Editorial Board: Editors and coordinators: Dr. Beata Gessel-Kalinowska vel Kalisz, Dr. Rafał Morek,

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2 Editorial Board: Prof. Dr.. Andrzej Szumański, Sylwester Pieckowski, Wojciech Błaszczyk, Dr. Beata Gessel-Kalinowska vel Kalisz, Dr. Andrzej W. Wiśniewski, Paweł Pietkiewicz, Dr. Rafał Morek, Tomasz Zbiegień Editors and coordinators: Dr. Beata Gessel-Kalinowska vel Kalisz, Dr. Rafał Morek, Secretary Editor: Agnieszka Różalska, Court of Arbitration at PCPE Lewiatan Flory Street 9/ Warsaw tel. (+48 22) fax (+48 22) Project co-financed by the European Union within the framework of the European Social Fund

3 Issue No. 3(6)/2011: Debate Commercial Arbitration in the 21 st Century in Poland and Europe: decline or development? DEBATE OPENING Beata Gessel-Kalinowska vel Kalisz, Marek Michalski, Maciej Szpunar, Maciej Bobrowicz PART I IDEOLOGICAL ORIGINS OF ARBITRATION WHAT VIRTUES SHOULD BE PROMOTED AND PROMULGATED? Introduction Beata Gessel-Kalinowska vel Kalisz 8 Discussion Jerzy Rajski, Marcin Dziurda, Jolanta Nowakowska- Zimoch, Ewa Nowińska, Małgorzata Podrecka, Krzysztof Stefanowicz, Ireneusz Matusiak, Aleksander Chłopecki, Zbigniew Banaszczyk, Tomasz Wardyński PART II ARBITRATION AND THE NEED FOR LEGISLATIVE CHANGES HAS THE TIME COME FOR A CHANGE IN THE MODEL OF THE APPLICATION FOR SETTING ASIDE AN ARBITRAL AWARD? Introduction Bartosz Krużewski 25 Discussion Karol Weitz, Tadeusz Ereciński, Aleksander Chłopecki, Ireneusz Matusiak, Beata Gessel-Kalinowska vel Kalisz, Jerzy Rajski, Rafał Morek, Barbara Grabowska, Paweł Pietkiewicz PART III CAN POLAND BECOME A EUROPEAN ARBITRATION CENTRE? Introduction Maciej Jamka 41 Discussion Tomasz Wardyński, Paweł Pniewski, Karol Weitz, Jacek Kaczmarek, Jerzy Rajski, Beata Gessel- Kalinowska vel Kalisz, Małgorzata Surdek SUMMARY Andrzej Kidyba, Beata Gessel-Kalinowska vel Kalisz, Marek Michalski

4 DEBATE OPENING Debate: Commercial Arbitration in the 21st century in Poland and in Europe: decline or development? 15th April 2011, Hotel Bristol, Warsaw Dr. Beata Gessel-Kalinowska vel Kalisz: Let me welcome you all to our debate. I must admit that this debate is a dream come true for me and I hope that this is how a constructive discussion on Polish arbitration will begin. Once in a while the issue of arbitration surfaces, although discussions about it are rare. The programme for the current debate, which I prepared, tackles issues which are related to both the practical aspects of arbitration and the more doctrinal ones. First of all I would like to thank Mr. Radosław Sikorski, the Minister of Foreign Affairs, for agreeing to this discussion taking place under his auspices. I am convinced that one of the themes of today s debate is crucial, i.e. the question of our place on the map of European and international arbitration. I would also like to thank Mr. Krzysztof Kwiatkowski, the Minister of Justice, who also agreed to give this debate his endorsement. Unfortunately, he could not be here with us today. I believe that the patronage we have been granted is of paramount importance to the development of, and changes to, arbitration. I would like to cordially thank Professor Rajski and Professor Sołtysiński, who provided us with substantive and organizational assistance. Unfortunately, Professor Sołtysiński could not be here with us but sends his regards. Let me now introduce the participants in the debate. Please note that the seating order is not accidental. First of all, there are the representatives of state institutions who agreed to take part in our debate. I would like to welcome Mr. Maciej Szpunar, the Minister from the Ministry of Justice. Please also welcome Ms. Joanna Kiełkowska, who is the Head of the Business Affairs Division of the Department of Common Courts in the Ministry of Justice, as well as Justice Michał Dąbrowski, a representative of the Ministry of Justice. I would also like to extend my warm welcome do Dr. Marcin Dziurd, President of the State Treasury s Solicitors Office, who is very often involved in arbitration proceedings, and Mr. Maciej Bobrowicz, the President of the National Board of Legal Advisors. The second group of professionals who are participating in today s debate consists of representatives of arbitration institutions. We have in our group Prof. Aleksander Chłopecki, who chairs the Arbitration Court at the Polish Financial Supervision Authority. We welcome Prof. Bernadeta Fuchs, the head of the Arbitration Court at the Chamber of Commerce and Industry in Katowice, and Ms. Elżbieta Kornatka, the Court Secretary at PKPP Lewiatan, who is known to many of you as a legendary figure in the field of arbitration; and Mr. Andrzej Jankowski, Vice President of the Arbitration Court at the Association of Polish Banks. Let me welcome Mr. Jacek Kaczmarek, Vice p. 4 Arbitration e-review, No 3 (Summer) 2011

5 DEBATE OPENING President of the Arbitration Court at the Chamber of Commerce and Industry in Nowy Tomyśl, for which today is a big day due to an international conference taking place there - to which we shall, most likely, refer in the third part of our discussion. We also have with us Mr. Ireneusz Matusiak, President of the Arbitration Court concerning internet domains, and Mr. Paweł Pniewski, General Secretary of the ICC Polish National Committee. Our group also consists of academics - whom I have not yet enumerated - distinguished due to the positions they hold in arbitration institutions. I would also like to welcome, this time in an alphabetical order, the following people: Dr. Zbigniew Banaszczyk from Warsaw University, Prof. Adam Brzozowski from Warsaw University, Prof. Tadeusz Ereciński from Warsaw University, the President of the Supreme Court and also, especially important for us today, the head of the Codification Committee. Let me also welcome Prof. Andrzej Kidyba from the Maria Curie-Skłodowska University, Prof. Marek Michalski from the Cardinal Stefan Wyszyński University, Prof. Ewa Nowińska from the Jagiellonian University, Prof. Karol Weitz from Warsaw University, Dr. Rafał Morek from Warsaw University and also the editor of E-Przegląd Arbitrażowy (Arbitration electronic newsletter). I would also like to welcome some people highly regarded in the field of arbitration: Mr. Maciej Jamk, a lawyer from K&L Gates, Mr. Bartosz Krużewski, a lawyer from Clifford Chance, Ms. Jolanta Nowakowska-Zimoch, a lawyer from Hogan Lovells, Mr. Paweł Pietkiewicz, a lawyer from White & Case, Dr. Małgorzata Podrecka, Head of the Legal Department in Can- Pack S.A., Dr. Krzysztof Stefanowicz and Ms. Małgorzata Surdek from CMS Cameron McKenna, Mr. Tomasz Wardyński, a lawyer from Wardyński i Wspólnicy and Prof. Andrzej Wierciński from Wierciński Kwieciński Baehr. We also have with us a representative of the Helsinki Foundation for Human Rights, Ms. Barbara Grabowska. I also extend a warm welcome to the representatives of the media. Mr. Krzysztof Sobczak will listen to our debate and Mr. Marek Domagalski will join us shortly. Let me also welcome our online audience. There is live coverage of the debate via the website of the Court of Arbitration at PKPP Lewiatan. All internet users are encouraged to voice their opinions and comments. You can either do it through the website or via electronic mail. Let me now give the floor to Prof. Marek Michalski, who will conduct the debate and whom I wish to thank cordially for accepting our invitation. Prof. Marek Michalski: Thank you very much. Let me welcome you all. Following what was said by the preceding speaker, I hope that maybe in the future, not necessarily in a couple of years but rather in a dozen or so, debates such as this will have audiences of millions. This is certainly what we wish for. We are already using new technologies to our advantage and, as far as I understand, we are being watched the whole time. Let me ask Mr. Maciej Szpunar, Undersecretary of State responsible for legal and treaty issues at the Ministry of Foreign Affairs, to take the floor. Maciej Szpunar, Undersecretary of State responsible for legal and treaty issues at the Ministry of Foreign Affairs: Thank you. Ladies and gentlemen, first of all I would like to thank you for the opportunity for the Ministry of Foreign Affairs to give its patronage to this event, and I also wish to congratulate you on such a Arbitration e-review No. 3 (Summer) 2011 p. 5

6 DEBATE OPENING wonderful initiative. The Ministry of Foreign Affairs is not involved in arbitration, but the functioning of arbitration, and in particular international arbitration is, in my opinion, of paramount importance to the tasks that face the Ministry of Foreign Affairs. I wish to tackle the following two issues. This conference should really be the focus of attention because it tackles general aspects of arbitration. One can even say that it is about the axiology of arbitration, about what arbitration is, what model should be applied, and whether Poland could become an arbitration centre. There are no doubts that the answers to such questions depend upon whether arbitration in Poland will be strong, whether entrepreneurs in Poland will refer to arbitration proceedings in disputes between themselves, and to what extent Poland can become a place for international arbitration. I would like to share a general thought with you. Irrespective of what provisions of law we apply in Poland and what solutions we reach with respect to complaints and the challenging of arbitration awards, the popularity of arbitration and the importance of Poland as a place for arbitration will depend most of all on the quality, strength and stability of the Polish State. Let me put it this way, if Poland is a popular place for arbitration, it will mean that Poland is perceived as a stable country in all meanings of this word, i.e. that Poland is a state in which state jurisdiction functions properly. The fact that arbitration constitutes an alternative to the jurisdiction of the state does not mean that the worse the state jurisdiction functions, the better arbitration functions. On the contrary. Both have to function properly. If Poland were a popular place for arbitration, it would mean that Poland plays an important role in the international economy, at least on a regional scale. It would also mean that Poland has good relations with its neighbours, maybe not excellent, but at least transparent. Poland is perceived as a country which can overcome differences between states. If Poland were an arbitration hub, it would also mean that Polish legal ideas are highly recognized and can influence international law and other legal systems. It would also mean that Poland has played its card well as the biggest country in this part of Europe. It would be perceived as a country which successfully carried out the transformation of its economy and which significantly contributes to the policy of the European Union towards its Eastern neighbours. I hope you can see that the success of arbitration is linked with the goals of the Ministry of Foreign Affairs; therefore, Mr. Sikorski had no doubts with respect to the Ministry s patronage concerning today s debate. I also have to apologize for leaving the debate earlier but, unfortunately, I have some previous commitments to attend to. I wish you a successful debate and I look forward to hearing about its results. Thank you once again for having me here. Maciej Bobrowicz, lawyer, President of the National Board of Legal Advisers: Minister, President of the Supreme Court, Ms. Gessel, I would like to thank you very much for inviting me to such an important debate. It is important not only for entrepreneurs - our clients - but it is also important for us, the lawyers, both theoreticians and practitioners. When I familiarized myself with the results of research on arbitration in Poland, which you can find in your debate materials, I realized that arbitration is not very popular: 410 cases before the Arbitration Court at the Polish Chamber of Commerce and p. 6 Arbitration e-review, No 3 (Summer) 2011

7 DEBATE OPENING 25 cases before the Arbitration Court at PKPP Lewiatan. We could ask ourselves what the reason is for such a state of affairs. It is a crucial question. If we find the cause we will also be able to find the solution. Why, for so many years, could arbitration as a concept not get its message heard by entrepreneurs and practicing lawyers? In my opinion, one of the reasons lies in the low level of legal awareness of Poles. If 67% of entrepreneurs are of the opinion that they do not need a lawyer because their type of enterprise does not need the support of lawyers, the OBOP research speaks for itself. If 66% of citizens share this view, and 87% of micro entrepreneurs have never hired a lawyer, the chance, in such circumstances, of a lawyer appearing and suggesting arbitration as the most effective way of resolving a dispute, is zero. the opinion that mediation is not financially profitable for them. This argument does not work in the case of arbitration. The important question is, why we, legal advisors or attorneys-at-law, do not perceive arbitration proceedings as an effective method of dispute resolution. Maybe some research would enrich our knowledge on the subject and enable us to look for some effective solutions. I wish you a successful discussion and interesting results. Thank you very much. There is also another question. Namely, in enterprises which actually employ lawyers, why do those lawyers not recommend arbitration as the best solution? This is an important question. PriceWaterhouseCoopers together with Viadrina University carried out some extremely interesting research - not on arbitration but on mediation, which is another method of resolving disputes. The research was based on big corporations. The questions asked were the following: Do you know all the advantages of mediation? Yes, I do. Do you know what mediation is? Yes, I do. Do you use mediation? No. I don't. The researchers failed to clarify the reasons for this situation. Perhaps it would be important to carry out such research in Poland. Maybe we should ask the practitioners about it, those who are the key keepers, as the English put it, and who open or close the doors to arbitration or mediation. As far as mediation is concerned, the situation is simple. The majority of practitioners are of Arbitration e-review No. 3 (Summer) 2011 p. 7

8 PART I Ideological origins of arbitration what virtues should be promoted and promulgated? Panel Moderator: Prof. Jerzy Rajski Introduction by: Dr. Beata Gessel-Kalinowska a.k.a. Kalisz Panel Participants: Prof. Jerzy Rajski; Dr. Marcin Dziurda; Jolanta Nowakowska-Zimoch; Prof. Ewa Nowińska; Dr. Małgorzata Podrecka; Dr. Krzysztof Stefanowicz; Ireneusz Matusiak; Prof. Aleksander Chłopecki; Dr. Zbigniew Banaszczyk; and Tomasz Wardyński Prof. Marek Michalski: Let us move to the first part of our debate. We have given it the following title: The ideological sources of arbitration: what values should be supported and propagated? Prof. Jerzy Rajski has been kindly asked to chair the first discussion. Prof. Jerzy Rajski: Thank you. Let me ask Dr. Gessel to take the floor and speak about the axiology of arbitration and the necessity of its presence in the world economy. Dr. Beata Gessel-Kalinowska vel Kalisz: Thank you professor. It could take me a very long time to speak of the importance of arbitration to entrepreneurs. I will, however, restrict myself to 10 minutes. I have selected 5 reasons, for the purpose of this debate, to justify why entrepreneurs should be encouraged to include arbitration clauses in agreements. Arbitration is liberal, fast, friendly, predictable and confidential. Let s say that the last issue is the least controversial. The first reason: Why is arbitration liberal? I also use the word flexible in this context. Arbitration is liberal for two reasons. First of all the most important principle of arbitration is the freedom to appoint an arbitrator. I can choose a judge in my own case, i.e. a person whom I trust. I can make a choice concerning an arbitrator taking into account a variety of criteria: e.g. I think that such a person will run the case smoothly, or that he or she has the appropriate knowledge and experience with respect to the issues which are to be adjudged. The right to choose an arbitrator is the beginning and the end of the arbitration, and the core of arbitration stems from this very principle. In particular, I must surrender voluntarily to the award of an arbitrator since I chose him or her personally, and nobody imposed him or her on me. There are several consequences that stem from such an assumption, and in fact the whole procedural side of arbitration arises from this very principle. First of all, arbitration is, in general, a single-instance court. If nobody imposes an arbitrator on me, I do not have to subject the award to control before a court of the second instance. This is how I understand the arbitration court as the court of single instance. The other issue which concerns the liberal aspect of arbitration is the fact that I can personally, as an entrepreneur, or a lawyer, select the rules according to which my case is to be examined. I can define the time-frame of particular actions, I can choose whether a case is to be tried in an institutional court or on an ad hoc basis. If the ad hoc method is selected, I can choose the procedure according to which the case is to be tried. It appears then that in arbitration the p. 8 Arbitration e-review, No 3 (Summer) 2011

9 PART I principle of freedom of contract is truly reflected. The second wonderful feature of arbitration is the fact that it is fast. In December last year there was a discussion in the Gazeta Prawna daily, in which Professor Sołtysiński - by the way, I regret he cannot be with us today - voiced the opinion that arbitration proceedings were long and costly. I ventured to disagree with Professor Sołtysiński in the subsequently published polemic. I calculated how long arbitration proceedings last before the Lewiatan Arbitration Court as I have access to such data. It turned out that last year each case was settled within 6 months on average. If we take into account five years and approximately 50 settled cases, the average length per case was 6.5 months. We do not hear a great many cases, but 50 cases could constitute a sample on the basis of which the length of the arbitration proceedings may be reviewed. At the preparation stage of this debate, I asked several arbitration institutions to share their data and it turned out that Lewiatan Arbitration Court was not an exception. The Court of Arbitration for Internet domains which deals with single-issue cases settles disputes in 1.5 to 3 months. It is a truly efficient institution. We have also received data from the Arbitration Court in Nowy Tomyśl. Their time frame for settling disputes is 7 months. In this light, the opinion that arbitration proceedings are lengthy is slightly far fetched. There is a general opinion after the Vivendi case that arbitration proceedings take years, are very complicated, and are beset by legal loopholes. We have to bear in mind that in this case, even the registration of the management board took a couple of years, so it is not a good example for disqualifying arbitration proceedings due to their pace. The next feature of arbitration is its friendliness. Judging from my experience as an arbitrator, and I am sure that at least half of you can share my opinion, I am sure that a situation differs, from the psychological point of view, when a case is adjudicated by a judge in a court room and when people meet in a conference room. In the case of arbitration, the disputes are, in fact, solved in a conference room in an atmosphere conducive to reaching agreement. It is very important in business that there is always sunshine after rain and that after a conflict people can still do business with one another provided that a certain unfortunate element in their cooperation has been resolved. It is not a rule but, in my opinion, such a situation is more probable in arbitration proceedings. This is also due to the fact that the majority of issues are agreed with the parties, such as a timetable for the proceedings, which I shall refer to later. Not every party to arbitration is aware of the fact that it can actually request the arbitrators to establish the timetable of the arbitration at the very beginning of the proceedings and that such timetable should be agreed with the parties. Agreeing on the manner of settling disputes is not only a conciliatory element, but it is crucial from the perspective of the pace of the proceedings. Arbitration is also predictable. The timetable is the crucial issue here. I shall refer to this issue from my own perspective as a practitioner. When a client approaches us, he usually has two questions. The first obvious one is whether the client will win or not, and what the chances are in percentage terms. It is a very difficult question but is always asked. The second question, notwithstanding winning or losing, is when? Let me go back to the timetable as an instrument. Even if there are delays in a given timetable, we are still able to tell the client when we can expect the award, and outline the course of the proceedings for him, e.g. when the statement of claim is going to filed, Arbitration e-review No. 3 (Summer) 2011 p. 9

10 PART I when the answer to it is going to be submitted, when the submissions will be filed and whether the award can be expected in September or in October. The planning of activities is important to entrepreneurs and the timetable is a part of such planning. The fifth feature of arbitration is the most obvious one, yet the one which is most often discussed. It is the question of confidentiality. I think that it is particularly important to public companies. I do not wish to concentrate on the interpretation of legal provisions right now because there have been many publications on this subject. Suffice to say that the rules of all arbitration courts contain confidentiality clauses. For the purpose of this debate, you have in your materials a report which includes an estimate comparison of data. We have counted the number of cases examined in institutional courts and, on the basis of Dr. Stefanowicz s assumptions, we estimated the number of ad hoc cases; we referenced it to the number of commercial cases examined (such data are available on the website of the Ministry of Justice) and it turned out that one-thousandth of all the cases are tried under arbitration proceedings. Even if I got it wrong by 100%, that is still only two-thousandths. The numbers are shockingly small. Therefore, I would like to pose a question. What is the reason for this situation? If we take into account the five features of arbitration, i.e. that arbitration is liberal, fast, friendly, predictable and confidential, which I have already mentioned, it would be a perfect tool for entrepreneurs. Why are only one-thousandth of all cases examined by arbitration courts? I think that there are three issues we need to take into account. First of all, there is no knowledge about arbitration among lawyers and entrepreneurs. The lack of knowledge on the part of entrepreneurs is, in a way, more obvious. Entrepreneurs are not obliged to know what arbitration is all about and how to use it. The lack of knowledge, however, on the part of lawyers is an issue which is much more painful. We have discussed with Mr. Bobrowicz the issue of the lack of arbitration classes in the core curriculum of the internship. Let s ignore the issue of universities because at the time of my studies, arbitration classes were optional. For a practitioner, however, who is trying to prepare himself to practice the profession, i.e. who participates in an internship for legal advisors or attorneys-at-law, it is crucial to have arbitration included in the core curriculum. I do not have in mind very extensive classes. I think that 6 hours of classes in which the core and philosophy of arbitration is explained would suffice. The second issue is the lack of procedural standards for the whole industry. Is the lack of competence on the part of arbitrators a discouraging issue? I mean the lack of competence with respect to the technical side related to the preparation of the arbitration proceedings. Arbitration proceedings are carried out in camera, and due to confidentiality issues, we cannot really tell how the proceedings are carried out by the arbitrators. The only circumstances in which we can talk about such issues are conferences or debates. I think that in our circles - and by saying our I mean arbitrators - a feeling that arbitrators play god in the proceedings still lingers. I often come across the attitude of arbitrators showing that they do not have to make any effort to make the proceedings efficient or to agree on timetables. They do not feel this obligation. Yet, in fact, it is a service - very well paid but still a service. I would like us to discuss these issues today. p. 10 Arbitration e-review, No 3 (Summer) 2011

11 PART I The third problem is the barriers arising from the legal environment. I m thinking here about the relations between arbitration and public courts in areas in which they come into contact. The basic issue is a complaint to have an arbitration award overruled. This will be the subject of the subsequent panel so I will not go into details. Apart from the complaint as such, there are some other issues which could be discussed which in the case of a common court is two instances, and in the case of Lewiatan just one. If we approach the issue from this perspective, it will be seen that arbitration proceedings are not significantly more expensive, and the higher the value in dispute, the lower are the costs of arbitration (see table). It is, however, only one side of the story. We will arrive at a Value in dispute (in PLN) 10, , ,000, ,000, Court fee on the claim (proportionate fee: 5% of the value in dispute) PLN PLN 5, PLN 50, PLN 100, Court fee on appeal PLN PLN 5, PLN 50, PLN 100, Court fees in total PLN 1, PLN 10, PLN 100, PLN 200, Arbitration fee - Lewiatan (inclusive of administration fee) PLN 1, (administration fee together with the arbitrator s remuneration) PLN 9, PLN 54, PLN 126, Difference (court fee arbitration fee) and properly regulated, such as the question of corporate disputes. But this could, just as well, be the subject of a different conference. At the end I wish to touch upon the issue of whether arbitration proceedings are cheap or expensive. The issue of arbitration costs is very often raised. I have drawn up a comparison of court fees and fees collected at Lewiatan. I do not think that such fees differ much in other arbitration courts. Let us compare court fees for the values 10,000.00, 100,000.00, 1,000,000 and 10,000, Please look at the bottom line which shows in which areas arbitration proceedings are more expensive and in which they are cheaper. I have taken into account fees from the beginning of the proceedings until the obtaining of a final and absolute judgement, - PLN PLN PLN 45, PLN 73, different result if we add post-arbitration proceedings. Just a small digression here. On the one hand, in a normative sense, an arbitration award is equal to a decision of a common court. On the other hand, an arbitration award may be subject to appeal proceedings which are more costly and time consuming. Obtaining a common court decision in the case of a claim with the value of PLN 1,000,000 costs PLN 100,000.00, and obtaining an arbitration award with respect to a claim of the same value costs PLN 54, This could be the end of the story. But often, as life teaches us, parties are unhappy with a decision or an award and continue the dispute. We should then add the costs of appeal proceedings pertaining to the final decision, i.e. PLN 50,000. Finally, we would arrive at the amount of PLN 150, with re- Arbitration e-review No. 3 (Summer) 2011 p. 11

12 PART I spect to common courts and PLN 204, as far as arbitration courts are concerned. Under such circumstances, the arbitration proceedings turn out to be more expensive, although we have been very economical at the first stage of examining the dispute. To sum up, the issues discussed are very important when we analyze why arbitration should be more popular and when we look into the obstacles to such popularity. Prof. Jerzy Rajski: Thank you Dr. Gessel. We begin a discussion with the participation already declared by Dr. Marcin Dziurda, Mrs. Jolanta Nowakowska-Zimoch, Prof. Ewa Nowińska, Dr. Małgorzata Podrecka, and Dr. Krzysztof Stefanowicz, so please take the floor in that order and, subsequently, I will wait for further volunteers to take part in our discussion. Mr. Dziurda, the floor is yours. Dr. Marcin Dziurda: Ladies and Gentlemen, to begin with, I would like to make two reservations. First, despite Mrs. Gessel s encouragements, I will not discuss investment arbitration, as I think it is rather commercial arbitration that is the topic of our discussion. If we were to talk about investment arbitration, my opinions would be probably a bit different and, I do not conceal it, more critical. The other reservation is that I am here as a member of a small group of people who might be called clients. And it is from this point of view that I will try to present some comments in the timespan we have. However, regardless of the foregoing, I do appreciate that Mrs. Gessel has not specified the sixth reason why economic arbitration is essential, namely, that it is inexpensive. This would be hypocrisy of a type. Arbitration is not cheap. We can argue when it is expensive and when very expensive, but one cannot say that it is inexpensive, and especially when also takes into account attorneys fees. We have to remember that, as we all know, attorneys fees are actually at the level charged in developed EU member states, which is out of proportion both to the average remuneration, the gross domestic product and other economic indicators. This, in addition, makes arbitration relatively more expensive for Polish entities than for German, French or British ones. As regards other opinions presented by Mrs. Gessel, I share a substantial portion of the same. However, I will begin with the issues that raise my doubts. The time-efficiency of arbitration is occasionally overrated. The specification drawn up by Lewiatan indicates that arbitration proceedings are not so timeefficient, and the long disputes referred to in that specification are frequently over quite simple matters. What poses a problem is the fact that the duration of a particular arbitration proceeding sometimes happens to be a matter of chance. It cannot be concealed that this depends, to a considerable extent, on arbitrators calendars, and on whether or not they manage to agree on reasonable dates. However, it is also clear that no generalizations can be made in this respect, as there are both methods of resolving disputes referred to arbitration in a much cheaper and less timeconsuming manner and methods generally more expensive and slower. Certainly, the role of permanent courts of arbitration should be appreciated. In my opinion, the predictability of arbitration proceedings conducted by ad hoc arbitrators is in itself highly questionable. Moving on to the opinions I share, flexibility of arbitration proceedings with their concurrent predictability are absolutely a virtue. I appreciate this more and more when comparing p. 12 Arbitration e-review, No 3 (Summer) 2011

13 PART I court proceedings with arbitration proceedings. Arbitration offers more discretionary power of arbitrators over the course of proceedings, which, if used reasonably, that is, in consultation with the attorneys and parties, produces very good results. The so-called terms of reference or other similar methods of establishing the course of a proceeding are most valuable. However, it should be also borne in mind that, perhaps, we will live to see the necessary changes taking place at common courts. Prof. Ereciński and Prof. Weitz could certainly elaborate on this. Draft amendments to the Code of Civil Procedure have been drawn up, which, if enacted, would partly make up for certain deficiencies of court proceedings, such as the filing of huge numbers of pleadings with courts. If those projects were successfully completed, common courts could draw upon the achievements of arbitration. Undoubtedly, such achievements are valuable. In the case of major disputes, and in particular those concerning infrastructure investments, arbitration is more efficient. I will not talk about proceedings in business matters and the two weeks available to draw up a statement of defense in response to a statement of claim drafted by the plaintiff during an incomparably longer period of time. Arbitration proves its value in such a case, obviously provided that the arbitrators act reasonably. Unfortunately, sometimes even arbitrators seem to disregard the need to offer to the parties equal treatment before the law, and if the plaintiff had a number of months to draw up its statement of claim, the defendant might not be offered a month or two to address the same. The last issue is the confidentiality of proceedings. This is a certain virtue, although it occasionally poses a problem to the State Treasury. It is worth bearing in mind that all public entities are governed by special regulations which, usually, are much more stringent than those applicable to private entities. For instance, the relation between the Act on Public Information Availability and the principle of arbitration confidentiality is a continuous problem. Summing up and to cut a long story short, I certainly agree that arbitration is almost always friendly and quite often predictable. This is something I am pleased to admit. Arbitration is a good instrument to resolve major and complex disputes requiring extensive proceedings to take evidence, although I have an impression that if the drafted amendments to the Code of Civil Procedure were enacted, much could be improved at the level of common courts. Arbitration is quick on some occasions but it is by no means cheap. There is one more point I agree with, namely, that arbitration makes a case more likely to end in a settlement, but this is not a question of fees or attorneys but, in the first place, of the understanding of the economic consequences to be borne by the parties. It is a well-known fact that, sometimes, a prompt case resolution is better, although not ideal, than a lengthy dispute taking years. Thank you very much for your attention. Jolanta Nowakowska-Zimoch: Thank you. As far as I am concerned, one issue was passed over which is, in my opinion, the most important one if we talk about arbitration. What I mean is professionalism. What is essential to the parties to an arbitration proceeding is their right to appoint arbitrators. Selection and appointment of arbitrators should consist (and I do hope that this is the case in practice) in consideration by the parties of whom to appoint as an arbitrator, while taking into account the arbitrator s knowledge and, in the first place, his/her expertise in a given field. At present, there is such a huge variety of problems, and not only legal ones but also those in terms of Arbitration e-review No. 3 (Summer) 2011 p. 13

14 PART I facts, that every reasonable attorney and party who is to get involved in court or arbitration proceedings have to consider which of those institutions will guarantee a more professional resolution of the case. I think that, given the fact that courts are overburdened and judges handle various civil or business law cases, such judges can hardly be expected to have the expertise needed in a specific case. Therefore, it is a standard practice for judges to use the assistance of court experts. In my opinion, we should strive to have a situation in which arbitrators appointed in specific types of cases use the assistance of experts but themselves have broad expertise in a given field. I think that this is what guarantees a correct dispute resolution to the parties. Therefore, I would not ponder over whether arbitration is liberal or flexible because this is a minor issue. Arbitration should be, in the first place, professional and this is the major virtue that arbitration offers, or should offer, and that we should propagate. Another issue certainly relating to the liberal nature of arbitration is the fact that parties may choose to submit to arbitrators award issued in equity. This institution seems to be still very rarely used. We are all aware of its existence but it is not actually known how it works and how parties can make use of it. I think that, given the enormous complexity of cases and the complicated situation where business and investment processes run fast and parties frequently do not focus on gathering documentation, as a result of which they subsequently find it difficult to attribute specific legal consequences to specific facts, submission to arbitration in equity has a future. I will not address the issues mentioned by the preceding speaker, namely, the duration of arbitration proceedings and whether such proceedings are expensive or inexpensive because, I think, there is no controversy in this respect and we all have a similar, if not identical, opinion on this issue. However, I would like to briefly address the question why arbitration is actually hardly popular. I think this is quite a simplified expression and, while law may be amended in a relatively short period of time and compliance with law enforced, mentality takes generations to change. And it is both clients and lawyers who are not used to the fact that arbitration can be the first choice. The first choice is the common court. This also originates in how students are educated. Please note that when we were students, and perhaps to this date, lectures on and classes in arbitration had/have been optional. It is already at this stage that the focus of student education is on the fact that there are court proceedings and somewhere in the background there is arbitration which is merely mentioned. The same holds true of the syllabus covered during advocate and legal advisor training. I think it will not be iconoclastic in any way if I tell by experience that we devote a lot of time to negotiating contractual provisions but when it comes to the dispute resolution clause, which is one of the last clauses to be drafted and which is often drafted pretty automatically, we sometimes do not have the time needed to discuss with the client the pros and cons of submission of disputes to common courts and courts of arbitration. If we go for a court of arbitration, then what court and why? I think all of us here can beat our breast and say: we devote too little time and thus we exercise some educational influence over our clients and colleagues. The third issue is arbitrators. It is only recently that we have been offered the opportunity of p. 14 Arbitration e-review, No 3 (Summer) 2011

15 PART I participating in workshops and have been able to learn by exchanging experience. For a long time we have been learning by our own mistakes and experience, by exchange of experience among persons who acted or act as arbitrators. In my opinion, this, too, is one of the reasons why arbitration is not so popular. Thank you. Prof. Ewa Nowińska: Thank you very much for the invitation and an opportunity to take the floor. A majority of the guests invited are, according to my knowledge, academics that are concurrently practitioners and, therefore, please let my comments be of such a dual nature. In the first place, the course of arbitration is friendly to the parties. At least this follows from my experience and stands in opposition to common courts which either have too little time or are unwilling to create the right atmosphere. When we enter the courtroom where a common court is holding its session, our attitudes become much more rigid than when we enter the courtroom in which a court of arbitration is examining a case. The atmosphere at the latter court is also conducive to considering the possibility of entering into a settlement. Prior to litigation commencement the judge asks a routine question whether the parties do not see any chance of settling the dispute amicably, and does not actually give the parties a chance to say anything because it is preassumed that they will fight each other, employing to that end various means, not always acceptable from the ethical point of view, instead of endeavoring to find room for an amicable settlement of the dispute. However, according to my experience gained at the courtroom in which a court of arbitration holds its sessions, the parties are really encouraged there to sit at a table and talk with or without the assistance of the arbitrators they appointed, and either way, just try to negotiate. And this is not a purely verbal encouragement but, as already suggested by the preceding speakers, an encouragement to resolve a dispute in such a manner that, after a settlement is executed, the parties are able to shake hands and, possibly, continue their cooperation on the market. And this is rarely the case after a dispute is decided by a common court. I represent a very narrow field of law, namely, intellectual property law, which offers exceptionally ample room for international dispute resolution in Poland. In this field, we have two fundamental pieces of EU legislation equivalent to regulation that provide for dispute resolution by Polish courts, namely the regulations relating to EC trademarks and designs, the latter being called in Poland industrial designs. In this respect, we have one court in Warsaw to decide such cases, which, accidentally, does that in a very professional manner. But this is the only court having the relevant authorization to do that. Perhaps, in this respect, there is room for international arbitration. Mrs. Gessel has brought up an issue that is absolutely crucial, namely, the possibility of referring to the equitable principle before courts of arbitration, which principle is so fundamental for the practice of the administration of justice in general, and which could be very useful for courts of arbitration to resolve disputes or reinforce something a little forgotten in Poland, that is, the sense of justice. And this could satisfy the need to go to court not for administration of justice but for justice itself, which is not always the case with justice administered by common courts. This is not a criticism of common courts but a sad conclusion. This conclusion is drawn based on the following observation: common courts are indeed overburdened with cases involving various fields of law. If you read the court calendar in cases Arbitration e-review No. 3 (Summer) 2011 p. 15

16 PART I heard, for instance, by the Supreme Administrative Court, you find both a case concerning a resolution adopted by a housing cooperative society and then a dispute involving legitimacy of a decision issued by the Patent Office in a case concerning protection of a pharmaceutical invention. Really, the decision-making panel has no chance to mentally switch from one field of law to another, both of which are usually quite complex and require expertise. Why are courts of arbitration not popular? I think, at this point, we return to the issue raised by both the preceding speakers, as students are actually little taught about the possibility of settling disputes in an amicable manner, as well as, and this has to be borne in mind, about the centuries-old tradition of excuse me the word litigiousness. If we quarrel, we go to court, unless the court is what it is but justice must be on our side, as Pawlak s mother used to say in the movie Sami swoi ( Our Folks ). The thought that comes first to the mind of a Pole entering into a dispute is that it is the court that will solve the problem for him, and, normally, he himself does not even consider a method of solving the dispute amicably. And, once again, the problem of lawyers education should be referred to: at present, there is very little focus on persuading clients that they had better mend fences as they live in a single world and sometimes need to coexist despite the dispute. Therefore, they had better leave the courtroom reconciled, and reconciliation is usually achieved through an amicable settlement of the dispute. Even the word itself sounds friendly, as in: I am settling the dispute amicably, I am not quarreling, I do not unreasonably insist on my arguments, although I certainly defend them. Perhaps if we, academic teachers, focused more attention on causing the common court not to be the first thought that comes to mind when we enter into a dispute, the subsequent generations of lawyers would see the advantages offered by amicable dispute resolution. So far we have gained great experience as far as the operations of the court of arbitration handling Internet domain disputes are concerned, which court actually examines a large number of cases and, somehow, those who submit themselves to it accept its awards even if they lose the case. Certainly, this is not an uncompromising statement, holding true in each and every case, but the time-efficiency of proceedings before that court and the reasons to awards that are formulated so that they are comprehensible not only to a lawyer, show, and sometimes even convince the losing party, that it was the latter who failed to see to something and this was the reason for the award issued. And so we come to the last issue which, again, has already been raised, that is, the statement that arbitration allows the parties to appoint a specialist or a person whom they trust. And this, too, has a bearing on the courtroom atmosphere, as it is clear that the decisionmaking panel is not composed of arbitrators selected totally at random and bored with or weary of the number of cases heard on a given day. The decision-making panel gives their attention to this specific case rather than to a number of cases in turn. And the case is the case of the day. Summing up: the time has come to undertake large-scale steps, and do so even through the mass media, to make an attempt at presenting our courts of arbitration as the procedural option which is, firstly, available and, secondly, has a chance of being friendly to both parties. Thank you very much. p. 16 Arbitration e-review, No 3 (Summer) 2011

17 PART I Dr. Małgorzata Podrecka: If we talk about the origins of arbitration, it should be noted that the idea of arbitration is based on autonomous will that allows the parties to select the venue and the rules governing future resolution of a dispute, if any. When making such a choice, the parties expect that a dispute will be resolved in a short period of time and by persons holding the required qualifications, which are frequently of specialist nature, and, therefore, the expenses incurred in order to resolve the dispute will be reduced. In the event that a dispute arises, the parties frequently forget about those expectations; dilatory practices are employed, legitimacy of arbitration awards is challenged. This may render arbitration proceedings ineffective and thus lead to negation of all the principles and virtues discussed by Mrs. Gessel. Efficiency of such proceedings is impossible to be guaranteed by the institution called a court of arbitration, if the parties forget that the arbitration clause was a result of their autonomous decision that should be respected. There is a link between the party s expectations of the court of arbitration to whose jurisdiction the party submits, of the arbitrators, and of the arbitration proceeding on the one hand, and the expectations of that party concerning its reasonable conduct in the course of the proceeding and voluntary performance of the award to be issued by the court of arbitration ( expectations of the party ). Without the understanding that those expectations represent two aspects of a single phenomenon one can hardly talk of any efficiency of arbitration. Development of arbitration is conditional upon proper legal culture required of all participants in such proceedings. Without this condition being satisfied, we can still talk about arbitration clauses and they will operate, but at the moment an actual dispute arises, arbitration may fail to bring out the virtues that lie at the heart of arbitration and to live up to the original expectations formulated by the parties. If we talk about the practical advantage of arbitration, I would like to say, as an in-house lawyer for many years, that Polish companies become more and more often parties to multilateral contracts incorporating commercial terms and conditions, general terms and conditions of cooperation, and principles of liability that are established at the level of a corporation (parent company) for a term of one year or even several years and binding upon a greater number of subsidiaries having registered offices in various countries, all of which are performing the contract. In consequence, a number of legal systems get involved, resulting in uncertainty as to at which point a dispute may occur, by whom and based on what rules it will be resolved. This uncertainty should serve as an argument weighing in favor of arbitration. When executing a contract and incorporating an arbitration clause into it, the parties choose all the virtues discussed by the preceding speakers, namely, the predictability of venue and rules governing resolution of a potential dispute rather than the unpredictability, as well as the professionalism of persons deciding the dispute rather than the randomness which may turn out to be the case. It seems to me that, if we talk about the conditions for further development of arbitration, it is advisable to introduce courses in arbitration or, in general, in alternative methods of dispute resolution, into the syllabi covered during advocate and legal advisor training. Some institutions conducting such training offer trainees an opportunity to participate in such classes, nevertheless, it would be advisable to introduce those problems into the obligatory syllabus covered as part of specific inn-of-court education programs. Arbitration e-review No. 3 (Summer) 2011 p. 17

18 PART I Furthermore, it should be pointed out that the incorporation of the arbitration clause is not the exclusive responsibility of an in-house lawyer or a lawyer having a private legal practice. It is the entrepreneur who assumes the risk of choosing this method of dispute resolution. A small or medium-sized entrepreneur is usually aware of the fact that disputes are resolved by common courts, the decisions of which may be appealed against. A decision on selection of an alternative dispute resolution method is frequently something of a novelty and entails other risks, hence the entrepreneur needs to be convinced that arbitration is efficient, independent and thus benefits the entrepreneur. Thank you. Dr. Krzysztof Stefanowicz: I would like to share with you my remarks on four issues, namely, the two polemic comments made by Dr. Dziurda, and the two more affirmative ones. As regards the polemic issues, I would like to say why I consider myself competent to address the same in terms of the cost and timeefficiency of arbitration proceedings. I had a chance of becoming more familiar with a few of the prominent cases given as examples of lengthy and exceptionally costly arbitration proceedings. If we examine those cases in more detail, we will find that the decisive factor increasing the cost and extending the duration of those proceedings was the involvement of the state. It was not the arbitration proceedings themselves that were lengthy and it was not the specific acts undertaken as part of the arbitration proceedings that were delayed, but the necessity of, and sometimes, unfortunately, the provisions of law resulting in, state courts interfering in all those cases, that caused the proceedings to be lengthy. In the Vivendi case referred to as an example, the majority of the lengthy procedures and most of the time taken up by the proceeding was the consequence of the inefficiency of Polish courts not only in terms of time-efficiency but also in terms of their inability to decide on simple, it could seem, registration issues. Thus, in connection with that proceeding, it turned out that mundane, it would seem, registration problems continued to have unresolved elements, but this was an issue outside arbitration. As was the case with the proceeding in which both of us were involved, as Dr. Dziurda probably remembers, where it was the inefficiency of common courts, fortunately not Polish but foreign ones, not to mention the state authorities, that made the arbitration proceeding lengthy. If we consider the beginning of each arbitration proceeding, that is, the question when we can expect the first hearing to be scheduled, being the fundamental issue in any discussions with the client, every permanent court of arbitration, not to mention ad hoc courts, offers complete predictability, and we do not talk about months or even years of waiting for the first scheduled hearing, as is the case with state courts. And the sequence of the events that follow certainly speaks in favor of the reasonable, from the point of view of parties expectations, duration of arbitration proceedings. As regards costs, let us refer once again to the table presenting the mode of proceeding and a comparison of the arbitration court at Lewiatan with state courts. The majority of expenses result from the involvement of the state; we all know what, unfortunately, became a measure sometimes abused by parties attorneys, that is, the petition to vacate award or the challenge to appointment of arbitrators which is a measure imported from common courts and which substantially increases the cost of arbitration proceedings. Not to mention the fact that, although we can argue, though this is a separate issue, to what extent this interference is reasonable or unreasonable, all control or supervi- p. 18 Arbitration e-review, No 3 (Summer) 2011

19 PART I sion procedures exercised by state courts over courts of arbitration are a material costgenerating factor. If we talk about the need to request court assistance in undertaking specific procedures either in Poland or abroad, it is such procedures that generate a major portion of the expenses. Certainly, it is undoubtedly very easy to raise a mediagenic charge, pointing out the fact that the remuneration of state court judges is incomparably lower than that of arbitrators. However, at this point, we probably encounter the second issue which I would like to discuss in a more affirmative manner and which has already been raised by the preceding speakers, that is, an equally fundamental benefit, an advantage of arbitration over state courts and I hope I will be correctly understood an advantage, in terms of quality, that arbitrators have over common court judges. This advantage results from numerous reasons, or various elements combine to form it. Certainly, the first element is the scale of business transaction complexity. It is only natural that we find it easier, if we have a very broad spectrum of arbitrators to choose from, to select a person being a competent expert to resolve a specific dispute from among arbitrators than from among state court judges. Thus, this is an objective element. The subjective element is associated with the career path in legal professions. The situation in this respect has been actually discussed and contested for many years now but remains an unresolved issue. If we compare, for instance, the average age of judges employed by regional courts, which are already intended to handle more complex cases, and thus try to determine the scope of their life experience, not to mention their experience in the field of business, with that of prospective arbitrators, the result of such comparison will be unambiguous. Judges will prove to be less qualified and will have less ability to competently resolve a dispute. That is, in terms of the quality of the human resources intended to handle disputes, arbitration offers an opportunity of having a dispute resolved and not just decided or, to use boxing terminology, decided by the referee raising the winner s hand. Due to a number of reasons we often learn about from research findings, a state court limits itself to deciding, and not solving, a case. But arbitration, thanks to the quality of the human resources available, provides an opportunity of having a dispute actually resolved and offers the parties to the dispute a chance of continuing their business activities on the market. As a rule, arbitration makes it more likely for the parties that they will not get destroyed as a result of the dispute between them but will stand a chance of continuing their business activity. In my opinion, this is the major advantage that will continue to be in place for many years. Undoubtedly, it should be eliminated in the sense of improving the quality of state court human resources, for which probably still there is room, however, no change in the proportions is, in principle, possible due to obvious reasons. To bring about a situation comparable to that in the United States, where the office of judge is the capstone of a legal career, is a long way to go. For now, arbitration and arbitrators appointed to resolve disputes undoubtedly offer a greater chance of competent dispute resolution than state courts. The last issue referring to the title of this part of our panel discussion is the ideological origins. And it is this problem that relates to the polemic issues. This is my very subjective opinion. It seems to me that arbitration should be viewed also from the perspective of the oversimplified and probably many times criticized Arbitration e-review No. 3 (Summer) 2011 p. 19

20 PART I opinion that the less the state is involved, the better for the economy. If we talk about economic disputes and allow for resolution of such disputes without involvement of the state but with a substantial and active involvement of the parties, then, I think, the ideological origins and the virtues found in this aspect of arbitration undoubtedly deserve more attention. At this point, I admit that, as far as amendments, if any, to the Code of Civil Procedure or rules of permanent courts of arbitration are concerned, they should be conducive to such developments. I would be very wary of regulations that would permit a broader scope of interference by or a broader scope of powers to supervise arbitration vested in state authorities or courts, so that this material virtue of arbitration could be preserved. And, as practice shows, restriction of economic freedom or attempts to influence the free market, even if favorable, usually bring about adverse consequences. Therefore, I think that if we take this axiological component of arbitration into consideration each time an amendment to the law is intended, all the virtues discussed before can be retained. Prof. Jerzy Rajski: Thank you very much. We could hold this interesting discussion all day long but, unfortunately, the event organizers gave us only half an hour, so I invite several speakers, giving five minutes to each, and would appreciate it if you could give me also five minutes for a brief summary, though I would not despair if those five minutes are not left for me in the discussion. Ireneusz Matusiak: I would like to address the issues raised by Dr. Gessel, that is, the reasons why arbitration is indispensable. Arbitration is by no means homogenous and, perhaps, this is an asset. Why is it not homogenous? There are here, in this room, a number of persons representing small courts of arbitration, that is, small in terms of the number and scope of the cases they handle. I dare to say the statements alleging that arbitration is unpopular are controversial. In a small court, and I am talking here about the arbitration court handling disputes over Internet domains, arbitration is popular. Why? Firstly, I would provide reasons to complete those enumerated by Dr. Gessel. Arbitration addresses a dispute on its merits. Parties are interested in resolution of Internet domain disputes because they know that other courts - that is, I mean common courts here do not have specialists in this field. Hence, when referring a dispute for resolution to a court specializing in this field, they know that the dispute will be best examined. Thus, it seems to me that such arbitration addresses the substance of a dispute, which is the first reason why entrepreneurs choose it. I would also point out reasons 7 and 8. In the first place, if we talk about time-efficiency, I would like to mention that arbitration makes use of new technologies. In the court referred to above, proceedings are conducted with the use of , and a hearing is not always held. The parties are medium-sized entrepreneurs without substantial financial resources to conduct long proceedings and participate in hearings. A solution of this type is impossible to be implemented in the case of any other dispute; in this case, however, it is favorable to entrepreneurs, arouses more interest and results in the dispute being resolved within a short period of time. And, finally, the last issue which is also of significance: arbitration shapes legal awareness of the society. At this point, I mean the information society. Selected awards issued by the arbitration court handling Internet domain disputes are made available on websites. Thanks p. 20 Arbitration e-review, No 3 (Summer) 2011

21 PART I to that, entrepreneurs intending to enter into a dispute learn beforehand what the rules are, whether they can protect their rights and what the consequences of an issued award are. Those three elements contribute to the popularity of arbitration. The fact that there are small courts of arbitration is a good feature of the entire arbitration system, though while talking about arbitration, we usually mean cases of great importance. I would like to emphasize that these are the elements that prove their usefulness at the micro level. Thank you. Dr. Marcin Dziurda: I would not like in the least to argue with Mr. Stefanowicz, as we do not have enough time for that. Besides, I am very glad that Mr. Stefanowicz made a comment on what I had said and he would probably be surprised if he knew that our opinions on many issues were even alike. However, I would like to repeat the reservation I made at the beginning: I was not talking at all about investment arbitration, as this was quite a separate issue. But, to give an example, if we have a simple dispute over a relatively small amount of money and the most prominent arbitrators in the world are appointed to resolve it, we should not be surprised that the first date of hearing they are able to schedule falls in a year time. Or if we have an arbitration proceeding conducted pursuant to the ICC rules, held in Paris, in English, and the case is handled by Polish attorneys and Polish arbitrators, then I am pleased to hear that some entrepreneurs are reasonable enough to suggest, for instance, that the venue be changed to Poland and the language to Polish. And, at this point, I agree with Mrs. Nowakowska that when it comes to negotiating the arbitration clause, it is often the case that no time is left for consideration, and the result is frequently absurd and inconsistent with the idea of time-efficient arbitration. Prof. Aleksander Chłopecki: I would like to point out yet another reason why arbitration is not so popular, a reason affecting the relations between a financial institution and its client, and being a notorious one. The majority of financial institutions make the following assumption: we have a legal department, we have lawyers and our adverse party is our client whose financial resources, time availability, etc. are limited. We will be better off just dragging him through common courts and all their instances with all the formal restrictions this entails. Perhaps we will scare him off before he puts up resistance. That would be much more convenient for us than to consent to arbitration. And, to make it clear, this is not part of my idea of the real life but part of my analysis of the actual situation. As regards the cost of arbitration, to make the matter not so nice, we have to address the following issues: if we talk about ideological principles, then should arbitration be a business and if so, to what extent? Please note that a major portion of arbitration procedures are business activities. In the case of the court I have the pleasure to represent, special regulations are in place, providing for asymmetry of expenses. Expenses borne by the institution correspond more or less to those borne in common court procedures. However, in relation to the institution s clients, these expenses are totally disproportional, as their amount is limited to several hundred Polish zlotys. Therefore, we should perhaps consider a certain modification to and stratification of the costs of arbitration, depending on the entity, its financial condition, etc. This is something that is missing from many arbitration institutions. And two more minor issues: as regards the first one, I will talk about myself not to offend anyone while acting as an arbitrator, I sometimes feel the need for some kind of introspection. Arbitration e-review No. 3 (Summer) 2011 p. 21

22 PART I This need is manifested, more or less, in the following question: I shall decide as my knowledge best allows me, according to the dictates of my conscience, etc., and the introspection is intended to determine whether and to what extent I feel any obligation towards the party who appointed me as an arbitrator. I am making money acting in this capacity. This is a psychological burden of which an arbitrator should be constantly aware, even if he/she is totally independent. Dr. Zbigniew Banaszczyk: I would like to note that I will present my opinions from three points of view simultaneously because I am a theorist, a practitioner, and an arbitrator at the same time. Therefore, I view the matter from three different angles. I would like to address some of the preceding statements. To begin with, Mrs. Gessel pointed out five properties of arbitration. Subsequently, it turned out that there were more such properties. Mr. Dziurda perhaps correctly started with a statement that arbitration was not cheap. Let us say: from the point of view of the office represented by Mr. Dziurda, every court which is not a common court is expensive. This is beyond doubt, actually. And, indeed, I agree that arbitration is not cheap but it is not cheap because the parties so decided. In exchange for the high cost, the expenses that need to be borne, arbitration offers what was called here dispute consideration on its merits or professionalism. And this is not professionalism juxtaposed with a lack of professionalism found with common courts. That is not the point. The professionalism is actually the one chosen by the parties. They incorporated into the contract they executed an arbitration clause providing for dispute resolution by an ad hoc or permanent court of arbitration, and specified that they would be permitted to appoint persons being the best arbitrators from their respective points of view. And those points of view can differ substantially. In the first place, the appointed arbitrators should be specialists in a given field and not necessarily in any field of law. Even a permanent court of arbitration allows for appointment of a person from outside a list of arbitrators. Such a person will not even be a lawyer but will have the capacity to correctly examine a dispute. This is a virtue that should be sought by entrepreneurs but of which they are frequently not aware. And here there is room for lawyers to bring it to their attention that there are such options. And, perhaps, this is the price that has to be paid in order not to have an award issued by a randomly selected judge of a common court, by saying which I do not mean to offend any such person, and what I mean by selected at random is that such a judge is examining a case just because he/she was blindly appointed to do so. This is an ineptness of the common court, manifested in the fact that a judge is sometimes forced to decide a case which is somehow beyond his/her skills. Although, thanks to their qualifications, judges can quickly acquire such skills when a need arises, and I saw many times common court judges remarkably well prepared to handle cases requiring expertise, this is by no means a rule. Another issue that I would like to discuss is the fact that a common court usually does not offer time for lawyers to have a debate. A court of arbitration offers such an opportunity. Sometimes I am surprised that attorneys of the parties do not attempt to discuss before the court the disputed issue purely in terms of its substance, as part of a direct debate held in a very friendly atmosphere. Tomasz Wardyński: I think too much time is devoted here to discussing the technicalities of arbitration. At its onset, a dispute is a psychological phenomenon. Arbitration is, by its very p. 22 Arbitration e-review, No 3 (Summer) 2011

23 PART I nature, a solution intended not for litigious people but for people actually seeking a reasonable solution to a problem they encountered while carrying out business activity. Naturally, we assume that a businessman makes reasonable decisions. I do not know whether arbitration is expensive. It can be expensive but if the parties manage to quickly reach an agreement and recognize the arbitration award as correct, it can also be inexpensive. Unfortunately, a lot depends on the legal culture, as well as on compliance with the principles of deontological ethics that form a basis for attorney s acts. Arbitration becomes expensive when abused in order to act in a litigious manner. And it is very often the case that such a litigious attitude is shared by parties attorneys. What is more, it seems to me that attorneys of the parties frequently consider the arbitrators to see only one half of the facts. Nevertheless, I think that if an arbitration proceeding is correctly handled both by the attorneys of the parties and the arbitrators, there is a real chance of making arbitration inexpensive. However, one should bear in mind that the expenses we are talking about here, the noticeable ones, represent only a small portion of the overall dispute cost. The true cost of a dispute is the mental energy and the time devoted by the parties to resolve the same and handle it correctly, so that their rights could be effectively protected. The fundamental question to be asked is as follows: is it easier to abuse litigation procedures before common courts or before courts of arbitration? In my opinion, a relatively reasonable handling of a dispute by arbitrators can prevent abuse of arbitration procedures by people who think that, as Prof. Nowińska said, the court is what it is but justice must be on our side. I also think that the psychological phenomenon in the form of a dispute makes us realize that the decision we take as attorneys, participants in a dispute, whether being natural persons carrying out business activity or a company, in the end needs to be a decision which is, in the first place, reasonable. In the end, everything boils down to simple arithmetic and the parties need only to be shown how to reduce the fractions which initially posed such a complex problem. Prof. Jerzy Rajski: Thank you. Instead of summing up the discussion, I will only say a few words because many conclusions should be drawn from this interesting discussion but, unfortunately, we do not have time enough to do so. Thus, first of all, I would like to point out a feature not enumerated so far among those that can represent fundamental properties of arbitration, that is, I would like to emphasize the perfect harmony between the contractual nature of a dispute and the contractual method of solving the same in arbitration proceedings. That symmetry contributes to the creation of the atmosphere, also the psychological one, mentioned by Mr. Wardyński. Substantive law allows the parties to shape their contracts as they wish, to the extent permitted under law. It is an indisputable advantage that the legal system also gives the parties the freedom to answer the fundamental question as to what procedures should be employed to resolve disputes that may arise as a result of the contractual relation they established. The contractual nature of dispute resolution under arbitration proceedings is of considerable importance here. It is of importance, inter alia, due to the fact that it is the parties who make a Arbitration e-review No. 3 (Summer) 2011 p. 23

24 PART I decision as to who and how will resolve a dispute. Thus, the parties remain deeply convinced that the course of the proceeding depends on the choice they make, as it is a generally recognized principle that the quality of arbitration is dependent upon the arbitrators. And by whom the arbitrators are appointed? By the parties. One could quote Molière here: vous avez voulus... you have arbitration of the quality you wished for yourselves. And this is also a virtue of arbitration, in addition to those referred to by the preceding speakers. Undoubtedly, professionalism is a praiseworthy property among the other virtues. In today s very complex business world and the corresponding complex juridical structures, a lawyer is required to have ever broader knowledge, which sometimes entails the necessity to acquire expertise that common courts are unable to offer, since, as their name itself indicates, they have to ensure administration of justice of a generally acceptable quality, whereas arbitration allows for higher requirements to be set in this respect and permits their satisfaction through selecting and appointing arbitrators having the required expertise. And, finally, as far as the other properties referred to are concerned, that is, time-efficiency and cost-effectiveness, the latter is not always the case, but this is somewhat similar to the idea of a cheap state. If we want to have a proper arbitration proceeding of a superior quality, comprising the relevant components that make it possible to examine a case thoroughly and devote to it the required effort within a compacted period of time, that is, without interruptions resulting from reasons other than those related to the case, which is time-efficient and which addresses the substance of the case and ends in an effective resolution of the same, such proceeding does not necessarily have to be inexpensive. The question of axiology, the virtues on which the concept of arbitration is built, was also raised but, as you noticed, those virtues were instantly reduced to the financial aspect of arbitration and much attention was paid to the cost of arbitration proceedings. But, returning to the virtues displayed by arbitration, the idea that was discussed, namely, the admissibility, the option of dispute resolution based on the equitable principle, is worth pointing out. The fact that, unlike the state court, the court of arbitration is not strictly bound to abide by the letter of the law but has some freedom of decision when construing provisions of law and applying the same, of course within the limits permissible under the public order clause, is a great virtue. If only for this reason, it is easier to seek justice at a court of arbitration. Thank you. p. 24 Arbitration e-review, No 3 (Summer) 2011

25 PART II Arbitration and the need for legislative changes Has the time come for a change in the model of the application for setting aside an arbitral award? Panel Moderator: Prof. UW Dr hab. Karol Weitz Introduction by: Bartosz Krużewski Panel Participants: Prof. Tadeusz Ereciński, Prof. Aleksander Chłopecki, Ireneusz Matusiak, Dr Beata Gessel-Kalinowska vel Kalisz, Prof. Jerzy Rajski, Dr Rafał Morek, Barbara Grabowska, Paweł Pietkiewicz Prof. Karol Weitz: Welcome ladies and gentlemen. Theme II of the panel is the issue of an evaluation of whether normative changes are necessary. The focus for the discussion in this respect is the issue of an application for setting aside an award of a court of arbitration and its normative model. As the topic is very interesting and may lead to a very lively discussion, I will stop speaking now and give the floor to counsellor Krużewski, who will lead us into the discussion. Counsellor Bartosz Krużewski: Thank you very much, Professor. Ladies and gentlemen, a word by way of introduction: the topic of the presentation is perhaps somewhat ambitious. I will not be speaking about the application model as such, first of all because such model in the form it has taken today is good and does not require change. On the other hand, I will be speaking only about an aspect which is undoubtedly difficult to classify, even as an application model, namely the issue of instances in proceedings. I submit my thesis straightaway: I believe that the time for change has arrived. It seems to me that at this stage of the debate we can make a certain assumption that it would be good if arbitration were more attractive. If I may sum up this morning s statements in three sentences. Firstly, it would be good if it were more attractive as it has advantages for the parties to the proceedings, in any event for some of the parties to the proceedings. Secondly, it would be good because it would also relieve commercial courts as an alternative means of resolving disputes. Dr. Gessel gave the figures. For the moment these are very modest figures. On the other hand, we know just how burdened the commercial courts are. It would be good if more cases went to arbitration. Thirdly and Dr. Szpunar in turn spoke about this there exists a certain link between well functioning arbitration and the general well-being of the State and society. Studies have appeared which point, for example, to the link between well functioning arbitration centres and an increase in GDP (Gross Domestic Product) of States. Of course, let us be realistic: we will not increase Polish GDP by 1% or 2% just because a good international arbitration system is in operation. Nonetheless, whilst retaining a Arbitration e-review No. 3 (Summer) 2011 p. 25

26 PART II certain sense of proportion, this connection does exist on some level. I think that the third panel will be also devoted to this. I would merely point out to you that, for example, not long ago in the ICC a battle took place behind the scenes as it were about whether the ICC will move out of Paris or not. Its chairman, John Beechey, played it like a poker player: he said that it would move out of Paris if it does not receive a better head office and a couple of other things. It is an open secret that it received very good offers from Vienna and a city in Switzerland. Ultimately, Paris made an effort for the ICC to stay in Paris, which is empirical proof that there is a connection between well-being, prestige for the State and society, and a well prospering arbitration centre. Of course, one can make arbitral proceedings more attractive by looking at the two sides of those proceedings: from start to finish arbitration is a hybrid proceeding: on the one hand, we have proceedings before a court of arbitration, on the other hand - proceedings before a common court. To be perfectly clear, I am one of those who believe that there is a lot to be done as regards the first side (the side of proceedings before a court of arbitration). Despite the fact that I am a great supporter and user of the court of arbitration, I believe there is much to do and this morning s discussion was very lively. However, I have been asked to take a look at the other side of the coin, that is proceedings before a common court. What has an influence on attractiveness in proceedings? Of course, it seems that first of all the quality of the court decisions, secondly the waiting time for a decision to be handed down, thirdly - costs. It is also obvious that a certain tension appears between quality on the one hand, and speed on the other. Speed can also be understood to be a factor which influences the attractiveness of proceedings. Quality is guaranteed by the State by way of judicial supervision over the awards of courts of arbitration, and it is very good that it is like that. Traditionally the State has a certain mistrust with regard to the private manner of resolving disputes which arbitration is, hence other applications and other means of challenging awards, though of course their grounds are very limited. Bearing these tensions in mind, I would like to put forward the thesis that the exercise by the State of judicial supervision over the awards of courts of arbitration should be shortened as regards the various instances. To use a popular, though not very elegant word, they should be compressed so as to increase the attractiveness of arbitration, but without detriment to the quality of that supervision. To justify this thesis I would like to very briefly look at two issues. First of all, I would like to go through the models of instances which appear in other European jurisdictions. Secondly, I would like to very briefly summarize a debate which has been going on for some time now about whether in Poland it is possible to shorten for constitutional reasons or other reasons the number of instances of arbitral proceedings. Of course, as you know, in Europe and elsewhere there are various means of challenging arbitral awards; these are not only applications but also various types of actions for a declaration of the invalidity of an award, or the existence and non-existence of an award. For the purposes of brevity, I will be using the word application. The common feature of the majority of these European proceed- p. 26 Arbitration e-review, No 3 (Summer) 2011

27 PART II ings is that the court rather does not examine an award on the merits, but can merely set it aside for the reasons listed it the statutory act. Let us begin with those States where the proceedings are the shortest. At the moment there are two such States: Bulgaria, and above all Switzerland. If we are speaking about the giants of arbitral proceedings, then Switzerland is undoubtedly one of them. The Swiss model is that of singleinstance proceedings, with a character similar rather to an appeal, challenge measure or indeed an extraordinary challenge measure. Switzerland is very interesting because it makes this single-instance judicial supervision its great virtue and boasts about it, uses it to advertise itself, uses it to attract arbitral disputes to Switzerland. According to statistics for 2007 of the ASA (Swiss Arbitration Association), the average duration of proceedings from the moment of filing an application to its being examined by the Federal Supreme Court of Switzerland is 5 months. We also have one jurisdiction where proceedings are also single-instance but confined to the court of second instance; we also have one jurisdiction (Hungary) where proceedings are confined to two instances without an extraordinary cassation measure. Country Proceedings before court of first instance Proceedings before court of second instance Proceedings before the Supreme Court France - Court of Appeal (Cour d'appel) application to Court of Cassation (Cour de Cassation) Greece - Court of Appeal application to Supreme Court Lithuania - Court of Appeal application to Supreme Court Germany - Higher National Court (Oberlandesgericht) application (Rechtsbeschwerde) to the Federal Court (Bundesgerichtshof) Romania - A court of higher instance than the court which would have had jurisdiction for resolving the dispute had the parties not concluded an agreement for adjudication by a court of arbitration application to Supreme Court Sweden - Court of Appeal application to Supreme Court (admissible upon the consent of the Court of Appeal only in matters of a precedential nature) Italy - Court of Appeal Court of Cassation Arbitration e-review No. 3 (Summer) 2011 p. 27

28 PART II We have a further large group of States which are particularly interesting, where judicial supervision is confined to proceedings before the court of second instance, i.e. the measure - or application (however we call it) - is sent directly to the court of second instance, the equivalent of our court of appeal, with an extraordinary measure of appeal to the Supreme Court. It is worth noting that these States include France, Germany and Sweden - giants of arbitral proceedings. In Sweden in particular you are undoubtedly familiar with the Svea court of appeal, which very often appears in publications. This may create the impression that in Sweden there is one court of appeal designated for receiving all applications. But that is not the case. As I understand it, an application is sent to the court of appeal which has geographical jurisdiction but in view of the fact that a clear majority of arbitration cases are located in Stockholm, it is precisely the court of appeal that examines those applications. We have another group of States which have the same model as in Poland, as adopted in our system, that is full two-instance proceedings with an extraordinary measure of appeal to the Supreme Court. One should take note here of England which does not entirely fit this model. As you know, already at the level of appeal one could engage in a discussion as to whether this is an ordinary or extraordinary measure of appeal in view of the fact that there is a need for a Country Proceedings before court of first instance Proceedings before court of second instance Proceedings before the Supreme Court England High Court appeal to the Court of Appeal admissible only upon the consent of the court (leave for appeal) Austria National Court (Landesgericht) Higher National Court (Oberlandesgericht) Belgium Czech Republic Finland court of first instance which would have had jurisdiction for resolving the dispute had the parties not concluded an agreement for adjudication by a court of arbitration (Rechtbank van eerste aanleg) court of first instance which would have had jurisdiction for resolving the dispute had the parties not concluded an agreement for adjudication by a court of arbitration court of first instance with jurisdiction as regards the place of issue of the award Court of Appeal (Hof van beroep) relevant court of second instance relevant court of second instance appeal to the Supreme Court admissible only upon the consent of the court (leave for appeal) Supreme Court (Oberster Gerichtshof) Supreme Court (Hof van Cassatie) Supreme Court Supreme Court Holland court of first instance with jurisdiction as regards the seat of arbitration relevant court of second instance Supreme Court p. 28 Arbitration e-review, No 3 (Summer) 2011

29 PART II leave for appeal and certain elements which must be shown for extraordinary measures. Of the States which are also giants in arbitral proceedings, Belgium and Holland have such a model. That would be all as regards the various instances. A few words now about other elements which also have an impact on the duration of proceedings, and thus on the attractiveness of proceedings. Firstly, in certain jurisdictions parties may exclude an application. This is the case in Switzerland. That is also how it is in Belgium and Sweden, with the difference that there is the condition that the parties be not local, i.e. they do not have their seats respectively in Belgium or Sweden. A further element which has an impact on the duration of proceedings is the deadline for filing an application. Here a clear majority (we are by no means an exception here) of jurisdictions provide for a deadline of 3 months, which seems to be quite a long deadline, but it is provided by the model law. England provides for 28 days, Switzerland 38 days, in France in certain cases it is 30 days, and in Spain 2 months. Finally, the last element which has an impact on the length of proceedings are the links between the application and proceedings aimed at declaring enforceability. I would merely point out here that in certain States an award of a court of arbitration, at the moment it is handed down, has a force equal to decisions of common courts, i.e. there is no need to go through the proceedings for a declaration of recognition of enforceability. This is the case, for example, in Austria. If we compare it to the Polish regulation, then a quite obvious conclusion emerges that in the Polish system we have a full range of judicial safeguards. We also have all the elements which have an impact on the length of proceedings, on prolonging those proceedings: two-instance proceedings, cassation, three months to file an application, the institution itself of the application cannot be excluded by contract, and then there are the two-instance proceedings for a declaration of enforceability or on recognition. That would be as much by way of legal comparison. Now, some brief remarks about the arguments for and against limiting the variety of instances in Poland. As you know, a debate has been underway for some time now as to whether such a compressing is possible. The debate revolves around constitutional problems, in particular art. 176 of the Constitution, which states that court proceedings are at least two-instance proceedings. Sometimes this debate also involves art. 78 of the Constitution, which in turn states that each of the parties has the right to challenge judgments and decisions handed down in first instance. It seems that one should confine oneself to art. 176; art. 78 concerns more the issue of appealing capacity than the issue of instances. The level on which these arguments clash is the dispute about the character of applications. Of course, here in this room there are outstanding representatives of the doctrine. I am not a constitutionalist and I am not going to extensively summarize all the arguments rather I will say just for your information and to prepare the debate (and I think this is the dominant voice of the doctrine) that an application has elements of both an extraordinary measure of appeal and elements of an action aimed at shaping changes in the legal state caused by a arbitral award, i.e. a legal action with a litigation character. In that situation, an application is not a measure of appeal. Why is this important? As I understand it, it is important because with this approach it is said (and this is an argument against compressing Arbitration e-review No. 3 (Summer) 2011 p. 29

30 PART II proceedings) that instance-structured proceedings being with an action or a type of action which the application is, in view of which the two-instance structure must be retained: court of first instance and court of second instance. On the other hand, there are voices in the doctrine which say that this is not so. An application is, all the same, a measure of appeal, and not an action. The arguments which are cited are more or less as follows: the purpose of this measure is to exercise supervision over an act of a litigation nature, which the legislator - not without reason -defines as an award. The purpose of this proceeding is to set aside an award. It is not a matter in this proceeding to directly decide on the legal situation an award in itself without a declaration of its enforceability does not shape the legal situation of the parties, but the court is merely to decide about the fate of the appealed award. Thus, the subject of those proceedings is not a resolution of the arbitrators as to the merits but merely a proceeding on the award. An additional argument cited by the supporters of this concept is the argument derived from art of the Code of Civil Procedure, namely the institution of remission, that is the possibility for a common court to remand an award of a court of arbitration for renewed consideration. It is said that it is in essence a mechanism adapted to arbitration, typical for measures of appeal, remanding a case for renewed consideration. Apart from constitutional arguments, also cited are arguments of a practical nature. It is said that at this stage of development the quality of arbitral decisions in Poland is mixed. There are institutions which are very renowned, arbitral institutions, but many permanent courts of arbitration still function which are of doubtful reputation. But also awards are issued ad hoc which require special judicial supervision. Finally there is the argument against concentrating the application in the first instance in one court of appeal on the assumption that a shortening of instances would take place. It is said that in that case a limitation of the rights to court could occur if it were territorially one court and the parties would have to travel from different parts of Poland. To conclude: in my opinion, in order for arbitration to represent a genuine alternative to court proceedings, regardless of the work on that first part about which I spoke (i.e. arbitral proceedings themselves), one should remove at least one instance in judicial proceedings. I am in favour of the option that an application be sent directly to the court of appeal and that cassation be retained. I am not a constitutionalist but as a practitioner I have doubts as to whether there really exist constitutional obstacles. In support of that thesis I would cite the decisions of the Constitutional Tribunal, controversial and not in these cases, concerning disciplinary matters concerning cases involving unfair competition where the Constitutional Tribunal gave certain guidelines nonetheless. First of all, it stated that the constitutional principle of two instances is not directly an element of a guarantee of the right to court. Secondly, it pointed out that the obligation of the legislator to respect the principle of instances relates to those cases which from start to finish are examined by courts. This is a phrase which we could undoubtedly debate about all day. Nonetheless, the Tribunal pointed out that the principle of two instances does not concern cases which are only subjected to final supervision on the part of courts, where they belong to the competence of other bodies. To be honest, it should be added that the Constitutional Tribunal made it would seem a proviso, namely insofar as proceedings before a court do not have the features of p. 30 Arbitration e-review, No 3 (Summer) 2011

31 PART II one-instance proceedings. In my opinion, proceedings from an application decidedly do not have such features. Thus, in reply to the question put by the organizers as to whether the time has arrived for a change in the application model, I say: yes, the time has arrived, though in a very limited scope. In my opinion, in the remaining scope the application works well, which of course does not close the debate regarding other features of that model. But in the scope of the variety of instances of proceedings, there is time for a change. Thank you very much. Prof. Karol Weitz: Thank you very much Counsellor for a very detailed and interesting presentation of certain aspects concerning an application for setting aside an award of a court of arbitration in the context of a legal comparison. Thank you also for the clearly presented thesis. I think that this will be the starting point for the discussion. Of course, I now invite you to take part in the discussion. I will now give the floor to Prof. Tadeusz Ereciński. Please go ahead. Prof. Tadeusz Ereciński: The previous speaker s talk was excellent in a short talk you presented very objectively the problems surrounding the application. Indeed it took away my arguments as I expected that you would be more committed to presenting evidence to the effect that this application should be liquidated altogether. Such voices could be heard at the time when provisions were being introduced which amended the arbitration regulation in 2005 why do we need an application for setting aside at all - arbitration should itself function without supervision from the judicial decisions of State courts. Thus, I am pleased that I can decidedly subscribe to such approach, i.e. that arbitration should not be competition for State courts. It has its place, which I see above all in those specialist areas about which there was mention on the one hand, while, on the other hand, in large international disputes where above all one avoids State courts in view of the courts natural tendency to prefer the party coming from the same State as the court. I would like, however, to return to what Prof. Rajski said, to a certain ideological character to which one should return in arbitration. This feature of an ideological character to which I would like to refer is that when deciding on arbitration, the parties to a large extent should be aware that they consent to a voluntary enforcement of the award. This is the first, original feature of arbitration. Arbitration has its virtues: a choice of arbitrator in whom we have confidence, thus we should consent to voluntarily enforce the award. If one does not do that and one begins to avail of all the possibilities offered by legal measures related to supervision by the State of arbitral awards, then pathological situations begin to emerge. And why must there be supervision of a State court? This issue has been touched on delicately but perhaps one should put it in strong terms. A party which chooses its arbitrator believes that this arbitrator is to perform some function as its quasi-attorney in fact or take a liberal view at its claims. That is not what arbitration is about. The right to choose ends the right of the party. The arbitrator cannot be linked to the party. Why is it that recently there are so many applications for exclusion of an arbitrator? Something not good is happening as regards independence and impartiality of arbitrators. Let us be honest it is not a good situation when a group of arbitrators is limited, and at the same time is internally connected with various dependencies. As a result we are dealing with a situation where in one arbitration someone is an arbitrator, and a moment later Arbitration e-review No. 3 (Summer) 2011 p. 31

32 PART II appears before his fellow arbitrators in the role of attorney in fact for a party. These situations should be avoided. I know that at present attempts are being made to avoid them. This is a pathological situation which occurs not only in Poland but worldwide, where functions performed by lawyers often overlap. If you encourage someone to choose arbitration, then it must be honestly said that the party should take into account the right of the arbitrator to err. An application for setting aside has ultimately a limited scope. Apart from serious breaches which cannot be included under the public order clause, there are no possibilities of challenging an arbitral award on the merits. This should additionally support the view that the award be voluntarily enforced. If I have confidence in the arbitrator, then I will enforce his award. Confidence should be built up by the fact that arbitrators are independent and impartial. In contrast, if the confidence is not there, then one should not avail of arbitration. Let us move on to the main problem. The previous speaker accurately linked the answer to the question of whether one may limit the number of instances when examining an application for setting aside with the question as to the character of the application. I do not understand those authors who state that an application for setting aside an arbitral award is a particular form of a statement of claim and at the same time imagine that one can limit the course of the instances. The action must be examined from the beginning, i.e. from the first instance. I do not see any constitutional arguments which would be against the thesis that proceedings brought about by the filing of an application would start from the court of second instance. Supervision over the arbitral award must exist. This follows irrefutably from certain decisions of the Constitutional Tribunal, whereas in theory it is possible assuming that an application is a measure of appeal for supervision by the State of the award of arbitrators were to take place from a stage closer to appeal proceedings. On the other hand, if we read that at present we have 440 courts of arbitration and very often the number of cases which they examine is not large, then the issue of access to the court should count. Why is it then that these simple cases cannot be examined in each court, but rather it must be some limited number of courts of higher instance? From the point of view of the State judiciary, the problem is that at present if we speak of an overburdening of the courts, of proceedings lasting a long time, then all those interested see the solution being in a specialization of courts and cases being remanded to examination to selected courts only, which is to guarantee faster proceedings. In the opinion of some, the best thing would be to write into the Code of Civil Procedure that proceedings are to be completed without delay. Moreover, we are dealing with pressure to remand specific cases to selected courts. Meanwhile, as it seems, the policy of the justice department at present is different, the specialization of divisions is limited, in smaller courts the labour and commercial divisions are liquidated, leaving just the two main divisions. Perhaps one could introduce this type of specialization, though one should answer the question of whether such a need actually exists. What then is the remedy at this point in time? And why not reflect on availing of the second arbitral instance? Everyone skips over this question because arbitral proceedings are quick thanks to the fact that they are singleinstance. However, there exists a right to a second arbitral instance written into the Code of p. 32 Arbitration e-review, No 3 (Summer) 2011

33 PART II Civil Procedure. What is the problem in offering parties some type of supervision over an arbitral award as part of a second arbitral instance? Perhaps it would limit the filing of applications with common courts for setting aside [awards]. The fact that there exists an application to the court has the advantage that the court of appeal may formulate a legal issue which it will present to the Supreme Court to be resolved. In turn, as part of cassation proceedings, the Supreme Court after 2005 clarified numerous problems connected with application of the provisions of part V of the Code of Civil Procedure. What therefore can be reformed? Of course, the issue of the extent to which disputes are subject to arbitration is one of the problems to be reformed. The Commission on Civil Law Codification is open to a discussion with representatives of the field of arbitration as to the extent to which it is possible to determine a dispute as to the possibility of setting aside resolutions of general meetings of capital companies in arbitral proceedings, whilst of course retaining the rights of third parties. We should note furthermore that the provisions concerning courts of arbitration, which have to a large extent been based on the UN- CITRAL model law, have been in force for just 5 years now. Let us wait until their application has become established, for the decisions of the Supreme Court to set down the directions for practice in the judicial decisions of courts, and then it may turn out that a change in the provisions is not indispensable. A habit has emerged in Poland whereby as soon as we observe some kind of pathological situation, the provisions are immediately changed. Maybe it is better to not change the provisions but rather better prepare judges, better direct practice, so that thanks to this court proceedings will move more quickly. Prof. Aleksander Chłopecki: Ladies and gentlemen, I will perhaps disappoint you to a large extent as you could have expected from the presiding judge of a court of arbitration that he would jump in the direction of a defence of an autonomization of arbitration, but my conscience will not allow me to do so. Apart from the issue of specialized courts, with regard to which I differ fundamentally with Prof. Ereciński, I must I fear agree as to the rest. I am deeply attached to the idea of two instances. We have here a mutually exclusive situation: on the one hand, we would like it to be faster, whilst on the other we see that the common judiciary does not manage to cope with that speed. Hence, we think like this: perhaps a remedy will be to compress the instances. Of course, but this compression as Prof. Ereciński said will unfortunately be done at the expense of the constitutional protection of the interests of the parties. Nomina sunt odiosa, though different types of cases occur. As a side note one could reflect on why indeed should a party appoint an arbitrator? Would it not be better if arbitrators, especially in permanent courts, were appointed by either the Presiding Judge or the panel. But that it would not be like in the common court where a judge receives a case about which he has no idea as to specific material. The choice would be meritsbased. Taking a look at the judicial decisions of the Supreme Court, we see that - whether we like it or not - we are dealing with a very general public order principle. For example, a decision of 9 September 2010: A lack of impartiality means that the award of the court of arbitration is contrary to the principles of public order. A decision of 2009: Undoubtedly, however, Arbitration e-review No. 3 (Summer) 2011 p. 33

34 PART II handing down decisions on the basis of a selective, dishonest evaluation of the evidence breaches the principles of legal order. Decision of 2008: If damage was not caused, adjudication of compensation should be considered to be contrary to the basic principles of public order of the Republic of Poland. On the one hand, we encounter very strong expressions regarding the lack of possibility of intervention of State courts in arbitral proceedings, whilst on the other hand we see the need to carry out an analysis which de facto amounts in some sense to resolving the case on the merits and entering quite deeply into details. Thus, from my point of view, what should be considered is decidedly not a compressing of this supervision but rather a retention of the current model, with even a consideration of whether the pre-requisites of the application should not be more precise or broadened. This is perhaps not in the purely particularistic interests of arbitral judiciary but is in the longterm interests. However, assuming of course that common judiciary starts to work in much more efficient manner. Moving on to the last issue which perhaps will amuse you: it has happened to me several times that I was a witness in various courts, e.g. criminal courts. I did not meet criminals too often. Rather the situation was as follows: in a case pending in matters connected with the capital market the judge would ring me and say: someone said that you could perhaps clarify certain things. I cannot question you as an expert as the court is the highest expert on law but would you consent to testify as a witness? I would say, OK. It ends with a discussion with the court about specific mechanisms, also legal ones. I know that the Ministry of Justice has a specific view combating specialist judiciary. I would not be too dogmatic in this respect. If one were to succeed in distinguishing reasonable (as regards scope) issues for a common court - after all that is the case, for example, in the Competition and Consumer Protection Court - then why not? After all a judge cannot be an expert on everything. A judge who has 10 cases on the court calendar and sets a hearing every 3 or 4 months is not in a position to conduct the proceedings economically because after these 3 months he will have already forgotten the 10 cases. I apologize for this somewhat secondary motif. Thank you for your attention. Counsellor Ireneusz Matusiak: I would like to look at the level of specialist courts which handle given cases. I would ask myself a question here: is there a need for a change in the model of the application for setting aside an arbitral award? The argument was made that, yes, amongst other reasons because the problem today is the multi-instance aspect. Appearing as the presiding judge of a court, I would say that the needs of courts of arbitration may be defined differently. In practice, courts in many cases examine a case as to the merits. I know such awards. Thus, we cannot speak here of a certain equal status, independence of courts of arbitration. In many cases an application to a common court is treated as a second instance. I believe that a court of arbitration is still inferior and that there is no equal status here. Another issue with regard to the second instance : in my opinion, one could accept a solution that the application is examined by the court of arbitration. Supervision of the common court would still be ensured by way of examination of the applications for recognition and granting an enforcement clause to an award. Dr. Beata Gessel-Kalinowska vel Kalisz: I would like to take the floor as president of a court of arbitration and a person who, in view p. 34 Arbitration e-review, No 3 (Summer) 2011

35 PART II of the position held, should care for the interests of all users of arbitration. In the opinion of the majority in arbitration circles - and it is my personal belief also - court supervision over arbitration is necessary, especially when it is question of the sensitive issues about which we spoke earlier concerning certain standards of conduct of arbitrators (and sometimes the lack of such standards), as well as the internal procedures adopted by them. With regard to the pre-requisites concerning setting aside an award I do not see any need for them to be changed. It also seems to me that the public order clause, in the form in which it is, should be further worked on by a legal interpretation. I believe that we are not in a position to make the said clause more precise in our legal norms. In its present form, the clause is acceptable also in the context of international conventions. Also, it is sufficiently flexible that it may cover numerous irregularities, and I think that the interpretation of the Supreme Court is going in the direction whereby the interpretation of this notion would not be broadened too much. The point is for the content of the public order clause to not make possible supervision of awards of a court of arbitration as to merits. As regards the second instance of arbitration I am thinking here of what Prof. Ereciński mentioned I do not fully understand what this concept is to look like. After all, both a second and a third arbitral instance is possible. Indeed, bearing in mind the autonomy of will of the parties, they may establish their own mode of proceedings, which may include a second and a third instance. Also the Code of Civil Procedure mentions a second instance. However, it should noted that in the present model of postarbitration proceedings, it would be a fourth or even fifth instance. This means that if the parties wished to provide for a second instance, de facto they would be adding yet more stages. As regards compressing the application, I am a supporter of this idea. I have many times discussed this with participants in today s debate. In my opinion, an ideal example which we could apply also in Poland is the Swiss solution, where it is the Supreme Court that is the instance which decides on the fate of an arbitral award. I do not understand why this solution is difficult to accept. But also, if we move away from the legal character of the award which is decided in the arbitral proceedings, it is a final award, thus it should in my opinion logically be subject to the same rules of appeal as a decision of a common court. I would be very happy if it were to turn out that there will exist the possibility of a two-stage appeal of an application, that is if we begin with courts of appeal, which would considerably shorten the proceedings. Please note that we have prepared estimate, incomplete data on the subject of how long application proceedings last. It turns out that these proceedings last on average at least two years. One must wait a very long time for the first hearing which decides on the application. It seems to me that the application should not last longer than the arbitral proceedings themselves. I have shown the data of courts which gave the average duration of their arbitral proceedings let us assume that it is 12 months. It seems to me that we must do everything possible for application proceedings to be shorter as otherwise it negates the whole sense of arbitral proceedings, both as regards costs and time. I would like if it were possible for proceedings to be shortened and for a case to be examined first at the level of a court of appeal, and then the Supreme Court. Perhaps we could consider (I submit this to the attention of the participants of today s debate) the introduction of a two-track procedure of proceedings: separately for domestic cases and separately for Arbitration e-review No. 3 (Summer) 2011 p. 35

36 PART II international cases. In the matter of international cases it is also a question of how to encourage a greater participation of Poland in these cases. Perhaps in international disputes there could exist a possibility of introducing a separate procedure only to the Supreme Court, whereas retaining two stages of proceedings in domestic cases? Prof. Jerzy Rajski: The first issue which does not give rise to any doubt: we cannot question that which constitutes the greatest achievement of the international legislator, which is that of making uniform on a worldwide scale the provisions concerning recognition and enforcement of foreign arbitral awards. This is the greatest achievement in the history of international law and we are not questioning that. On the other hand, a second issue, very important, is the lack of proper harmony between the specific nature of recognition and enforcement of foreign awards of courts of arbitration and the procedure of the proceedings. This specific nature must be taken into account when adopting a pertinent procedure for proceedings before a State court. The foregoing cases are examined in the common mill of court proceedings in which all civil cases are examined. Thus, a demand appears here for a certain organization of matters; perhaps one should begin with those matters which can most easily be taken care of, and then move on to the more complicated ones. The first matter with regard to which in my opinion there is a consensus amongst those here present is the need to create a special jurisdictional procedure for examining cases related to awards handed down in international commercial arbitration. The international character of these awards creates a need for a special procedure which, on the one hand, would meet the requirements as to merits (special knowledge), and on the other hand would create an easier and more effective route thanks to which it being the topic of our conference Poland could become a more attractive place for international arbitration. In turn, as regards awards handed down in domestic arbitration, I agree with Prof. Ereciński that the matter is more complicated, though indeed it is linked to the overall issue of putting our justice system in order. And now a question: what direction should one go in? There is no easy answer to that question. First of all, it should be preceded by empirical research which would give us stronger grounds for putting forward certain theses but intuitively such routes which could be foreseen here should take into account two criteria: on the one hand, effectiveness, the efficiency of those proceedings, and on the other hand requirements concerning professionalization, that is specialization. A suitable solution must be found of an organizational nature; one could consider creating in certain courts divisions or other units; in any event specialization is necessary here. At present what is required is knowledge which State judges sometimes do not have. I do not want to go back to the discussion from the first part of our session in which it was emphasized that the average law graduate does not have sufficient education in this area and does not acquire it in the course of apprenticeship. These are very complicated issues. In my opinion, one should not begin with changes of the current instance model until such time as we have the results of empirical research on how it functions, but rather attempt to make more efficient that which can be made more efficient, without radical changes. This means making some internal organizational improvements thanks to which those cases could be examined, first of all by compe- p. 36 Arbitration e-review, No 3 (Summer) 2011

37 PART II tent judges, and secondly in a procedure which would be more efficient that at present. Dr. Rafał Morek: I would like to speak just briefly a large number of interesting topics have appeared in the discussion, but I will confine my comments to just two of them. It seems to me that our hands are tied as regards the pre-requisites of an application for setting aside an arbitral award. The standard following from art. 34 of the UNCITRAL model law is so common, adopted in all significant arbitration jurisdictions, that a departure from it essentially in any direction would be treated as something unusual and controversial. I would draw attention to the fact that art. 34 is closely linked to art. 36 of the law and above all with art. 5 of the New York Convention of In the course of 50 years of application, this regulation became the common international standard. That would be all as regards the issue of pre-requisites. On the other hand, with regard to the issue of how many instances there should be in supervision proceedings before State courts, I would point out that the United Nations Commission on International Trade Law (UNCITRAL) deliberately left this issue unregulated. The procedure under which common courts supervise arbitral awards depends above all on the judiciary form in a given country. If in Austria State courts operate quickly and efficiently, then the three-instance proceedings adopted there may work in practice. If in England an application for setting aside an arbitral award has the nature of an extraordinary appeal measure, then also beginning proceedings from the High Court has its own specific local justification. In general, to sum up, I subscribe to what Counsellor Krużewski said: the dominant model is to compress these proceedings into two instances. Bearing in mind the lengthiness of proceedings before common courts in Poland, it seems that this is a model which would decidedly meet the needs of practice. Ms. Barbara Grabowska: As can be easily guessed, I am not a specialist in arbitration. However, I would like to share some observations with you on arbitration in the context of the European Convention on human rights, that is arbitration treated as a possible untypical access to justice. In the Code of Civil Procedure, we read that an agreement to adjudication by a court of arbitration leads to an automatic dismissal of a statement of claim before a domestic court, which in my opinion means that a potential application for setting aside an award of a court of arbitration causes that it cannot be treated as an action as then we would be dealing with a situation where we would be adjudicating twice in the same case. On the other hand, bearing in mind the judicial decisions of the European Court of Human Rights, what Strasburg emphasizes is the effectiveness of awards of courts of arbitration. In a case where arbitration is obligatory, the requirements following from art. 6 of the Convention are fully applicable to such proceedings. The situation appears somewhat differently when this arbitration is optional. Over the last 3 years at least two quite important decisions have been handed down (against Serbia and against Ukraine), in which Strasburg declared that a situation is in violation of the Convention where despite the fact that arbitral awards are handed down, because of the lengthy appeal proceedings these awards cannot be carried out. This, in turn, causes that the State-Party to the Convention must pay compensation in the full amount of the subjectmatter of dispute which was adjudicated by the court of arbitration. I think that it would be Arbitration e-review No. 3 (Summer) 2011 p. 37

38 PART II worthwhile to hold a discussion on the form of an application for setting aside the award of a court of arbitration and its effectiveness, taking into consideration the judicial decisions of the Tribunal in Strasburg. As it is, to date we have no Polish Strasburg decisions concerning arbitration. Perhaps if the Polish model of the application for setting aside and arbitration itself are ineffective, then later it may turn out that such cases will go to the Tribunal in Strasburg. Counsellor Paweł Pietkiewicz: I would like to refer to what Prof. Chłopecki said, namely that decisions of common courts in the scope of an application for setting aside an award of a court of arbitration are unpredictable. They are indeed unpredictable. In particular, this is caused by the public order clause. Of course, its presence amongst the pre-requisites is necessary but, by applying it in a pathological manner, courts arrive at various conclusions and sometimes indeed examine the case as to the merits for a second time. It seems to me that this compressing or shortening of the entire post-arbitral proceedings could also cover the following issue. Namely, if an application for setting aside an arbitral award were to be indeed addressed to courts of appeal as courts of first instance, then these courts are so few that I suspect that in a short time an accumulation would appear of the knowledge of judges working in these courts. All the more that these are judges with extensive experience and knowledge. At present we have a situation where a judge working in the first instance which must examine an application for setting aside an award of a court of arbitration has little chance of encountering this type of issue once again. I suspect that most often it is the case that on one occasion a judge receives such an application for setting aside an award of a court of arbitration, examines it, applies the mechanisms and thinking processes which he has used to date, that is more often what is applied to the plaint procedure, and uses this mechanism to examine such application. Now, even if a judge had relevant knowledge and experience, the chance that he will be able to use it for this type of case is quite slight as the diffusion of applications in the application proceedings is enormous. The likelihood is small that such a number of cases will go to one judge that this accumulated knowledge could be used. If it were the case that there were far fewer of these courts (we are talking about courts of appeal), then the likelihood of developing a coherent line of judicial decisions and building up experience would be much greater. At the same time, the supervision of the Supreme Court which potentially could correct a certain type of deviation from the correct understanding of the pre-requisites for an application of a court of arbitration would ensure the proper uniformity of those judicial decisions. Thus, it seems to me that a shortening of these proceedings, as proposed by Counsellor Krużewski, where the first instance would be the court of appeal, would also ensure a predictability of decisions of common courts. Thank you. Dr. Beata Gessel-Kalinowska vel Kalisz: I will only speak briefly as I would just like to raise an issue which was touched on by Counsellor Pietkiewicz. I would like to take advantage of the presence of representatives of the Ministry of Justice. What I mean is how arbitration is seen and experienced by professional judges. It seems to me that it is not understood that arbitral proceedings are not formalistic in their nature, such as for instance, I would say, court s execution of promissory notes I am thinking of a specific dispute: the Gdańsk awards, which was extensively commented on in arbitration circles when the arbitral award p. 38 Arbitration e-review, No 3 (Summer) 2011

39 PART II was set aside in view of the fact that it was signed (indeed in accordance with the tradition adopted in courts of arbitration for many years) under the justification. The award was set aside because it had not been signed also under the sentence of the award. I do not think that this decision would have been upheld in the next instance. Nonetheless, that case shows that in a court of arbitration the same standards of proceedings are applied as are applied in common judiciary. But that should not be the case. It is a farther-reaching issue, a question of education and understanding of what arbitration consists in. Thank you. Prof. Karol Weitz: Thank you very much. Perhaps first of all one issue with regard to the application models which operate in Europe and the model that we have. One thing has escaped us in the discussion: we have a model of two instances, though there is no guarantee that the Supreme Court will examine a cassation as it may refuse to accept it for examination. Thus, in this respect we are somewhat closer to England, for example. Another thing: I agree that a potential compressing of proceedings would absolutely not be unconstitutional. Unfortunately, though, I am almost certain that it would be considered by the Constitutional Tribunal to be unconstitutional. Why such a conclusion? If the CT believes that two instances are necessary in the matter of costs of a trial, then it is highly probable that though probably not understanding the problem of the application it could go in the same direction. I am speaking here of the unpredictability of decisions of the Tribunal. Another matter: in an earlier panel discussion there was mention of the fact that proceedings are lengthy; this is not the fault of arbitration, but of State courts. I believe that it is above all the fault of the parties which avail of this institution in a manner which is not entirely compliant with the essence, objectives and functions of the Act. It is a bit like this that on one occasion someone is an arbitrator, hands down a resolution, is convinced that it is right and that this award should be upheld because he did his best and arrived at the decision to his best ability. On the other hand, a moment later he is an attorney in fact and very often a little time later he will be filing applications for setting aside the award of a court of arbitration. Of course, then the explanation is very simple: it is in the interests of his client. But we must remember that since arbitrators are so good and arbitration is so good, then there is a question as to why the point of view changes as soon as the function changes. After all, it is not the case that in the case of Vivendi and Deutsche Telekom the entire fault lay on the side of the State courts. After all, it was not the State courts will initiated such a large number of proceedings; it was not the State courts which flooded themselves with hundreds of court submissions the day before the hearing; it was not the State courts which wrote 150-page court submissions every day, transcribing almost the same text every day. One must retain a sense of proportion if one says that arbitration is ideal or that something is wrong with it; if one says that it is lengthy or that it is the fault of State courts. It is not State courts which initiate proceedings before themselves when it is a question of their intervention in arbitration. With regard to what Prof. Ereciński said, if the parties submit to arbitration, then the assumption should be this: since we choose the best specialists, we should agree with their decision. At that point the issue of the form of the application becomes a much lesser problem. Another matter: Prof. Rajski emphasized that a compressing would lead to specialization but we would not achieve even that. If it follows Arbitration e-review No. 3 (Summer) 2011 p. 39

40 PART II from the data we have here that we have approximately 1000 arbitration cases annually, and we would like as few of them as possible to end up in the courts: several score, two hundred, three hundred? How many judges could specialize in examining these applications? After all, a couple of judges handle as many cases annually. It is not the case that one can create specialized units in individual courts. The problem is more complex than that. With regard to Prof. Chłopecki: well and good if we create specialized courts for individual cases, only that then a very crucial problem will arise which will take up a huge amount of energy: namely, to determine whether it is to be this court or that court or the other court. An example of this are the commercial courts. A large number of resolutions of the Supreme Court concern the question of whether a case is commercial or not, and not what the problems are. Another matter: as regards the problem of the model of proceedings, we are speaking somewhat about mathematics two, three, one instance, or straightaway a court of appeal. But perhaps there is an indirect solution, perhaps it is the application proceedings which should be simplified: only in writing, without a hearing. The party submits an application there is a reply to the application there is a decision of the court. Perhaps the problem does not lie in the number of instances but rather in the form of those proceedings. Perhaps this could be a certain solution. must therefore absolutely deny the ability of State courts to exercise supervision? Not entirely. Moreover, that is one of the mistakes. There is another problem here: it was not the court that thought this up, but it was the attorney in fact who suggested it to the court. There can be no discussion about the fact that such a decision was mistaken. But do we need to go as far as the Supreme Court in order to ascertain that? Is that the procedure for proceedings that we must have? This is why we have the possibility of appealing such decisions in order for such problems to not exist. One last remark: I do not know any legal system where supervision over the awards of a court of arbitration would be granted only to the court of arbitration. The Constitutional Tribunal would undoubtedly deem such a solution to be unconstitutional. In one of its rulings, allowing submission of a dispute to the judicial decision of a private court, it stated that it is possible only because the State retains supervision in the form, amongst others, of an application for setting aside an award of a court of arbitration. Please do not assume that an application for recognition or declaration of enforceability would be sufficient, as there the subject of supervision is one thing, whilst it is a different thing in the case of an application for setting aside an award of a court of arbitration. Thank you very much. We have ended Part II of our discussion. With regard to what Ms. Gessel-Kalinowska said: the Gdańsk decision, the famous refusal to grant an enforcement clause because the award of the court of arbitration was signed under the justification, and not under the sentence. This is an obvious error. All of us here knows that that was a mistake but does that mean that we p. 40 Arbitration e-review, No 3 (Summer) 2011

41 PART III Can Poland become a European arbitration centre? Panel Moderator: Tomasz Wardyński Introduction by: Maciej Jamka Panel Participants: Paweł Pniewski, Prof. Karol Weitz, Jacek Kaczmarek, Paweł Pietkiewicz, Prof. Jerzy Rajski, Dr. Beata Gessel-Kalinowska vel Kalisz and Małgorzata Surdek. Prof. Marek Michalski: Turning to the third topic of the discussion, devoted to the issue Can Poland become a European arbitration centre? I invite Tomasz Wardyński to moderate the discussion. Tomasz Wardyński: Thank you. I turn over the floor to Maciej Jamka, who will introduce the topic. Maciej Jamka: Thank you. I would like to start by posing the question, What are the benefits of being an arbitration centre? They are vast but difficult to measure. One benefit, clearly, is work for lawyers (which is why I was so eager to take up this topic). The benefits extend to the entire service sector, even hotels and other such institutions. We tend to under-appreciate this type of business and this sector of the economy. I will give you an example. In a publication by the UK Treasury, entitled The Plan for Growth, it was stated that the professional and business services sector, including accountants, lawyers and other professionals, was responsible for one-third of economic growth in the UK in This is the largest sector in the British economy, generating 166 billion of the gross domestic product. Of course we cannot match that level, which Britain has been working towards for the past 600 years. But there is still potential here for us, I believe. Does competition exist between arbitration centres? On the slide you may see two quotes that demonstrate that such competition not only exists, but has gotten stronger in recent years. Markus Wirth is the head of the Swiss Arbitration Association, and the ICC Task Force on the Brussels II Regulation also discusses the growth in competition. And who is in the running? The leader in Europe when it comes to international arbitration is the ICC, followed by London with the LCIA, Geneva, Stockholm and Vienna. These are recognised arbitration centres which everyone has no doubt heard of, and many of us have had the pleasure of making use of their services. There are also other wellknown centres. The second league includes Madrid, Milan, Germany (with DIS), and Moscow. New centres are appearing: Dublin, Edinburgh, Kiev, Frankfurt. I found statistics from 2007 saying that the leaders, the ICC and LCIA, have more or less the same levels of cases being filed. Meanwhile, the new centres are observing significant growth. There is probably some economic rationale for this. How do arbitration centres promote themselves? We will consider some examples of countries in Europe: Arbitration e-review No. 3 (Summer) 2011 p. 41

42 PART III Spain fosters an arbitration-friendly legal environment. There is a new arbitration act based on the UNCITRAL Model Law, with work currently underway on amendments. There is discussion of strengthening local arbitration institutions by merging them, and with new regulations, as well as promotion of arbitration through the activities of the Spanish Arbitration Club, founded for this purpose in Spain hosted the International Bar Association Annual Conference in Spain defines its goal as serving as a bridge between Latin America and Europe, for obvious reasons. Ireland A friendly legal environment (a topic we will return to), with a new arbitration act in 2010 based on the UNCITRAL Model Law. Arbitration-related cases are assigned to one, experienced judge, the president of the High Court. There are no appeals from his decisions. A new institution, the Dublin International Arbitration Centre, has been opened. There is a strong arbitration community, and a branch of the Chartered Institute of Arbitrators with 600 members. Promotion of arbitration: creation of the organization Arbitration Ireland, hosting of the ICCA Conference, strong governmental support, with the Prime Minister of Ireland attending the conference. Goal: to become, as the Irish put it, the Switzerland of common-law countries. Scotland provides a supportive legal environment, with a new arbitration act based on the UNCITRAL Model Law and, most importantly, the strong support of the Scottish government. The Irish stress that they are numerous in international business, particularly in the United States, and for this reason alone some portion of the caseload may go their way. The Scots, for their part, point out that although golf is one of their strengths, it is not the only one. They also specialize, for example, in energy, e.g. mining in the Norwegian Sea. Both of these countries are striving to find their niche in arbitration, and neither of them rests on its laurels. France In the latest news, a new arbitration law has just been passed, in I have not reviewed it yet in detail, but an interesting and revolutionary feature is that it is possible in the arbitration clause itself to waive a right to seek recourse against an award. This does not apply only to international arbitration, as in Switzerland, but also domestic arbitration. Further: efforts to keep the ICC in Paris, as mentioned already by Mr Krużewski. What incentives are offered? A new building for the ICC International Court of Arbitration, and tax exemptions for staff. The ICC has obtained a status similar to that of tax-exempt international organizations. Sweden New arbitration rules at the Stockholm Chamber of Commerce in 2007, and an invitation extended to six international experts to join the SCC Board, occupied for the previous 75 years exclusively by Swedes. England First of all, financial support from the state. We can still picture the recent rioting by students in London over budget cuts. But the same budget includes special provisions with a pool set aside for growth of arbitration. On the slide you see the new office building that is the headquarters of arbitration in the centre of London. London arbitration does not have this building yet. Just yesterday I was in London for a procedural hearing, and because of the cramped quarters of the current arbitration headquarters in London, the parties and the arbitrators decided that it would be better to move the hearing to another location: The Hague. This is eyewitness proof that there is competition between arbitration centres. Turning to our own backyard: Is there an economic need to create an arbitration centre in p. 42 Arbitration e-review, No 3 (Summer) 2011

43 PART III Poland? Could Warsaw become one of the group of cities hosting major arbitration courts? I think that our discussion will answer this question, but I would first like to say only that it appears that a business need for it does exist. East of our own borders there are neither effective courts nor well-established arbitration centres, and there probably will not be for a long time. Thus the situation definitely presents potential. Jan Paulsson, a leading figure in contemporary arbitration, has said that there are two major factors here: First, will the national courts prevent the parties from obtaining an award in a favourable time and at a reasonable price? Second, after an award is issued, will it be followed by costly proceedings before the national courts? When considering what should be done in order to create an international arbitration centre here, I looked at the example of the Warsaw Stock Exchange. Just 20 years ago, if anyone said that Poland would one day have a strong stock exchange, a centre for the region which I believe it now is no one would have believed it. I think it is worth considering how that happened and what were the conditions. It seems to me, and this is just my subjective view, that there are four essential elements: the right legal environment, institutional environment, state support, and human capital. Legal environment: In the case of the WSE, the regulations have been shaped over the past 20 years and have undergone changes, but they were always good or excellent regulations, and no shortcuts were taken. Shall we consider what we have in arbitration? A good law, but not excellent. An example that has not been mentioned yet is the effect of bankruptcy on an arbitration proceeding, which is an incredibly important issue but not understood at all by most of the legal profession not involved in arbitration. We have major problems with prolonged proceedings connected with arbitration. Finally, we have unstable case law. Institutional environment: The stock exchange is one central institution, a clear leader organized by the state, equipped with everything it needs, with financial incentives for brokerages. What we have in arbitration is several competing arbitration courts, the lack of a truly impressive headquarters (even the offices of the Polish Chamber of Commerce are merely not too shabby ), and no organizational unit within the Ministry of Justice to stand watch over arbitration or deal with the topic of arbitration in general. State support: The WSE was not built all by itself. Other institutions were established, open pension funds directed investment streams toward the WSE, large privatizations by the state were organized by the State Treasury, there was pressure on investment banks to encourage them to set up offices in Poland, and the WSE was promoted by each successive government. What do we have in arbitration? Arbitration is a private affairs of private individuals and organizations. This aspect has already been raised: They earn money on it. There is no coordinated state policy with respect to arbitration clauses in agreements affecting the interests of the State Treasury. We have heard from Mr Dziurda, and I interpret his comments as at best mixed feelings about arbitration. Mr Dziurda only reaps the fruit of arbitration clauses, however. Many prominent lawyers also have negative opinions about arbitration. I daresay that even in this room we have heard several comments that give us pause to consider whether arbitration is considered a desirable element of the legal landscape in Poland. Arbitration e-review No. 3 (Summer) 2011 p. 43

44 PART III Human capital: The staff at the Warsaw Stock Exchange has grown over the years along with growth of the exchange. Know-how was imported into Poland by international institutions, law firms, investment banks and brokerages. In arbitration we have a large local community, partially satisfied with the status quo, and a new wave of the younger generation of people who seek broader horizons for arbitration. With a few exceptions, we as Poles do not have a presence in international arbitration structures, we are not engaged in global debates about arbitration, and we are not physically in attendance at world arbitration events. In 1902 Lenin published a brief work with the brief title What Is to Be Done? I mention it not just because it is a catchy title, but also because it appeared at a time when the revolutionaries were in disarray and indeed the December Revolution was soon to be put down, in It appeared at the time that there really was nothing to be done. Nonetheless, eventually the Russian revolution prevailed. Even the longest journey starts with but a single step. So the question is: what is the that first step? For me, the first step is to articulate the goal. The question is whether we want to have such a goal, to internalize it, to adopt it as our own, to strive in that direction. If so, we need to prepare a strategy, a conscious-raising campaign for state institutions to show that it will pay off for the state and the state should act toward this end. But also for the city. Further: to prepare a strategy for joint action by the main arbitration courts. First, do no harm, I think it should say. Promotion of Poland in the global arbitration community: writing for law journals, participating in worldwide events, hosting international events, promotion in the countries that may potentially be interested in our services, participation by individual lawyers in foreign arbitration institutions. As I get older, it seems to me that nothing has such a good effect on human relations as a little self-serving flattery. That s why I would like to say now that the Lewiatan Court of Arbitration is already on this path, and it is doing a lot to reach out beyond the domestic environment. It is enough to mention the successful conferences last year and the Polish-Austrian cooperation initiative, which will be held for the second time in June. Also important is the arbitration quarterly published in English. The list goes on. But if we truly want to become a major international centre, certainly not in just a year or two, that depends on all of us, the arbitration community. Thank you. Tomasz Wardyński: Thank you very much, Mr Jamka. Before we begin the discussion, I would like to draw your attention to a brief report on the ICC International Court of Arbitration. Because we have with us today Paweł Pniewski, who is the chairman of the national committee ICC Poland, but Piotr Nowaczyk is not with us, I would like to request a brief report on the role played by the ICC International Court of Arbitration in the Polish arbitration community. Then we will turn to the discussion. Paweł Pniewski: Thank you, Mr Chairman. Good afternoon, ladies and gentlemen. First of all I would like to convey the warmest regards on behalf of Piotr Nowaczyk. Unfortunately he could not be with us today, and he is truly a person who would have much to say on the subject of how we should promote Poland as an arbitration centre. p. 44 Arbitration e-review, No 3 (Summer) 2011

45 PART III With respect to the ICC, you have materials before you which I will not discuss in detail. I would like to say a few words about the war going on over the ICC s staying in Paris. Indeed, there was serious competition, and there was a battle between France and Switzerland and Austria. The parties brought heavier and heavier artillery to the table. When you get right down to it, the basic reason that the ICC stayed in Paris was that no one wanted to leave that beautiful city. Because the financial arguments of the two other countries were serious, however, the French government had to give way and offer the broad concessions to the ICC which have already been mentioned. If you look at the enclosure to the materials you have, you will probably notice that it begins from We began activity in Piotr Nowaczyk became our ICC representative in about More or less from the same time, as you will see, the numbers of parties from Poland began to grow significantly, and the number of Polish arbitrators, as well as Poland as the place of arbitration, not to mention Polish as the language of the arbitration. I can only say, first, that promotion works, and it is possible to promote Poland just as we to some extent promoted the ICC on the Polish market. How did we do it? At a certain time, we consistently organized conferences to popularize the ICC, travelling among the largest cities in Poland and presenting the accomplishments of the ICC, particular the achievements of the International Court of Arbitration. Piotr Nowaczyk became very actively involved in the work of the court. At one point we even began to think about foreign promotion. We did conduct two manoeuvres, as ICC Poland, in Minsk and in the Czech Republic. Not that the ICC needs to be promoted in the Czech Republic, where they have their own national committee, but it was promotion of Poland as a strong arbitration centre. We are also happy that our colleagues actively participate now in sessions of the ICC Commission on Arbitration. It s not the way it used to be, when one person would travel there every six months. I am pleased to say that our representation on the ICC Commission on Arbitration is very strong. For my part, I would also like to add that ICC Poland is always eager to cooperate and join in on any project connected with promotion of Poland as an arbitration centre, because I believe it is in our common interest. Thank you. Prof. Karol Weitz: Thanks to Mr Jamka for his introduction. My comments will not be as organized, but I would like to tie in to the information about the contribution that the arbitration market makes to the gross domestic product in the UK. I think that this is just a small fragment of the whole picture, because in the UK the legal services market as such is an important element in establishing the country s position. As an example, right now in Brussels we are negotiating a new Brussels I Regulation. One of the options is to replace national rules with this EU regulation also when the defendant is domiciled in a third country. The greatest objection was raised by the UK, because it is against its interest for Brussels, instead of a court in London, to decide when the English courts will be able to decide a dispute between someone from India and someone from Canada. If it is a good case or an interesting case, the English court will hear it, and if not it will find that it is not the proper forum. The issue of arbitration as an element affecting the position of the country and its welfare is very important. Of course, we are starting from a much worse position. London is not an arbitration centre just because London is a nice place to visit. It is not just several centuries of development of arbitration, but also historical Arbitration e-review No. 3 (Summer) 2011 p. 45

46 PART III events. To put it bluntly, Poland did not have the good fortune to have colonies or at any rate we had only one, in the 17 th century, through the Duchy of Courland, which we lost after 20 years. That is the unvarnished truth. In a manner of speaking again, bluntly we had colonies much closer, to the East, and this is probably the arbitration market we should be reaching for. We will not compete with London, and we will not compete with Paris, Vienna or Stockholm. If there is one thing we can do, it is to return to the East. There is no such market in Central & Eastern Europe either. Here we may express amazement. Germany has no one strong arbitration centre. There is only DIS, but it is left somewhere back at the starting block. If there is one direction we should look, it is to the East. At this point I would like to jump to the issues related to the conditions for creation of an arbitration centre. I agree that the regulations in the Polish Civil Procedure Code are not perfect. When we enact a set of regulations, it is only after some time that their weaknesses become visible. But I would always stress that a law that is a little better or worse will not guarantee that arbitration in fact works well. This is because the arbitration regulations are flexible enough to create the conditions enabling arbitration to develop in Poland. It is hard for me to accept such a superficial view that we cannot be an international arbitration centre because the state courts here are too powerful and interfere too much. Certainly, the regulations are developing in the direction of limiting that interference. That will happen, but it seems to me that first arbitration must demonstrate that it needs less interference. This is an area where it is necessary to convince decision-makers that less interference is needed. That is why I would also strongly emphasize that it is not just the fault of the state courts that there are post-arbitration or arbitration-related proceedings that last too long. It is not just the fault of the courts, but also counsel who appear before the arbitrators, and the parties. This is extremely important. I do not want to speak too harshly here, but sometimes certain behaviours display hypocrisy. On one hand we say we want to reach an award more quickly, as soon as possible, and that it should be effective and enforceable, but on the other hand we say that to defend the client s interests, I will use every opportunity available, to the bitter end. One more thing: I agree that our regulation concerning the effect of bankruptcy on arbitration is bizarre. I see no ground on which this regulation can be defended. That is my opinion. I have always been opposed to it. This issue should be addressed in a completely different way. Another issue, perhaps the biggest problem: many competing arbitration courts. There is no concerted will on the part of the broader arbitration community to agree institutionally, as it were, on one Polish arbitration court for export. It is not up to me to take action in this respect. I can only say that perhaps an interim form would be some joint institutions. Perhaps a solution would be to create an arbitration institute, in which all of the permanent arbitration courts, or at least the major ones, would be involved as founders, without trying to decide whether we are more important than the Polish Chamber of Commerce or vice versa. I offer for consideration the creation of such an arbitration institute. Perhaps it would be a solution. With all due respect, I would not count on the Ministry of Justice here, because it is probably not institutionally prepared to act toward this end. There is no such tradition in the ministry. Please note that in the case of the Warsaw p. 46 Arbitration e-review, No 3 (Summer) 2011

47 PART III Stock Exchange, it is much easier to justify its public importance as a centre. Unfortunately, arbitration is popularly labelled as an elitist form of dispute resolution. This is a certain image problem. Another thing: The arbitration community is to some extent a closed community, which is not always willing to admit the new arbitration generation into specific, ambitious arbitrations. In a human sense this is somewhat understandable. We can t hide the fact that this is the business of the lawyers, thanks to whom the disputes may be resolved. Unfortunately, we are not heard in the overall European discussion of arbitration. I am sorry to say that when the draft Brussels I Regulation was being prepared, not only where there no publications on this topic in Poland, there were also no reports that Polish experts were participating in meetings with the European Commission on whether or not Brussels I should be extended to arbitration. I will stop there. In the draft regulation presented by the Commission, there were certain concepts for extending aspects of the regulation to arbitration. At this time it appears that probably that will not happen. It seems like a good thing to me, but the largest arbitration centres are blocking it. The UK and France said quite bluntly that the provisions that are being proposed should be thrown out. One British professor admitted straight out, This is about our money. We want to decide when and how arbitration will function here. It seems that we can gain from this, because the Brussels I Regulation that was planned could have caused ossification of the status quo, as it assumed the omnipotence of the courts of the state of the place of arbitration, which in European terms would mean the omnipotence of Paris and London, perhaps Stockholm, sometimes Vienna. As long as that ossification can be avoided, there is always a chance that a slice of the cake will be left for Warsaw. That is my personal hope for the entire arbitration community. Thank you. Jacek Kaczmarek: I am not in a position even to begin to answer the question of whether Poland can become a European arbitration centre. I would like to make a few comments to you, however, on the initiatives and actions we are undertaking in our own arbitration court. I think that these actions in some way serve the notion that in the future our country could become such a centre, specifically by creating favourable conditions for development of alternative methods of resolving disputes in every field, among businesses in particular, but also among economic institutions, lawyers, and legal scholars. We are confident that concrete actions, the number of cases, and the great experience and level of the decisions that come with it, are a method for development and an increase in the interest in our country as an arbitration centre. The efforts of each of our arbitration courts concerning the number of cases and the level of the decisions, the support of a good law, and building a positive atmosphere of all of these groups, are enough to head in the right direction. Not necessarily through creation of any new central institutions, or if so only an organization supporting and coordinating the goal we jointly set for ourselves. I am the vice president of a small arbitration court. From the perspective of Warsaw it is a local court and a local community. We have nonetheless adopted the guiding principle for our activity that even though our capabilities are local, we would like to think and act globally or at least that is our aspiration. Arbitration e-review No. 3 (Summer) 2011 p. 47

48 PART III Thus we try to establish cooperation with specific arbitration courts. In our actions on the international side, we have decided to develop this cooperation with countries and arbitration institutions in Eastern Europe, where we see potential and dynamics for growth in economic relations, although we also perceive risks related to economic and cultural differences and from differing visions and levels of the civil society. Therefore, as I said, we try to form close contacts directly with the arbitration courts and chambers of commerce of these countries, by signing various declarations and understandings, in which we try to have an impact on local government and economic institutions in our regions, to strengthen and reinforce the economic cooperation between businesses from our regions. In these initiatives, we rely on opportunities for effective use of alternative dispute resolution, including the benefits of agreeing on an arbitration clause. We also undertake to promote the concept of arbitration, and also indicate to the businesses cooperating with us from the given regions the option to select one of our arbitration courts who are signatories to these agreements. We promote legal knowledge among businesses, particularly in the area of commercial law, with respect to the legal systems of the countries in question. We organize workshops and training sessions here. We also undertake to provide one another interesting rulings in cases decided by the arbitration courts in the given countries. We invite each other to participate in conferences and seminars that we organize. We would also like to present and make available analyses, reports and publications concerning arbitration, and depending on the possibilities and the needs, we supplement one another s list of arbitrators. The scope of the declared cooperation is open and may always be extended. We also undertake to include information on one another s website concerning the arbitration courts in question and the host chambers of commerce, as well as their logos. These declarations and understandings are not empty or just on paper. Among recent events, we were on a working visit to Ukraine. In Kiev we met with the president of the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce & Industry. During the meeting we exchanged views on the functioning of arbitration in Poland and Ukraine and also learned about the specific nature of dispute resolution between Ukrainian businesses and the Ukrainian legal regulations in this area. We also visited the Ternopil Chamber of Industry & Commerce. One of the results of that meeting was signing of another cooperation agreement. For three years our court has been cooperating primarily with arbitration courts in Ukraine, but we also have contacts, and our own arbitrators on the lists, in Georgia, Moldova and Slovakia, and vice versa. So far, in the 5 years that our court has been in operation, our arbitrators have resolved two international disputes, and to the best of our knowledge the awards were complied with voluntarily, without commencement of execution proceedings. In Ternopil, Ukraine, we also organized a conference on alternative dispute resolution in Ukraine and Poland. The honorary patrons of the conference were the Minister of Justice, the Polish Consul General in Lvov, and the honorary consul of Ukraine. Over 100 people from Ukraine and Poland took part in the conference. During another visit to Ukraine, the president of the arbitration court, Włodzimierz Brych, met with the Ukrainian Vice Minister of Justice p. 48 Arbitration e-review, No 3 (Summer) 2011

49 PART III to discuss current issues in development of ADR in Poland and Ukraine. The result of the meeting was a common initiative to organize a major conference on arbitration in Odessa. It was held in October 2010, and representatives of arbitration and mediation from many countries around the region took part. The conference in Odessa also resulted in establishment of the ADR Cooperation Forum, whose goal is to promote arbitration and mediation in the signatory countries. Cooperation declarations were signed by representatives of arbitration institutions from 10 different countries. The forum is open to anyone who wants to cooperate. Last year we also participated in an international conference in Chişinău, the capital of Moldova. Today, at the same time as our own meeting, a conference is being held at our court in Nowy Tomyśl the 5 th in a series entitled Arbitration and Mediation in Theory and Practice. The honorary patrons of the conference are the Deputy Prime Minister and Minister of Economy, the Minister of Justice, and the local authorities of Nowy Tomyśl. Distinguished arbitration and mediation scholars and practitioners from Armenia, Azerbaijan, the Czech Republic, Denmark, Georgia, Kazakhstan, Lithuania, Poland, Romania, Russia, Serbia, Turkey and Ukraine are scheduled to attend. After the end of the conference, there will be a working session of the Odessa 2010 ADR Cooperation Forum I mentioned before. I think that for a court in Nowy Tomyśl, we have done a lot to promote arbitration. We hope that this carries over to the number of cases filed with our court. Nonetheless, a greater caseload, including international cases, does create problems of its own. Handlings the logistics for an international dispute is a big challenge for us, although, as I mentioned, we have already completed the first international cases. They were concluded successfully, with fair, substantive and professional awards. In the rest of the discussion about barriers to development of arbitration, no doubt many issues will be raised. It is important that these barriers be identified and brought to the attention of decision-makers, in order to find positive solutions. Referring to cooperation with countries from Eastern Europe, we count on cooperation specifically with this region. There are many arbitration institutions and courts in Poland that have established contacts with countries in Western Europe. Thus we may hope that a combination of these experiences and contacts abandoning unhealthy forms of ambition and competition presents, I believe, an opportunity for Poland to become a European arbitration centre. I say this even though I must admit that in the hand of cards we hold as a nation, a willingness to compromise is not our strong suit. There is a lot of work to be done there. Thank you. Paweł Pietkiewicz: Much has been said about whether Poland can become an arbitration centre, and I would not like to repeat the statements I agree with, but rather add something or possibly criticize certain views. It seems to me and here I agree with Prof. Weitz that the expectation that Poland will become an arbitration centre on a European-wide scale, or a European centre in the sense that it will be important for the entire Europe, is premature at this point. I agree with Prof. Weitz that the kind of centre Poland could become would be limited to our region, and not even the whole region. Central & Eastern Europe: Yes, here Poland could conduct a certain expansion in this respect, but not entirely. I think that the Baltic States would naturally gravitate toward the Scandinavian countries. Russia is a specific Arbitration e-review No. 3 (Summer) 2011 p. 49

50 PART III market unto itself. If any cases did come in, but probably not many if at all, it would more likely be from the former Soviet republics, not from Russia itself. With respect to expansion westward, that expansion would end at the Oder and Neisse rivers. As for the south, I think that there is a large area where we could make an impression particularly when we consider what is happening now with the rules of the arbitration court in Bucharest and in Sofia. These are not large courts, but I have the impression that there is room for expansion there. Particularly when we see, to use Mr Jamka s example, that a bank from Slovenia has just been listed on the Warsaw Stock Exchange within the past couple of weeks, there is a natural gravitation in that direction. What does it mean to be an arbitration centre for the region? The expectation at this time that we will export our know-how in this way, that parties will sign arbitration clauses for Polish arbitration courts, that we will export Polish as a language of arbitration, or that we will export the jurisprudence of our state courts or arbitration courts I think that those expectations are over-reaching. I think that being an arbitration centre may only mean that Poland becomes the location for arbitration proceedings not necessarily before Polish arbitration courts, but even before other courts and if Polish arbitrators hear these cases and Polish lawyers appear in these cases, that in itself would already be a major accomplishment. It appears that this is sufficient to become an arbitration centre. It does not necessarily mean that cases are physically brought here, or hearings are held in Warsaw, or that Polish courts rule on applications to set aside awards issued here in Poland. I was in Odessa and Kiev, and I was even in Chişinău. I have the impression that the amount of know-how we have here in Poland already is incomparably greater than other countries in the region. A serious problem is that the vehicle for exporting knowledge is language. And, clearly, such arbitration centres as Dublin, Edinburgh and Frankfurt will have an easier time of it because theirs are commonly known languages, conference languages. The Swedes are certainly in a different situation, but the history of Swedish arbitration is based on the fact that there was a neutral body there, where East and West could meet, and that is why arbitration blossomed there. It seems to me that in Central & Eastern Europe, we could be attractive although not for all countries in the region specifically by selling or exporting our know-how. Right now we are witnessing that this will soon happen, if it is not already happening. We observe a very large phenomenon of export of capital from Poland, or via Poland, to the region. This will be accompanied by arbitration clauses. Here we have a large field to mine for expansion, so that in a situation where this kind of export is being conducted from Poland we can attract these cases to Poland. In any event, we can bring our interest to bear in this field, not so that the cases would necessarily even be conducted in Poland. Thank you. Prof. Jerzy Rajski: Thank you. Ladies and gentlemen, in order to answer the question of whether Poland can become a European arbitration centre, we first need to ask a preliminary question: Are there any objective grounds that would encourage establishing such a centre in Poland specifically? The answer is Yes. First, because of the geopolitical location of our country, we are at the crossroads of East and West, North and South. And this is not just an issue of geopolitics, which is of great significance in this area, because we know that much depends on the political positions of countries. If you have their support, there are opportunities, but without that support there are not. But p. 50 Arbitration e-review, No 3 (Summer) 2011

51 PART III there is also a second factor that we can bargain with: the cultural factor. Namely, we are the heirs of a tradition of legal culture which also draws its sources from various traditions, mainly western, Romance or Germanic, but it should also be remembered that before the war, for a certain time in the period following the partitions the system of Russian law was in force in some Polish lands. Thus we have a good geopolitical location and we have a rich legal tradition. What do we lack? We lack the most important thing: the right infrastructure. That has to be built consistently, and slowly, exploiting the current situation, both objective and subjective. Most essential is to build the support, because a house cannot be built without a foundation. In my view, a realistic attempt to construct such support could be made by creating an international institute of arbitration law and practice in Poland, which would be the start for building the centre that could arise on this foundation. The institute could serve the functions mentioned earlier in our discussion: educational, training staff and providing continuing education for practitioners. Thus it could serve various useful purposes, and there is something to build it on because there are certain elements of an arbitration centre already existing at the University of Warsaw. Thus with a little organizational stimulus an attempt could be made to take it out of the academic structure and build something greater. In the longer term, of course, with support from the state being necessary for this, we could think of building a kind of international arbitration centre in Warsaw along the lines of the LCIA, for example a Warsaw Court of International Arbitration, or, drawing on the Swedish pattern, affiliated with the institute I mentioned. In any event, a degree of positivism is needed here. First it is necessary to start the fundamental structural work so that there is solid support for further efforts. I firmly believe that there are objective chances for Warsaw to become an international arbitration centre in the near future. Our geopolitical position may be one important element. Note that it is fairly easy to get to Warsaw from any country in Europe. Warsaw also has good connections with economic centres in both Americas and in Asia. Thus, exploiting the strengths we have at this time, we can try to do something. But we will need support from the world of commerce and the world of politics. Dr. Beata Gessel-Kalinowska vel Kalisz: Prof. Rajski, I think that is a fantastic comment, because it demonstrates that we have great potential, and together we can accomplish this. I would just add two elements: Our community is large, we have numerous legal and scholarly personnel, and, to put it crudely, we are the producer of some of the biggest and most prominent disputes anywhere in Europe. With many disputes, we are also in a position to create an active centre to service those disputes. I think that when it comes to promoting Polish arbitration, the truly most important thing is to consolidate the community. This means that we need to come together and support one another within the existing international institutions, along the lines Paweł discussed. This doesn t mean just to hear lots of international disputes in Warsaw, but also to support one another on the international arena, whether through participation in organizations, or European legislative work, serving as arbitrators, or any other way. We are not just fighting for Warsaw to become the place of arbitration. I think we are in a position to achieve this. Arbitration e-review No. 3 (Summer) 2011 p. 51

52 PART III I also think that today s debate is the first step toward that goal. We invited all of the major arbitration institutions to take part, and almost all of them responded. We are here and talking. Note that if we look at the other side of the table, we see lawyers from various competing firms. If we manage to come together in this sense, despite competing with one another every day, and discuss what should be done to jointly promote Polish arbitration on the international arena, it seems to me that this is a good start and shows that we can do this together. Małgorzata Surdek: Ladies and gentlemen, when I saw the title of this debate I thought it would be interesting to debate a slight variation on the topic: not whether Poland can become a European or regional arbitration centre, but how Poland can become such a centre. Prof. Rajski pointed to the potential, in the sense of the geopolitical position and a certain legal tradition. Nonetheless I have the impression that we are sorely missing something in our discussion. We said first with a certain amount of reserve, and then more and more openly, that when we talk about arbitration we are talking about business. We also use words like competitiveness being competitive with other arbitration centres. We should not limit our discussion only to how to remove the legal barriers. Although that is clearly an important point and without any doubt encourages promotion of arbitration, it does not guarantee success. point to Eastern Europe, and Southern Europe, but we are not focusing our debate on what in fact would encourage a company from Lithuania, or Slovenia, or Kazakhstan to decide on arbitration in Warsaw instead of London, Paris or Stockholm. Thus I think that we should devote a lot attention to this if the discussion is truly going to change anything. Raising the profile of the Polish arbitration community in the international debate is absolutely crucial. Of course, I agree with Mr Jamka s diagnosis that we practically have no presence. Maybe that is too harsh, but we are insufficiently present in the international debate. The third and final reflection is that state support is absolutely necessary. Arbitration, and organizing an international arbitration centre, is one way to promote the country. Just as the French government fought to keep the ICC headquarters in Paris, and just as countries promote themselves and compete to host the Olympics or other sports events, so also, it seems to me, without the active role of the state we will not manage to quickly reach the place we want to be. Thank you. This means that it is not just about removing barriers, and amending the Civil Procedure Code, but we need to consider what incentives we could create so that Warsaw, and Poland, would really be taken seriously as an arbitration centre. Maybe not yet equal to the first league, but at least the second. We are able to identify fields for potential expansion. We can p. 52 Arbitration e-review, No 3 (Summer) 2011

53 SUMMARY Summary of the Debate Prof. Andrzej Kidyba, prof. Marek Michalski, dr Beata Gessel-Kalinowska vel Kalisz Prof. Andrzej Kidyba: Let us sum up. I think that today s meeting was, in fact, a discussion on the condition in which Polish arbitration currently finds itself. I shall not dwell upon the issues addressed by the last panel because one can only support the voices diagnosing the situation and stating that arbitration should be internationalised. I wonder, however, if the situation is as good as it has been presented here. What really worries me is the small number of cases tried by arbitration courts. There is no doubt that we do not have many cases. I think that, taking into account certain past behaviour, we should concentrate on promoting arbitration. As Ms. Gessel informed us, we have here two people representing the Ministry of Justice, and that Ministry recognizes the problem of arbitration. I guess there is plenty of room for promoting such activities. It is really good that Mr. Bobrowicz and the representatives of the Supreme Bar Council and the commercial chambers were here with us. This idea should really by explored and promoted to cause an increase in the number of cases. We have pointed out certain features of arbitration. My learned colleague began with such a distinction. I have doubts as to whether the features enumerated here result from selfjudgement or arise from a comparison with the common court system. I think that the latter is true. I am of the opinion that we really need a more profound discussion on the situation in which arbitration finds itself right now, and about the problems we may encounter. Such issues have been highlighted here. If we mention the pace of the proceedings, we cannot ignore the issue of complaints - just as Ms. Gessel said. If we argue against flattening the single-instance system of arbitration courts, we would lengthen the proceedings and make them more costly. Then the features of arbitration which we have pointed out, such as the fact that it is inexpensive and fast, will fail to exist in reality. I think that there is also a certain client-related issue which is sometimes raised in unofficial discussions and sometimes completely ignored. There are relations in which arbitrators are involved and standards which should prevent such situations. I have come across many situations in which an arbitrator fails to understand his or her role, because he or she acts as an attorney or even an ally of a party to the proceedings. The other problem which is worth discussing, and which has already surfaced today, is the issue of the transparency of actions undertaken by an arbitrator. In some courts an arbitrator may, on one day, be in charge of a case hearing and on another day perform the duties of an attorney. I think that this should also be the subject of a wider discussion. Another problem is the issue of the exclusion of arbitrators. Arbitration e-review No. 3 (Summer) 2011 p. 53

54 SUMMARY To cut a long story short, there was not much unity showed today. Some of us expressed an opinion that the pace of arbitration proceedings is too fast, some that it is too long, some said that arbitration was expensive, and some the contrary. I do not agree with the opinion expressed by Prof. Chłopecki that the principle of the asymmetry of costs was applied by the arbitration court at the Polish Financial Supervision Authority leading to cost minimization. Well, such cost asymmetry failed to translate itself into the number of cases because this number is really very small. I would rather share the opinion that we should really operate according to the principle that cheap meat never makes good soup. I do not think that costs have any influence on arbitration clauses. I would also like to draw you attention to a certain idealism that we have come across here a couple of times. Mr. Wardyński said that arbitration was not for the type of people who enjoy court processes. Agreed. Then we had some other opinions demonstrating a certain idealism. Someone said that if we agree on an arbitrator, we automatically agree on the award. If this were true in practice, and I have recently participated in a great many arbitration cases at the arbitration court at the Association of Polish Banks, then court employees would not do what they actually do, i.e. they photocopy court files. At the request of the parties. Then the parties wish to challenge the awards. The practice is then contrary to the idealism. I think that this has been a very good meeting. All the opinions were so clear and interesting that there is no need to address them individually. It would make it a really long debate. And Professor Michalski would silence me very shortly. Thank you very much. Prof. Marek Michalski: Let me also share with you some of my own opinions. They relate to different facets of the discussion and problems which occurred during individual panel discussions. Let me refer to the last panel, in which the idea of an arbitration centre in Warsaw was brought up. How does the idea of an arbitration centre in Warsaw, or even a regional centre, relate to the fact that, according to what Mr. Bobrowicz said in his presentation, approximately 77% of entrepreneurs do not feel the need to use the support of lawyers in their operations? The necessity of lawyers participating in business ventures is growing. We observe that there is a need for specialization, which is the consequence of the dynamics of the social, economic and technological processes which we are encountering. There is also the issue of professionalism which we have already mentioned in the context of arbitration and the lack of specialized jurisdiction. By the way, I would like to point out that at the beginning of the nineties there was a discussion about whether a stock exchange court dealing with securities cases should be appointed. The court obviously did not come into existence, but please bear in mind that there are currently a great number of cases related to the financial market, financial instruments, and options, and that not a great number of them reach arbitration. We should extend the scope of arbitration activities to such areas because we have access to great experts. At this stage, I come to the common denominator of all the subjects raised today, i.e. the question of the training young lawyers and preparing them to work in the field of arbitration and to promote arbitration as such. If we take into account all the tools that we have to promote arbitration and introduce it to a wider audience, this is one of the truly important ones. If arbitration becomes part of a university p. 54 Arbitration e-review, No 3 (Summer) 2011

55 SUMMARY or internship curriculum, the awareness of lawyers concerning the advantages of arbitration will increase. Let me finish here with the hope that our meeting has raised certain issues, of which there are plenty, and as Professor Rajski said, each discussion could become a separate conference. I think that it would be worth continuing such discussions, and I address this hope to our host, Ms. Gessel. I hereby formally close the debate and give the floor to Ms. Gessel. Dr. Beata Gessel-Kalinowska vel Kalisz: Ladies and gentleman, I wish to thank you for your participation in the debate and I also wish to thank the participants who are watching the live coverage via the Internet. The original aim of the debate was to raise certain issues which are important in arbitration circles as a whole and to start up a long-term discussion. Thanks to your participation, we have achieved our goal and, as Professor Rajski suggested, we now have to sort out the problems which, I hope, will be the subject of our subsequent meetings. Thank you again and let me now invite you to our gala dinner. Arbitration e-review No. 3 (Summer) 2011 p. 55

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