Arbitration Guide in Poland
Arbitration in Poland – Key Facts
|Advantages of Arbitration||
|Average Duration of Arbitration||
|Fast Track Arbitration||
|Most Common Arbitration Tribunals||
|Cost of Arbitration||
|Cases eligible for Arbitration||
|Key Regulations of Arbitration|
Types of ADR in Poland
Alternative dispute resolution (ADR) methods have been gaining popularity in Poland in recent years, including in the commercial dispute sector. This is in part a response to Poland’s increasingly slower judicial system as well as changes in the law encouraging parties to seek amicable solutions before taking a case to court. ADR also plays an important role in disputes with consumers, who often turn to this form of dispute resolution.
Resolving to ADR methods can be a good solution especially when:
- the parties are keen to keep information about the dispute confidential i.e. out of the public domain,
- the parties want to be able to conduct the proceedings in English or in language other than Polish,
- the parties want to have extensive control over the course of the procedure of resolving the dispute,
- an expert with either specific technical expertise or experience in a particular type of contract (e.g., IT project disputes) is needed to resolve the dispute,
- the priority for the party is the speed of the proceedings and finding a way out of the problem,
- the parties want to continue their cooperation despite the dispute.
Participation in ADR methods in Poland is voluntary but encouraged by the courts. For that reason, when filing a lawsuit, the claimant is obligated to state if they attempted to resolve the dispute amicably before taking the case to court through mediation or other out-of-court method.
The most common types of ADR in Poland are mediation, conciliation and arbitration:
Arbitration proceedings are an alternative to resolving the dispute in a court of law.
In simple terms, arbitration proceedings come down to the resolution of a case by an expert tribunal selected or established by the parties for this purpose. The purpose of arbitration is not to reach a settlement (although the court can and should encourage the parties to end their dispute amicably), but to decide on the merits of the claimant’s demands with an arbitral award.
An award issued by an arbitral tribunal “replaces” a judgment of a court of law – once approved by a court of law, it can be compulsorily enforced like any other judgment. If the parties agree to settle the dispute in arbitration they are bound by this decision – if the lawsuit is filed with the court of law, the defendant can claim a lack of its jurisdiction and request the lawsuit to be rejected.
Arbitration proceedings may be conducted in a permanent arbitral tribunal operating under its rules, or ad hoc, i.e., by an arbitral tribunal formed only to resolve a specific dispute. Regardless of the form of arbitration chosen, the arbitral award has the same legal force.
The main characteristics of the arbitration proceedings include:
- Voluntarity – the voluntary nature of arbitration manifests itself in the fact that the parties must agree to participate in it by entering into an arbitration agreement or an arbitration clause either before the dispute arises (e.g., in a service contract) or after it arises.
- Flexibility – in arbitration, the parties have a greater ability to influence the course of the proceedings than in a court of law and have a say in, among other things, the language of the proceedings, the number of hearings, the composition of the arbitral tribunal, etc. The arbitral tribunal shall decide the dispute according to the law applicable to the legal relationship, nevertheless, when expressly authorized by the parties, it may also decide the dispute according to general principles of law or principles of equity.
- Single – instance – as a rule, arbitration proceedings are single-instance, which means that a party dissatisfied with the outcome cannot request that the entire case be re-evaluated by another arbitral tribunal unless the parties have provided for such a possibility in the arbitration agreement. Only in certain cases, a party may request that the arbitration award be set aside by a court of law.
Cases that can be Resolved in Arbitration
The vast majority of cases can be settled by arbitration. Generally speaking, the parties may submit to arbitration:
- disputes over property rights, except for cases of alimony or cases explicitly excluded by the provisions of law,
- disputes over non-economic rights, if they can be the subject of a court settlement.
Some limitations are associated with labour disputes and disputes with consumers. These can be settled in arbitration, provided that:
- the parties agreed to arbitration only after the dispute arose (so it is not possible to include a clause in the employment contract, according to which, disputes that arise in the future will be heard by the arbitral tribunal),
- the arbitration provision was made in writing.
In addition, in the arbitration clause drawn up with the consumer, it must be indicated that the parties are aware of the consequences of the conclusion of the clause, in particular, as to the legal force of the arbitration award or the settlement before this court.
By way of example, the following table indicates typical cases that can be subject to arbitration and cases that can only be heard by the courts of law:
|Cases that can be resolved in arbitration||Cases that only can be resolved in a court of law|
|Debt collection or cases for payment (due invoices, contractual penalties, compensation for damages, etc.)||Alimony|
|Determining the existence or nonexistence of a legal relationship (e.g., annulments of the contract)||Social security cases|
|Division of the joint assets (e.g., between spouses or heirs)||Disputes over industrial property rights (e.g., patent expiration)|
|Disputes from the company relationship (e.g., between the company and members of its bodies, cases on cancellation or annulment of the resolutions)|
|Disputes arising from promissory note obligations|
|Disputes concerning real properties (except for land and mortgage disputes)|
Permanent Arbitral Tribunals in Poland
Although a number of arbitral tribunals operate in Poland, the most popular are:
- Court of Arbitration at the Polish Chamber of Commerce
- Court of Arbitration at the Confederation of Lewiatan
- Court of Conciliation at the Association of Polish Banks
These arbitral tribunals hear all cases that can be subject to arbitration. They operate on the basis of rules of procedure and have lists of persons (lawyers and experts in their fields) to whom the parties may submit a dispute for decision. The largest and most popular arbitral tribunal in Poland, especially for international business disputes, is The Court of Arbitration at the Polish Chamber of Commerce.
There are also arbitral tribunals established to handle a specific type of case, or cases between specific entities, such as:
- Court of Conciliation at the Financial Supervision Commission (https://www.knf.gov.pl/dla_rynku/sad_polubowny_przy_KNF) – specialises in resolving disputes between financial market participants,
- Court of Conciliation at the General Prosecutor’s Office of the Republic of Poland (https://www.gov.pl/web/sp-prokuratoria) – dedicated to resolving disputes with State Treasury, local government units, state legal persons, legal persons and companies with participations of these entities,
- The Arbitration Construction Court at the Association of Consulting Engineers and Experts in Warsaw – deals with construction and public procurement disputes.
Arbitral tribunals differ from each other as to the tariffs for service fees as well as the rules for conducting arbitration proceedings. Each of them also has its own list of arbitrators appointed to the arbitral panels. For that reason, we recommend getting acquainted with them before choosing the right arbitral tribunal so that it meets the expectations of the parties, e.g., providing the possibility of remote litigation or choosing a specific number of arbitrators to hear the dispute.
Duration of the Arbitration Proceedings
The speed of proceedings is one of the main advantages of arbitration proceedings. Declared duration of the arbitration proceedings is lower than the time needed to obtain a verdict in a court of law.
|Duration of Arbitration Proceedings in Poland|
|Arbitral Tribunal||Regular Arbitration Process||Fast Track Arbitration Process|
|Court of Arbitration at the Polish Chamber of Commerce||9 months||6 months|
|Court of Arbitration at the Confederation of Lewiatan||6 months||3 months|
In reality, the average duration of arbitration proceedings is usually around 12 months, but often cases end after just one hearing and last around 6-8 months. This is still quicker than obtaining an award at first instance in a general court, where it usually takes no less than 12-24 months to proceed with a commercial case if the defendant undertakes a defense.
The speed of arbitration proceedings is influenced by the flexibility of the parties in setting the rules of the arbitration procedure (e.g. by exchanging correspondence by email) and the widespread single-instance nature of such proceedings.
The permanent arbitral tribunals also offer the possibility of hearing a case in a fast-track procedure for disputes with a lower value of the subject matter of the dispute that should take no longer than 3- 6 months depending on the arbitral tribunal.
Costs of the Arbitration Proceedings
The costs of the proceedings consist of:
- Registration fee,
- Arbitration fee,
- Reasonable expenses,
- Administrative fees (for copies of documents etc),
- Legal Fees – the parties’ reasonable costs of conducting the arbitration proceedings.
Registration fee is a fixed amount paid by the claimant filing a statement of claim or summons for arbitration to the arbitral tribunals as well as by the defendant who files a counterstatement of claim or raises a set-off of claims. Usually, the registration fee amounts from PLN 500 – 2000 depending on the value of the claim and the number of appointed arbitrators.
Arbitration fee is charged proportionately to the value of the claim and is paid by a claimant or a defendant raising a set-off of claims. The total fee (registration fee + arbitration fee) paid by the claimant to start the proceedings is usually higher than the usual 5% fee in court of law unless the claimed amount is high (PLN 2,000,000 or more).
|Average Fee to Initiate Arbitration Proceedings in Poland|
|Claim Value||PLN 100,000||PLN 1,000,000||PLN 5,000,000|
|Court of Arbitration at the Polish Chamber of Commerce||PLN 12,054
|Court of Arbitration at the Confederation of Lewiatan||PLN 12,423
|Court of law||PLN 5,000||PLN 50,000||PLN 200,000|
*the fee is lower when the case is decided by only one arbitrator
In Poland – in the court of law proceedings – the reimbursement of legal costs does not correspond to the actual costs incurred by the attorney but is set according to a rigid framework resulting from the legal provisions on minimum attorney’s fees. These provisions indeed allow for the award of rates higher than the minimum, but this is very rarely the case in practice. As a result, despite winning the dispute, a party is only reimbursed for part of the costs spent on legal aid.
In arbitration proceedings, attorney’s fees are usually reimbursed on the basis of a list of costs incurred presented by the parties, so that the amount awarded usually corresponds to the actual expenses of the party.
Due to the flexibility of the arbitration procedure, the parties can agree on the issue of bearing the costs of the proceedings, also at the stage of negotiating the arbitration clause, e.g., by determining that each party bears them on its own or by introducing cost limits. It can be especially useful when deciding on the case may require an expert’s opinion or on-sight inspection of the goods which are usually quite expensive.
Appointment of Arbitrators
One of the advantages of arbitration is the parties’ ability to influence:
- who will decide their dispute as an arbitrator, and
- how many arbitrators the arbitral tribunal will consist of.
This allows arbitration cases to be heard by experts in their fields and lawyers with experience in resolving specific disputes (e.g., IT contracts, leases, construction contracts). In courts of law, cases are allocated to the judges based on random assignment.
Each of the permanent arbitral tribunals maintains a list of permanent arbitrators from which the parties can choose. At the same time, most arbitral tribunals also allow the selection of arbitrators from outside the list maintained by the court.
The selection of an appropriate arbitrator is crucial, especially when the parties have not provided for the possibility of appealing an arbitration award in the arbitration clause, or when they decide to have the dispute heard by only one arbitrator (e.g., to minimize the cost of the proceedings and shorten their duration).
If the parties are unwilling or unable to independently designate arbitrators to hear their dispute, arbitrators may be appointed by the arbitral tribunal from the permanent list of arbitrators.
In the arbitration clause, in addition to the number of arbitrators hearing the case, the parties may indicate either the specific arbitrators or the conditions that the person selected as an arbitrator should have (e.g., specific professional experience). The parties may also designate a third party to select arbitrators for them to hear the dispute. If the parties do not indicate the number of arbitrators, the case will, as a rule, be heard by a court of 3 arbitrators.
The establishment of rules for the selection of arbitrators must be approached carefully. Too stringent requirements for arbitrators can make it difficult to select one. In turn, granting one of the parties greater powers when appointing an arbitral award (e.g., a provision allowing only one party to the contract to designate arbitrators) will be ineffective by law.
Exclusion of Arbitrators
Trust in the person of the arbitrator is the basis for effective arbitration proceedings. Therefore, like judges, arbitrators may be excluded from hearing a case when there are reasonable doubts about their impartiality or independence, as well as when they lack the qualifications specified in the parties’ agreement. The parties may establish rules for the exclusion of an arbitrator from the proceedings, or rely on the procedure contained in the court rules or the law.
Unless otherwise stipulated, a party has 2 weeks to file a request for the exclusion of an arbitrator from the date of his appointment or the taking of information about the grounds for his exclusion.
Referring case to Arbitration in Poland
In order to refer a case to arbitration, it is necessary to conclude a valid arbitration clause, i.e., an agreement between the parties whereby they agree that the dispute between them will be resolved by arbitration. Otherwise, the arbitral tribunal will find that it lacks the jurisdiction to hear the case and will refuse to accept it.
How should an arbitration clause be drawn up?
The arbitration clause should be drawn up:
- in writing (compulsorily if either the consumer or the employee is a party to the contract), either as a separate arbitration agreement or as an arbitration clause in the contract entered into by the parties,
- in the letters exchanged between the parties, or statements made by means of remote communication that allow their content to be recorded (e.g., by sending a signed scan of the agreement in an email).
If the parties only refer to the arbitration provision contained, for example, in the general terms and conditions of the contract, the contract itself should be in writing and indicate that the arbitration provision is part of the contract. In this way, the party entering into the contract is aware that at the same time he agrees to the settlement of the case by the arbitral tribunal.
By when can an arbitration clause be drawn up?
Most often, the parties agree to arbitration even before the dispute arises, for example, by including an arbitration clause in a contract for the provision of services.
It is also possible to agree to refer a case to arbitration after the dispute between the parties has arisen, when the dispute cannot be resolved amicably, but the parties do not want to refer it to a common court.
As of July 1, 2023, the parties will be able to conclude an arbitration provision even after the case has been brought before a court of law – until the case is finally settled by the court. As a result, the court of law will discontinue the proceedings, and the parties will be able to initiate them before the arbitral tribunal.
Note: In such a case, the statute of limitations for claims asserted before the court will run all over again from the moment the proceedings before the common court are discontinued. This is especially important in cases where a lawsuit is filed shortly before the statute of limitations for claims – this will give the party time to prepare AND file a lawsuit in arbitration.
How to initiate the case in the Arbitral Tribunal in Poland?
If a party has entered into a valid arbitration clause, it may initiate arbitration proceedings by filing a lawsuit in arbitration, which may or may not be preceded by summons to arbitration.
Summons to arbitration is a letter in which one party requests that the case be heard in arbitration. It should contain information about:
- the parties to the dispute,
- the subject matter of the dispute,
- the arbitration clause under which the proceedings are to be conducted,
- the arbitrator selected by the party (if applicable).
On the day the summons for arbitration is served on the defendant, the arbitration proceedings shall commence. The parties then select the arbitrators and during the organisational hearing, decide on a date for submitting the lawsuit.
Lawsuits in arbitration proceedings should include the same elements as the summons to arbitration as well as present evidence to support the case. They are no legal requirements for the form of the lawsuit, but the tribunal’s regulations or the arbitration clause may include additional provisions in this respect.
Arbitration Clause in Poland
The correct formulation of the arbitration clause is very important for the success of the arbitration proceedings. Errors in the content and form of the arbitration clause may lead to its invalidity and, consequently, the inability of the arbitral tribunal to hear the case.
Model Arbitration Clause in Poland
Many arbitral tribunals have model (template) arbitration clauses containing the minimum content of an effective arbitration provision.
The use of model clauses is a safe solution, but it does not take advantage of all the possibilities offered to the parties by arbitration in terms of the voluntariness of the arbitration proceedings, including the conduct of the proceedings, the persons hearing the dispute, its language and venue, etc.
Mandatory Elements of an Arbitration Clause
Mandatory elements of an arbitration clause include:
- the subject matter of the dispute or the legal relationship out of which the dispute has arisen or may arise,
- an expressed willingness to submit the dispute to arbitration,
- where the consumer is a party to the contract, a statement that the parties are aware of the effects of the arbitration clause.
There is some divergence in case law as to whether the designation of an arbitral tribunal is a necessary element of an arbitration clause, but it is strongly recommended.
Additional Provisions in Arbitration Clause
Additional provisions that can be included in an arbitration clause:
- the number of arbitrators to hear the dispute (this has an impact on the cost of the proceedings),
- the law applicable to the dispute,
- the place of arbitration,
- the language of the proceedings,
- the number of arbitrators and the manner of their appointment and exclusion,
- the manner of service of correspondence in the arbitral proceedings,
- the conduct of the hearing in the course of arbitral proceedings (including, for example, the conduct of hearings in remote form),
- the principles of bearing the costs of proceedings,
- the possibility of appealing an arbitral award (two-instance arbitration).
The arbitration clause may also provide for mixed solutions, being a combination of arbitration and mediation, e.g., stipulating that the parties will only refer the matter to arbitration if the previously conducted mediation fails to resolve the dispute.
When drafting an arbitration clause, great care must be taken – if the dispute to be arbitrated is defined too broadly or if the clause violates the principles of equality of the parties, it may be rendered ineffective.
Common Mistakes – Arbitration Clauses
What are common mistakes when drafting an arbitration clause?
- too general wording that does not make it possible to determine what matters are subject to arbitration – e.g. if the parties submit to arbitration all disputes that may arise between them in the future, without specifying a particular legal relationship – such a clause will not be valid,
- overly specific designation of the claims covered by the arbitration clause – e.g., only to disputes arising during the term of the contract and arising therefrom (claims arising after the end of the term of the contract will then not fall within the scope of the arbitration clause),
- powers of the parties that interfere with their equality in arbitration, e.g., the right to refer a case to arbitration by only one party – such a provision will not be valid,
- selecting an arbitral tribunal that does not exist or ceased to exist.
Consequences of Concluding an Arbitration Clause
If a valid arbitration clause is included in a contract, the parties limit their right to have the dispute resolved by a common court.
Bringing a case covered by an arbitration clause to a common court may be ineffective, and the lawsuit or application will be rejected by the court, i.e., the court will refuse to hear it for formal reasons. For this to happen, the opposing party must raise a plea of the arbitration clause, and this must be done before the dispute on the merits. After this time, the plea of arbitration clause may prove to be late and the common court will be able to decide the case, despite the valid arbitration clause linking the parties.
The court of law will also be able to hear the case when the arbitration clause is invalid, ineffective, unenforceable or has expired, as well as when the arbitral tribunal has ruled that it lacks jurisdiction.
Location of Arbitration: Warsaw / Krakow / Online
Flexibility of arbitration allows the parties to freely choose the location of arbitration proceedings. Most often arbitration cases by default are heard remotely (online) unless one of the parties request for regular hearings. Regular hearings can take place in building of the Tribunal (most are located in Warsaw or Kraków) or in any other place agreed by the parties – e.g. Law Office of the arbitrator.
Securing Claims in Arbitration Proceedings
Securing claims helps ensure effective legal protection and a real possibility of enforcing a favourable verdict. It can involve, for example, seizure of funds in bank accounts, prohibition of disposal of disputed property, etc.
In arbitration proceedings, the parties enjoy the same protection in this regard as before the courts of law and may apply for security of claims before the initiation of arbitration proceedings, as well as during their course.
Securing claims before initiation of the arbitration proceedings
Prior to the initiation of the arbitration proceedings, when the arbitral tribunal has not yet been established, the only option is to apply to the court of law for the securement of claims. This solution has many advantages:
- the courts of law in Poland have jurisdiction to secure claims in a case covered by an arbitration clause, both when the proceedings before the arbitral tribunal take place in Poland, abroad, and when the place of the proceedings has not been designated at all,
- the security provision is ex officio enforceable and can be immediately referred to a public bailiff for enforcement,
- the defendant learns of the filed request for securement only after it has been granted, which minimizes the risk of the defendant taking steps to hide assets.
However, it should be kept in mind that in the case of securing claims by a court of law prior to the initiation of proceedings, the claimant must file a letter initiating the proceedings within a specified period (maximum 2 weeks) under pain of its annulment. In addition, both the application for securing clams and its execution by a judicial officer are subject to fees.
Securing claims during the arbitration proceedings
Once the arbitration proceedings have been initiated, a party, at his or her choice, may request security from either the ordinary court or the arbitral tribunal, in accordance with the provisions of its regulations. The biggest disadvantage of obtaining security in arbitration is the difficulty of enforcing it if the defendant is unwilling to voluntarily comply with the tribunal’s decision. In such a situation, a party must obtain its recognition before a court of law (as in the case of an arbitral award), which prolongs the process of enforcing the security by at least several weeks.
Arbitration in Poland – Step by Step
The arbitration proceedings consist of several successive stages. Due to the considerable flexibility of arbitration proceedings, not all of them are necessarily a mandatory part of every proceeding. The following table shows an example of the course of arbitration proceedings:
|Summons for Arbitration / Statement of claim||Unless decided otherwise by the parties, the arbitration proceedings are initiated by the summons for arbitration containing information about the:
The administration proceedings are usually initiated on the date summons for arbitration is delivered to the defendant.
In the case of permanent arbitral tribunals, the court rules indicate whether summons for arbitration is mandatory and when the case before the arbitral tribunal is initiated. In most cases, it is enough to submit a statement of claim.
|Selection of Arbitrators||Once the arbitration proceedings are initiated, the parties should choose one or more arbitrators that will resolve the case.
The arbitrators are usually selected from the list of arbitrators recommended by the arbitral tribunal or outside the list of arbitration by mutual agreement of the parties.
|Organisational hearing||Once the arbitrators have agreed to participate in the proceedings, the arbitrators shall convene an organisational meeting at which the parties shall agree on the conduct of the arbitration, including, inter alia, the language of the proceedings, the manner of service of correspondence, the schedule for the filing of pleadings and the schedule of hearings, as well as the order and manner of taking of evidence.
Organisational hearing can usually be done in a form of a videochat.
|Exchange of the pleadings||The parties exchange pleadings in accordance with the schedule established at the organisational hearing. If no statement of claim has been filed so far, the parties shall file a statement of claim and a statement of defence.
The filing of a statement of claim is the right, not the obligation, of the parties, but a party who is passive in the proceedings must take into account the possibility of being deemed not to contest the claim.
|Arbitration hearing||After the parties have exchanged pleadings, the case may be heard at a hearing. However, hearings are not a mandatory part of the arbitration proceedings. If the issue of hearings is not regulated in the arbitration agreement and no party has requested a hearing, the arbitral tribunal decides whether the case requires a hearing. Usually, one hearing is sufficient.
Most arbitration hearings can be conducted remotely, with the assistance of an interpreter if necessary.
|Arbitral award /
|After the hearing is closed, the arbitral tribunal issues an award based on the law applicable to the case, or, where the parties have expressly authorized it to do so, according to the general principles of law and equity.
The award usually includes the award of cost of the proceedings.
In case the parties reach an agreement before the arbitral tribunal, the tribunal may give the settlement agreement the form of an arbitral award and discontinue the arbitration proceedings.
Enforcement in Poland of the Arbitration Award
If the unsuccessful party does not voluntarily satisfy the arbitral award or the settlement agreement, in order to enforce it, it is necessary to carry out the procedure for its recognition by the court of law.
It is because an arbitral award and a settlement reached before an arbitral tribunal have the same legal force as a court judgment or a settlement reached before a court of law only after it has been recognised by the court or declared enforceable by the court. The enforceability clause is granted to the awards that can be executed through enforcement proceedings (for instance an award that includes a payment order).
Once an arbitral award has been declared enforceable, enforcement proceedings can be initiated against the losing party before the public bailiff, in the same way as in the case of a court of law award.
Request for recognition of Arbitral Award in Poland
The motion for recognition or declaration of enforceability of the arbitral award or settlement should be submitted to the competent appellate court. The court fee for such motion amounts to PLN 300.
The motion should include the following elements:
- original or duly certified copy of the arbitral award or settlement,
- original or duly certified copy of the arbitration agreement or arbitration clause.
It should be kept in mind that scans or copies of these documents will not be accepted in court. Documents issued in freeing language should be submitted with their sworn translation into Polish.
The other party is informed about submitting a motion for obtaining a declaration of enforceability of recognition of the award and can present its standpoint to the appellate court upon receiving a copy of the motion. If the award of the arbitral tribunal has been issued abroad, the appellate court is obligated to schedule a court hearing before the motion is recognised.
In some cases, the appellate court can reject the motion for obtaining a declaration of enforceability of recognition of the award. Such decision can be appealed to another panel of judges in the appellate court.
The grounds for refusing to confirm an arbitral award differ for awards issued in Poland and abroad. In the case of awards issued abroad, the appellate court particularly carefully verifies the manner in which the award was issued and the participation of the other party in the arbitration proceedings. For this reason, it is recommended to check in advance whether the award will meet the conditions for its recognition and granting of an enforceability clause. If this is not the case, the award will not be enforceable despite a positive outcome.
When the Arbitral Award or Settlement cannot be recognized by Polish Court?
|Arbitral Award / Settlement issued in Poland||Arbitral Award / Settlement issued in other countries|
|The dispute resolved by the arbitral award/settlement is excluded by law from arbitration proceedings||The dispute resolved by the arbitral award/settlement is excluded by law from arbitration proceedings|
|The recognition of the arbitral award/settlement would be contrary to the fundamental principles of the legal order of the Republic of Poland (public policy clause)||The recognition of the arbitral award/settlement would be contrary to the fundamental principles of legal order in Poland|
|In case of disputes with consumers – when the arbitral award/settlement deprives the consumer of the protection granted by the mandatory provisions of law||In case of disputes with consumers – when the arbitral award/settlement deprives the consumer of the protection granted by the mandatory provisions of law|
|There was no arbitration clause, or the arbitration clause turned out to be ineffective, invalid or has ceased to have effect|
|Other party was not duly notified about the appointment of the arbitrator, about the initiation of the proceedings or was otherwise deprived of the opportunity to defend itself before the arbitral tribunal|
|The arbitral award/settlement concerns a dispute not covered by the arbitral clause or goes beyond such scope|
|The composition of the arbitral tribunal or the rules of the proceedings before the arbitral tribunal were not consistent with the provisions of the arbitration agreement or if no agreement was concluded – with the competent law applicable to the state in which the arbitration proceedings were conducted.|
|The arbitral award/settlement is not yet binding or has been overturned or its enforcement has been suspended by the court in which it was issued.|
Enforcement of Polish Arbitral Awards Abroad
Arbitral awards and settlements issued by arbitral tribunals in Poland may be recognised by most foreign courts for the purpose of forced enforcement based on international conventions and agreements.
Over 150 states (including most EU countries, UK, Australia, India and USA) are bound by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 10 June 1958), also known as the “New York Arbitration Convention“.
Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles.
Under the New York Arbitration Convention, parties to arbitration proceedings may obtain a declaration of enforceability of an arbitral award issued in one state in another state party to the Convention in a standardised manner. This makes arbitration an attractive means of resolving cross-border disputes. The procedure for applying for the recognition of an arbitral award is very similar to the procedure for the recognition of domestic awards in Poland.
Motion for recognition of Arbitral Award under NY Convention
The motion should include the following elements:
- original or duly certified copy of the arbitral award or settlement,
- original or duly certified copy of the arbitration agreement or arbitration clause.
Grounds for Refusal of recognition of Arbitral Award under NY Convention
Recognition and enforcement of the award may be refused:
- at a request of the party against whom the enforcement is invoked after submitting proof that at least one of the following conditions to refuse the recognition of the award is met:
- the parties were under some incapacity when concluding the arbitration agreement/clause under the law applicable to them, the arbitration agreement is not valid under the competent law chosen by the parties or under the law of the state where the award was made,
- other party was not duly notified about the appointment of the arbitrator, about the initiation of the proceedings or was otherwise deprived of the opportunity to defend itself before the arbitral tribunal,
- the arbitral award/settlement concerns a dispute not covered by the arbitral clause or goes beyond such scope,
- the composition of the panel of arbitrators or the proceedings before the arbitral tribunal was not consistent with the provisions of the arbitration agreement or if no agreement was concluded – with the competent law applicable to the state in which the arbitration proceedings were conducted,
- the arbitral award/settlement is not yet binding or has been overturned or its enforcement has been suspended by the court in which it was issued.
- by the competent authority recognising the motion if, according to the law of that state:
- the dispute cannot be resolved by the arbitral award/settlement,
- the recognition of the arbitral award/settlement would be contrary to the public policy of that country.
Bilateral Agreements on Recognition of Arbitral Awards
Given that the procedure for recognition of an arbitral award may be additionally governed by bilateral agreements concluded by Poland, and having in mind procedural differences in the recognition of an application in different states, it is worth verifying the specific procedure for obtaining recognition of an arbitral award and the time required to obtain it already at the stage of concluding the arbitration agreement or arbitration clause, especially in case of international commercial contracts.
Appeal against Arbitral Awards
Due to its flexibility, arbitration proceedings allow the parties to introduce two-instance arbitration proceedings in the arbitration agreement or arbitration clause. In such case, the appeal procedure is carried out according to the party’s agreement or the arbitration rules of the arbitral tribunal if it provides for an appeal proceeding.
However, if the issue has not been the subject of the parties’ agreement, the arbitration is usually a single-instance proceeding.
|The arbitration proceedings usually do not provide for the right to appeal the arbitral verdict by another panel of arbitrators unless the parties agree to do so. The party wishing to ensure that the award can be reviewed on its merits in arbitration proceedings should address this issue in advance.|
On the one hand, this guarantees the speed of the proceedings, but on the other hand, the absence of an instance review, especially when the dispute is heard by only one arbitrator, entails risks for the parties. This is because the possibility of appealing an arbitral award to a court of law is very limited.
The court of law may overturn the arbitral award in whole or in part or dismiss the application on setting aside the award, but may not rule on the merits of the case. In particular, the court of law, as a rule, does not verify whether the arbitral award is accurate, and the arbitral tribunal’s violation of the law can cause its annulment only if it offends the basic principles of the legal order.
Extraordinary Judicial Review of Arbitral Awards
The final arbitral award (issued in 1st instance or 2nd instance if applicable) can be evaluated by the court of law by submitting an application for setting aside the arbitral award. The application is submitted to the competent appellate court and is subject to the court fee (usually 5% of the amount of claim).
There is a short deadline to apply for setting aside the arbitral award – the application must be submitted to the court within 2 months from the date the arbitral award (including corrected or interpreted award) was served. In case the reason for setting aside the arbitral award is based on the information obtained after its issuing (e.g., about the forged documents on a basis of which the award was issued), then the 2 months deadline is calculated from the date of finding out about such facts, but no later than 5 years from the date the arbitral award was served.
Applying for setting aside the arbitral award does not automatically result in the suspension of the enforcement of such award. Only at a party’s request the appellate court may decide to suspend the enforcement of the arbitral award, but may condition such suspension on the provision of security (e.g., depositing an appropriate sum of money with the court).
At the party’s request, the appellate court can also suspend the proceedings regarding setting aside the arbitral award for a fixed period of time, in order to give the arbitral tribunal the opportunity to resume the arbitration and eliminate the grounds for setting aside. In the resumed proceedings, the arbitral tribunal shall take actions indicated by the appellate court.
The parties should have in mind that the setting aside of an arbitral award shall not result in the expiration of the arbitration agreement unless otherwise agreed by the parties. As a result, if the parties do not want the matter to be heard again in arbitration after the arbitral award has been set aside, they should make appropriate provision for this either at the stage of agreeing the arbitration agreement or at a later stage of the proceedings.
The party not satisfied with a result of the setting aside proceedings carried out before the appellate court, can appeal it to the Supreme Court. A party may also request that the proceedings which ended in a final and non-revisable judgment to set aside an arbitral award be resumed or that a final and non-revisable judgment rendered in this respect be declared unlawful – just like awards issued by courts of law.
Grounds of setting aside the arbitral award
Below table includes a closed list of grounds leading to the setting aside of an arbitral award. Some of them are verified by the court only upon the party’s motions, other are analysed by the court in every proceeding, regardless of the party’s standpoint:
|Taken into account by the court in every proceeding:||Taken into account only at the request of the parties:|
|The dispute resolved by the arbitral award is excluded by law from arbitration proceedings||There was no arbitration agreement or the arbitration agreement is invalid, unenforceable or no longer effective in accordance with applicable law|
|The arbitral award is contrary to the fundamental principles of the legal order of the Republic of Poland (public policy clause)||The applicant was not given proper notice of the appointment of an arbitrator or of the arbitration or was otherwise deprived of the right to present its case or respond to the other party’s case before the arbitral tribunal|
|In case of disputes with consumers – when the arbitral award/settlement deprives the consumer of the protection granted by the mandatory provisions of law||The award deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that goes beyond the scope of such agreement, provided that it is possible to separate the decisions on matters covered by the arbitration agreement from the impugned ones, the court shall only set aside the impugned decisions and allow the others to stand; the court shall not set aside an award on the grounds that it decided on a matter not covered by the arbitration agreement if the party to the arbitration failed to object to its inclusion|
|The requirements regarding the composition of the arbitral tribunal or the fundamental rules of procedure before such tribunal, as provided for by the law or specified by the parties, were not complied with|
|The award was obtained by means of an offence or on the basis of a forged or altered document|
|A final and non-revisable court judgment has been issued in the same matter between the same parties|
Advantages and disadvantages of arbitration – is it worth choosing arbitration?
Arbitration proceedings are slowly gaining popularity, especially in international disputes and specialised fields. Its greatest advantages are the high degree of flexibility and the real influence of the parties on the course of the proceedings, including the choice of arbitrators, the language of the proceedings, the number of hearings and so on. Arbitration proceedings escalate the conflict to a lesser extent and often allow cooperation between the parties to be maintained. Before the arbitral tribunal, the entire proceedings can be conducted in a foreign language, so that the parties do not have to translate case documents and hear witnesses with an interpreter. The possibility for the parties to choose the arbitrators allows the case to be decided by experts with expertise and experience in the area of the dispute. The whole procedure is less formalised. The length and cost of some proceedings will be lower, but the successful party can usually expect to receive a larger recovery of its costs.
The biggest disadvantage of arbitration is the very limited review of the merits of arbitral awards, unless the parties agree to a two-instance proceeding, there is virtually no possibility of appealing the award. A court of law can only set aside an arbitral award in very limited circumstances. If the losing party refuses to voluntarily execute the award, its enforced execution requires an additional procedure of its recognition by a court of law, which affects the duration of the proceedings.
Before making a decision on whether to enter into an arbitration clause, it is well advised to analyse the expectations for the outcome of a potential conflict and the risks involved. Automatic incorporation of ready-made arbitration clauses into contracts, without tailoring them to the needs of the parties, may do more harm than good and block the possibility of the case being heard in a court of law while not ensuring the parties’ rights in arbitration proceedings.
It is therefore advisable to seek prior advice from a lawyer as to the merits of the choice of arbitration in a particular case and the adequate wording of the arbitration clause. The many benefits of having a case heard in arbitration can only be fully realised with a well-written arbitration clause.
|Advantages of Arbitration||Disadvantages of Arbitration|
|Real control by the parties over the rules and conduct of the arbitration, including the number and timing of hearings||The single-instance nature of the proceedings limits the review of the merits of the award (unless the parties have agreed in advance that the arbitration proceedings will be two-instance)|
|Conciliatory nature, the proceedings do not escalate the conflict in the same way as filing a lawsuit in a court of law||In case of lack of voluntary execution of arbitral awards and orders, the necessity of their approval by a court of law in order to enforce them before a public bailiff|
|Possibility to conduct proceedings in a foreign language, which reduces costs and increases efficiency||The parties’ disagreement as to the choice of arbitrator and the manner in which the proceedings are to be conducted may effectively prolong the resolution of the dispute|
|The case is decided by qualified professionals, especially in case of disputes requiring specialised knowledge||In cases with a low and moderate amount in dispute, the costs of arbitration may be higher than before a court of law|
|Secrecy of the proceedings and the award, if so agreed by the parties||The outcome of the dispute is less predictable, as the arbitral tribunal may be guided by principles of equity in addition to the provisions of law|
|In cases with a high amount in dispute, the costs may be lower than the court fee in a court of law|
|Better chances of being reimbursed for all legal costs if the case is won|
|Usually a shorter duration of proceedings, especially in cases where the parties have not provided for the possibility of appealing the judgment|
|Lower level of formalism|
FAQ – Arbitration in Poland
What are the stages of Arbitration in Poland?
Arbitration in Poland consists of:
- Summons for Arbitration
- Selection of Arbitrators
- Organizational hearing
- Exchange of Pleadings
- Arbitration Hearing
- Arbitral Award or Settlement
What is the average duration of arbitration proceedings in Poland?
Average duration of arbitration proceedings in Poland is around 6 – 12 months.
What is the model arbitration clause in Poland?
Each Arbitration Tribunal provides its own model arbitration clause. As an example model arbitration clause of Arbitration Court of Polish Chamber of Commerce reads “Any disputes arising out of or related to this agreement shall be finally settled under the Arbitration Rules of the Court of Arbitration at the Polish Chamber of Commerce in Warsaw in force on the date of commencement of the proceeding by an arbitrator or arbitrators appointed in accordance with the said Rules.”