This article was featured in Jus Mundi‘s 2023 Arbitration Year in Review, in collaboration with VYAPs, a yearly collection of articles from jurisdictions all around the globe updating you on arbitration-related developments from the previous year.
THE AUTHORS:
Olga Marcinkowska, LL.M Candidate at HumboldtUniversität zu Berlin
Agata Zwolankiewicz, Associate at Linklaters
Szymon Tkaczyk, Associate at White & Case
Developments in Commercial Arbitration
Conversion of Court Proceedings into Arbitration Proceedings – Amendment to Polish Arbitration Law
An amendment to Polish arbitration law (Chapter V of the Polish Code of Civil Procedure), effective as of July 1, 2023, introduced a provision enabling the conversion of civil proceedings pending before common courts into arbitration proceedings. The primary objective of this legislative change is to streamline existing procedures, ultimately alleviating the burden on common courts, and expediting the dispute resolution process. By providing the option for parties to convert proceedings, the legislature emphasizes the importance of allowing disputing parties to choose the method of dispute resolution until a court conclusively decides the case.
The new law outlines specific time limits for parties involved in proceedings to opt for conversion. First, the law permits the conversion of ongoing proceedings, i.e., cases where a statement of claim has been successfully filed and a copy has been served on the opposing party. Second, parties retain the right to decide on conversion until the court reaches a final decision. This flexibility allows converting court proceedings into arbitration at any stage.
To convert proceedings, the parties must first enter into an arbitration agreement. Only a legally valid arbitration clause can trigger the conversion of proceedings. In cases where an arbitration agreement is reached between parties before a common court, the court conducts a thorough review to ensure compliance with all legal requirements governing the validity and effectiveness of the arbitration agreement. Upon confirming the agreement’s validity, the court discontinues the proceedings, transferring the case to arbitration. It should be noted that, upon successfully converting of court proceedings into arbitration, the plaintiff receives a refund of 3/4 of the paid court fee.
The successful conversion of court proceedings to arbitration can potentially expedite dispute resolution. In traditional court proceedings, the timing and duration of hearings are largely contingent on the judge’s workload and the technical capabilities of the court. Indeed, according to the official statistics prepared by the Ministry of Justice for 2021, the average duration of commercial proceedings in the court of first instance is approximately twenty months.
SAKIG and Jus Mundi Forge Exclusive Partnership to Share Non-Confidential Arbitration Awards
In October 2023, the Court of Arbitration at the Polish Chamber of Commerce in Warsaw (SAKIG) and Jus Mundi announced an exclusive partnership aimed at globally disseminating non-confidential SAKIG arbitration awards and related materials for the greater public good.
Under this collaboration, selected SAKIG arbitration awards and associated materials will be included in Jus Mundi’s expansive international law and arbitration database. Jus Mundi will publish non-confidential SAKIG arbitration awards and pertinent information on its open public database. Therefore, people anywhere in the world will be able to access and search these materials using Jus Mundi’s research tools.
The partnership underscores SAKIG’s commitment to fostering cross-border trade and investment. Through Jus Mundi, SAKIG aims to contribute to the global promotion of these values while upholding the highest standards of independence, impartiality, and transparency in all arbitration proceedings. This collaboration signifies a pivotal step towards making valuable arbitration insights accessible to a broader audience, enhancing understanding and trust in international dispute resolution.
Developments in Investment Arbitration
ECT Award Against Poland
In a recently published award in Mercuria v. Poland (II), the arbitral tribunal chaired by Klaus Sachs awarded the investor USD 33 million in damages plus interest on tax in arrears.
In 2008, Mercuria initiated proceedings against the Republic of Poland under the Energy Charter Treaty 1994 (“ECT”) for the first time. Mercuria alleged that the Republic of Poland breached Article 10(1) of the ECT (fair and equitable treatment (“FET”) obligation) arising out of the imposition of a fine for failure to maintain mandatory stocks of fuel oil for use in a state of emergency, as required by Polish law. In 2011, the arbitral tribunal found that Poland had not breached its FET obligation under the ECT.
In 2019, Mercuria commenced new arbitration and alleged that Poland had breached the ECT’s FET obligation due to the Polish Material Reserves Agency’s failure to pay interest applicable under Polish law when it repaid the fine. Mercuria also argued that the Republic of Poland failed to ensure that its domestic law provided an effective means of redress for investors.
The arbitral tribunal confirmed its jurisdiction despite the Republic of Poland’s arguments that the tribunal had no jurisdiction to adjudicate an intra-EU dispute under the ECT (from the moment Poland became an EU Member State).
On November 30, 2023, Mercuria filed a petition in the US District Court for the District of Columbia to enforce the award. The Republic of Poland filed a motion in Swedish court to annul the ECT award.
Dutch Court Refuses to Cease Intra-Eu Bit Claim Against Poland
On March 8, 2023, an Amsterdam court refused to order LC Corp (a Dutch investment company) to cease arbitration against the Republic of Poland under the Netherlands-Poland BIT (1992) (LC Corp v. Poland).
The Netherlands-Poland BIT (1992) was terminated in 2019. In 2021, the Republic of Poland and the Netherlands signed the EU’s termination treaty for intra-EU BITs, extending sunset clauses.
The Republic of Poland requested the court to order LC Corp to file a joint application with the Republic of Poland for termination of the arbitral proceedings within two weeks, to declare that no valid arbitration agreement existed between the parties, and to impose a daily fine of EUR 1 million if the investor did not comply. LC Corp, in turn, argued that the Dutch court lacked authority to rule on the arbitral tribunal’s jurisdiction and that the proper court for annulment or enforcement proceedings would be at the arbitral seat in the UK.
Arbitration Community Events
March 3: 14th Warsaw Pre-Moot and “Discretion or Randomness: Arbitrators’ Decision-Making Framework” Conference addressing challenging procedural issues and arbitrators’ discretion in applying material law organized by the University of Warsaw. The conference was accompanied by a Moot Alumni Association presentation addressed to students and young practitioners on the MAA Mentor-Mentee Program and a satellite event organized by Poland VYAP titled “Career Pathways in Arbitration – Everything You Wanted to Know But Were Afraid to Ask.” September: Arbitration Lunch Match – the Polish chapter of a worldwide initiative intended to bring together female arbitration practitioners through a blind date coordinated by the law firms Gessel and Baker McKenzie.
September 7: 3rd edition of “Women in Arbitration: SpeedNet” aimed at integrating the arbitration community organised by SKS Law firm.
October 5: Workshop on the IBA Rules on the Taking of Evidence in International Arbitration (2020), curated by the Eastern Europe Arbitration Group of the IBA Arbitration Committee in cooperation with the Faculty of Law of the University of Warsaw and the Warsaw Bar Association. The panel discussions involved key features and lessons to be learned from applying the IBA Rules of Evidence 2020 to increase the efficiency of arbitration and litigation. The workshop was later followed by a discussion organised by CMS on the counsel perspective on the IBA Rules.
October 19: “Financing disputes as a type of investment project” meeting aimed at presenting the perspective of arbitrators, counsel, scholars, and experts organized by the Court of Arbitration at the Polish Chamber of Commerce in Warsaw.
October 20-22: SWPS University in Warsaw, together with the United States Agency for International Development (USAID), and the Commercial Law Development Program Office of the U.S. Department of Commerce for a second time organized a three-day intensive training gathering students from 11 universities in Lithuania, Moldova, Poland, and Ukraine.
October 22: ICC YAAF “Arbitration Insights: How to Navigate Your Career in International Arbitration” to shed more light on different pathways and opportunities, and the do’s and don’t’s of building a career in international arbitration.
December 6-7: Solidarity Arbitration and Mediation Days – to express the continuing solidarity of the international arbitration and mediation community with Ukraine. The topics discussed included novel kinds of disputes resulting from energy transition, ESG, modern dispute prevention, and mediation in complex infrastructure disputes. Numerous satellite events also addressed the calculation of damages in IT disputes, arbitration in a tech-driven world, CEE countries as seats for arbitration, and the practical implications of insolvency in arbitration.
December 14: International Chamber of Commerce (“ICC”) Poland held a conference titled “Disability Inclusion in International Arbitration: Make Arbitration a Better Place”, focused on spreading awareness on how arbitration can benefit from including people with disabilities, providing practical recommendations for arbitral tribunals, institutions, and counsel.
The conference was followed by the 4th ICC Charity Christmas Dinner in Warsaw, where funds were raised for Fundacja Centrum Edukacji Niewidzialna, supporting blind and visually impaired people.
ABOUT THE AUTHORS:
Olga Marcinkowska is currently an LL.M Candidate in International Dispute Resolution at Humboldt-Universität zu Berlin. Olga is also a trainee advocate with the Warsaw Bar Association and a member of the Poland VYAP Founding Committee.
Agata Zwolankiewicz is an associate in the Litigation, Arbitration, and Investigations department at Linklaters Warsaw, and a PhD Candidate at KU Leuven. She holds an LL.M. with a concentration in international investment and trade law from the University of Ottawa. Agata is a trainee advocate with the Warsaw Bar Association and a member of the Poland VYAP Founding Committee.
Szymon Tkaczyk is an associate in the Dispute Resolution and Arbitration practice of White & Case in Warsaw. He provides legal assistance to clients in court, arbitration, and administrative proceedings. Szymon is also a trainee advocate with the Warsaw Bar Association and a member of the Poland VYAP Founding Committee.
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