The arbitrability of corporate disputes has long been a controversial issue in Poland. Recent changes in Polish law introduced by the Act of 31 July 2019 aimed to resolve the issues surrounding and give the green light to arbitrating corporate disputes. Unfortunately, it seems that these amendments have failed to solve all of the problems and have even created additional uncertainties.
A recent Supreme Court case touched on the obligations of an arbitral tribunal which cannot base its award on party-appointed experts' opinions. In a controversial decision, the court clarified that in such cases, when both parties request a tribunal-appointed expert, the tribunal should allow such a motion and cannot merely decide against the motioning party, as this may cause it to violate its obligation to consider the case, which – according to the Supreme Court – is part of public policy.
It is obvious to arbitration practitioners that an arbitral award cannot deal with claims not brought before a particular tribunal. However, it is also clear that vacating an award due to a violation of public policy should be an exceptional measure. The Supreme Court recently dealt with these two principles and leaned towards the former, setting aside a domestic award granted for interest for a different period than the one demanded by the claimant in the proceedings.
In post-arbitral proceedings, parties challenging an unfavourable award or its enforcement often argue that they were deprived of the right to present their case or that the tribunal violated the rules of procedure or committed some other procedural error and often request the state courts to order the tribunal to present the arbitral case file. A recent Supreme Court decision evaluated the usefulness and necessity of granting such requests and clarified that such measures should be granted only rarely.
Parties unhappy with an arbitration award often try to question its enforcement based on public policy, raising numerous violations of law that do not amount to public policy. However, public policy is a tool that can also protect the legal system in certain situations. Two interesting Katowice Court of Appeals decisions made on the same day by the same judge in two non-related cases demonstrate how the courts deals with collusion cases.
It is a well-established rule that the setting aside of an arbitral award or the refusal of its recognition or enforcement due to a violation of public policy can occur only as a last resort to remedy a grave error in the award. It is also well established that the state courts in post-arbitral proceedings do not reconsider the facts established by an arbitral tribunal. A recent Supreme Court decision illustrates that although these rules are clear on paper, they are less clear when applied in practice.
The Supreme Court recently held that the autonomous position of arbitration courts as an alternative to state courts means that the judicial review of an arbitral award by an arbitral tribunal cannot be considered the equivalent of appellate review by a court. The control over arbitration exercised by common courts is primarily aimed at eliminating abuses of arbitration, including violations against the public order; however, provisions regarding the statutes of limitations of claims are excluded from this category.
The assignment of rights and obligations stemming from an agreement forms part of everyday business. This issue can become complicated if a transferred claim is covered by an arbitration agreement. A recent Supreme Court decision shows that in such a case, the assignee and the debtor must resolve their disputes through arbitration. This decision confirms the arbitration-friendly approach of the Polish courts, especially regarding the validity and scope of arbitration agreements.
Cases involving allegations against the appointment, impartiality or independence of abitrators are usually complicated and it is difficult to make any firm statements, save for obvious cases of bias. A recent Court of Appeals decision set aside an International Chamber of Commerce award due to the fact that, among other things, one party's rights had allegedly been infringed when the sole arbitrator was selected in the course of the proceedings.
A recent Supreme Court case found that an arbitral tribunal did not violate public policy by reducing an agent's claim for commission against a football club. In addition to setting a precedent in the field of sports law, the decision is important for arbitration practitioners as it confirms that intervention in the arbitral process on the grounds of public policy is limited to the most severe violations of Polish law.
International contracts are often concluded via email. This practice requires a more liberal approach to the form of arbitration agreements under the New York Convention. However, the convention is silent on the form in which an agent's authorisation (ie, power of attorney) to enter into an arbitration agreement must be made. A recent Supreme Court decision confirms that under Polish law, such authorisation is required and should be made in an equal manner to that required to conclude the agreement itself.
Mass contracts are usually drafted favourably only for the stronger party in the contractual relationship. This particularly pertains to dispute resolution (eg, its method or place). The Supreme Court recently ruled strongly in favour of the weaker parties in a contract and found that an arbitration clause in the contract between a Polish franchisee and a Dutch franchisor that opted for New York as the place of arbitration was invalid, as it was grossly unfair to the Polish party.
Anti-suit and anti-arbitration injunctions are useful instruments for enabling efficient dispute resolution and preventing forum shopping. However, these instruments are not favoured in some legal systems. Poland is one of the jurisdictions that was said to exclude the use of anti-suit and anti-arbitration injunctions. The Krakow Court of Appeals recently confirmed that Polish courts cannot prohibit a party from initiating or continuing arbitration.
Parties sometimes believe that the recognition and enforcement of an arbitral award is a mere formality, as the substantive proceedings are already over. However, the enforcement stage can prove formal and parties should be careful not to overlook certain requirements of a motion. A recent Supreme Court decision demonstrates the serious consequences that can stem from parties' errors in this regard.
A recent Supreme Court judgment confirms that there is no possibility of obtaining a declaratory decision regarding the validity and effectiveness of an arbitration agreement. According to the court, a party that is uncertain of the validity of an arbitration agreement must initiate a substantive case before either a state court or an arbitral tribunal. Only then can the jurisdiction of the tribunal be determined.
The effective interruption of a limitation period of a claim can be crucial to the final success of arbitration. However, it is unclear whether a party can interrupt a limitation period by bringing a case before an improper forum or by initiating conciliatory proceedings before a state court for a claim covered by an arbitration agreement. This update examines the risks relating to attempts to interrupt the limitation period in both instances.
High thresholds for proceedings set in arbitration agreements, such as short time limits, can have serious consequences, including the loss of an agreement's legal effect. Parties must also choose their arguments carefully, as they may be used against them later on. These issues were present in a recent Warsaw Court of Appeal judgment made in post-arbitral proceedings.
Parliament recently adopted amendments to arbitral law. The changes allow the period for enforcing claims in arbitration to be shortened by reducing the period for filing a motion to set aside an award as well as reducing the number of instances in which post-arbitral cases will be heard. The amendments mark a step forward in making Poland a more arbitration-friendly jurisdiction.
A Law on Restructuring was recently signed that derogates from the controversial provisions under which a declaration of bankruptcy rendered arbitration agreements concluded by an insolvent company ineffective. In future, a declaration of bankruptcy will not impede ongoing arbitration. The new provisions require a closer look by foreign parties that have an arbitration agreement with a Polish company.
The Supreme Court recently issued a judgment relating to a provision of the law regarding the expiration of an arbitration clause. Pursuant to this provision, if an arbitrator or presiding arbitrator refuses to perform that function or if it is otherwise impossible for him or her to perform that function, the arbitration clause will lose its effect, unless the parties decide otherwise.
A recent Supreme Court ruling has confirmed that the principle of the compensatory function of penalty clauses is a basic rule of Polish public order. The key issue from a commercial arbitration viewpoint relates to the requirements for the enforcement of a foreign award in Poland and the limits of the public order clause.