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Commentary on Judgment of Court of Appeal in Gdansk, Poland

Bartosz Biechowski
Radca prawny / Attorney-at-law
Maritime and Commercial Law Office
Gdynia, Poland

Form of the arbitration clause and authorisation to conclude an arbitration clause under Polish law 
Commentary on the judgment of the Court of Appeal in Gdansk, Poland in the case I AGa 196/19 of June 16, 2020

The details of the case were as follows: the shipowner A (the Owner) concluded a ship repair contract with the yard B (the Yard). The vessel’s engine broke down shortly after it had left the Yard and the Owner decided to set-off its losses against the remaining price to be paid to the Yard. The Yard, in turn, decided to start an ad hoc arbitration procedure in Poland in accordance with the ship repair contract (governed by Polish law).

The Owner in its reply to the Yard’s writ of summons argued that the arbitration clause was invalid as the ship repair contract and the arbitration clause contained therein were signed by a person not authorised to represent the Owner (i.e. Owner’s employee supervising the repair). This issue was not checked by the Yard at the moment of execution of the contract.

According to the Owner, under Polish law the arbitration clause should be concluded in written form under pain of invalidity (or other equivalent form such as exchange of e-mails, faxes etc.). Additionally, if a specific form is required for a legal act to be valid, the power of attorney to perform that act should be given in the same form. In other words, if Polish law requires written form of the arbitration clause, the POA should be also done in writing.

Moreover, the question of validity of the arbitration clause should always be assessed separately from the question of validity of the main contract. This means that even if contract is valid this does not automatically mean that an arbitration clause will be valid as well. Many contracts under Polish law do not require any specific form for their validity – like for instance the ship repair contract (qualified by Polish law as the contract to perform a specific task) whereas the arbitration clause must always be made in writing.

The Yard argued that Owner’s employee had so-called “implied authorisation” to conclude the contract and an arbitration clause on behalf of the Owner. The alleged source of such authorisation was the fact that this employee usually supervised repair works, negotiated repair contracts, could amend the scope of works, finally that he signed the contract himself. Owner’s members of the board were fully aware of that and never limited his powers.

The ad hoc arbitral tribunal appointed in the case shared Yard’s point of view and decided that the arbitration clause was valid. It also adjudged full claim amount in favour of the Yard.

The Owner did not agree with the above and lodged a motion for setting aside of the arbitration award (Polish: skarga o uchylenie wyroku sądu polubownego) to the Court of Appeal in Gdańsk, Poland. Please note that under Polish law an arbitral award can be contested only on formal grounds (like invalidity of the arbitration clause) not on the merits of the case which means that jurisdiction of the courts in this respect has limited character. So, a motion for setting aside of the arbitration award under Polish law should not be confused with an appeal.

The Court fully agreed with Owner’s argumentation outlined above and decided to set aside (repeal) the arbitral award given in the case. Apart from sharing Owner’s point of view the Court stated that since arbitration is an alternative method of dispute resolution, the party’s consent to participate in the arbitration cannot be presumed, such consent should be expressly clearly.

Consequently, it is not possible to conclude an arbitration agreement (arbitration clause) in an implied form. Such agreement must always be signed by a person authorised to represent the party, and the form of authorisation for that person must correspond to the form of the arbitration agreement (i.e. both arbitration clause and the POA require written form under pain of invalidity).

The analysed judgement reflects strict approach to validity of the arbitration clause in Poland. The judgement confirms that in the Polish law (save for representation by law), there is no presumption of authorisation, which means that that the idea of the implied authorisation is not acceptable.