The European Arbitration Review 2019
Is Poland an arbitration-friendly place? How does one avoid the pitfalls of Polish law? How are challenge and enforcement proceedings conducted? When is an arbitral award likely to be set aside by a Polish court? Many foreign practitioners may pose these, and similar, important questions while considering Poland as an arbitration venue. In order to dispel these doubts and to give readers an overview of the Polish arbitration landscape in recent months, we would like to tackle several areas: assessment of the 2016 reform of the Polish Code of Civil Procedure; legislative changes in the field of investment arbitration; the most interesting cases in arbitration-related proceedings; as well as activities aimed at the popularisation of arbitration in Poland.
Polish arbitration reform from a two-year perspective
The consequences of significant changes introduced to Polish arbitration law on 1 January 2016 might be observed from a longer perspective at the turn of 2017 and 2018. The amendments to Part V of the Polish Code of Civil Procedure regard challenges to arbitral awards before state courts, as well as recognition and enforcement proceedings. First, the deadline for filing challenges to arbitral awards has been shortened from three to two months. Second, the Polish legislature decided to ‘flatten’ the post-arbitral proceedings by eliminating one court instance. Currently, applications to set aside an award and to recognise and enforce it may be submitted only to a court of higher instance, ie, the Court of Appeal. In limited circumstances, recourse against a judgment of the Court of Appeal is available before the Polish Supreme Court in cassation proceedings – solely on grounds encompassing infringements of substantive law or infringements of procedural law, if the infringement could have affected the result of the proceedings. Additionally, the case must involve an important legal question that requires the Supreme Court’s ruling, that the complaint is obviously justified or that the proceedings were void.
Prior to 1 January 2016, post-arbitral proceedings were held in two instances, with limited possibilities to file a complaint in cassation to the Supreme Court. This two-instance system made the proceedings considerably lengthy and inefficient, particularly bearing in mind the need for speed in both international and domestic arbitration. Therefore, the main purpose of the abovementioned legal reform was to shorten post-arbitral proceedings and to improve the quality of state court rulings. The 11 Courts of Appeals functioning in Poland are now expected to develop more expertise in arbitration-related cases, gain more experience in this field and to make relevant jurisprudence more consistent. In other words, Poland as a place for arbitration shall be more friendly and more predictable for parties making such a choice in arbitration clauses. Analysis of recent judgments and post-reform statistics might reflect whether this aim was, or is going to be, accomplished.
1 January 2016 also brought a significant amendment affecting arbitration in Poland in the realm of Polish bankruptcy law. Under the previous regulations, all arbitration clauses executed by a party that has since become insolvent lost their effect, and all arbitration pending at the time of initiation of bankruptcy proceedings had to be terminated. Following the 2016 amendment, arbitration clauses concluded by an insolvent debtor remain in force and pending arbitration proceedings may be continued; if arbitration is not commenced before the declaration of bankruptcy, such a possibility remains open. This amendment of Polish bankruptcy law has been welcomed by Polish arbitration practitioners.
Post-reform setting aside statistics
According to official statistics of the Ministry of Justice,1 attempts to set aside arbitral awards have been successful in only a very small percentage of cases. In 2016, 56 applications to challenge arbitral awards were submitted, 21 of which were decided in 2016. Only two arbitral awards were set aside by the Courts of Appeal.
In 2017, 76 challenge proceedings were initiated before the state courts. The Courts of Appeal rendered 96 rulings, including decisions in outstanding cases from the year 2016. Only six arbitral awards were annulled as a result of these proceedings.
An important conclusion might be drawn from the presented statistics made available by the Ministry of Justice. Namely, over a two-year-period, only 6 per cent of arbitral awards (ie, eight out of 132 challenged by the Parties) were set aside by the Courts of Appeal. These statistics show that state courts are not eager to set aside the arbitral awards, which makes the arbitral awards relatively stable and increases confidence of the parties in Poland as a place of arbitration.