POLAND

Aleksandra Żanowska, and Łukasz Zbyszyński

A. LEGISLATION AND RULES

A.1 Legislation

The Act of 17 November 1964 – Code of Civil Procedure, which governs arbitration in Poland, has undergone a couple of changes aimed mostly at resolving interpretational controversies arising in the jurisprudence and in the academia.

The most important changes concern the arbitrability of disputes under Polish law. The amendment to article 1163 of the Code of Civil Procedure has explicitly confirmed that the arbitration clause included in the articles of incorporation of a company bind not only the company and its shareholders but also the governing bodies of the company and its members. Moreover, the amendment has resolved a long-lasting controversy as to the arbitrability of disputes concerning an annulment or a declaration of invalidity of the resolutions adopted by the shareholders’ meeting. Currently, it is clear that such disputes can be resolved in arbitration if the arbitration clause provides for an obligation to publish an announcement about the commencement of the proceedings within a month. The shareholders can join either of the parties to the proceedings within a month following the publication of the announcement. The change may increase the popularity of arbitration in corporate disputes, as the uncertainty of the validity of arbitration clauses concerning disputes regarding shareholders’ meeting resolutions was an important factor in discouraging the parties from submitting such disputes to arbitration.

An editorial change to article 1157 of the Code of Civil Procedure introduced a clear distinction as to the arbitrability of property and non-property disputes. In general, all property disputes are arbitrable (except for disputes concerning alimony or disputes explicitly specified as non-arbitrable), while non-property disputes are arbitrable if they can be resolved through settlement. This amendment has had a mostly organizational character and so far has not introduced significant changes to the arbitration practice.

There have also been two minor but potentially significant changes concerning the arbitration procedure. First, an amendment to article 1161, section 3 of the Code of Civil Procedure states that the parties are bound by the arbitration rules in force on the day of the commencement of the proceedings rather than the day of the conclusion of the arbitration agreement. The discrepancy between the Polish regulation and typical regulations included in the rules of many popular arbitration institutions unnecessarily subjected the arbitration awards to challenge if the parties failed to address the issue of the applicable version of the rules in the arbitration clause. The said amendment appears to solve this problem.

Second, article 1169, section 2 of the Code of Civil Procedure now provides that if two or more parties act as claimants or respondents in the same proceedings, they have to nominate an arbitrator unanimously. The parties may, however, adopt a different procedure in the arbitration clause.

A.2 Institutions, Rules and Infrastructure

The Court of Arbitration at the Polish Chamber of Commerce in Warsaw has introduced a minor amendment to its Arbitration Rules. Among other changes of a mostly editorial character, the Court has modified section 17 of the Arbitration Rules, which previously provided that arbitrators included in the List of Arbitrators of the Court could not appear before the Court as an attorney for a party. This exclusion deterred many accomplished arbitration practitioners from registering on the Court’s List of Arbitrators if they wished to continue representing clients before the Court. Therefore, since the presiding arbitrators, the sole arbitrators and the arbitrators appointed by the Court should, in general, be chosen among the arbitrators registered on the List of Arbitrators, the limitations described above might have negatively affected the pool of available arbitrators. This limitation has now been removed from the current version of the Arbitration Rules, which may increase the number of practitioners registered as arbitrators on the Court’s List.

B. CASES

B.1 An award contemplating claims beyond the submission has to be set aside[1]

The decision of the Supreme Court pertaining to the results of rendering an arbitral award which dealt with claims not submitted in arbitration was rendered in setting aside proceedings. It concerned an award issued in a dispute resolved under the Arbitration Rules of the Court of Arbitration at the Polish Chamber of Commerce. These were the second proceedings concerning a controversy that arose between the parties. In the first case, the claimant partially prevailed with regard to the main claim. In the proceedings which led to the issuance of the award scrutinized by the Supreme Court, the claimant brought claims for interest for the delay in payment of the main claim due for a specific period, not covered by the first award. The tribunal considered this claim and awarded the claimant interest, but for a completely different period of time while dismissing the remainder of the claim. The awarded interest payments were lower than the ones sought by the claimant. The respondent filed a request to set aside the award. In the request, the respondent invoked, among other things, the following grounds in order to justify its motion: (i) that the award breached the basic rules of the arbitral proceedings applicable to the dispute; (ii) that the respondent was not able to present its case, as the award dealt not with the claim submitted by the claimant, but with a completely different one; and (iii) that the award breached the public policy of Poland.

In the first instance proceedings, the court dismissed the respondent’s request to set the award aside by stating that since the amount awarded to the claimant by the tribunal was within the amount sought by the claimant, there were no grounds to set the award aside. The respondent filed an appeal against this decision, which was dismissed by the Court of Appeals. As a result, the respondent filed a cassation appeal to the Supreme Court invoking the same grounds.

The Supreme Court agreed with the respondent’s cassation appeal. It underlined that by agreeing to arbitration, the parties had resigned from the possibility to have the case heard by the state courts. However, this does not mean that the arbitral tribunal’s actions cannot be scrutinized if the arbitral tribunal violates the basic interests not only of the parties but of the public. While Polish law does not include as a separate basis for the setting aside of arbitral awards a situation in which the award contemplates issues beyond the claims submitted to arbitration, the court still has the right to examine whether the violation took place. The principle that a court cannot rule on claims not submitted to it forms part of the legal order of Poland, as it guarantees that the respondent has the possibility to protect its rights since a specific claim creates the boundaries for the respondent’s defense. The Supreme Court observed that this is not contradicted by the nature of arbitration, which allows for a more flexible approach to the scope of the claim than in proceedings before the state courts. However, even in arbitration, the claim has to be sufficiently specified in order to delimit the subject matter of the proceedings. The Supreme Court explained that the fact that the amount awarded by the tribunal was lower than the amount sought by the claimant in arbitration had no significance, as the tribunal had clearly decided on a claim from a period different from the one specified in the statement of claim.

With that in mind, the Supreme Court found that the award had to be set aside on the grounds on violation of the applicable arbitration rules, which did not contain an explicit prohibition of deciding beyond the scope of the claims brought before the tribunal but provided for this rule implicitly. Furthermore, the Supreme Court agreed that such an award also violated the right of a party to present its case. The Supreme Court decided not to consider whether there was a violation of public policy, as the other grounds were successfully invoked by the respondent.

This importance of the Supreme Court’s judgment is significant, as it reaffirmed that, with regard to arbitration proceedings seated in Poland, a party can be assured that if a tribunal grossly breaches the boundaries set in the claimant’s claims by ruling on completely different matters, the respondent’s right to have its case heard will be upheld by the state courts. Additionally, it creates a possibility for the state courts to interpret the arbitration rules chosen by the parties in order to decode the implied principle embodied within them. While this is an approach that makes it possible to uphold vital principles such as fairness and equality of the parties in the proceedings, if abused it may lead to the unjustified interference of a state court in a decision rendered by an arbitral tribunal.

B.2 A tribunal dismissing a motion for the appointment of an expert violates Polish public policy[2]

The Appellate Court in Wrocław considered the question of whether the principle of a case must be examined comprehensively and that doubts must be cleared to the fullest extent possible before the tribunal renders an award constitutes one of the basic principles of Polish public policy. The case was then heard by the Supreme Court, which dismissed the cassation appeal due to the improper drafting of the objections in the cassation appeal filed by the respondent.

The judgment was rendered in setting aside proceedings. It concerned an award issued in an ICC arbitration which concerned remuneration and compensatory claims connected to the construction of sewerage. The main substantive issue to be considered by the tribunal was whether there was a causal link between the damage incurred by the claimant and the actions of the respondent, as well as the quantum of damages due. To that end, each of the parties presented their expert reports. The conclusions of the parties’ experts were contradictory, and their testimony provided during the hearing did not resolve these differences. The respondent – before the hearing – requested that the tribunal appoint an independent expert. After the hearing, the claimant stated that it would agree with the respondent’s motion if the tribunal were to decide that based on the submitted evidence it is not yet possible to rule in favor of the claimant. The tribunal decided, however, to dismiss these motions, and rendered an award in which most of the claims were dismissed as unproven.

In the setting aside proceedings, both parties sought for the award to be set aside, with the claimant relying on, among other things, the fact that the tribunal had breached the rules of the proceedings, such as the obligation to consider all the facts and evidence, the rules of fair trial, as well as the public policy of Poland by, among other things, disregarding the expert reports filed by the claimant and not fully establishing all the facts of the case necessary for the dispute to be properly resolved.

The court set aside the entire award by agreeing with the claimant’s request. The court noted that by not appointing an independent expert, the tribunal had breached the basic principles of Polish law. In this respect, the court relied on earlier case law, which confirmed that a tribunal is in breach of Polish public policy if it does not consider the evidence presented by the parties if it is crucial for the proper adjudication of the case. The court further found that the tribunal had breached the parties’ equality in arbitration by failing to establish the key issue at stake (the existence of a causal link). The tribunal assumed that it was the claimant’s duty to provide the necessary evidence and its insufficiency burdened the claimant.

This decision of the Appellate Court in Wrocław is rather surprising, as the court stated that the arbitral tribunal should have acted in a more inquisitorial manner, which includes taking an active part in the collection of evidence. The fact that the national court assessed the findings made by the arbitral tribunal on the merits of the case could be alarming. The limited jurisdiction of the national court in proceedings challenging an arbitral award is a cornerstone of arbitration. The assessments made by the court are on the border of a thin edge leading to direct judicial interference in the merits of arbitration cases, which, in other cases in Poland, has been greatly frowned upon on many occasions. Nevertheless, as the Supreme Court did not fully hear the case due to the improper drafting of the objections of the cassation appeal, it had no possibility to present its views on the reasoning of the Appellate Court. Had the cassation appeal been drafted properly, the final outcome could have been different.

B.3 Arbitration agreement can be concluded via e-mail – both parties have to consent to the arbitration by e-mail though[3]

The Supreme Court confirmed that pursuant to article II.2 of the New York Convention, it is possible to conclude an arbitration agreement by an exchange of e-mails. The Supreme Court stated, however, that both parties have to express their consent to arbitration in the e-mail correspondence to effectively subject a dispute to arbitration. Reference to general terms and conditions in an e-mail followed by the performance of the contract was considered insufficient to meet the form requirements under article II.2 of the New York Convention.

The parties in a case concluded a series of sales contracts concerning cocoa powder. In each case, the buyer placed the order by phone or e-mail. The seller would then send the buyer confirmation of the order by e-mail and the sales contract by post. Subsequently, the seller would prepare the order for delivery. The confirmations of the orders included a reference to the Conditions of Contract of the Federation of Cocoa Commerce (FCC) published online. The referenced conditions included an arbitration clause subjecting the disputes to FCC Arbitration. The seller prevailed in the arbitration proceedings, despite the buyer’s objections as to the jurisdiction of the tribunal and attempted to enforce the award in Poland.

The Supreme Court analyzed in the first place whether article II.2 of the New York Convention allows the parties to conclude an arbitration agreement by an exchange of e-mails. The Supreme Court observed that article II.2 of the New York Convention provides that an arbitration agreement is concluded in writing if it is, “signed by the parties or contained in an exchange of letters or telegrams.” In the Court’s opinion, the aim of the form requirement included in article II.2 of the New York Convention is to make the parties aware of the fact that they exclude their dispute from the jurisdiction of the state courts and to preserve the expression of their consent for the courts and tribunals which would examine the existence and validity of the arbitration clause in the future. The Supreme Court stated that an exchange of e-mails is sufficient to achieve those aims and therefore satisfies the requirements under article II.2 of the New York Convention.

The Supreme Court stated, however, that article II.2 of the New York Convention specifies that the arbitration agreement can only be concluded through the “exchange of letters or telegrams.” Similarly, the parties should, therefore, express their consent to arbitration through an exchange of e-mails. In the case at hand, the seller sent a confirmation of the order including a reference to the FCC Conditions of Contract which included the arbitration clause. The buyer did not express its consent by e-mail or in any other written communication. Hence, the arbitration agreement was not concluded. The Supreme Court stated the interpretation of the requirements included in article II.2 of the New York Convention cannot be more liberal, as it would deprive the said requirement of any meaning. As a result, the implied acceptance of the arbitration agreement by the performance of the contract is insufficient to meet the said requirement.

This ruling confirms that the parties may subject their dispute to arbitration by an exchange of e-mails and specifies the conditions for an effective conclusion of the arbitration agreement. Hence, it may incentivize the parties to include arbitration agreements in contracts that typically are not concluded in writing.

[1] Judgment of the Supreme Court of 8 February 2019, Case File No. I CSK 757/17.

[2] Judgment of the Appellate Court in Wrocław of 17 October 2017, Case File No. I ACa 1109/17; Judgment of the Supreme Court of 28 February 2019, Case File No. V CSK 63/19.

[3] Judgment of the Supreme Court of 4 April 2019, Case File No. III CSK 81/17.