Katowice Court of Appeal judgment

dated 26 October 2022

Case No. V AGa 163/22

Summary by arbitraz.laszczuk.pl:

A limited liability company based in W. concluded a contract of assignment of a claim regarding a contractual penalty with another limited liability company. On that basis, the former company filed a lawsuit with the Arbitral Tribunal against a registered partnership.

The Arbitral Tribunal rendered an award in which it found the lawsuit to be well-founded. As a result, the respondent filed a petition to set aside the arbitration award on the basis of Art. 1206 § 1 point 5 of the Polish Civil Procedure Code (the “PCPC”), i.e. alleging that the award was issued on the basis of a forged or altered document, namely a power of attorney granted by the respondent, and Art. 1206 § 2 point 2 of the PCPC, i.e. alleging that the award was contrary to the fundamental principles of the legal order of the Republic of Poland (the public policy clause).

The Court of Appeal in Katowice found the petition meritless. It stated that the public policy clause makes it possible to review arbitration awards only within a limited scope. Review of compliance of an arbitration award with the public policy clause is not of an appeal character and cannot replace it. The Court of Appeal hearing a petition to set aside an arbitration award may only dismiss a petition or set aside the award. A broader review of an arbitration award is excluded, because it would be contrary to the purpose of arbitration, would render its existence aimless, and would be contrary to the autonomy of the will of the parties who have submitted their dispute to the jurisdiction of an arbitral tribunal, resigning from the jurisdiction of a state court. The Court of Appeal stressed that the arbitration award had not been contrary to the public policy clause. In addition, it indicated that the power of attorney had been neither forged nor altered due to the fact that affixing a stamp “Exclusive power of attorney. …, a limited liability company” to the power of attorney, in line with the contract binding for the parties, did not fulfil the prerequisites of alteration of a document, and was not a circumstance which would undermine the authenticity of the power of attorney. As it was noted by the Court of Appeal, an alteration of a document consists in an alteration of the content of the document by an unauthorized person.

It is worth noting that in this judgment the Court of Appeal in Katowice made a reference to, among other things, the following rulings: the Court of Appeal in Warsaw judgment dated 30 May 2017, Case No. VI ACa 180/16 and the Court of Appeal in Gdańsk judgment dated 30 November 2017, Case No. I ACa 1125/16.

               Excerpts from the text of the court ruling:

1. Only in the situation when the assessment made by the state court that the effects of the arbitration award are grossly and plainly contrary to the fundamental principles of the legal order of the Republic of Poland, it is possible to find a petition to set aside an arbitration award based on the allegation of violation of Art. 1206 § 2 point 2 of the PCPC to be well-founded. In applying the public policy clause, the point is not that the ruling being reviewed is to be consistent with all of the mandatorily applicable provisions of law entering into play, but that it does not exert an effect inconsistent with the fundamental principles of the domestic legal order.

2. The Court of Appeal examining the legitimacy of a petition to set aside an arbitration award cannot change such an award, but only dismiss the petition or set aside the award.

3. [A] basis for setting aside an arbitration award may be … aggravated violations of substantive or procedural law which render the arbitration award irreconcilable with the legal standards deemed fundamental for the functioning of the legal system as such. Therefore, neither a mere misinterpretation of the substantive law nor a misapplication thereof by an arbitral tribunal justifies upholding of the petition even if mandatorily applicable provisions were violated… .

4. [A]n assessment as to whether an arbitration award violates the fundamental principles of the legal order shall be formulated narrowly and on the basis of factual circumstance of a given case.