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ABC of arbitration

It is dispute resolution.

It has always existed. Amicable dispute resolution probably existed before states and state
courts were created.

Commercial contracts, civil procedure codes, by-laws of arbitration courts, international
treaties, conventions (e.g. the New York Convention on the Recognition and Enforcement of
Foreign Arbitral Awards of 1958), the Code of Conduct for Arbitrators, and others. Other
applicable principles include equity principles (ex aequo et bono) and commercial practices,
commonly known as lex mercatoria.

The parties can influence many elements of the proceedings. They select their own arbitrators, who rule within the limits of their powers. The court of arbitration is not bound by the provisions on proceedings before public courts.

Yes. The parties are seated comfortably and give their testimony while sitting down. The hearing is held in a room at a selected chamber of commerce. Attorneys are not required to wear robes. A break may be announced at every request of the parties. Coffee and tea are available. There is no yelling, kicking people out or threats of criminal action.

A lot. They can choose: a specific court of arbitration, the composition of the arbitration tribunal, the procedure of how the arbitrators are appointed, the date and venue of the proceedings, the rules of dispute resolution, and they can even specify the number of instances of the proceedings if they require more than one.

There’s no difference. They are different names for the same institution.

Simpler procedures, lower and predictable costs, a single-instance system and speedy proceedings. The hearings are held in a smaller setting. Arbitration offers privacy, confidential proceedings, and ensures that both parties’ interests and trade secrets will be respected. Arbitrators have a better understanding of business than state judges. They can be appointed for a specific case on the basis of their specialisation and expertise.

It is still relatively unknown and not commonly used. The pool of experienced arbitrators is fairly limited. A ruling is final, and there is basically no means of appeal.

Yes, very easy. All you need to do is sign an arbitration clause. This can be done in a contract, invoice, correspondence exchange, or the statute of a company, foundation, cooperative or association.

Yes. In 2005, parliament introduced provisions on arbitration into the Civil Procedure Code, modelled after the UNCITRAL Act. Foreign investors regard this as an important criterion to consider when selecting the country for proceedings. Warsaw may become a centre of international arbitration. We have it all: a central location, talented arbitrators, a permanent court of arbitration - one of the largest in Europe, in operation for nearly 60 years.

About fifty. They maintain their own arbitrator lists and have their own administration, governing bodies and rules. They are typically found alongside chambers of commerce.

It varies - regional, industry-wide, nationwide or international, depending on the by-laws, rules, and actual needs and capabilities.

Yes, as long as the country in question has adopted the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. Approximately 150 countries have done so.

The court to which the parties have referred a dispute for resolution, i.e. the one selected by the parties themselves.

What’s cheaper may not necessarily be good. In the case of “young” or “new” courts, there is a risk that they may cease to exist before they hear a matter. In such cases, the arbitration clause will expire automatically.

They have three options: include an arbitration clause in the agreement, conclude an additional agreement to undergo arbitration in the event of a dispute (compromise), or introduce an arbitration clause into the statute of the company, foundation or association.

It is an agreement on referring a dispute for resolution by a court of arbitration. It must specify the subject of the dispute (what the conflict is about) or the legal relationship (a contract, etc.) that has given or may give rise to a dispute.

An arbitration clause is a form of registering with an arbitration court. It pertains to disputes that may arise in the future. A compromise clause pertains to existing disputes.

It may be included in a contract, invoice, bill, statute, correspondence exchange, in writing or in any other recordable means of communication, such as the internet, email exchange or phone calls recorded with the consent of the parties involved. It is typically placed at the end of the document but must constitute an integral part of it. It can also be an annex to an agreement.

The wording of the clause affects the course of the proceedings. It may be worded as follows: “Any disputes arising under or in relation to this agreement will be resolved by (name of a permanent court of arbitration and its seat) in accordance with the rules of that court.” You can also add: “in force as on the date of filing the statement of claim.” The clause may contain additional provisions - the number of arbitrators, the venue, the language of the proceedings, etc.

Granting extensive privileges to one of the parties, e.g. unilateral arbitrator selection, the ability to amend the wording of the clause by one party only, failure to specify the legal relationship to which disputes may pertain, failure to provide the appropriate details of the court (incomplete name, failure to specify the seat, errors in the name or address of the court), specifying more than one court or set of rules.

It is a contractual clause that states what will happen to the parties’ obligations in the event of an occurrence that is reasonably unforeseeable and unavoidable, and the consequences of which cannot be prevented. It releases parties from liability for failure to perform an obligation.

It is a stamp that is affixed by a common court judge to, among other things, the rulings of courts of arbitration. In the wording of the stamp (exequatur), the court “orders and commands” that all offices and persons concerned enforce the provisions of the ruling. If a ruling of a court of arbitration is not implemented voluntarily, it must be recognised by a common court, or such an enforceability clause must be obtained.

It does happen, though rarely, that court proceedings are held in one country and arbitration proceedings in another country in the same matter. In such cases, a public court may issue anti-suit injunctions and prevent the arbitration proceedings from continuing (which happens occasionally in Latin American jurisdictions). As a rule, arbitration clauses exclude matters from being heard by common courts. If the defendant raises an allegation concerning an arbitration clause, the common court will dismiss the case. However, proceedings before a common court will commence if the defendant fails to raise such an allegation. Nevertheless, a matter concerning the same claim that was once resolved between parties in arbitration proceedings cannot be heard again in a common court.

The ruling of a court of arbitration has the same effect as the ruling of a common court after it is declared enforceable by a common court. The process of determining enforceability should not take long.

Technically, no. The parties to a dispute are entitled to move that a ruling be repealed only for formal reasons, such as: the absence of or defects in the arbitration clause, a ruling on matters not covered by the clause, a party being deprived of the opportunity to defend its interests, improper appointment of the arbitral tribunal, a different prior ruling being issued in the same matter, or inconsistency with the fundamental principles of Poland’s legal system. The court repeals the ruling or dismisses the complaint but does not hear the matter again in lieu of the court of arbitration. A new motion must be submitted by the party for the matter to be heard again after the ruling is repealed.

A mediator facilitates dialogue between the parties and helps search for a compromise, while an arbitrator determines who is right. Mediation is cheaper, but offers no guarantee of a binding conclusion of a dispute. Settlements are not covered by the New York Convention. Their enforcement cannot be pursued abroad. A settlement can be converted into a ruling in an arbitration court. If the mediator accomplishes a settlement, both parties can feel victorious. Mediation fees tend to be lower than arbitration fees (e.g. at the Court of Arbitration at the PCC, they are only 20 per cent of arbitration fees).

Mediation is worth pursuing if the parties are still working together but the dispute is an obstacle to their continued cooperation. Arbitration should be selected when the parties are no longer able to resolve the dispute on their own.

After a motion is filed, the other party agrees to mediation and the mediation fee is paid. The parties then appoint a mediator from the List of Mediators. The mediator organises a meeting, allows the parties to speak, and may present different settlement proposals. A meeting may be held with each party individually. The statements, motions and clarifications provided during mediation are confidential, and cannot be taken into account in the future, whether in arbitration or court proceedings (unless the parties determine otherwise). If a settlement is reached, a report is drafted which contains the terms and content of the settlement. At the request of the parties, the settlement agreement may be drafted in the form of a ruling. In such cases, the mediator will serve as an arbitrator and issue the ruling agreed by the parties. If a settlement is not reached, that’s just too bad. The parties have the option to pursue arbitration or litigation.

The experience and competence of the arbitrators, the stability of the institution and its achievements, the court’s rules, its reputation and, last but not least, its focus. The rules may vary with regard to appointing arbitrators, selecting the presiding arbitrator, etc.

Alternative Dispute Resolution - dispute resolution methods outside the public court system. These include: negotiations, conciliation, mediation, initial expert opinions, mini-trials, trial resolutions and others.

They typically take place in accordance with the rules of the selected permanent court of arbitration in force at the time of either concluding the arbitration clause or bringing the action. Arbitral proceedings are commenced via an arbitration summons or by filing a statement of claim. The arbitral tribunal considers the matter at a hearing, or without holding a hearing, solely on the basis of the documents collected (if so requested by the parties).

At practically any stage.

No. Arbitration is voluntary.

Yes. At any time before the date of the hearing is announced. Afterwards, the consent of the other parties is required. Proceedings may also be discontinued if there are circumstances that prevent the matter from being pursued, if the statement of claim is withdrawn, or if the proceedings become redundant or impossible.

The arbitrators’ skills and experience, help from the secretary’s office, good organisation by the court, good manners of the parties, talented attorneys.

Each case is different, but matters concerning payment under sale and supply contracts tend to be straightforward. On the other hand, corporate disputes resulting from business transformations are typically very complex.

Any disputes regarding property rights or non-property rights that may be subject to a court settlement. The only exceptions are alimony cases.

For fear of concluding fictitious settlements. Moreover, public courts wish to continue their supervision of matters involving marital status and the well-being of families.

The majority of disputes arise under leases, sale, supply and franchise agreements, construction law, telecommunications law and copyright law.

No, they are not open. All participants are bound by the confidentiality principle, and this may even apply to the fact of initiating the proceedings. Only the parties, their attorneys and persons summoned participate in arbitration hearings. Others must have the consent of all the participants in the hearing.

The cost may be determined in advance. It is composed of a registration fee and an arbitration fee. These are determined in accordance with the price list effective on the date of filing the statement of claim, and are paid once only. There are no additional fees for specific decisions of the court, preliminary awards, or partial awards. There are no fees for grievances or appeals, as the proceedings are single-instance. The parties may be responsible for possible travel and accommodation costs for the arbitrators, as well as the costs of translating documents and of expert opinions.

The law selected by the parties, which also governs the legal relationship stemming from the agreement. Also, at the parties’ request, the general principles of commercial law (lex mercatoria) or equity principles (ex aequo et bono).

At a venue determined by the parties - in the city specified as the venue of the proceedings (typically at the seat of a permanent court of arbitration). Sometimes in a rented conference room, a hotel, or another location that fulfils the needs of the proceedings. The proceedings may also be held by correspondence on the basis of documents, without a hearing.

Rather than selecting an existing permanent arbitration court, the parties may appoint a “oneoff” court, solely for the purpose of resolving a single specific matter. Such a court has no organisational or office support. It may be supported by the staff of a permanent court or another selected institution, such as a chamber of commerce. It can also support the proceedings by drawing on the resources of the arbitrators themselves. In such cases, physical facilities and secretarial support must be provided, and travel arrangements must be made. Such arbitration proceedings may operate on the terms agreed by the parties, or under model rules recommended by international organisations such as UNCITRAL. Upon the resolution of the dispute, the ad hoc court is dissolved. Ad hoc proceedings are recommended where highly specialised knowledge is required on the part of the arbitrators (e.g. technical knowledge) or if absolute confidentiality must be maintained, even as to the very existence of the dispute.

In a public court, anyone who feels they have a valid legal interest in ensuring that a matter is resolved in favour of one of the parties may, at any stage in the proceedings, join that party (auxiliary intervention). In arbitration courts, admitting a third party requires the consent of all parties involved.

Only if, under law, the dispute cannot be referred to arbitration, e.g. in alimony cases, in cases that do not lend themselves to settlement, or if the arbitration clause is invalid.

When the arbitrator specified in the arbitration clause has refused or is unable to accept the role for valid reasons. Also when the arbitrators, when issuing a ruling, are unable to reach unanimity or a majority of votes.

When he/she has a conflict of interests, is not qualified in the area in question, does not speak the language of the proceedings, or does not have sufficient time or availability.

It depends on the court. The Court of Arbitration at the PCC hears 300-400 cases per year. Other arbitration courts in Poland hear up to twenty cases per year.

Yes, the guidelines of the International Bar Association. They pertain to conflicts of interest in international arbitration. Some courts produce their own guidelines, such as the Code of Conduct for Arbitrators at the Court of Arbitration at the PCC.

Most disputes have a value of between PLN 10,000 and PLN 100,000. Occasionally, there are multi-million zloty cases.

In Poland, it is typically 6-9 months.

By a majority of votes. An outnumbered arbitrator may submit a dissenting view. The award is not published. Instead, it is delivered by post, specifying in writing the grounds for the ruling.

Yes. If a majority of votes is not achieved, the arbitration clause becomes ineffective.

The case may be referred to a common court.

A ruling should be issued within one month following the closure of the case. The award may be final, initial or partial. The award is made in writing and delivered to the parties following the payment of all costs of the proceedings. It should set out the grounds for the ruling. If the losing party does not implement it voluntarily, the ruling must be granted an enforceability clause or be recognised by a common court in the country in which it is to be implemented.

Before initiating proceedings before an arbitration court or common court, a party may request mediation aimed at a settlement. A settlement concluded in the course of arbitration proceedings will result in their discontinuation.

Arbitration assumes that the parties intend to resolve their dispute. In arbitration, it is more difficult for parties to use procedural tricks, evasion tactics and stalling. The court may issue a ruling on the basis of the evidence collected in the absence of a party if notification of the date of the hearing was sent to the party to its address listed in the commercial register.

One, unless the parties agree otherwise. In practice, a single instance is the rule.

If the losing party fails to implement the award voluntarily, it is necessary for a common court to recognise or declare the enforceability of the arbitration award. Sometimes the losing party will file a complaint requesting its repeal. However, awards may only be repealed on formal grounds (see question 27).

In Poland, they are held in up to three instances. Elsewhere, often in two or even one instance, before a specialised court of higher instance.

It is an arbitration court judge, a member of the arbitral tribunal, or the sole arbitrator where only one arbitrator is appointed.

They are appointed by the parties or third parties nominated by those parties. If no arbitrators are appointed by the parties, an arbitrator may be nominated by the Arbitral Council or another appointing body of the arbitration court.

Each court maintains its own lists. The Court of Arbitration at the Polish Chamber of Commerce recommends 176 arbitrators.

Anyone with full capacity to perform acts in law who is of legal age, regardless of nationality. Active public court judges cannot serve as arbitrators. Sometimes the parties or certain courts place additional requirements, such as: qualifications useful for serving as an arbitrator, age, excellent integrity, experience, knowledge of foreign languages, nationality, etc.

Yes.

An arbitrator is replaced in the event of his/her death, resignation, challenge, removal by the parties or Arbitral Council, or when he/she refuses or is unable to conclude an agreement.

Domain arbitrators specialise in matters concerning internet domain names.

They can be determined according to the value of the subject of a dispute or according to hourly rates, depending on the agreement or rules of the court. Arbitrators are also entitled to a reimbursement of travel and accommodation expenses.

Unless the parties agree otherwise, there are three arbitrators. The tribunal may also be composed of one person or more than three persons, usually an odd number. Even numbers of arbitrators, e.g. two, are found in some US institutions or in maritime arbitration.

Foreign arbitrators are featured on the lists of Polish arbitration courts and vice versa. Arbitration courts enter into bilateral cooperation agreements. Since 2000, forty Polish arbitrators have appeared in ICC cases, while many others have participated in ad hoc proceedings. Poland has its representative at the International Court of Arbitration at the ICC. The Court of Arbitration at the PCC is a founding member of the International Federation of Commercial Arbitration Institutions (IFCAI), the International Council for Commercial Arbitration (ICCA), and a member of the European Arbitration Group at the International Chamber of Commerce (ICC) in Paris and the Special Committee at the Economic Commission for Europe in Geneva.

The International Chamber of Commerce. It is a non-government organisation bringing together thousands of companies and chambers of commerce and industry from more than 130 countries. It represents the interests of global business before governments and international organisations. Its areas of activity include international commercial arbitration and setting the rules of international business transactions.

Yes. For instance, the Court of Arbitration at the Polish Chamber of Commerce has concluded more than 20 cooperation agreements that have been bringing measurable results. Together with the Swiss Arbitration Association (ASA), it is involved in publishing activities. Together with the ICAC in Kiev, it promotes arbitration in sports and construction, preparing arbitrators for disputes that may arise in connection with Euro 2012.

At least 20 per cent of the cases heard by the Court of Arbitration at the Polish Chamber of Commerce are international.

The parties determine the language of the proceedings themselves. This also applies to all documents. The Court of Arbitration at the PCC conducts matters in Polish, English, French, German or Russian.

The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958, the European Convention on International Commercial Arbitration of 21 April 1961 and the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 18 March 1965.

The law selected by the parties. A ruling is recognised or declared enforceable in the country in which it is to be implemented.

he United Nations Commission on International Trade Law with its seat in Vienna.

The universal rules of arbitration adopted in 1976, helpful in resolving ad hoc arbitration disputes.

The Model Law on Commercial Arbitration is a model law that each UN member state may adopt or adjust to its legal system. The purpose of adopting the Model Law in 1985 was to promote uniformity among the arbitration legislation of UN member states. Modern-day arbitration acts of parliament of many countries, including Part Five of the Polish Civil Procedure Code, are largely modelled after the Model Law.

A convention adopted in 1958 concerning the recognition and enforcement of foreign arbitral awards. As a result, an arbitral award may be enforced in approximately 150 countries worldwide.

Adopted in 1965, it governs the issue of resolving investment disputes between an investor and the state receiving the investment. So far, it has been ratified or signed by nearly 150 countries. Poland is the only European country not to have signed the convention.

Adopted in 1961, it is a convention on international commercial arbitration. It sets out detailed principles of procedure, for example, in matters where the parties did not determine the governing law for the dispute or the venue of the proceedings.

There are a little over a dozen notable arbitration institutions worldwide. Each country has one primary arbitration court. A world arbitration map would feature the courts in: Paris, London, Geneva, Prague, Warsaw, Kiev, Budapest, Vienna and Stockholm, followed by: Cairo, Singapore, Seoul, Kuala Lumpur, Hong Kong, Sydney, Washington DC and New York.

The International Court of Arbitration at the International Chamber of Commerce in Paris (ICC),

The World Intellectual Property Organization Arbitration and Mediation Center in Geneva ABC ARBITRAŻU ok.DOC 11 (WIPO),

The London Court of International Arbitration (LCIA),

The German Arbitration Organisation (Deutsche Institution für Schiedsgerichtsbarkeit) (DIS),

The Arbitration Institute at the Stockholm Chamber of Commerce (SCC),

The International Commercial Arbitration Court (Международный коммерческий арбитражный суд) in Kiev (ICAC),

The Court of Arbitration at the Chamber of Commerce and Agriculture in Prague, and the Court of Arbitration at the Polish Chamber of Commerce in Warsaw (SA KIG).

Author: Piotr Nowaczyk, President Court of Arbitration at the Polish Chamber of Commerce