In Poland, international arbitration is used, particularly in commercial cases involving cross-border transactions. International arbitration is chosen for its neutrality, expertise, confidentiality and the enforceability of awards under the New York Convention to which Poland is a party. Despite this, domestic parties in Poland often still favour litigation before common courts as a means of resolving their disputes.
In Poland, no particular industries have experienced a notable surge in international arbitration activity in recent years. The popularity of arbitration within various sectors has remained relatively stable. There has not been a significant event or development that would cause one industry to stand out from others in terms of choosing arbitration for dispute resolution. This stability suggests that while international arbitration continues to be a viable option, it has not seen any dramatic changes in preference within specific industries. International arbitration is most often used in the context of cross-border transactions giving rise to post-M&A disputes.
The most prominent and thus popular arbitral institutions in Poland are the Court of Arbitration at the Polish Chamber of Commerce in Warsaw and the Lewiatan Court of Arbitration.
These two are the biggest and most popular Polish arbitral institutions, but they are certainly not the only ones. There is also the Court of Arbitration at the Polish Bank Association, which specialises mainly in disputes concerning financial services rendered by banks, the Construction Court of Arbitration at the Association of Engineers, Experts and Advisers in Warsaw, which specialises in construction disputes and in disputes regarding public procurement, or the Court of Arbitration of the Polish Financial Supervision Authority set up to deal with disputes between financial market participants, in particular those arising from contractual relations between entities subject to the Authority’s supervision and recipients of services provided by those entities.
In 2019, the Electronic Arbitration and Mediation Centre at the Association of Notaries of the Republic of Poland in Warsaw (previously named Ultima RATIO), an online arbitration court, was created.
No new arbitral institutions have been established in 2023-2024.
In Poland, there are no specific courts designated to hear cases related to arbitration. Pursuant to the Polish Code of Civil Procedure (CPC), common courts have jurisdiction to resolve disputes related to arbitration proceedings, eg, regarding the appointment of arbitrators, assisting with obtaining evidence or the setting aside of an award. It is not a single designated court, but in each particular case, it is the common court that would have had jurisdiction to resolve the case if it had not been covered by the arbitration clause.
In Poland, international arbitration is governed by the CPC, specifically Part Five, which is dedicated to arbitration. This legislation is largely based on the UNCITRAL Model Law on International Commercial Arbitration and does not diverge from the Model Law in any significant way, ensuring that Poland aligns with internationally recognised standards.
Poland is a party also to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the European Convention on International Commercial Arbitration.
In 2023, the CPC was amended, introducing the conversion of pending litigation to arbitration.
Conversion entails concluding a submission agreement (a compromise) during pending proceedings before a state court and directing the case to arbitration. Court proceedings are discontinued as a result of the conclusion of the submission agreement at the joint request of the parties. The plaintiff will be refunded ¾ of the court fee.
However, the discontinuation of court proceedings does result in the fall of the previously granted interim measures and consequently opens up the possibility of seeking compensation for damage caused by the execution of the interim measures. Therefore, it seems that conversion may be less advantageous for plaintiffs and counterclaimants who have obtained interim measures for a claim before filing a lawsuit or during the course of the proceedings.
The court examines ex officio whether the conclusion of the submission agreement by the parties or the circumstances of the case show that discontinuance of the court proceedings would be contrary to the law, the principles of social co-existence or would be aimed at circumventing the law, or the arbitration agreement is invalid or ineffective. If that is the case, the proceedings are not discontinued.
The limitation period for the claims covered by the arbitration agreement starts to run anew from the date on which the decision to discontinue the proceedings becomes final.
The converted case cannot go back to litigation. The court dismisses the claim or the application to commence non-litigation proceedings if it relates to a dispute which was the subject of a case discontinued as a result of conversion.
Polish law has never prohibited conversion of court proceedings to arbitration. However, regulations introduced in 2023 explicitly provide for and regulate this process.
According to the CPC, an arbitration agreement must meet the following requirements.
Under Polish law, all disputes over material claims are arbitrable and can be subject to arbitration. The only exception are disputes over child support (alimony) which are not arbitrable and cannot be heard in arbitration.
Disputes over non-material rights are arbitrable only if such non-material right might be a subject of a court settlement – the decisive factor is therefore whether a party can independently dispose of the right to which the dispute relates. For this reason, disputes concerning, inter alia, marital relations, parental authority or civil status are not arbitrable.
Determining the Law Governing the Arbitration Agreement
The New York Convention and the European Convention, both of which Poland is a party to, play an important role in determining the law governing the arbitration agreement. Pursuant to Article V(1)(a) of the New York Convention, the parties may choose the law governing the validity of arbitration agreement, and if they fail to do so, the validity of the arbitration agreement shall be assessed in accordance with the law of the state in which the arbitral award was made (lex fori). According to Article VI(2) of the European Convention, the law governing the validity of an arbitration agreement is:
When neither the New York Convention nor the European Convention apply, one must resort to national law, namely Polish Private International Law (PIL). The PIL distinguishes between the law applicable to the merits of an arbitration agreement and the law governing the form of the arbitration agreement.
As regards the law governing the merits of the arbitration agreement, the PIL indicates that in the first place it is the law chosen by the parties that is applicable. If the parties have not chosen the applicable law, the lex fori is applicable. If the parties have chosen neither the applicable law nor the place of arbitration, the arbitration agreement is governed by the law applicable to the legal relationship to which the dispute relates. In such a case, however, it is sufficient that the agreement is effective under the law of the state in which the proceedings take place or the arbitral tribunal has rendered its award.
The form of the arbitration agreement shall be governed by the law of the state of the place of arbitration. However, it is sufficient that the arbitration agreement meets the form requirements of the law applicable to the merits of the arbitration agreement.
Enforcement of Arbitration Agreements
Polish courts uphold arbitration agreements robustly, reflecting a pro-arbitration stance.
The judiciary’s approach aligns with the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, to which Poland is a signatory. Grounds for refusing enforcement are interpreted narrowly, in line with the international standards.
Polish law applies the rule of separability to arbitration clauses. The CPC expressly provides that the invalidity or extinction of the main contract containing the arbitration clause does not in itself entail the invalidity or extinction of the arbitration clause.
There are a few restrictions concerning the appointment of arbitrators. Firstly, the CPC provides that provisions in an arbitration agreement granting one of the parties more powers when appointing an arbitral tribunal are ineffective. Secondly, the arbitrator must be a natural person (an individual) and have full legal capacity. Lastly, the parties may not appoint a state judge as arbitrator, with the exception of retired judges.
Polish law allows the parties to choose for themselves how arbitrators are to be appointed and gives them wide discretion in this regard.
If the parties agree that the arbitrator is to be appointed by a third party, but this procedure fails and the designated third party does not appoint the arbitrator in a timely manner, then either party can ask the state court to appoint the arbitrator.
However, it is not clear what happens if the parties agree that the arbitrator will be appointed in a different way than by a third party and this procedure fails. While Polish law does not explicitly say what happens in such a situation, two possibilities have been identified by the legal authorities. Firstly, it can be assumed that in such a situation, the arbitration clause becomes unenforceable. Secondly, it can be assumed that in such a situation one should apply, per analogiam, the CPC’s standard procedure for the appointment of an arbitrator in the lack of the parties’ chosen method of appointment. The latter solution seems more reasonable and thus preferable, but the jurisprudence has not yet clearly determined which of these solutions prevails.
The said difficulties with determining the consequences of the failure of the parties’ chosen method of appointment will not emerge if the parties have agreed on the substitute appointment procedure. This can be done expressly or by agreeing that the dispute will be decided in accordance with one of the arbitral institution’s arbitration rules, which provide for a substitute appointment procedure.
In the case of multiparty arbitration, Polish law provides that the persons acting jointly on one side of the dispute appoint the arbitrator unanimously, unless the arbitration agreement provides otherwise.
If the parties do not agree on the method of the appointment of arbitrators, the CPC’s standard procedure applies. In the course of this procedure, a party should appoint an arbitrator within one month of the request by the other party to do so. If they fail to comply with this obligation, the other party may request the appointment of an arbitrator by the state court.
When appointing an arbitrator, the state court shall take into account the qualifications that the arbitrator should have pursuant to the agreement of the parties and other circumstances that ensure that an independent and impartial person is appointed as arbitrator. If the court is to appoint either a sole arbitrator or a presiding arbitrator in a dispute between parties from different countries, the court should consider the need to appoint a person not connected with any of those countries.
The CPC provides for excluding an arbitrator by a common court. If the arbitrator is not excluded by the arbitral tribunal within one month of the party’s request for exclusion, the party can request the court to exclude the arbitrator.
The time limit for submitting the request to the state court is two weeks from the expiry of the one-month period for the exclusion of an arbitrator before the arbitral tribunal.
Any provision in the arbitration agreement that modifies the aforementioned powers of the court is ineffective.
Polish law does not establish an exhaustive catalogue of reasons for the exclusion of an arbitrator. An arbitrator may be excluded when there are circumstances that raise reasonable doubts as to their impartiality or independence, as well as when they lack the qualifications set out in the parties’ agreement. The International Bar Association (IBA) Guidelines on Conflicts of Interest in International Arbitration are often relied on when determining whether the “reasonable doubts” standard for exclusion is met.
In Poland, arbitrators must maintain independence and impartiality. They are required to submit a written statement of their impartiality and independence upon accepting their role. Throughout the entire arbitration process, the appointed arbitrator must promptly disclose to the parties any circumstances that could raise doubts about their impartiality or independence.
The proper test for verifying whether an arbitrator may be deemed independent and impartial is whether the circumstances related to that arbitrator raise objective, reasonable doubts about the arbitrator's impartiality and independence.
In addition, the parties may contractually agree on the requirements for the qualifications of the arbitrator. If it turns out that the arbitrator does not have such qualifications, the arbitrator may be excluded from hearing the case.
Under Polish law, non-arbitrable disputes are excluded from arbitration. Non-arbitrable disputes are disputes over child support (alimony) and disputes over non-material rights that cannot be subject to a court settlement (see 3.2 Arbitrability).
In principle, consumer disputes and labour law disputes are not excluded from arbitration, but since in these types of cases an arbitration agreement can only be concluded after the dispute has arisen, in practice very few such disputes go to arbitration.
Polish law applies the principle of competence-competence (kompetenz-kompetenz). The CPC explicitly stipulates that the arbitral tribunal may determine its own jurisdiction, including the existence, validity or effectiveness of an arbitration clause, as well as rule on a party’s challenge to jurisdiction.
The role of common courts in addressing the issues of jurisdiction of an arbitral tribunal is threefold.
Firstly, a court will address the issue of an arbitral tribunal’s jurisdiction if a party files a claim to a state court and the respondent asks the court to reject the claim, arguing that the dispute is subject to an arbitration agreement and thus cannot be heard by the state court. The court will reject the claim unless it finds that the arbitration agreement is defective or the tribunal had already declined its jurisdiction.
Secondly, if the arbitral tribunal issues a positive decision on jurisdiction (ie, a decision rejecting the challenge to the tribunal’s jurisdiction), either of the parties may challenge such decision by bringing the appeal to the state court. The common courts do not review arbitral tribunals’ negative decisions on jurisdiction.
Thirdly, the common court reviews the jurisdiction of an arbitral tribunal in post-arbitral proceedings on setting-aside, recognition or enforcement of the arbitral award.
If the arbitral tribunal issues a positive decision on jurisdiction (ie, a decision rejecting the challenge to the tribunal’s jurisdiction), either of the parties may challenge such decision by bringing the appeal to the state court within two weeks of the arbitral tribunal’s decision.
The state court can also address the issue of an arbitral tribunal’s jurisdiction in post-arbitral proceedings on setting-aside, recognition or enforcement of the arbitral award. There is no deadline to file for the recognition or enforcement of an arbitral award. The party can bring an action before a common court to set aside the award for a period of two months after delivery of the award.
In general, Polish courts tend to apply the de novo standard of review for questions of jurisdiction, while typically referring to the facts as established by the tribunal. However, the standard of judicial review for questions of jurisdiction has not yet been explicitly determined in Poland.
As for admissibility, Polish law does not explicitly recognise this notion. Some issues that typically fall under the notion of admissibility in other legal systems, like a statute of limitations or compliance with claim notification obligations, are treated as matters of substantive law, and some issues, like failure to comply with pre-arbitration dispute settlement procedures, are dealt with as matters of jurisdiction and contract interpretation.
According to the CPC, a breach of a valid, enforceable arbitration agreement leads to the rejection of the claim. However, the court does not take it into account ex officio. The defendant must raise the objection regarding the arbitration clause within a certain time limit, ie, before entering into the dispute on the merits. It is considered that if a claimant submits a claim covered by an arbitration clause to a state court and the defendant does not object to the state court hearing the case before entering into a dispute on the merits, it means that both parties agree to hear the dispute in litigation and there is no breach of arbitration agreement.
Polish law does not explicitly address the issue of jurisdiction over third parties, not bound by the arbitration clause, with one exception ‒ an arbitration agreement included in the articles of association of a company binds not only the company and its shareholders, but also the company’s bodies and managers.
Despite that, sometimes an arbitration agreement can bind its non-signatories, especially in cases of different types of legal succession. For example, heirs are bound by arbitration agreements concluded by the deceased and an acquiring company is bound by arbitration agreements entered into by the acquired company. The same applies to companies created after demerger and arbitration agreements concluded by demerged company, as well as assignees or acquirers of debt and arbitration agreements concluded by former debtors or creditors.
Under Polish law the arbitral tribunal has the power to award interim injunctions, if it has not been excluded by the parties in the arbitration agreement. The arbitral tribunal, acting at the request of a party who has substantiated the claim, may decide to apply interim injunctions which it deems appropriate. The interim injunction is only enforceable upon obtaining an enforceability clause from the common court.
Under Polish law, the state courts play their part in granting interim relief in arbitral proceedings.
Firstly, a party may always ‒ including prior to the commencement of arbitral proceedings ‒ request a state court to grant interim relief. Polish courts can also grant interim relief in connection with foreign-seated arbitrations. The courts may grant interim relief to secure a claim, eg, by seizing the defendant’s accounts or ordering or prohibiting the defendant to behave in a certain way.
Secondly, interim relief granted by an arbitral tribunal can only be enforced after its enforceability is confirmed by a state court.
Polish law does not provide for the institution of an emergency arbitrator.
Polish law does not explicitly regulate the institution of security for costs. However, under Polish law, unless the parties have agreed otherwise, the arbitral tribunal, at the request of the party who has made the claim plausible, may decide to apply such security as it deems appropriate in view of the subject matter of the dispute. This means that if the arbitral tribunal deems it appropriate to grant security that will have similar practical effects as security for costs, it may do so.
Arbitration proceedings in Poland can be governed by two regimes ‒ contractual or statutory.
The statutory regime is applicable in the absence of regulation of the proceedings by the parties to the arbitration agreement. Therefore, it is also possible that a partly contractual and partly statutory regime will apply. Such situation occurs if the parties only regulate certain procedural issues in the arbitration agreement. The statutory regulation is contained in the CPC, Part Five.
The parties may regulate the procedure entirely in the arbitration agreement between them or refer, in the agreement, to the rules of one of the arbitration institutions or the UNCITRAL Arbitration Rules.
The arbitration procedure is generally not regulated by mandatory provisions of law. The procedure may be decided by the parties in an agreement, or, in the absence of an agreement, the arbitral tribunal may, as a rule, conduct the proceedings in any manner it deems appropriate.
It is, however, a mandatory part of the arbitration procedure that the parties are notified of the hearing and of meetings of the arbitral tribunal held for the purpose of taking evidence and that each party must be served with all the letters filed by the other party, expert opinions and other written evidence that the arbitral tribunal may take into account in settling the dispute.
Moreover, the parties cannot stipulate that an arbitral award is not subject to recognition or declaration of enforceability by a common court, nor can they exclude the right to request setting aside the award of an arbitral tribunal by a common court.
Polish law imposes several powers and duties upon arbitrators to ensure the fair and efficient conduct of arbitration proceedings. The key powers and duties are as follows.
Polish law does not provide for the qualification of representatives in arbitration proceedings ‒ in particular, representatives do not have to be legal professionals. However, limitations may be established in the rules of arbitration institutions. For example, the Rules of the Court of Arbitration at the Polish Chamber of Commerce in Warsaw provide that an employee of this institution and a mediator in the dispute subject to the proceedings cannot be a representative of either of the parties.
Polish law does not contain any explicit provisions regarding the collection and submission of evidence in arbitration proceedings. Arbitrators typically apply a mix of standards on the taking of evidence from civil law and common law. For example, extensive document production, following the model of document production known in common law jurisdictions, is not popular, but there are cases in which document production occurs. Arbitrators then often use the Redfern schedule. As for witnesses, depositions are not used, but written witness statements and cross-examination are. It is common for arbitrators to apply the IBA Rules on the Taking of Evidence.
There are no specific rules of evidence in arbitral proceedings stipulated in Polish law. The CPC provides that the arbitral tribunal may take evidence from witnesses, expert opinions, documents, inspection, as well as any other evidence necessary.
The only restriction under the law is the prohibition for the arbitral tribunal to use coercive measures.
The generally applicable law also does not provide for preclusion of evidence in arbitration proceedings, leaving this issue to the discretion of the parties.
It is common practice in Polish arbitral institutions, as well as for Polish ad-hoc arbitral tribunals, to apply the IBA Rules on the Taking of Evidence.
Under the CPC, an arbitral tribunal may take any evidence it deems necessary, however the arbitral tribunal does not have the power of compulsion and cannot take any coercive measures.
The arbitral tribunal may request the assistance of a state court to take evidence or perform any other act that the arbitral tribunal cannot perform.
Polish law does not explicitly regulate the confidentiality of arbitration. Nevertheless, it is sometimes argued that confidentiality is an inherent feature of arbitration, so arbitration is confidential by nature. To avoid any doubts, the parties may explicitly establish the confidentiality of the proceedings in the arbitration agreement. The rules of procedure before the largest permanent arbitration courts in Poland also provide for confidentiality.
State court proceedings related to arbitration are not confidential and the hearings are open to the public.
The CPC stipulates that an arbitral award should be in writing and signed by the arbitrators (if issued by three or more arbitrators, the signatures of the majority of the arbitrators are sufficient).
As for the content of the award, the law stipulates that it must include the reasons for the decision, identification of parties, arbitrators and a reference to the arbitration clause, as well as the date and place of issue of the award.
The award does not require publication; however, it must be delivered to all parties. The generally applicable law does not regulate the method of delivery. The method of delivery can be specified by the parties or by the arbitral tribunal.
If the arbitral panel consists of more than one arbitrator, its awards shall be made by majority vote, unless otherwise agreed by the parties. An arbitrator who voted against the majority position may submit a dissenting opinion. The dissenting opinion should be backed up by written reasoning.
There are no explicitly established restrictions to the types of remedies that an arbitral tribunal may award. However, it should be noted that during the proceeding to set aside an award, the court examines if the award is pursuant to the fundamental principles of the legal order of the Republic of Poland. It is therefore possible that some types of remedies ‒ for example US style punitive damages ‒ could be challenged on these grounds.
Polish law does not regulate separately the recoverability of interest in arbitration proceedings. Under Polish law, the recoverability of interest – whether in litigation before common courts or in arbitration – is a matter of substantive law governing the parties’ relationship.
If the law applicable to the legal relationship giving rise to the dispute referred to arbitration is Polish law, the interest is recoverable. Interest should be ordered on the awarded monetary claim from the date on which the claim became due. The rate of interest is regulated either in an agreement of the parties (the parties cannot agree on an interest rate higher than the maximum interest set by the legislation), or – in the lack of the parties’ agreement – by the pertinent legal acts applicable to the dispute.
Generally, applicable law does not prescribe the rules regarding the costs of the arbitration proceedings. This issue is also left to the discretion of the parties or the arbitral tribunal.
However, according to the rules of the principal arbitration institutions in Poland, the costs of the proceedings are borne by the losing party in accordance with the degree of defeat, applying the “costs follow the event” approach.
The costs are settled according to a schedule of costs submitted by the parties and include the costs of legal representation.
The parties do not have a statutory right to appeal an arbitral award. However, the parties can agree on the right to appeal under an arbitration agreement introducing, for example, two-instance proceedings.
Under the CPC the parties have the right to bring an action before a common court to set aside an arbitral award. The court shall set aside an award only in enumerated cases. The court sets aside an award if:
The court may also set aside an award if:
The CPC provides the parties with an absolute right to bring an action before a common court to set aside an arbitral award. The right to bring an action may not be limited, excluded or waived. Nor can the parties expand the scope of review of an arbitral award by the state court.
Under the CPC, common courts reviewing arbitration awards do not examine the merits of the case. Both the procedure for the recognition, enforcement or setting aside of an award are limited to a formal examination of the content of the award and an examination of whether the correct procedure was followed.
The court refuses to recognise or enforce an award if:
The above-mentioned conditions are also grounds for setting aside an award, following a party’s application.
The court may also set aside an award if:
Polish law does not provide for any other cases of review of an arbitral award by a common court.
The Republic of Poland was one of the first ten signatories to the 1958 New York Convention and ratified the Convention in 1961. The Republic of Poland has signed the Convention with both reservations provided for in Article I(3) of the Convention.
An arbitral award has the force equal to a judgment of a common court once it has been recognised or declared enforceable by the common court. This applies to all arbitral awards, regardless of the country of issue.
The court of appeal is competent to recognise an arbitral award or declare it enforceable. The procedure takes place at the request of a party to the arbitration and is not time-barred.
Generally speaking, the court refuses to recognise or declare enforceable an award only if:
However, the requirements for the recognition or enforcement of an arbitral award rendered outside the Republic of Poland are more restrictive. In particular, an arbitral award will not be recognised if it has not yet become binding between the parties or if it has been set aside or its enforcement has been suspended by a court in the country of issue.
If the award is subject to ongoing set-aside procedure in the country of the seat or elsewhere, Polish courts can adjourn the enforcement proceedings. Such adjournment is, however, not mandatory and thus is decided on a case-by-case basis.
Once an arbitral award has been recognised or declared enforceable, the same rules apply to its enforcement as to a judgment of a common court. This also applies to the issue of sovereign immunity.
In enforcement proceedings and in setting-aside proceedings, Polish courts are far more likely to rule in favour of upholding an arbitral award. Situations in which courts refuse enforcement or set aside an arbitral award are in the minority.
The most common basis for refusing enforcement or setting aside an arbitral award is the public policy clause, understood as the domestic public policy clause. The basic principles of the legal order in force in Poland, constituting the domestic public policy, are the fundamental constitutional principles and the supreme principles governing individual areas of substantive and procedural law. There is no predetermined catalogue of such principles ‒ such a catalogue is shaped by the Polish courts’ jurisprudence on a case-by-case basis.
In principle, there is no class action arbitration or group arbitration in Poland. However, there is an exception with respect to social arbitration in labour matters in the Collective Disputes Settlement Act which provides for group arbitration. In such disputes, the trade union representing the interests of the employees acts as a party. The dispute is adjudicated by a dedicated institution, the College of Social Arbitration at the district courts.
There is no generally applicable code of ethical conduct for arbitrators or counsel in arbitration. Such codes are instead formulated by the most important arbitration institutions, eg, the Code of Ethics for Arbitrators of the Court of Arbitration at the Polish Chamber of Commerce in Warsaw or the Code of Ethics for Arbitrators of the Lewiatan Court of Arbitration.
In 2019, the Polish Arbitration Association prepared an Arbitrator’s Pledge which reflects good practices in the management of arbitral proceedings. These are the minimum requirements to be met by the arbitrators to handle proceedings efficiently and effectively. The principles set out in this document do not prejudice further-reaching requirements that can arise from the rules of arbitration courts.
Additionally, if the counsel in arbitration are professional counsel, ie, advocats (adwokat) or attorneys-in-law (radca prawny), they are bound by their professional codes of conduct.
There are no regulations in the CPC concerning third-party funders.
However, in the draft of the new arbitration rules of Poland’s most prominent arbitral institution, namely the Court of Arbitration at the Polish Chamber of Commerce in Warsaw, information duties regarding third-party funding are to be imposed on the parties. The work on the new rules is expected to be concluded by the end of 2024 with amended rules coming into force from January 2025. If the proposed third-party funding regulations hold up, from January 2025, parties involved in PCC arbitration will be required to disclose in arbitration proceedings the identities of their third-party funders.
Under the CPC, when an arbitration agreement is included in the company’s articles of association, the arbitration tribunal before which the case regarding a particular resolution of the shareholders’ meeting was first brought shall have jurisdiction over all disputes concerning a given resolution.
Other than that, Polish law does not provide any rules for the consolidation of arbitration proceedings, so there are no restrictions in this respect either.
Polish law applies the principle of separateness and independence of legal entities. Thus, as a general rule, an arbitration agreement will not bind third parties. However, a third party may be bound by an arbitration agreement in the case of assignment of a contract, general succession, or acquisition of an enterprise. Moreover, there are special rules pertaining to an arbitration agreement included in the articles of association of a company which allows for extending the arbitration agreement to the company and any subsequent shareholders as well as to the bodies of the company and members of these bodies. Similar rules apply also to family foundations.
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This article delves into significant trends and developments in Polish aspects of international arbitration, providing essential insights for businesses operating or considering operations in Poland. It will explore the comprehensive revisions to the rules of leading Polish arbitration institutions, namely the procedural innovations aimed at enhancing the efficiency of state court proceeding by converting them to arbitration. Additionally, it will analyse recent landmark judicial decisions that have shaped the enforceability of arbitration agreements. Through this examination, the authors aim to equip readers with a thorough understanding of the current and future state of arbitration in Poland.
Revisions to the Arbitration Rules of Leading Polish Arbitration Institutions
Over the past decade, the nature of arbitration proceedings has evolved significantly, reflecting changes in user expectations and greater awareness of international arbitration practices. Arbitration institutions worldwide have incorporated new measures to streamline their processes, and Poland is no exception. The two most significant arbitration institutions in Poland, namely the Court of Arbitration at the Polish Chamber of Commerce (PCC) and the Lewiatan Court of Arbitration, have embarked on revising their arbitration rules to enhance efficiency and meet contemporary challenges.
New arbitration rules for the Court of Arbitration at the PCC
In early 2024, the Court of Arbitration at the PCC published a draft of its new rules, which are currently under consultation. The proposed changes aim to modernise the arbitration process and include the following key aspects.
The draft of the new Rules is expected to be concluded by the end of 2024 with the amended Rules coming into force from January 2025.
New arbitration rules for the Lewiatan Court of Arbitration
Similarly, the Lewiatan Court of Arbitration announced in the spring of 2024 that it is working on new arbitration rules set to take effect from 1 January 2025. The proposed changes aim to enhance the efficiency of arbitration proceedings, address new challenges and elevate service standards. These key changes include:
Conversion of Court Proceedings to Arbitration
The COVID-19 pandemic significantly disrupted court operations worldwide, including in Poland, exacerbating the issue of lengthy civil proceedings in state courts. Although Polish courts resumed operations after COVID-19 as early as May 2020, there is still a backlog.
In March 2023, the CPC was amended with new regulations to provide for a possibility to convert court proceedings to arbitration. Such possibility was earlier possible. However, this amendment strived at explicitly regulating this institution and providing for some financial incentives. The main aim of the conversion is to aid the parties that suffer the consequences of lengthy court proceedings, which may last up to five years or sometimes even more in first instance, by relieving the backlog.
The new rules provide as follows.
Since the conversion is concluded after the dispute has already arisen, it can also apply to labour and consumer disputes, ie, matters that, under Polish law, cannot be covered by a traditional arbitration agreement, ie, an arbitration agreement concluded before the emergence of a dispute.
It is most practical to convert litigation to arbitration during first-instance proceedings, before the first hearing, or at least before the commencement of evidentiary proceedings, when the examination of witnesses or the selection of experts has not yet taken place.
In order to better facilitate the process, the parties who have decided on conversion could also conclude a so-called conversion protocol. In such a protocol, the parties could set out detailed rules for the transfer and further conduct of the converted proceedings, so that the conversion is safe for the parties and fully protects their interests. The more advanced the state court proceedings, the more issues the parties will have to agree on in the conversion protocol. In particular, it is useful to establish the following issues in the conversion protocol:
The conversion protocol is not provided for in the statutory rules.
Recent Landmark Supreme Court Decisions
Recently, the arbitration community has been incensed by the Polish Supreme Court’s decision of 19 January 2024 (II CSKP 897/22), in which the Supreme Court accepted that, if the plaintiff is unable to bear the costs of arbitration, the arbitration agreement is unenforceable and the plaintiff can file a lawsuit in a state court.
The Supreme Court justified its decision by referring to the following.
It remains to be seen whether this landmark decision will be followed by other similar ones and whether this will lead to the formation of a solid line of jurisprudence. There are already indications that this may be the case.
On 20 March 2024, the Polish Supreme Court issued another decision (II CSKP 1187/22) in which it accepted that the unenforceability of an arbitration agreement may result from a party’s inability to bear the costs of arbitration due to their living, financial and health situation.
Both decisions are highly controversial and hotly debated in the Polish arbitration community. In the course of these discussions, many question the correctness of the Supreme Court’s position. It has been pointed out that it may be difficult to apply the test proposed by the Supreme Court. These difficulties may relate, for example, to the fact that it is not always possible to anticipate what the costs of arbitration would be prior to the commencement of proceedings, eg, in ad hoc arbitration. If that is the case, then it is thus impossible to show that a party will not be able to bear these unquantifiable costs of the proceedings.
Many critics also point out that the Supreme Court left the door wide open to the evasion of arbitration provisions solely on the basis of the argument of lack of funds to conduct arbitration. A party may take advantage of a temporary deterioration in its financial situation or deliberately create a temporary financial incapacity to evade an arbitration agreement. One proposal is therefore to limit the possibility of evading an arbitration agreement on the basis of a lack of sufficient funds, for example by requiring the claimant to show that, between the conclusion of the arbitration agreement and the commencement of the proceedings, theirfinancial situation deteriorated through no fault of their own or that or that the claimant had attempted to obtain third-party funding but had failed.
Overall, the recent advancements in Poland’s arbitration framework are set to provide a more streamlined, transparent and accessible dispute resolution avenue, potentially benefiting investors who aim to minimise the risks associated with commercial disputes. Nevertheless, investors should remain aware of the active discussions and possible shifts in legal precedents that could influence Poland’s arbitration environment, particularly concerning parties’ financial difficulties, which may be leveraged to bypass arbitration in favour of state court proceedings.
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