Warsaw Court of Appeal judgment
dated 18 March 2021
Case No. VII AGa 773/19
Summary by arbitraz.laszczuk.pl:
A limited liability companies decided to build a new rendering plant. Hence, it entered into a contract with a foreign company. Under the contract, the foreign company was obliged to, among other things, manufacture and assemble a Recycling Line and this was done. However, the domestic company reported defects of the Recycling Line, and thus the foreign company’s employees installed additional elements on the Line. In the meantime, there was a fire in the plant. Then the companies agreed on additional services, however, a dispute arose between them. The Recycling Line kept on malfunctioning and the foreign company objected to fixing it, because in its opinion the Line did not work properly due to the reasons attributable to the domestic company, that is due to incorrect use thereof.
On 24 September 2015 the domestic company filed a lawsuit with the Court of Arbitration at the Polish Chamber of Commerce in W. (the “Court of Arbitration”). The Court of Arbitration found that, among other things, the respondent was liable for non-conformity of the Recycling Line with the concluded contract and this resulted in an explosion and the fire of the Recycling Line. The respondent filed a petition to set aside the arbitration award in the aforementioned scope.
The Court of Appeal in Warsaw found the petition to be well-founded. It was found that the Court of Arbitration went beyond the limits of the claim. The Court of Appeal indicated that the arbitration award was set aside on the basis of Art. 1206 § 2 point 2 of the Polish Civil Procedure Code (the “PCPC”).
It is worth noting that in this judgment, the Court of Appeal in Warsaw made a reference to the Polish Supreme Court judgment dated 8 February 2018, Case No. I CSK 757/17.
Excerpts from the text of the court ruling:
1. The grounds of a petition to set aside an arbitration award have been divided in Art. 1206 of the PCPC into two categories, to which the prerequisites set out in § 1 and § 2 of this provision correspond. In case of the grounds indicated in § 1, the state court shall take them into account only upon request of a party, so it is bound by the grounds relied upon by the petitioner. The grounds indicated in § 2 shall be taken into account ex officio.
2. The public policy clause…, like any general clause is not precisely defined and does not include an exhaustive list of principles. Therefore in each case it is necessary to consider whether the circumstances make it possible to draw the conclusion that a violation was in breach of principles that are the fundamental principles of the legal order. Pursuant to the public policy clause expressed in Art. 1206 § 2 of the PCPC, an arbitration award shall be set aside when effects determined by its content are irreconcilable with the particular norm which is one of the fundamental principles of that order, which leaves a great degree of discretion to the state court ruling in a given case.
3. [A]n arbitration award shall correspond to the wording of the statement of claim. Depending on the content of the claim, an arbitration award may establish, rule on, or shape a right or a legal relationship.
4. [A]lthough Art. 1188 § 1 of the PCPC does not indicate obligatory elements of a statement of claim in arbitration, including the exact wording of the claim…, nonetheless the necessity to specify the claim, as the element determining the subject matter of arbitration, may be derived indirectly from Art. 1202 first sentence of the PCPC; it may also be derived from the procedural rules agreed upon by the parties or defined in the rules of arbitration. Irrespective of the above, this does not mean, however, that going beyond the limits of a claim by an arbitral tribunal evades the state court review.
5. [T]he audi alterem partem principle is the fundamental principle of the legal order. The audi alterem partem principle means the parties’ right to conduct a dispute in a way designated by them and shifts to them the burden of gathering factual and evidentiary material which is necessary to resolve a case.