The Polish courts rarely confirm violations of procedural law. In two recent cases, the appellate courts found that procedural errors in arbitration were grave enough to justify setting aside the awards in question. These cases are interesting, especially from the perspective of arbitrators. Arbitrators must be careful in verifying whether they have ruled on a case exactly as it was brought before them. The consequences of a mistake in this respect can be serious.
Arbitration does not provide for legal aid or an exemption from paying costs. Some regard this as a disadvantage of alternative dispute resolution. One party's lack of funds to pay for its share of arbitration costs can indeed deprive it of its day in arbitration court. This issue recently came before the Warsaw Court of Appeals, which decided that a party's lack of funds to launch arbitration does not render the arbitration agreement defective.
The issue of arbitral tribunals' application of EU law is not new. In the 1990s the European Court of Justice (ECJ) established that a national court which receives an application to annul an arbitration award must grant such application if it considers that the award in question is contrary to EU law. In recent years, this issue was revived in investment arbitration and the ECJ's famous (or for many, infamous) Achmea judgment. A landmark decision of the Warsaw Court of Appeals is yet another chapter in this story.
The issue of an arbitral tribunal's jurisdiction over set-off claims that are not covered by an arbitration agreement is controversial, with the rules differing from jurisdiction to jurisdiction. In a recent judgment, the Warsaw Court of Appeals held that even if a set-off claim is based on an agreement that is outside the scope of an arbitration agreement, the tribunal must determine the set-off's effects on the main claim raised in the proceedings.
Parties which lose in arbitration often continue to fight off a claim before a state court in post-arbitral proceedings, despite not having a strong case. This provides a double benefit for Polish arbitration practice: not only are a vast majority of these attempts defeated, but the Supreme Court also has a chance to confirm its pro-arbitration approach. One recent decision underlines that the mere fact that the reasoning of an arbitral award is concise is insufficient grounds to vacate the award.
The Supreme Court has previously opted for both a broad and a narrow understanding of res iudicata in Polish arbitration law. In a recent judgment, the court again leaned towards a narrow understanding of to what degree an arbitral tribunal is bound by a previous award. The decision should be a caveat for all participants in the Polish legal market that they should play until the whistle is blown.
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 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.
Significant changes to the regulation of arbitration in Poland were recently introduced. The changes will have a profound effect on business practice and lawyers nationwide, modifying a wide range of rules – from the form of an arbitration agreement to the preconditions for the enforcement of awards. However, the act aims not only to support consumers in arbitration, but also to provide a new impetus for the development and expansion of arbitration in Poland.
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.
A recent Supreme Court judgment contributed to the debate on the res judicata of arbitral awards on other cases. Arbitration practitioners engaging in a res judicata argument before an arbitral tribunal that must take Polish public policy into account or acting before Polish state courts in arbitration-linked matters should be aware that there is flexibility in that regard.
A recent Warsaw Court of Appeals decision made a clear distinction between the jurisdictions of state courts and arbitral tribunals regarding the enforcement of claims. The court also discussed the defence of set-off raised after an award has been made and clarified when a claim covered by a valid and enforceable arbitration agreement can be examined only by a state court.
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.