POLAND

Aleksandra Żanowska and Łukasz Zbyszyński

A. LEGISLATION AND RULES

A.1       Legislation

Arbitration proceedings in Poland continue to be governed by the rules embodied in the Polish Civil Procedure Code. These rules are based on UNCITRAL Model Law[1]. In 2020, no amendments to these rules were made.

A.2       Institutions, rules and infrastructure

There are two main arbitration institutions that administer arbitrations and also provide the rules of arbitration and the facilities where arbitration may be conducted. These are the Court of Arbitration at the Polish Chamber of Commerce and the Lewiatan Court of Arbitration at the Lewiatan Confederation.

In 2020 the Lewiatan Court of Arbitration enacted two changes to its Arbitration Rules. On 13 May 2020, it formally made it possible to exchange pleadings electronically and conduct hearings remotely. On 8 July 2020, it adopted supplementary rules concerning corporate disputes. The new rules address the changes in the Code of Civil Procedure confirming the arbitrability of disputes related to the validity and legality of the resolutions adopted by the shareholders’ meeting. The supplementary rules regulate the most troublesome issues that may arise in this type of proceedings. In particular, they provide rules for the joinder of the shareholders and their rights in the proceedings.

The supplementary rules also regulate the process of the nomination of arbitrators – a potentially difficult stage of the arbitration proceedings with multiple shareholders participating. The shareholders joining the case will be allowed to comment on the candidacy of the arbitrator proposed by the party they join. Unless the party and the shareholders joining such party agree on the candidacy, the nominating committee will appoint all arbitrators. This solution seems to minimize the risk of challenges to the award by the parties deprived of the possibility to nominate the arbitrator.

Another new rule concerns the automatic consolidation of proceedings related to the same resolution being challenged. Given that several shareholders may potentially initiate proceedings concerning the same resolution, there was a risk that different tribunals could issue conflicting awards. The adopted solution addresses that risk and allows the parties to resolve all disputes concerning a specific resolution in one arbitration.

Finally, the rules provide a relatively short deadline for issuing the award – the proceedings should be finished within three months after the selection of the arbitrators. While it remains to be seen what effect the rules will have on corporate disputes, they surely resolve several problems one could expect in this new type of proceedings.

B. CASES

B.1       Former employee may act as an arbitrator in a case concerning their former employer[2]

The case concerned the enforcement of an arbitral award issued in proceedings between two Polish companies. The arbitration took place on the basis of an arbitration clause included in a settlement agreement concluded in February 2019. In the course of these proceedings, the tribunal found the claims to be justified, and thus it issued an award in favor of the claimant. The claimant sought to obtain an enforcement clause on the award before the Polish courts. However, the respondent raised several objections, including one asserting the lack of impartiality and independence of one of the members of the arbitral tribunal. The argument was that the said arbitrator had been employed by the claimant in the past. In the respondent’s view, this might have affected the arbitrator’s independence and impartiality, and thus, the enforcement of the award had to be refused.

The court considered the objections and concluded that they were not justified. With regard to the arbitrator, the key factor considered by the court was the chronology. The court noted that the arbitrator had indeed been employed by the claimant; however, only until 31 December 2017. Given that the dispute concerned a settlement agreement concluded in February 2019, the court decided that there could be no connection between the arbitrator and the subject matter of the case since the dispute resolved by the award arose only after his employment with the claimant had been terminated. For the court, the mere fact that the arbitrator used to work for the claimant was also insufficient to find a breach of the arbitrator’s obligation to be impartial and independent, as the arbitrator issued a statement of independence and impartiality. As a result, the court granted the claimant the enforcement clause on the award.

The decision of the court is interesting for two reasons. Firstly, while it was a domestic arbitration case, in the past, a few Polish courts have relied on the IBA Guidelines on Conflicts of Interest in International Arbitration (“IBA Guidelines”) in case of similar objections. This is because, under Polish law, there is no uniform standard as to challenges of the arbitrators.

Under the IBA Guidelines, the described circumstances would fall within the so-called Orange list – circumstances that should be disclosed by the arbitrator in order to allow the party involved to assess their potential impact on the case, which, however, cannot be a basis for the disqualification of the arbitrator if the party does not object and the relevant body appointed to rule on such objections dismisses it. Thus, under the IBA Guidelines, the standard is as follows: requirement for the arbitrator to disclose the circumstances, an obligation for the party to file a timely objection, and the circumstances as a whole have to give rise to justifiable doubts as to the lack of impartiality or independence of the arbitrator. In the current case, the court did not follow this standard.

Secondly, the standard employed by the court is more favorable towards the presumption of the impartiality and independence of arbitrators. This is because, under the court’s standard, the main question was whether the arbitrator was or could have been personally involved with the subject matter of the dispute. And while the court noted that the arbitrator issued a statement of independence and impartiality, the court did not consider the contents of the document and whether the relevant disclosures had been made in it. Thus, the court’s standard was as follows: lack of impartiality or independence takes place when there is or could have been a connection between the subject matter of the dispute and the arbitrator. Therefore, the threshold for a successful challenge was higher than under the IBA Guidelines.

The take-away from this case is that since there is no uniform standard in Poland that would apply to resolve challenges to the arbitrators, the parties must be aware that the standards applied internationally may not necessarily be followed. Therefore, if a party was to consider raising a similar challenge before the Polish courts, the arguments would have to satisfy more stringent standards in order to increase the chances of success.

B.2       Court’s powers in setting aside proceedings are limited[3]

The case concerned an application to set an arbitral award aside. The Appellate Court in Warsaw dismissed the application to set the award aside. As a consequence, the Applicant filed a cassation appeal with the Supreme Court.

As a basis of the cassation appeal, the Applicant indicated the need for the Supreme Court to rule on the issue of the scope of court control over arbitral awards and its criteria, in particular, in light of the principle that awards cannot be blatantly contrary to the facts of the case and the rule of law.

The Supreme Court did not allow the cassation appeal. It noted that the case law and the jurisprudence are consistent with regard to the scope of court control in setting aside proceedings. The courts cannot examine the award, save for the explicit exceptions provided for in law. The issue of misapplication of the law and a blatant error in establishing the facts of the case are covered by the public policy exception, which cannot be applied extensively. The courts may examine whether or not the tribunal complied with the requirements of the procedure when conducting evidentiary proceedings. Nevertheless, the Supreme Court emphasized that the scope of powers of an arbitral tribunal in terms of assessing evidence is broader than the powers conferred on courts in litigation.

A month later, the Supreme Court upheld the above views and also did not allow a cassation appeal based on the issue of misapplication of the law in a different case concerning setting aside proceedings.[4]

The consistency of the views of the Supreme Court with regard to the scope of the court’s control over arbitral awards allows more certainty for arbitration users in terms of what they may expect in case of an award issued in Poland being challenged. Further, this standard is similar to the one applied in other countries, which based their arbitration law on UNCITRAL Model Law. As such, parties choosing Poland as the seat of arbitration may be quite confident as to what they can expect in the potential post-arbitral proceedings.

B.3       An arbitration clause excludes the court’s jurisdiction in so-called anti-enforcement proceedings against an enforcement title in the form of a notarial deed[5]

The case concerned a dispute between the parties with regard to an enforcement title in the form of a notarial deed issued in connection with a contract which contained an arbitration clause. Under Polish law, this sort of enforcement title is quite commonly used to secure transactions. In case of a breach of contract, a party seeking relief may simply provide the court with the notarial deed and request the court to grant an enforcement title to it. The court does not examine the merits of the claim or breach and focuses only on assessing whether the procedural terms provided for in the deed have been complied with. To challenge a deed with an enforcement clause, the other party has to initiate so-called anti-enforcement proceedings, during which the merits of the dispute are examined.

In the discussed case, the enforcement clause had been granted on the notarial deed and the other party, acting as the claimant, challenged it in the court by filing an anti-enforcement. In response, the respondent (the party which obtained the enforcement title) raised a jurisdictional objection pointing to the fact that the parties had concluded a broad arbitration clause which also encompassed the merits of the dispute initiated by the claimant in the court. The first instance court decided that the jurisdictional objection was unjustified and issued a judgment as to the merits of the case. The respondent appealed against this ruling, once again raising the jurisdictional objection.

The regional court, hearing the appeal, agreed with the jurisdictional objection. Firstly, the court noted that the arbitration clause was broadly worded. Secondly, it focused on the substance of the claimant’s claim and found that it fell within the scope of the arbitration agreement. The court considered the case to be a dispute in connection with the conclusion of the agreement and found no reason to exclude the application of the arbitration agreement simply because there was an enforcement title issued in the form of a notarial deed. As such, the court changed the challenged decision by rejecting the claim due to lack of jurisdiction.

The decision, although issued only by a regional court, may have a bearing on future similar disputes. Hitherto, in the few cases dealing with the issue, the courts mostly considered anti-enforcement proceedings to be a separate type of dispute which cannot be subject to an arbitration clause (irrespective of how broadly formulated). The main argument used by the courts was the fact that the claim in anti-enforcement proceedings is not for the performance of the contract but rather the termination of the enforcement clause. This argument omitted the fact that anti-enforcement disputes, save the requested relief, deal with the exact same substance and arguments as cases for the performance of contracts, which may be subject to arbitration agreements. As such, the discussed decision of the Regional Court in Łódź may open a discussion towards a more comprehensive understanding of the scope of a broad arbitration clause when an enforcement title in the form of a notarial deed has been issued.

From the practical point of view, arbitration users considering including arbitration clauses in contracts which are secured by notarial deeds should be aware of the lack of uniform approach to the scope of arbitration agreements in such cases. Depending on the circumstances and the court handling the case, the breadth of the arbitration clause and the jurisdiction of an arbitral tribunal may be seen differently.

[1] The UNCITRAL Model Law before the 2006 amendments.

[2] Decision of the Appellate Court in Katowice of 21 February 2020, case file no. V AGo 14/19.

[3] Decision of the Supreme Court of 15 September 2020, case file no. I CSK 182/20.

[4] Decision of the Supreme Court of 9 October 2020, case file no. II CSK 37/20.

[5] Decision of the Regional Court in Łódź of 16 January 2020, case file no. III Ca 1187/19.