Legal nature of the dispute before the arbitration court

Arbitration, like proceedings before a state court, aims to settle a dispute with authority. Judgment is key, while an arbitration settlement is also possible.

The arbitration court, although less formalized, is contentious in nature. The tribunal conducts evidentiary proceedings, including questioning witnesses/parties, providing (often with state court involvement) safeguards. It may also consult experts. Arbitration has long been familiar with, for example, remote hearings or written witness statements.

Arbitration differs from mediation, in which the parties seek to reach a compromise. It is possible to “switch” in arbitration to mediation (the so-called. “arb-med” model).

Possible resolutions

The arbitration proceedings can end in several possible ways:

1. a decision on the merits (judgment);
2. a procedural decision (e.g., an order to discontinue the proceedings due to, among other things, expiration of the arbitration clause, withdrawal of the lawsuit, conclusion of a settlement, etc.);
3. settlement, which will then be given the form of an arbitral award (this means giving it the status of such an award, so it is not an “ordinary settlement”).

Practical notes

It is worthwhile to familiarize yourself with the provisions of national law governing how a dispute can be concluded in arbitration. The freedom of the parties is, of course, fundamental, but neither they nor the arbitrators can violate mandatory rules. Permanent arbitration courts ensure that their rules of procedure (which shape the rules of procedure less formally than national procedural regulations) are in accordance with statutory iuris cogentis.

If, for procedural reasons, the arbitration ends before an award is issued, the following scenarios are possible, which are generally based on national law:

• arbitration is completed; it is not permissible to resolve the same subject matter of the dispute, between the same parties in the same arbitration;
• arbitration proceedings end, while the case automatically goes to a state court for resolution;
• arbitration proceedings are terminated, but the same arbitration clause (arbitration agreement) can be brought before an arbitral tribunal.

The issuance of an award by arbitrators, or the conclusion of a settlement before them, can lead to:

• voluntary execution of the judgment/agreement by the losing party (in whole or in part as to the claim asserted by the opponent);
• compulsory enforcement of a claim that has been established by arbitrators in an award, or settlement agreement.

Post-judgment or settlement proceedings

The following scenarios are possible after the parties obtain an arbitration award or reach a settlement before it.

Voluntary enforcement of an award, or settlement agreement, means that the losing party in a dispute over a given claim nevertheless behaves in accordance with the contents of the arbitrators’ award, or the settlement before them. It does not matter whether or not the settlement is given the form of a judgment.

Forced execution of a judgment, or a settlement that has the form of a judgment is their sanction (approval) by a state court. In Poland, it is referred to recognition of a judgment (when the claim established by it is not subject to enforcement), or a declaration of enforceability (when the judgment/decree is enforceable by way of enforcement – in practice by a bailiff).

A challenge to an arbitration award may consist of, among other things. on revocation, amendment, annulment, determination that the judgment does not have certain legal effects, etc.

Practical notes

Each of the scenarios presented is governed by national arbitration laws. The key is always the law (the rules of the permanent arbitration courts do not, in principle, regulate the issue of forcing the losing party to comply with the award, or how to challenge the arbitration award). Domestic law regulates cases of refusal of its recognition/enforceability. Polish law determines when an arbitrators’ award should be overturned by a state court.

The procedures leading to (1) compulsory enforcement of an award/agreement in arbitration, or (2) challenging the arbitrators’ award, are regulated by law. It defines the procedure, deadlines and consequences of procedural actions leading to the mentioned results.

The grounds for refusing to recognize/establish enforceability are relatively narrowly defined and lead to a demonstration of what mistakes the arbitrators made in the award, not in the proceedings preceding its issuance. The Polish legislator has separately regulated the recognition/establishment of enforceability of domestic and foreign judgments.

Experience shows that the refusal to recognize/establish the enforceability of such a judgment or its challenge (in Poland: revocation) is extremely rare.