The International Journal of Public and Private Arbitration
Full Contents List
- Introduction
- Regional Overviews
- Country Overviews
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The European & Middle Eastern Arbitration Review 2008
Section 2: Country Overviews
A new Polish regulation concerning arbitration judicature became binding in
October 2005. The basis for this regulation was the UNCITRAL Model Law regarding
international commercial arbitration, worded before the amendment in 2006. The
unification of arbitration procedure rules was supposed to simplify commercial
trade and arbitrate litigations arising in connection with commercial trade.
The rules concerning international arbitration are found in part 5 of the Polish
Code of Civil Procedure (PCCP). In principle, the method of the UNCITRAL Model
Law was preserved. Crucially the solution was adopted according to which the
same rules regulate both domestic and international arbitration.
The PCCP introduced two general rules on the relations between arbitration courts
and state courts:
• Article 1159(1) says that, in matters regulated by part 5 of the PCCP,
state courts can undertake decisions only if the PCCP directly says so. It basically
means that if parties made arbitration agreement, in principal it rules out
competence of state court to act in particular litigation. This rule was implemented
in order to prevent interference from state courts in arbitration procedures,
which happened periodically before the regulations based on the Model Law.
• Article 1159(1) says that, whenever the PCCP allows a state court to
undertake action towards an arbitration court, it will be this state court that
would be competent if the parties have not made an arbitration agreement. This
general rule makes it easy to specify which state court is authorised to undertake
action.
At this point it is worth discussing basic relations between courts of arbitration and state courts. While discussing particular legal solutions attention will be paid to acceptable participation of a state court.
Appointing authority
According to PCCP, article 1171(1), the parties can settle the method of appointing
arbitrators. Article 1161(3) states that parties must obey the regulations of
the court they have identified as the permanent arbitration court competent
to settle the litigation. In consequence, parties are also obliged to appoint
arbitrators accordingly to the regulation.
However if the parties have not chosen a permanent arbitration court, article
1171(2) of the PCCP will be applicable. In agreement with this article, if a
party will not appoint an arbitrator within a month of the date of receiving
the other party’s demand to do so, or if arbitrators appointed by parties
will not call up a presiding arbitrator within a month of the date of the appointment,
than the state court appoints an arbitrator or the presiding arbitrator. Similarly,
when a case is arbitrated by sole arbitrator and he or she has not been appointed
within a month of the date on which one party appealed for his or her appointment,
an arbitrator is appointed by the state court.
In accordance with article 1172, if, according to the parties’ agreement,
the arbitrator or presiding arbitrator is to be appointed by another person,
who fails to do so in a term specified by the parties or, if the parties did
not specify this term, within a month of the date of calling for the appointment,
either of the parties can appeal to a state court in order to appoint an arbitrator
or the presiding arbitrator, unless the parties decide otherwise.
It is worth mentioning, that, during the substitute nomination, the state court
has to take in consideration the arbitrator’s qualifications (as per the
parties’ agreement) as well as his or her independence and neutrality.
This is regulated by PCCP, article 1173(1).
From the international perspective, article 1173(2) is crucial. When the state
court is appointing an arbitrator or presiding arbitrator in litigation where
the parties have residence in different countries, it should take into consideration
that such arbitrator should not be connected to either country.
This solution suits international standards used in Polish arbitration court
(Court of Arbitration at the Polish Chamber of Commerce) but also in international
permanent arbitration courts (eg, ICC International Court of Arbitration or
the Permanent Court of Arbitration in The Hague).
Challenge procedure
According to PCCP, article 1176(1), parties can define ways of challenging
an arbitrator. As mentioned above, if parties make an arbitration agreement
they are bound by the regulations of this particular court. Regulations of arbitral
courts usually contain specific rules concerning challenge of an arbitrator
(section 25 of the Rules of the Court of Arbitration at the Polish Chamber of
Commerce). Parties’ liberty in this area is, however, restricted by article
1176(2) of the PCCP. This states that if, within a month of the date on which
a party makes a request to the arbitration court to challenge the arbitrator
in the manner previously defined by the parties, the arbitrator has not been
excluded, the party that made the demand is entitled within the following two
weeks to ask the state court to exclude the arbitrator (against which rule a
differing parties’ agreement or permanent arbitration court regulations
are ineffective).
Crucially, according to article 1176(6), bringing such a motion to the state
court has no influence on the procedure in arbitration court – the arbitration
court can wait for the state court’s decision on the challenge to the
arbitrator or continue the procedure. There is no appeal from the state court’s
decision on a challenge to an arbitrator.
Revoking the appointment of arbitrator
State courts’ competences are crucial also when it comes to revoking the appointment of arbitrator. According to article 1177(2) of the PCCP, on application the state court can revoke the appointment of an arbitrator if it is clear that the arbitrator will not make his or her decisions within a proper term, or if he or she is late in making them without due cause. This rule aims to encourage arbitrators to carry out their duties efficiently. However, practice and the judicature will decide what should be understood by ‘proper term’.
Establishing arbitrator’s salary
According to article 1179(2), if there is no agreement between the arbitrator and the parties regarding the amount of his or her salary and expenses, then an arbitrator can ask the state court to establish his or her salary and expenses according to his or her work and the value of the dispute subject matter. Here the state court’s decision is not final and can be appealed.
Jurisdiction of arbitration court
The jurisdiction of arbitration courts is regulated in article 1180 of the
PCCP. According to the Kompetenz-Kompetenz rule, the arbitration court is competent to judge on its jurisdiction and about the existence of a significant or efficient arbitration agreement.
According to article 1180(2), parties can contest the jurisdiction of the arbitration
court with an objection in principle no longer than in reply to the statement
of claim or other term defined by the parties (eg, in the regulation of the
permanent arbitration court). If the arbitration court dismisses the claim,
according to article 1180(3), each of the parties can within two weeks appeal
to the state court to resolve the matter of jurisdiction. Initiation of legal
proceedings in the state court in this matter does not halt the proceedings
in the arbitration court.
Another rule says that nullity or expiration of a contract in which an arbitration
agreement was made does not mean that the arbitration agreement is null. The
arbitration court can decide about its jurisdiction in the decision given during
the proceeding or in the award. Only when the arbitration court decides about
its lack of jurisdiction to adjudicate on the selected merits of the case demanded
during proceedings will the second solution apply (PCCP, article 1180(1)).
The matters related to jurisdiction of arbitration court are also regulated
by article 1165. According to section 1 of this article, when there is a case
in a state court related to the litigation covered by the arbitration agreement,
the state court will dismiss the claim if the defendant made an accusation about
the arbitration agreement. It should be noticed that the state court will not
dismiss the claim and will have to adjudicate this case, or if it states that
arbitration agreement is not valid, ineffective, unenforceable or has expired
and when arbitration court ruled out its jurisdiction.
Evidentiary proceeding
In the matter of civil procedure, the PCCP accepts that an arbitration court
can cooperate with a state court in proceedings to take evidence. This is supported
by the fact that an arbitration court cannot use force.
The matter of support for the arbitration court is regulated by article 1192.
According to section 1 of this article, an arbitration court can ask for evidentiary
hearings or other procedures that cannot be done by the arbitration court itself
but by the district court in whose jurisdiction these procedures are done. During
the hearing of evidence in the district court, the arbitrators and parties can
participate in evidentiary proceedings and ask questions. Article 1192(2) says
that the rule from section 1 also applies when the place of the trial in the
arbitration court is outside Poland or is not set.
Interim measures of protection
According to article 1166(1), if the litigation is adjudicated by the arbitration court it does not rule out the possibility of securing claims in front of arbitration court by state court. According to article 1166(2), the aforementioned procedure is also used when the place of proceedings is outside Poland or has not been set.
Submission of case files by an arbitration court to a state court
According to article 1204(1), there is a rule that, after an arbitration court
has pronounced judgment, the acts of proceeding together with the original documents
of an award should be handed over to the state court by the arbitration court.
The PCCP does not specify how quickly the arbitration court should submit files
to the state court but it is commonly accepted as just after pronouncement of
a judgment.
The rule is crucial when it comes to an ad hoc arbitration court, which ceases
to function after passing the award in a particular case. When a permanent arbitration
court adjudicates, in accordance with article 1204(2), it has the right to archive
all its files; the only duty is to make them accessible to the state court and
other authorities on their demand.
Application to set aside an arbitral award
Below are the basic rules used by a state court in the process of adjudicating
such a motion. Polish regulations are based on article 34 of the UNCITRAL Model
Law.
According to article 1205(1) of the PCCP, an award of an arbitration court passed
in Poland can be set aside by a state court only in proceedings initiated by
a motion to set aside this particular award based on the PCCP. The state court
can not investigate a case on its merits when the case is finished and the arbitration
court has made an award. Moreover, state courts cannot make new statements of
facts (discounting the exceptions listed in the PCCP).
A state court investigating a motion for cancellation of an award of an arbitration
court can only verify whether the award is invalid because of a legal defect,
as pointed out in article 1206 of the PCCP. Importantly the state court can
only verify the award within the scope described in motion. The exception to
this rule is article 1206(2), equivalent to article 34(2)(6) of the UNCITRAL
Model Law, according to which a state court will only set aside an award (i)
based on non-arbitrability of the dispute; and (ii) if it is incompatible with
the basic rules of Polish legal system. This is the so-called public policy
of Poland. Similar policies are also in many foreign legal systems. The character
of this policy means that interpretation of article 1206(2) should be based
not only on the Polish legal system but also on international practice.
As demonstrated, the competence of state courts is restricted and under no circumstances
can a state court with which a motion was filed be considered as a court of
second instance. This is important because before the UNCITRAL Model Law, state
courts had a tendency to investigate cases on their merits, apart from investigating
the formal part of proceedings in an arbitration court.
It is worth mentioning an interesting solution from article 1209 of the PCCP,
corresponding with article 34(4) of the UNCITRAL Model Law. A state court where
the motion was filed can suspend proceedings for a specified period of time,
so arbitration court can begin proceedings once again in order to eliminate
the legal basis of the motion. The state court can undertake this action only
after direct request of one party. The arbitration court, in the example mentioned
above, will pass a supplemental award within two months.
Recognition and enforcement of arbitral awards
The general rule in this matter is in article 1212(1) PCCP, according to which
an award of an arbitration court or a settlement is equal to an award or settlement
concluded in a state court, but only after approval or confirmation of enforceability
of award done by the state court.
From the point of view of international companies conducting their business
in Poland, article 1212(2) is also important.This states that an award of an
arbitration court or a settlement conducted in this court, no matter in which
country it was issued, is subject to rules described in articles 1212 to 1217.
In particular, article 1215 imposes higher standards when it comes to approval
or confirmation of enforceability of an award of an arbitration court from abroad
or settlement also concluded abroad than an award issued on Polish territory.
* * *
The above depiction of relations between arbitration courts and state courts
in Poland shows that, following implementation of the UNCITRAL Model Law, state
courts can still influence procedure in an arbitration court at a high level.
Moreover, the functioning of Polish state courts shows that action undertaken
by court makes the procedure last too long. As a result, the general advantage
of an arbitration court, namely the pace of procedure, suffers.
Facts brought up in this article justify actions to make arbitration procedure
more effective and to reduce the competence of state courts. It is worth mentioning
that there is an amendment of PCCP being prepared by the Court of Arbitration
at the Polish Chamber of Commerce in Warsaw. This project will shorten the time
periods in which state courts can undertake actions in arbitration procedure.
There is also an idea to entrust all motions for setting aside of the award
of arbitration court to only one court (Appeal Court in Warsaw). The authors
of the amendment say that one court that recognises all motions will be faster,
more efficient and more competent.
It seems that the proposed amendments could make arbitration more efficient
and entrepreneurs will use this form of solving litigations more often, assuming,
of course, that those amendments are enacted. It will make Poland a more attractive
place to conduct international arbitration proceedings.
M.Furtek i Wspolnicy
M Furtek i Wspolnicy kancelaria
prawnicza sp.k.
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Our priority is to understand the business of a client and provide legal services of the highest quality. M.Furtek i Wspolnicy is a medium-size independent Polish law firm based in Warsaw providing legal services for businesses. Since 2006 M.Furtek i Wspolnicy has been a member of Legalink (www.legalinklaw.coam) – an international association of law firms present in 40 jurisdictions around the world. Primary practice areas:
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