Judgment of Supreme Court, Civil Chamber

12 September 2007

Case No. I CSK 192/07

Grounds for vacating arbitration award

Concept of lawfulness

Function of arbitration award

1. Civil Procedure Code Art. 1206 §2(2) provides that inconsistency with fundamental principles of the legal order of the Republic of Poland is grounds for vacating an arbitration award (the public order clause).

2. A petition to vacate an arbitration award does not involve substantive review of the merits of the decision by the arbitration court by the common court, as would be the case with a judicial appeal. An arbitration award is reviewed to determine whether it violates the concept of lawfulness or principles of social coexistence.

3. In a proceeding seeking to vacate an arbitration award, whether the arbitration court correctly decided the facts or the law is not reviewable. An arbitration court is not bound by provisions of substantive law, and incorrect interpretation of substantive law is not regarded as a violation of the concept of lawfulness under Civil Procedure Code Art. 712 §1(4). The essential concept of lawfulness is a duty imposed on state institutions to comply with applicable law, and an arbitration court functions in this sense as a decision-making agency of the state, which must thus comply with the principle of lawfulness.

4. Seeking to set aside an arbitration award for violation of lawfulness or principles of social coexistence does not involve demonstration of legal or factual defects in the award (see Judgment of Supreme Court of 27 May 1998, Case No. I CKN 709/97).

5. In a proceeding to vacate an arbitration award, the state court may not consider the merits of the dispute between the parties to the arbitration proceeding (see Judgment of Supreme Court of 11 May 2007, Case No. I CSK 82/07).