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Dispute Resolution in Poland

Issues and new developments in dispute resolution in Poland.

Good change in the ICC

Posted in Arbitration

Alexis Mourre took up the office of President of the ICC International Court of Arbitration almost
a year and a half ago. From the beginning it was clear that Alexis had a vision to address the problems of arbitration, particularly the criticism regarding the lack of transparency and lengthy arbitration proceedings. These two issues appear frequently, as the main ills of arbitration. Since he took his post, we have been witnessing a significant change in the practice of the ICC Court. Most of the changes have not been introduced in the Rules of Arbitration themselves, even though the changes were made here, but in the document titled Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration (“Note to Parties”). It is some kind of manual for the ICC arbitration users, available at: http://www.iccwbo.org/products-and-services/arbitration-and-adr/arbitration/practice-notes,-forms,-checklists/.

As early as in October 2015 a modification of Note to Parties was published, regarding justification of certain Court decisions. It refers to the exclusion and replacement of an arbitrator (art. 14 and 15(2) of the Rules), prima facie jurisdiction (art. 6(4) of the Rules) and consolidation of the proceedings (art. 10 of the Rules). Now, these decisions may be justified if all parties so require prior to the issuance of the decision. It must be emphasized that it is an exception to the international and domestic arbitration practice, and except for LCIA, which justifies decisions regarding exclusion of an arbitrator, no major arbitration institution makes justifications of such decisions available to the parties. It will take time to see whether the parties will indeed demand those justifications and whether a coherent policy and the ICC case law emerge from the decisions of the Court.

The issue of transparency was a prerequisite for another change of the Note to Parties made at the beginning of this year. It refers to the listing of cases which require disclosure of a potential conflict of interest (Section A, Chapter III of Note to Parties). Albeit as regards conflicts of interests, IBA Guidelines on Conflicts of Interest in International Arbitration still remain the fundamental document, modification of the Note to Parties confirms the importance of this issue for the ICC management. What is important is that changes to the Note to Parties do not refer so much to the assessment of the existence of grounds for exclusion, but rather to a necessity to disclose the circumstances which may, but do not have to, lead to a successful challenge. The message from the ICC is clear – relevant disclosure of the circumstances regarding a conflict of interest is an arbitrator’s obligation.
A failure to make such disclosure will be taken into account and will influence assessment of impartiality (item 19 of Notes to Parties, in fine), although it does not necessarily have to lead to exclusion.

One of the key criticisms against arbitration, including arbitration before the ICC, is the issue of the lengthiness of proceedings. The issue is complicated, and probably only part of the blame that can be attributed to the arbitrators and arbitration institutions. However, this part of the blame is particularly annoying. A waiting time of over a year for a verdict unfortunately occurs. As a reaction to such situation, the ICC introduced a rather radical system with negative consequences for arbitrators who prolong the proceedings by way of untimely preparation of draft awards. The ICC expects that
a draft award will be submitted for scrutiny by the sole arbitrator within 2 months of termination of the last hearing or submission of the last substantial pleading in the case (item 43 of Note to Parties). For an adjudicating team composed of three arbitrators, this deadline is 3 months. The very expectation as to the timeliness of drafting an award is perhaps not so revolutionary as the consequences of its breach. If the arbitrators fail to submit an award for scrutiny within 7 months, their remuneration might be reduced by 5 to10%. Respectively, if a delay ranges from 7 to 10 months, a reduction may amount to 10-20%, and if the delay exceeds 10 months, the arbitrators’ remuneration can be reduced by 20% or more. Although the ICC has already had the right to reduce arbitrators’ remuneration, the detailed and precise gradation of such reduction is a radical novelty. The aim of such approach is obviously to discipline the arbitrators, but together with a modified form of a statement on impartiality (2012 RulesICC Arbitrator Statement Acceptance, Availability, Impartiality and Independence), which now has a form of a regular calendar, on which a potential arbitrator must explicitly state its unavailability for handling a new case, it is a clear and a strong signal for the arbitration community:  “do not bite of more than you can chew”, as the ICC will monitor it and mete out consequences.

One should also mention completely new amendments to the Regulations to be operational since March 1, 2017. These amendments stipulate that claims with a value of less than USD 2 million will be subject to an accelerated procedure if only the parties have not excluded this possibility. The accelerated procedure involves several important procedural modifications. Basically, cases will be handled by a single arbitrator, and an award must be issued within six months from the date of the organizational meeting. An arbitrator will be able to issue an award without hearing, without production of a documents procedure and without hearing witnesses, relying mainly on the documents. It is clear that this procedure will reduce the costs, including the ICC fees.

The ICC goes further as regards transparency. From January 1, 2016, information on the appointment of arbitrators in all cases in which the Terms of Reference were submitted to the Court, are published on ICC websites. Publication of appointments of arbitrators, both those made by the Court and by the parties, is a milestone in transparency. By virtue of its structure, in which the representatives of the specific National Committees are Court members and participate in the ongoing works of the Court, in this scrutiny process, the ICC has always been international and open to new members. However, public information on the specific appointments is a breakthrough for the transparency of the Court’s activities. A list of nominated arbitrators can now be found on the ICC websites. I think that initial analyses of this list will be possible after the first year of its operation. However, certain tendencies are already clear. For example, the very strong position of the Swiss arbitration community comes as no surprise. So far, no Polish name has  appeared on this list. And this is not surprising either, but I hope it will change quickly.

Alexis Mourre undoubtedly has a vision of changing the ICC Court. He is implementing it quickly and is open to all those criticisms that have been addressed both against arbitration and against the ICC. Lack of transparency and vague criteria for operation of arbitration institutions and lengthiness of proceedings were the most frequent concerns. Alexis provides responses to them that seem to be radical.  I believe that this is what the clients expect.

Is mandatory online mediation admissible?

Posted in Uncategorized

Both national and EU legislations allow solutions which provide for mandatory participation in ADR procedures available online.[1] From a policy-making perspective, the introduction of mandatory online mediation may be considered expedient in many respects. Firstly, it is effective: quick, cheap, convenient, as it does not require any movement etc. It is associated with a greater availability and feasibility of legal protection, in particular for a consumer. Lack of the mandatory nature very often creates a situation whereby entrepreneurs do not agree to mediation. Secondly, mandatory mediation can be reconciled with the constitutionally guaranteed right to court proceedings, provided that, among other things, the freedom of settlement and the admissibility of legal action, in the event mediation does not lead to a settlement, are retained. Thirdly, these type of proceedings are adjusted to the nature of many disputes characteristic for contemporary legal transactions, in particular activities arising from online trading (i.e. legal acts also performed via the Internet) or other types of Internet activity (disputes regarding domains etc.), as well as other matters with participation of consumers, with low claim values, cross-border matters etc., namely matters for which court proceedings are too formalized, long-lasting or costly, and consequently, not sufficient to be treated as an actually available manner of guaranteeing legal protection arising from substantive law. Fourthly, cautious implementation of mandatory online mediation in specific categories of matters is supported by international experience. Fifth, an obligation to join ADR often refers only to the “stronger” party – an entrepreneur. Consequently, it does not lead to a deprivation of a consumer of a possibility to choose enforcement of substantive law protection standards in court proceedings.

De lege lata Polish law does not stipulate online mediation explicite. However, the legal environment is currently subject to substantial transformations, in particular in respect of mediation in consumer matters. On November 9, 2016, 15 months will elapse from the deadline for the implementation of Directive of May 21, 2013 on alternative dispute resolution for consumer disputes (the so-called Directive on consumer ADR).[2] Poland was among a mere three countries (in addition to Croatia and Portugal) that have not implemented the Directive into their legislations to date. The Act of September 23, 2016 on an out-of-court solution of consumer disputes was adopted by the Senate without amendments on October 21 this year and is currently awaiting the President’s signature. It will become effective after a two-month vacatio legis. Introduction of the regulations implementing the Directive is necessary to ensure a possibility of application of the Regulation of May 21, 2013 on online dispute resolution for consumer disputes.[3]

The Directive and the Regulation are intended to ensure that consumers throughout the European Union possess efficient and actual access to out-of-court pursuit of claims, especially to mediation procedures, on the basis of uniform, minimum standards for ADR, in particular in an online form. The model of the ADR system proposed in the act on out-of-court resolution of consumer disputes covers three types of entities. The first type comprises ADR entities created by entrepreneurs from a specific industry. The second type of ADR entities comprise public ADR entities from the industry existing “at” the administrative authorities of a specific industry, such as for example the President of the Energy Regulatory Office, Financial Supervision Commission or Financial Ombudsman. The third type comprises an entity of a horizontal nature, namely a Trade Inspection – the scope of its activity will refer to the matters not covered by the competent sectoral entity. Both sectoral ADR entities and the structures of the Trade Inspection offer the resolution of disputes through arbitration or mediation. President of the Office of Competition and Consumer and Protection shall be competent for the supervision of the entire system due to its location in the Polish system of consumer protection and horizontal nature of the competencies.

The Act on out-of-court resolution of disputes only mentions mandatory mediations (without differentiation whether in an online form or otherwise) in art. 31 section 1.[4] Similarly, a concise solution – allowing mandatory mediation on the national law level, although without detailed regulations – was included in the Directive.[5] In both cases an obligation to join mediations can only refer to the “stronger” party – an entrepreneur.

De lege lata, the financial market entities are obligated to participate in ADR procedures in connection with the proceedings carried out by the Financial Ombudsman. Pursuant to art. 37 of the Act of August 5, 2015 on handling of complaints by financial market organisations and on the Financial Ombudsman, their participation in the proceedings regarding resolution of disputes between a client and a financial market entity is mandatory. No obstacles exist to using online mediation in the proceedings carried out on these grounds. These matters must be treated as a pilot system, and depending on its results – similar solutions should be implemented in a wider scope.

[1] The phrase „procedure (available) online” was adopted in Directive 2013/11/EU, art. 8 letter a) and subsequent letters, as referred to below.

[2] Directive of the European Parliament and of the Council 2013/11/EU of May 21, 2013 on on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR), OJ L 165, 18.6.2013, p. 63–79.

[3] Regulation of the European Parliament and of the Council (EU) No. 524/2013 of May 21, 2013 on online dispute resolution and for consumer disputes and amending Regulation (EC) No. 2006/2004 and Directive 2009/22/EC (Regulation on consumer ODR), OJ L 165, 18.6.2013, p. 1–12.

[4] Art. 31 section 1 of the Act stipulates that „An entrepreneur which undertook or is obligated under separate regulations to use out-of-court resolution of disputes with consumers, shall notify the consumers of the entity entitled which is relevant to this entrepreneur.”

[5] See i.a. item 39 of the Recitals of the Directive.

New statutory interest

agnieszka1 Posted in Uncategorized

Since January 1, 2016 new regulations have been in force regarding interest payments. The act of 9 October, 2015 came into force then regarding amendments to the act on the terms of payments of commercial transactions, the civil code as well as other acts, further the “Amendment” (Journal of Laws from 2015 item 1830).  A principle reason for the enactment of the Amendment was to adapt national legislation to the European Directive 2011/7/EU on combating late payment in commercial transactions.   At this point, however, I would like to focus on “when the opportunity arises” changes made to the Civil Code in relation to statutory interest.  These are important changes from the practice point of view, and not only from the procedural viewpoint.  Continue Reading

The first anniversary of the new EU Consumer ADR regime

morek Posted in Uncategorized

The Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes (Directive on consumer ADR) obliged Member States to bring into force the laws, regulations and administrative provisions necessary to comply with said Directive by 9 July 2015. Today we should hence be celebrating the first anniversary of the new ADR regime coming in force for European consumers. However, due to delays and problems in the transposition processes across the EU Member States, the celebration needs to be postponed.

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Are we dealing with the trend of specialised arbitration?

Lukasz Gembis Posted in Arbitration

The development of international arbitration in recent years has led to a significant multiplication of arbitration institutions around the world. In fact, every major city related to trade or industry has at least one dispute resolution centre. In addition to having long-standing, very reputable institutions for resolving commercial disputes, i.e. ICC in Paris or LCIA in London, for some time there has been a trend in establishing dispute resolution centres specializing in particular sectors of the economy. This trend is particularly noticeable in disputes relating to energy and natural resources, as well as those regarding the financial sector.

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On a judgment which was not.

MAntoniak Posted in Litigation

After specialists on sky jumping and Formula 1, Poland has recently seen the rise of proceduralists, i.e. specialists on each and every proceedings, including, in particular, proceedings on front of tribunals. O tempora, o mores, in the media, the press, in restaurants, at bus stops and in parks almost everyone discusses procedure. Particular popularity has been granted to the concept of the so-called “non-existing judgment” (Lat. sententia non existens), i.e. a rather sophisticated concept of the doctrine of procedural law, revolving around, in particular, the issue of what makes a judgment a judgment. Specialists of various kinds and species have entered a fierce battle for arguments on how potential procedural flaws (including, in particular, flaws in the composition of the court) may influence the (non)existence of a judgment. Politically sensitive readers are kindly informed in advance that any similarity to real persons and events is almost entirely unintended.

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Appellate court is calling!

maciej Posted in Arbitration

“Good morning, Sir. I’m calling from the appellate court in X – you transferred 300 zloty. What’s that for please?”

“A court fee for the declaration of enforceability in Poland of a judgment of a foreign arbitration court.”

“Sir, we are the appellate court and recognize only appeals”

“No, from January 1st this year, the appellate courts will recognize also motions to set aside arbitration awards as well as the recognition of enforcement of judgments of foreign arbitration courts.”

“Oh, in that case, could you please tell me the court file number?”

“I cannot, because the motion only goes to you and once it arrives, you indicate the court file number.”

“Oh.”

“Please call me if there are any problems.”

(authentic conversation)

We submitted our first application for a declaration of enforceability of a judgment of a foreign court of arbitration in Poland to the appellate court. Under the act of 10 August 2015 on amendment of certain acts in relation to the promotion of amicable dispute resolution, such an application, and an application to set aside an arbitration award, should be referred to the appellate court. For decisions in such a case only a cassation can be filed. This is a breakthrough in Polish arbitration law. For years, the arbitration community endeavored to flatten post-arbitration proceedings. The reason for this was that one of the main advantages of arbitration, the speed, was bedeviled by the fact that after the ruling of the court of arbitration, the matter went to the state courts and passed two instances and possibly a cassation. On the whole, it was not shorter than the time that the common courts would have spent exclusively on such matter. For years it has been impossible to change this state of affairs. From important people, including the authorities, we have heard that the two instances which dealt with the judgment of the arbitration courts was a constitutional requirement (art. 176, section 1 of the Constitution). Complaints and arguments were heard practically at each arbitration conference. Among us who are involved in arbitration, some doubted that this could ever be changed. And yet it has. It took a determined government minister – Mr. Mariusz Haladyj, who pushed though the entire legislation process – and the matter is settled.

One of the main problems of Polish arbitration has been resolved. Now, we in the arbitration community have fewer and fewer arguments and excuses for the sluggish growth of arbitration in Poland.

Changes in the air. Will TTIP change ISDS model?

maciej Posted in Investment Arbitration

On July 8, 2015 the European Parliament approved the recommendation to the European Commission regarding the Transatlantic Trade and Investment Partnership by endorsing the Lange report. In fact, they are guidelines for the European Commission to negotiate with the United States. The approval of these guidelines has taken place with a considerable majority of votes: 436 to 241 with 32 abstentions. It bodes well for the possibility of negotiating the final agreement. Continue Reading

The TTIP, arbitration and copycats

wojciech_s Posted in Investment Arbitration

This week, representatives of the European Commission and the US Government met in New York for the ninth round of negotiations over the proposed trade and investment agreement between the European Union and the United States [http://trade.ec.europa.eu/doclib/events/index.cfm?id=1287]. The agreement will be known as the TTIP. If adopted, it will impact the economies and lives on both sides of the Atlantic, in a way and to an extent we are unable to predict. Continue Reading

Failure of the regulatory model of the 2005 Polish ADR laws: Time for change

morek Posted in Commercial Arbitration

It is ten years since the current Polish mediation and arbitration laws were enacted. Round dates encourage retrospection and thoughts about the future. Just like wine, law needs time to mature. It needs court decisions and doctrine to pull it out of its depths and decode the “proper” sense of the legal norms. But only a select few wines are suitable to drink after numerous years or decades. A 100-year-old bottle of wine sold at auction for an enormous amount might only be used as a collector’s exhibit. Most white wines, due to a lack of antioxidant tannins, must be drunk within 5-10 years of their production date. Law “ferments” even faster. Continue Reading