Katowice Court of Appeal order

dated 11 February 2019

Case No. V AGo 32/18

Summary by arbitraz.laszczuk.pl:

A company based in O. (the United States of America) filed a motion, among other things, for enforcement of an award of the International Court of Arbitration in P. dated 22 August 2018 against its debtor, i.e. …, a limited liability company based in C. The arbitral tribunal did not indicate in the award the amounts on which interest was to be charged, but pointed out that the basis for fixing the interest rate was in fact the claimants’ letter of 3 November 2016, i.e. the claimants’ rejoinder to the statement of defense. The limited liability company demanded that the motion be dismissed.

The Court of Appeal in Katowice found the motion well-founded, but only in part. It stated that the fundament of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards done at New York, June 10, 1958 (the “New York Convention”) is the requirement for the parties to act in accordance with the principles of good faith and fair dealing, and hence a prohibition against acting in violation of such principles. Such interpretation frustrates actions disloyal to the other parties and the arbitral tribunal, causing unnecessary costs and a waste of time. There is no concern in this respect that a party’s procedural rights will be limited, because each party decides on the arbitration agreement autonomously. The Court of Appeal also stressed that the interpretation of Art. IV of the New York Convention has to take into account the functional relationship thereof with Art. II of the New York Convention which provides for requirements of an arbitration agreement.

It is worth noting that in this order the Court of Appeal in Katowice made a reference to, among other things, the Polish Supreme Court rulings dated 13 September 2012, Case No. V CSK 323/11 and dated 23 January 2015, Case No. V CSK 672/13.

Excerpts from the text of the court ruling:

1. [I]f a participant of legal proceedings before a foreign arbitral tribunal did not contest the jurisdiction of the arbitral tribunal and did undertake substantive defense, such a participant is not able to successfully seek non-existence or invalidity of the arbitration agreement in the proceedings concerning recognition and enforcement of the arbitration award… .

2. [T]he wording of Art. II of the New York Convention calls for a liberal understanding of the concept of an “agreement in writing”, as the requirement for effectiveness of an arbitration clause, and requires an acceptance that the parties have freedom with respect to selection of the form of the agreement in which they submit to the jurisdiction of an arbitral tribunal. It is thus possible to conclude such an agreement also using means of reaching agreement at a distance, for example by an exchange of faxes or statements by email.

3. With reference to the public policy clause (Art. V (1) (b) of the New York Convention), the Polish Supreme Court in its case law explained that the views of the doctrine regarding the fundamental principles of the legal order referred to in Art. 1214 § 3 point 2 of the Polish Civil Procedure Code shall apply. In other words, these are the principles arising out of the Constitution and the principles governing particular fields of law, a violation of which is incompatible with the very concept of a specific legal institution in Poland, not just with particular provisions regulating the same institution in the country of origin of the arbitration award and in Poland, as the state of execution of the award, which results in the conclusion that in proceedings concerning enforcement of an arbitration award, its substantive review is not allowed… .