On 1 January 2016 significant changes to Polish law affecting arbitration will come into force (the “Changes”). The amendments pertain to the Bankruptcy Law and the Code of Civil Procedure. They impact the existence of the arbitration agreement in cases of a bankruptcy of one of the parties and relate to post-arbitral proceedings, by flattening (shortening) the challenge to award proceedings and the recognition and enforcement by eliminating one court instance.
Amendments to the Bankruptcy Law
At present, Polish law is strict as far as the legal effect of the arbitration agreement is concerned in case of a bankruptcy of one of the parties. It provides that all arbitration clauses entered into by an insolvent party lose their legal effect. What is more all arbitration pending at the time of instigating bankruptcy proceedings have to be terminated. The provisions have been widely criticised, in particular among the international business community. They certainly diminish legal and commercial stability. The key rationale behind the amendments was to rectify the above situation. The changes stipulate that the arbitration clauses concluded by a debtor remain in force, and pending arbitration proceedings may be continued. If arbitration is not commenced before the declaration of bankruptcy, there is still a possibility to commence the arbitration.
Amendments to Polish Civil Procedure Code
Recent legislation amending Polish Code of Civil Procedure was aimed mainly to support alternative dispute resolution in Poland, in particular meditation and arbitration. As far as arbitration is concerned, these amendments affect post-arbitration proceedings, namely challenges to the award before state courts and recognition and enforcement proceedings. The key changes affect the post-arbitral procedure and the timing by:
(i) Shortening the deadline for filing of the application to challenge an arbitration award from three to two months;
(ii) “Flattening” the award challenge proceedings and the recognition and enforcement proceedings by eliminating one court instance. Applications to challenge an award and to recognize and enforce it will now be submitted to a court of higher instance, viz the Court of Appeal. In limited circumstances, recourse against a judgement of the Court of Appeal will be available before the Polish Supreme Court in cassation proceedings.