The purpose of referral to arbitration
Generally, dispute resolution is entrusted to state courts, but the parties can renounce this jurisdiction in favour of arbitration. Typically, the parties elect arbitration in an arbitration clause included in their original contract, signed well before any dispute arises. In other cases, after a dispute arises, the parties may agree to seek arbitration by signing a post-dispute referral to arbitration.
Under the 9 March 2023 amendment to the Civil Procedure Code (which entered into force on 1 July 2023), parties to civil cases in Poland can now “transform” the judicial proceeding into an arbitration proceeding through a referral to arbitration.
Referral to arbitration, and submission of the dispute to an arbitral tribunal, requires an agreement between the parties, and can be done at any time up until final resolution of the dispute before the state court (Civil Procedure Code Art. 11611 §1).
The referral to arbitration, signed by the parties, is submitted to the court of the instance before which the case is pending. The judge will terminate the state-court proceeding unless it is clear from the terms of the referral and the circumstances of the case that this would be contrary to law or public policy or seek to circumvent the law, or that the agreement is invalid or ineffective.
The limitation period for the claims subject to the referral to arbitration starts running again from the date when the decision to terminate the state-court proceeding becomes legally final (Civil Procedure Code Art. 11611 §2).
If the state-court proceedings are terminated as a result of a referral to arbitration, the court will automatically reimburse three-fourths of the court fees (Art. 79 §2aa of the Act on Court Fees in Civil Cases).
The Civil Procedure Code does not specify if the referral to arbitration applies only to the dispute before the state court, or all potential disputes that might arise from or relate to the legal relationship underlying the claims referred to arbitration. But under Polish law, unless the parties agree otherwise, it appears that a referral to arbitration excludes the competence of the state courts in favour of arbitration, also extending to all other disputes arising from the same legal relationship. By comparison, French law is more precise in this regard, providing that to be valid, the referral to arbitration must precisely identify the dispute to which it relates.
For the parties, arbitration can have significant advantages. Often the transfer of a case from the state court to an arbitral tribunal will cut the duration of the proceedings (for complex commercial disputes in Poland, court proceedings can last up to 8 to 10 years, while arbitration proceedings generally do not exceed 12 to 24 months). Contrary to popular belief, arbitration fees are not always higher than state court fees. Disputes decided before the Court of Arbitration at the Polish Chamber of Commerce in Warsaw with a value up to EUR 2.8 million would entail lower costs for initiating the proceedings (arbitration fees, registration fees) than in state court.
The practice will show whether the new provisions are successful at encouraging litigants involved in protracted disputes to refer their cases to arbitration.
Franciszek Wiącek, adwokat trainee, Dispute Resolution & Arbitration practice, Wardyński & Partners
This article was originally published in French on the website of the French–Polish Chamber of Commerce.
