case law

id : 20606

id: 20606

Katowice Court of Appeal judgment

dated 24 September 2021

Case No. V AGa 408/20

Summary by arbitraz.laszczuk.pl:

W. G. and I. G., conducting business activity under the name… civil law partnership I. G., W. G. provided accounting services to a company since 2010. In the course of providing services, there were significant accounting irregularities going back at least 4 years. The parties concluded a settlement under which W. G. and I. G. undertook to return all financial and accounting documentation belonging to the company within 3 days, and to cover the costs related to the necessity to bring the account books into conformity with the law, as well as to cover the costs of any administrative penalties, fines and interest on outstanding taxes related to the irregularities which could be imposed on the company. The settlement contained an arbitration agreement. Then W. G. and I. G. made statements on evasion of the legal consequences of the agreement because this document had been concluded, according to them, under unlawful menace.

The company filed a lawsuit with an arbitral tribunal. It delivered an award, however, I. G. and W. G. filed a petition to set aside the arbitration award. The Court of Appeal in Katowice found the petition meritless.

It is worth noting that in this judgment the Court of Appeal in Katowice made a reference to, among other things, the following rulings of the Polish Supreme Court: dated 11 August 2005, Case No. V CK 86/05, dated 11 May 2007, Case No. I CSK 82/07, dated 9 July 2008, Case No. V CZ 42/08, dated 3 September 2009, Case No. I CSK 53/09, dated 9 September 2010, Case No. I CSK 535/09, 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.

Excerpts from the text of the court ruling:

1. [A]n arbitration award may be set aside only as a result of reasons indicated in Art. 1206 of the PCPC… .

2. [A] state court cannot examine the dispute between the parties to the arbitration proceedings on the merits within the proceedings to set aside an arbitration award.

3. An assessment as to whether an arbitration award violates the fundamental principles of the legal order shall be formulated 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… .

4. [C]ompliance or non-compliance of an arbitration award with the fundamental principles of the legal order is determined by the wording thereof, it is, however, not allowed to make such an assessment on the basis of facts and evidence unknown to the arbitral tribunal.

5. [T]here is a great deal of autonomy in arbitration, which is entirely consistent with the intentions of the lawmaker, distinctly limiting the review capabilities of a state court. The fundamental objective of this regulation is to expedite the procedure for resolving civil disputes, and not to create an additional phase of pre-judicial procedure. Parties deciding to submit a dispute to arbitration must take these conditions into account, which also include scant external review of arbitration awards.

6. The procedural public policy may be the basis for assessment of an arbitration award in two aspects. Firstly, the procedure which led to the delivery of the arbitration award is assessed for its compliance with the fundamental procedural principles of the legal order, secondly, the effects of the arbitration award are assessed from the perspective of their consistency with the procedural public policy, i.e. whether they are compatible with the procedural legal system, for example, whether they do not infringe res iudicata or the rights of third parties.

7. 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 of the equality of entities… .

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