case law

id : 20584

id: 20584

Polish Supreme Court judgment

 dated 10 May 2021

Case No. I CSKP 64/21

Summary by arbitraz.laszczuk.pl:

On 30 March 2010 A., as the seller, and C., a limited liability company, based in W., as the buyer, concluded a contract of sale of 10,700 shares of Przedsiębiorstwo Handlu Zagranicznego “B.”, a joint-stock company, based in W. (“PHZ B.”). According to the contract, the price was to be paid in 4 installments. The payment of the first 3 instalments, in the total amount of PLN 14,720,000, was unconditional and was made by the buyer. However, the payment of the last installment in the amount of PLN 7,000,000 was to be made with the reservation that the buyer would not need to pay the fourth installment, if the declarations of seller regarding the financial and organizational situation of PHZ B. turned out to be untrue.

On 26 April 2010 the seller and F. Limited based in N., India, entered into a contract named “Guarantee II” under which F. undertook to pay the amount of maximum PLN 7,000,000 connected with the fourth installment, in the event the buyer failed to make the abovementioned payment. The parties agreed that the contract would be governed by Polish law and would constitute a component of the contact of sale. According to the arbitration agreement contained in the contract, all disputes were to be resolved by the Court of Arbitration at the Polish Chamber of Commerce in W. (the “Court of Arbitration”). The contract was signed by persons acting on behalf of F. and C. However, C. did not pay the last installment to A. due to the fact that, according to C.’s position, the declarations made by A. regarding the situation of PHZ B. had turned out to be untrue.

On 27 May 2011 the Court of Arbitration delivered an award and ordered C to pay A. the amount of approx. PLN 7,000,000. The enforcement clause was granted to the award. On 29 March 2013 the Regional Court dismissed C.’ claim for declaration of unenforceability of the enforcement clause. Then the Court of Appeal dismissed the appeal brought by C.

On 12 October 2011 A. filed a lawsuit with the Court of Arbitration against F. The seller demanded that the amount of PLN 7,000,000 be paid by F. However, F. raised that the Court of Arbitration did not have jurisdiction to resolve the dispute due to a lack of an arbitration agreement regarding this matter. Nevertheless, F. still demanded that the dispute be resolved by state courts, but then the Regional Court and the Court of Appeal found F.’s claim meritless.

The Court of Arbitration found that it had jurisdiction to deliver an award. It stated that the arbitration agreement contained in the contract of sale concluded between A. and C. did not bind F., but the Court of Arbitration also found that the arbitration agreement came into effect also between F. and A. On 2 July 2015 the Court of Arbitration delivered an award in which it found A.’s claim to be well-founded in full.

F. filed a petition to set aside the arbitration award. However, state courts of two instances, i.e. the Regional Court and the Court of Appeal found that the issue of existence and effectiveness of the arbitration agreement had been already decided by state courts pursuant to Art. 1180 § 3 of the Polish Civil Procedure Code (the “PCPC”). Both courts stated that according to Art. 365 of the PCPC they were bound by the aforementioned rulings regarding the jurisdiction of the Court of Arbitration and therefore they could not examine this issue once again.

F. filed a cassation appeal to the Polish Supreme Court, which was then found to be meritless.

It is worth noting that in this judgment the Polish Supreme Court made a reference to, among other things, the following rulings of the Polish Supreme Court: dated 23 September 2010, Case No. III CZP 57/10, dated 11 October 2013, Case No. I CSK 769/12, dated 28 May 2015, Case No. III CZ 20/15, dated 7 October 2016, Case No. I CSK 592/15.

Excerpts from the text of the court ruling:

1. [I]n case of an arbitral tribunal dismissed by a separate order, a plea raised by a party that the arbitral tribunal did not have jurisdiction in a dispute or a demand of the opposing party asserted during the course of the proceeding exceeds the scope of the arbitration agreement (Art. 1180 § 2 of the PCPC), a state court’s review of the legitimacy of this position can take place only in the manner provided for in the Art. 1180 § 3 of the PCPC… .

2. A valid state court’s order confirming jurisdiction of an arbitral tribunal, delivered in accordance with Art. 1180 § 3 of the PCPC, is binding in the proceedings regarding a petition to set aside an arbitration award… and excludes the possibility of re-examination of the issue of the arbitration agreement… . 

3. If, pursuant to Art. 1180 § 3 of the PCPC, a state court has validly dismissed a motion for declaration that the arbitral tribunal does not have jurisdiction to settle the dispute, such a ruling binds the state court in the case of setting aside of the arbitration award in such a way that if there are no new facts which may justify the expiration of the effect of the arbitration agreement after the state court has delivered its ruling pursuant to Art. 1180 § 3 of the PCPC, a party cannot effectively rely on non-existence of the arbitration agreement (Art. 1206 § 1 point 1 of the PCPC).

4. Submitting an arbitration award on lack of jurisdiction of the arbitral tribunal to review by a two-instance state court also fully satisfies the parties’ right to court and the right to have the case heard in two-instance proceedings… .

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