{"id":8730,"date":"2024-06-18T17:09:21","date_gmt":"2024-06-18T15:09:21","guid":{"rendered":"https:\/\/jklaw.pl\/mity-o-arbitrazu\/"},"modified":"2024-09-04T22:01:32","modified_gmt":"2024-09-04T20:01:32","slug":"myths-about-arbitration","status":"publish","type":"post","link":"https:\/\/jklaw.pl\/en\/myths-about-arbitration\/","title":{"rendered":"Myths about arbitration"},"content":{"rendered":"\n
\n

The greatest enemy of truth is often not a deliberate, fabricated, and dishonest lie, but rather a myth: persistent, persuasive, and unrealistic.<\/p>John F. Kennedy<\/cite><\/blockquote><\/figure>\n<\/blockquote>\n\n\n\n

Books and events dedicated to arbitration (conferences, symposia, etc.) often portray it in a positive light. Arbitration is presented as a superior, faster, more flexible, or more cost-effective way of resolving disputes compared to state courts. However, these scientifically interesting features of arbitration require proper confrontation with the reality of its application.<\/h3>\n\n\n\n

e\u0107 \u015bwiadomo\u015b\u0107 tego, \u017ce \u2013 nawet przy mniejszym formalizmie \u2013 s\u0105d polubowny cechuje si\u0119 jednak okre\u015blon\u0105 specyfik\u0105. Regulamin post\u0119powania danej instytucji arbitra\u017cowej (sta\u0142ego s\u0105du polubownego) to za ka\u017cdym razem u\u0142amek ustawy. R\u00f3wnie\u017c wiedza na temat arbitra\u017cu jest obecnie na wyci\u0105gni\u0119cie r\u0119ki. Chocia\u017c jednym z czynnik\u00f3w zach\u0119caj\u0105cych do wykorzystania s\u0105du polubownego jest jego odr\u0119bno\u015b\u0107, z pewno\u015bci\u0105 nie rekomenduj\u0119 arbitra\u017cu przy braku znajomo\u015bci jakichkolwiek regu\u0142 jego organizacji czy funkcjonowania.<\/h2>\n\n\n\n

Myth 1 \u2013 Arbitration is more expensive than state court proceedings<\/h3>\n\n\n\n

This myth stems from the mistaken assumption that only the fees and costs charged by the permanent arbitral tribunal\/arbitrators should be considered in calculating the costs of a dispute. In fact, the costs of a dispute include:<\/p>\n\n\n\n

    \n
  • Fees, upon which the decision to undertake arbitration depends,<\/li>\n\n\n\n
  • Legal representation fees (which are generally unlimited),<\/li>\n\n\n\n
  • Interest on the value of the subject matter of the dispute (the longer the dispute, the higher the interest),<\/li>\n\n\n\n
  • Losses resulting from the suspension or termination of business relations with the party to the dispute (arbitration is faster than state court proceedings and offers greater chances of maintaining or restoring business relations and deriving profits).<\/li>\n<\/ul>\n\n\n\n

    Cost discussions in arbitration are often treated superficially in commentaries. However, in my view, all the above factors must be considered rather than merely comparing the fees charged by institutions or arbitrators.<\/p>\n\n\n\n

    Myth 2 \u2013 Arbitration is suitable for every type of case<\/h3>\n\n\n\n

    Polish law (Article 1157 of the Civil Procedure Code) sets out a broad range of cases that may be resolved through arbitration. This is generally referred to as \u201carbitrability.\u201d Although the legislature defines which categories of disputes can be resolved by arbitrators, in practice, not every dispute should be referred to arbitration. Aside from cases reserved for state courts, arbitration should not deal with disputes involving relatively low amounts, even though many permanent arbitral tribunals have regulations allowing the resolution of smaller disputes.<\/p>\n\n\n\n

    Consequently, at least one of the parties should be a business entity. It is rare for two individuals who are not engaged in business to have claims of significant value or importance against each other.<\/p>\n\n\n\n

    Arbitration is, however, ideal for larger, multi-faceted disputes, including those at the intersection of civil and administrative law (e.g. unfair competition cases).<\/p>\n\n\n\n

    Myth 3 \u2013 \u201cThe bigger, the better\u201d<\/h3>\n\n\n\n

    The attractiveness of arbitration should not depend on the size or position of the entity involved. However, there are opinions that success before an arbitral tribunal is influenced by non-substantive factors such as market power, brand, image, or the party\u2019s recognisability. This is a misconception. Favourable outcomes can be achieved regardless of the other party\u2019s market position. A smaller entity is not inherently at a higher risk of losing the dispute.<\/p>\n\n\n\n

    Personally, I have successfully handled cases where my clients were smaller market players compared to the other party.<\/p>\n\n\n\n

    It is true that a larger entity may more easily bear the costs of legal representation in arbitration, but this does not automatically translate into winning the dispute.<\/p>\n\n\n\n

    Myth 4 \u2013 Arbitration is \u201cesoteric knowledge\u201d<\/h3>\n\n\n\n

    I believe that the use of arbitration requires prior familiarisation with its specifics. Parties may be surprised by the lack of formality typical of courtrooms, reduced procedural formalities, and a partnership-based atmosphere in resolving disputes. Those accustomed to state courts may be surprised that arbitrators do not always refer to the Civil Procedure Code (or other procedural laws).<\/p>\n\n\n\n

    It is therefore worth understanding the procedural rules before an arbitral tribunal and being aware that, even with reduced formalities, arbitration has its own specificities. The procedural rules of an arbitral institution (permanent tribunal) are only a fraction of statutory provisions. Knowledge of arbitration is also now readily accessible. Although one of the factors encouraging the use of arbitration is its distinctiveness, I would not recommend arbitration without at least a basic understanding of its rules and operation.<\/p>\n\n\n\n

    Myth 5 \u2013 \u201cThe old boys’ club\u201d<\/h3>\n\n\n\n

    Seeing the same faces at domestic arbitration events (which is not inherently problematic) does not influence the outcome of a particular case. Statements such as \u201cwe know the arbitrators\u201d (from the website of an international law firm) are harmful to arbitration. It is better to be knowledgeable about arbitration.<\/p>\n\n\n\n

    Even though the Polish arbitration community is relatively small, this does not automatically lead to losing a case. Polish arbitration needs development and promotion, and non-substantive factors hinder its progress. The community is aware of this and strives to eliminate unfavourable factors, regardless of personal relationships.<\/p>\n\n\n\n

    Myth 6 \u2013 An arbitral award is equivalent to a state court judgment<\/h3>\n\n\n\n

    Yes, provided that \u2013 in the Polish context \u2013 it is recognised by a state court (if it is not enforceable through a bailiff) or its enforceability is confirmed (which allows bailiff enforcement of the arbitral award). The view that an arbitral award is equivalent to a state court judgment is commonly found in the literature, but it is an oversimplification. The winning party does not need to seek recognition or enforcement of the arbitral award if the losing party voluntarily complies. Arbitration also typically achieves its goal more quickly if the parties settle during the proceedings and subsequently enforce the settlement.<\/p>\n\n\n\n

    Arbitration itself is much faster than state court proceedings. Arbitrators take about a year to resolve disputes, while state court proceedings take around 18 months (an optimistic statistic, given the methodology and personal experience). Arbitration is also generally a single-instance process. Arbitral awards enjoy greater stability, with only 1-2% of them being overturned by state courts.<\/p>\n\n\n\n

    In conclusion, even though an arbitral award is not equal to a state court judgment, arbitration is much more advantageous in terms of the time required to obtain an enforceable decision.<\/p>\n\n\n\n

    Myth 7 \u2013 A state court judgment is \u201cbetter\u201d<\/h3>\n\n\n\n

    This is not about its status (this myth, I hope, has been debunked above) but about its quality. Arbitrators are private judges familiar with the subject matter of the dispute. The parties decide who will resolve their case. In state courts, there is no option to choose the judge; often, cases are heard by individuals who have never dealt with the subject matter. This raises questions about the quality and stability of judgments \u2013 whether such state court judgments may be overturned or amended. With longer state court proceedings and the risk of a judgment being invalidated, pursuing a dispute in this forum can sometimes lose its purpose.<\/p>\n\n\n\n

    Myth 8 \u2013 Arbitration in Poland is steadily growing<\/h3>\n\n\n\n

    A holistic assessment of arbitration development should not only include academic growth, an increasing number of specialists or recommended arbitrators, but also its commercial aspect: an increase in the number of cases. Conferences, publications, international cooperation, competitions, etc., are essential for the development of arbitration. However, Polish arbitration has not yet reached a higher volume of cases per year. Even 1,000 cases (data may be understated, as ad hoc arbitration cases are not tracked) represent only a tiny fraction of the approximately 1.5 million commercial disputes handled by state courts annually.<\/p>\n\n\n\n

    Undoubtedly, only mass promotion of arbitration, with state support, will enable the effective development of this attractive form of dispute resolution.<\/p>\n\n\n\n

    In the current legal environment, arbitration is a more attractive method of resolving (commercial) disputes than state courts. It is worth utilising the services of arbitrators (arbitration is a service), but with full awareness of its advantages, disadvantages, and specifics. This attempt to address some of the myths surrounding arbitration is merely a personal reflection on prevailing opinions and views.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

    The greatest enemy of truth is often not a deliberate, fabricated, and dishonest lie, but rather a myth: persistent, persuasive, and unrealistic. John F. Kennedy Books and events dedicated to arbitration (conferences, symposia, etc.) often portray it in a positive light. Arbitration is presented as a superior, faster, more flexible, or more cost-effective way of…<\/p>\n","protected":false},"author":1,"featured_media":8356,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_kad_blocks_custom_css":"","_kad_blocks_head_custom_js":"","_kad_blocks_body_custom_js":"","_kad_blocks_footer_custom_js":"","_kadence_starter_templates_imported_post":false,"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[118],"tags":[],"obszary-praktyki":[269],"ppma_author":[268],"class_list":["post-8730","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","obszary-praktyki-arbitration"],"acf":[],"taxonomy_info":{"category":[{"value":118,"label":"News"}],"obszary-praktyki":[{"value":269,"label":"Arbitration"}]},"featured_image_src_large":["https:\/\/jklaw.pl\/wp-content\/uploads\/2024\/06\/JKLAW-Grafiki-blog-3840-px-82-1024x576.png",1024,576,true],"author_info":{"display_name":"Administrator","author_link":"https:\/\/jklaw.pl\/en\/author\/administrator\/"},"comment_info":0,"category_info":[{"term_id":118,"name":"News","slug":"news","term_group":0,"term_taxonomy_id":118,"taxonomy":"category","description":"","parent":0,"count":235,"filter":"raw","term_order":"0","cat_ID":118,"category_count":235,"category_description":"","cat_name":"News","category_nicename":"news","category_parent":0}],"tag_info":false,"authors":[{"term_id":268,"user_id":0,"is_guest":1,"slug":"dr-lukasz-wydra-en","display_name":"dr \u0141ukasz Wydra","avatar_url":{"url":"https:\/\/jklaw.pl\/wp-content\/uploads\/2024\/02\/800x1200-wydra.png","url2x":"https:\/\/jklaw.pl\/wp-content\/uploads\/2024\/02\/800x1200-wydra.png"},"first_name":"dr \u0141ukasz","last_name":"Wydra","funkcja":"ADVOCATE, PARTNER","telefon":"+48 22 416 60 04","job_title":"","linkedin":"https:\/\/www.linkedin.com\/in\/lukasz-wydra-ph-d-in-laws-0571a0207\/","description":""}],"_links":{"self":[{"href":"https:\/\/jklaw.pl\/en\/wp-json\/wp\/v2\/posts\/8730","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jklaw.pl\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jklaw.pl\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jklaw.pl\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/jklaw.pl\/en\/wp-json\/wp\/v2\/comments?post=8730"}],"version-history":[{"count":0,"href":"https:\/\/jklaw.pl\/en\/wp-json\/wp\/v2\/posts\/8730\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/jklaw.pl\/en\/wp-json\/wp\/v2\/media\/8356"}],"wp:attachment":[{"href":"https:\/\/jklaw.pl\/en\/wp-json\/wp\/v2\/media?parent=8730"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jklaw.pl\/en\/wp-json\/wp\/v2\/categories?post=8730"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jklaw.pl\/en\/wp-json\/wp\/v2\/tags?post=8730"},{"taxonomy":"obszary-praktyki","embeddable":true,"href":"https:\/\/jklaw.pl\/en\/wp-json\/wp\/v2\/obszary-praktyki?post=8730"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/jklaw.pl\/en\/wp-json\/wp\/v2\/ppma_author?post=8730"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}