Kraków Court of Appeal order

dated 30 June 2021

Case No. I AGo 16/20

Summary by arbitraz.laszczuk.pl:

A joint-stock company, based in L. (Latvia) and a limited liability company, based in K., cooperated under a framework purchase agreement dated 26 October 2015. Based on the agreement, the parties entered into 4 contracts pursuant to which the limited liability company was purchasing particular goods from the Latvian company. However, a dispute arose between the parties. Pursuant to the concluded arbitration agreement, the seller filed a lawsuit with the Court of Arbitration of the Latvian Chamber of Commerce and Industry in Riga (the “Court of Arbitration”), which then rendered an award in the case.

On 22 July 2016, the Latvian company and an Ukrainian company, based in K., entered into a contract of assignment of receivables. According to the contract, the Ukrainian company acquired all the receivables established by the aforementioned arbitration award.

Then the Ukrainian company demanded that the arbitration award be enforced. It stated that its intention was to initiate debt enforcement proceedings. However, the Court of Appeal in Kraków dismissed the motion. In the opinion of the Court, the company did not prove that the necessary prerequisites indicated in Art. 788 § 1 of the Polish Civil Procedure Code (the “PCPC”) had been fulfilled.

It is worth noting that in its order the Court of Appeal in Kraków made a reference to, among other things, the following rulings of the Polish Supreme Court: dated 18 October 2006, Case No. II CSK 123/06 and dated 11 May 2007, Case No. I CSK 82/07.

Excerpts from the text of the court ruling:

1. This notion (the fundamental principles of the legal order of the Republic of Poland – insertion added) is not unequivocal and is subject to interpretation. According to the well-established case-law of the Polish Supreme Court, it pertains to such violations of the provisions of substantive law that result in violation of the principles of the rule of law, and the award infringes the fundamental legal principles in force in the Republic of Poland and is in conflict with the legal order in force… .

2. [T]he fact that the Polish law excludes the possibility of stipulating contractual penalties for late performance of a pecuniary obligation does not per se make it incompatible with the Polish legal order to satisfy such a performance based on Latvian provisions of substantive law (the Civil Code) on the territory of Poland… .