appeal shall apply accordingly to a petition to set aside an arbitration award, unless otherwise provided therein.

4. The assessment of whether an arbitration award violates the fundamental principles of the legal order should be thus conducted on a case-by-case basis, narrowly, and an affirmative conclusion may be reached only if the effects of the arbitration award would result in a material violation of the aforementioned principles. However, it should be emphasized that there is a great deal of autonomy of arbitration, essentially limiting the possibilities for review by the state court.

5. In the case law, the fundamental principles of the legal order include, among other things: the principle of civil liability for the injury caused …, the principle of the restitutive nature of liability for damages …, the pacta sunt servanda principle …, the principle of business freedom and freedom of contract, the principle of contractual fairness …, the principle of protection of property rights …, the principle of the autonomy of the will of the parties and the equality of entities … . The aforementioned enumeration is, naturally, only of an exemplary character, because the assessment regarding inconsistency of an arbitration award with the fundamental principles of legal order may be determined based on the analysis of a given case, however, with the proviso that it must be a discrepancy of obvious, general and fundamental character, i.e. a discrepancy which is incompatible with the principles of a democratic state of law, when an arbitration award infringes the governing legal principles in force in the Republic of Poland.

6. [P]ursuant to Art. 1197 § 2 of the PCPC, an arbitration award shall contain the reasons for the award, but this does not mean, however, that the reasoning shall be constructed strictly according to the rules indicated in Art. 328 of the PCPC, which stipulates necessary elements of the state court reasoning. This follows from the character of arbitration proceedings, which are not as formalized as civil law proceedings. However, without any doubt, the grounds of an arbitration award should be clear and reflect a reasoning analyzable in terms of the grounds to reject the petition, but in the properly formulated reasoning an arbitral tribunal is not obliged to refer to all the arguments and arguments presented by a party at any stage of the arbitration proceedings and in any form … . It is sufficient for the arbitral tribunal to consider all factual circumstances and arguments of a judicial nature, significant from the point of view of the award and the examined legal relationship.

7. The circumstance … that not all arguments and evidence were deemed well-founded and sufficiently significant for the outcome of the arbitral award does not mean that a party has been deprived of the possibility to defend its rights or that the principle of equality has been infringed.

8. [I]n arbitration proceedings, the tribunal may also disregard evidence motions of the parties, if the tribunal finds they are not necessary to examine the case or examination of the evidence encounters significant obstacles … .

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