Warsaw Court of Appeal judgment

dated 30 January 2020

Case No. VII AGa 1508/18

Summary by arbitraz.laszczuk.pl:

A. O. and a GmbH company were bound by a lease agreement of 18 December 2007. According to the agreement, A. O., as the lessee, was entitled to use certain commercial premises, a store and one parking place. The contract was concluded for a fixed term of 9 years and 10 months. However, a dispute arose between the parties.

The company filed a lawsuit with the Court of Arbitration at the Polish Chamber of Commerce in Warsaw on 10 November 2015. An arbitration tribunal in the composition of 3 arbitrators: M. K. (the presiding arbitrator), J. N. and A. H. delivered an award on 11 January 2018 in which the tribunal: 1. ordered the respondent to pay to the claimant approx. PLN 146,000 with statutory interest for late payment, and 2. ordered the respondent to pay to the claimant approx. PLN 34,000 as reimbursement of the costs of the arbitration proceedings.

A. O. filed a petition to set aside the arbitration award. The Court of Appeal in Warsaw found the petition meritless. According to the Court, the challenged award did not violate the provisions of the Constitution of the Republic of Poland, in particular the constitutional principles of the rule of law (Art. 2 of the Constitution), or the principle of social justice, as the award was delivered within the limits of law. The Court of Appeal in Warsaw stated, for example, that a court where a petition to set aside an arbitration award is filed does not act as a court of second instance, authorized to review the case on the merits and applying the provisions of substantive law, but assesses the challenged award only in terms of the violations indicated in Art. 1206 § 1 and 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, among other things, the following rulings of the Polish Supreme Court: dated 14 November 1960, Case No. II CR 1044/59, 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 28 November 2000, Case No. IV CKN 171/00, dated 26 August 2003, Case No. IV CK 17/02, dated 19 October 2007, Case No. V CSK 181/07, dated 27 March 2013, Case No. V CSK 222/12, dated 20 March 2015, Case No. II CSK 352/14, dated 7 June 2019, Case No. I CSK 76/19.

Additionally, the Court of Appeal in Warsaw made also a reference to, among other things, the judgment of the Court of Appeal in Poznań dated 16 November 2005, Case No. I ACa 912/05 and the judgment of the Court of Appeal in Warsaw dated 25 January 2013, Case No. I ACa 374/12.

Excerpts from the text of the court ruling:

1. [T]he fundamental principles of the legal order are the constitutional principles and the principles of other fields of law including civil, family, labour and procedural law. However, it cannot be assumed that an arbitration award violates the rule of law only on the basis of the arbitration award not being complaint with, for example, certain provisions of substantive law… .

2. Depriving a party of the ability to defend its rights before an arbitral tribunal occurs, if the arbitral tribunal fails to notify the party of the date of the hearing after which the award is announced, if it does not hear out a party at all or fails to give a party the opportunity to submit statements with respect to the matter in dispute, if the principle of equal treatment of the parties or the right of the party to be heard and submit evidence is infringed, if a party is prevented from getting familiar with the opposing party’s position, evidence submitted by the opposing party, if a party is prevented from addressing them, if a party is prevented from presenting and proving their arguments… . A party is no deprived of its defences, if evidence offered by that party is not admitted or examined… .  

3. The petitioner had… at least 3 weeks to authorize a new attorney [in the arbitration proceedings in the case – insertion added]. The fact that it decided to do so only one day before the hearing… cannot be a basis for setting aside of the arbitration award.

4. [A]pplication of Art. 1193 of the PCPC cannot be limited to shortcomings which took place in the course of arbitration proceedings, it should also cover the activities taken at the stage of appointment of the arbitrator, including at the stage of the petition set out in Art. 1206 § 1 point 2 of the PCPC submitted due to violation of the principles of arbitrator appointment.

5. [I]f, during the examination of a case by an arbitral tribunal, a party represented by a professional attorney took part in the activities of the arbitral tribunal and did not demonstrate at that time any procedural violations which were indicated by this party in the petition to set aside the arbitration award as the grounds for setting aside of the arbitration award indicated in Art. 1206 § 1 point 4 of the PCPC, the recourse to a procedural defect identified in such a way cannot take effect… .

6. In connection with the above, in the assessment of the Court of Appeal hearing the case, there are no grounds to find that the disputed arbitration award… violates the fundamental principles of the legal order of the Republic of Poland. In particular, this cannot be demonstrated by the circumstance, relied upon by the petitioner, that the Court of Arbitration recognized the activities of advocate R. D. taken before initiation of the arbitration proceedings to be the activities of an attorney-in-fact, in the situation when in the files of the case there was no power of attorney for an attorney-in-fact, granted to advocate R. D. by the petitioner, which would specify the scope of authorization of the attorney.    

7. [P]roceedings initiated by a petition to set aside an arbitration award do not lead to a substantive re-examination of the dispute between the parties, but their purpose is to verify the petitioner’s pleadings presented in the petition as to existence of the grounds referred to in Art. 1206 § 1 of the PCPC, and to assess if any of the conditions referred to in Art. 1206 § 2 of the PCPC exist, regardless of whether the petitioner relied thereon… .

8. [I]t cannot be accepted that an arbitration award violates the public policy clause solely on the ground that the award is not consistent with certain provisions of substantive law… .

9. A party cannot effectively raise [in the proceedings initiated by a petition to set aside an arbitration award – insertion added] that the composition of the arbitral tribunal was incorrect when during the proceedings before such a tribunal the party did request that a particular arbitrator be excluded… .