Arbitration – where to start from?

Łukasz Wydra, PhD

Arbitration courts are generally treated as the “younger brothers” of state courts. What is interesting Is that historically it was the other way around and arbitration is older. There are multiple reasons why over the years the state judiciary gained primacy and knowledge concerning arbitration began to disappear. To revitalize this knowledge, we are providing you with this mini handbook, which will be published periodically. Our goal is to present various aspects of arbitration that will help you decide on the choice of this way of resulting legal disputes and organize the party’s participation in the arbitration proceedings.

Recommendations before entering into an arbitration agreement

  1. If (1) a dispute has arisen, but (2) you have not previously concluded an arbitration agreement with the other party, and nevertheless, (3) you are considering going to an arbitration court, the “arbitration utility test” may be of help.

There are some advantages of arbitration worth paying attention to. Some of them are not broadly commented. Therefore, if:

  • a quick resolution of the dispute is crucial;
  • the matter might be complex and should be resolved by experts familiar with its matter;
  • confidentiality of the proceedings, without open access by outsiders, is important;
  • the party/parties wish to avoid formalism typical to the proceedings before a national court;
  • the parties want to be free to decide on the applicable law;
  • a business relationship with the partner needs to be maintained;

-when at least one of the conditions above is met, arbitration is a better solution than going to a national court.

Based on the currently applicable arbitration agreement

  1. When an arbitration agreement has been concluded earlier, filing a lawsuit before an arbitration court is (in the Polish legal system) necessary. Were it to be brought to a national court without an arbitration court, the state court may reject the lawsuit (Article 1165 § 1 of the Code of Civil Procedure), which is an obvious waste of time and resources.

What are the costs?

It is thought that arbitration is expensive. This is a bit too simplistic a thesis. When planning an arbitration, you may consider elements such as:

– selection of the type of arbitration (permanent arbitration court/ ad hoc/ administered arbitration);

– the procedure of resolving the dispute (normal v. accelerated/simplified);

– number of arbitrators hearing the dispute.

The costs of arbitration proceedings can be reduced already at the pre-dispute stage. Additionally, permanent arbitration courts usually have tools allowing them to calculate the amount of fees that the plaintiff will incur.

An important note:

The misconception that arbitration costs are higher is common because of failing to consider the following factors:

  • costs of remuneration of attorneys in connection with a much longer dispute before a national court;
  • the possibility of agreeing on a fixed (lower) fee in ad hoc arbitration than in proceedings before a national court;
  • completely unmeasurable costs arising in connection with a much longer dispute in a national court (for example, the longer it takes, the higher interest accrues in disputes over monetary benefits);
  • the possibility for arbitrators to award the costs of the proceedings to the party winning the dispute.

To give an example, let’s compare the costs that must be paid to initiate a dispute:

As observable, with proper management of the costs of proceedings, and above a certain value of the subject matter of the dispute, arbitration costs might be lower than a dispute before a national court.


dr Łukasz Wydra
ADVOCATE, PARTNER+48 22 416 60

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