Białystok Court of Appeal judgment

dated 23 November 2018

Case No. I AGa 136/18

Summary by arbitraz.laszczuk.pl:

On 20 March 2015, …, a joint-stock company, based in O., and …, a limited liability company, based in O., entered into a contract under which the former company undertook to provide accommodation together with necessary infrastructure and to provide other services to the limited liability company. § 9 (1) of the contract stipulated that ‘the contractor undertakes that bringing claims for outstanding receivables arising out of the contract in court shall be preceded by an amicable procedure, including a request for a conciliatory hearing pursuant to Art. 184 – Art. 186 of the Polish Civil Procedure Code (the ‘PCPC’). On 26 June 2015, the parties amended the contract. As a result, the principal made a statement that, among other things, it had expended the scope of its business activity with a new product which was a product innovation consisting in, i.a. providing short-term accommodation with a ‘business concierge’ service.

On 10 December 2015, the limited liability company sent a letter to the joint-stock company in which it proposed to extend the contract until 31 March 2017. The joint-stock company did not agree to extend the contract, and it even proposed to terminate it earlier, i.e. with the effect as from 20 March 2016 by mutual agreement. The limited liability company stated that it could terminate the contract, but as of a later date, if the other party gave it a 30% discount for the period January-March 2016. In response, the joint-stock company terminated the contract relying on Art. 750 and Art. 746 § 2 of the Polish Civil Code.

As a consequence, a dispute arose between the parties. The joint-stock company filed a lawsuit against the limited liability company, however, the latter filed a counterclaim. The Regional Court in O. rendered a judgment, but the joint-stock company filed an appeal.

The Court of Appeal in Białystok dismissed the appeal. The Court indicated, among other things, that Art. 1165 § 1 of the PCPC stipulates that if a dispute subject to an arbitration agreement is brought to court, the court shall dismiss the lawsuit or the request for a conciliatory hearing, if the defendant or the participant of an amicable procedure asserts the pleading of existence of an arbitration agreement before defending on the merits of the case. However, pursuant to Art. 1165 § 2 of the PCPC, § 1 thereof shall not apply if the arbitration agreement is invalid, ineffective, unenforceable or has expired, or if the arbitral tribunal declines jurisdiction. The Court of Appeal stressed that the arbitration agreement concluded by the parties was ineffective – it violated the principle of equality of the parties due to the fact that the right to bring a claim before an arbitral tribunal had been made in favor of only one party. In addition, the Court of Appeal stated that the Regional Court’s findings had been fully accurate and took them as grounds for its ruling.

It is worth noting that in this judgment the Court of Appeal in Białystok made a reference to, among other things, the Polish Supreme Court judgment 8 April 2009, Case No. V CSK 405/08.

Excerpts from the text of the court ruling:

1. In fact, an effective pleading of existence of an arbitration agreement causes a state of inadmissibility of the proceedings, which makes it necessary to dismiss the lawsuit … .

2. [A]n arbitration agreement cannot violate the principle of equality, however, Art. 1161 § 2 of the PCPC in fact provides only one example of infringement of this principle, i.e. the arbitration agreement containing a provision which entitles only one party to bring a case before an arbitration tribunal provided for in the arbitration agreement or before a court … .