ARBITRATION - AN EMBLEM OF CIVIL SOCIETY

Polish Confederation of Private Employers Lewiatan

6 Klonowa Street, 00-591 Warsaw, Poland, phone (+48 22) 845 95 50, fax (+48 22) 845 95 51, e-mail: [email protected], internet: www.prywatni.pl

1

European Forum for New Ideas

OPENING REPORT

Discussion panel:

Arbitration - An Emblem of Civil Society

DATE 28 September 2011; 17.45 -19.15

KEY MESSAGES/ISSUES

Principal issues and questions to be touched by the panel:

What are the prospects of arbitration in the EU countries? Is arbitration to be developed by integrating into European Union institutions, or

as an independent creature? Arbitration community: proactive or reactive? Should arbitration institutions be

actively involved in creating European arbitration policy? The challenges of supporting and propagating the value of commercial

arbitration for business in the EU context. DETAILED DESCRIPTIONS OF INDIVIDUAL ISSUES

By Sophie Nappert

FACT: Surveys show that some 63% of large European companies prefer arbitration over litigation to resolve their business disputes.

FACT: Where they have a choice, European companies prefer to arbitrate within the EU.

FACT: The total value of the arbitration ‘industry’ in the European Union can be estimated at €4 billion.

FACT: When implementing EU law, the EU institutions as well as the Member States have to respect the rights, observe the principles and promote the application of the Charter of Fundamental Rights of the European Union,



2

which came into force with the Treaty of Lisbon. The Charter includes the right to conduct a business (Article 16).

(Source: Commission Staff Working Paper, Impact Assessment, Accompanying document to the Proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM (2010) 748, SEC (2010) 1548, 14 December 2010).

These facts speak for themselves. Yet, despite these significant numbers and the strong voice of business in favour of arbitration, the EU has yet to articulate a recognisable policy on arbitration.

The EU Commission itself recognises that the current legal framework does not sufficiently protect the effectiveness of arbitration agreements in the EU. Arguably this jeopardises the right to conduct a business, guaranteed by the European Charter of Fundamental Rights.

This panel looks at what it takes for the arbitration industry to thrive in the European context, and how it can play its part to help create the necessary legal environment for the European economy to recover.

Discussion topics will include:

What stands in the way of the harmonious integration of the world’s premier means of business dispute resolution into the European space?

What role for the arbitration institutions and chambers of commerce across the EU? In 2009, European arbitration centres administered 4,453 international arbitration cases with a total value of over €50 billion; surveys indicate that this tendency is growing.

What factors to preserve Europe’s attractiveness as a place of arbitration, in light of growing competition from other centres such as Singapore and New York?

Challenges to a transparent and predictable coordination between court and arbitration proceedings in the Member States.

Is a policy favouring the growth of the arbitration ‘business’ a threat to a stable and predictable legal environment, given that arbitration is still largely a private process, without appeal or precedent?

Do arbitration’s values reflect those of European civil society?



3

MAIN ATTITUDES – SUMMARY

Arbitration Community

Commercial Arbitration

o Brussels I : do we want more, or less? o Influence of EU law on arbitration (the Jivraj case and

the arbitrator as “employee”) - a threat to the Member States as seats of arbitration?

o The proposed harmonization of contract law in the EU - what place and role for arbitral tribunals (without direct access to the ECJ) to interpret EU law?

o Annulment of awards based on breach of European substantial law in light of the public policy principle.

Investment arbitration, the Treaty of Lisbon and the EU as a non-State - is European ICSID the solution?

EU On the Parliament draft Report, it is now clear (and rather surprising) that the Parliament wishes to go back entirely to the pre-West Tankers position, as expressed in its position paper of June 2011. Arbitration is therefore wholly excluded from the Brussels Regulation, and the Commission’s goal of eradicating parallel proceedings defeated.

There is also a wish on the part of the EU Parliament to retain interim measures in the Member States (including anti suit injunctions) insofar as they ‘comply’ with EU law.

Business community The value of commercial arbitration for business in

the EU context: o Business is now more sophisticated and better

informed about arbitration – better organized at exchanging experiences: CCIAG (Corporate Counsel International Arbitration Group how has an observer seat in the UNCITRAL Working Group)

o Business is also more critical of arbitration’s so-called ‘selling points’ – it attracts laughter now to contend that arbitration is quicker and cheaper than litigation.

o Arbitration’s real selling points for business are elsewhere – control of the appointment of decision-makers and the procedure, privacy of proceedings,



4

flexibility of process, a level-playing field, a specialist tribunal.

o Yet business feels that much of these selling points come at the expense of transparency and speed. Quality control of the performance of arbitrators is also very patchy, if not nonexistent.

o It would be useful to discuss whether these criticisms are realistic, and how to reconcile business expectations with the realities of arbitration practice and procedure. The role of institutions (which are often also chambers of commerce) in bridging the gap between practitioners, arbitrators and users should also be better understood.



5

DATA AND GRAPHS

Growth in case loads. The number of cases filed with the arbitral institutions between 1993-2 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006AAA 207 187 180 226 320 387 453 510 649 672 646 614 580 586BCICAC 52 54 40 57 41 49 60 88 88 71 76 84 77 76CIETAC 486 829 902 778 723 645 609 543 731 684 709 850 979 981HKIAC 139 150 184 197 218 240 257 298 307 320 287 280 281 394ICC 352 384 427 433 452 466 529 541 566 593 580 561 521 593JCAA 3 4 7 8 13 14 12 10 17 9 14 21 11 11KCAB 28 33 18 36 51 59 40 40 65 47 38 46 53 47KLRCA 3 8 12 6 8 7 10 11 1 2 4 3 6 1LCIA 29 39 49 37 52 70 56 81 71 88 104 87 118 133SIAC 15 22 37 25 43 67 67 41 44 38 35 48 45 65SCC 78 74 70 75 82 92 104 73 74 55 82 50 56 141TOTAL 1392 1784 1926 1878 2003 2096 2197 2236 2613 2579 2575 2644 2727 3028 Żródło: Gary B. Born, International Commercial Arbitration, vol.I, Kluwer Law Arbitration, 200



6

SUBJECT MATTER REFERENCES:

I.

Commission Staff Working Paper, Impact Assessment, Accompanying document to the Proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM (2010) 748, SEC (2010) 1548, 14 December 2010).

2.4. INTERFACE BETWEEN THE REGULATION AND ARBITRATION

2.4.1. Problem definition for the interface between the Regulation and Arbitration

2.4.1.1. The current problems

Arbitration is a matter of great importance in international commerce. It is a way for companies to resolve their disputes out-of-court which has certain advantages over court litigation, notably in terms of confidentiality, speed and informality of proceedings1.

Arbitration is currently not covered by the scope of Regulation Brussels I. The exclusion of arbitration can be explained by the existence of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards* which requires the courts of the Contracting States to give effect to a private agreement to arbitrate and to recognize and enforce an arbitral award made in another Contracting State. All Member States are party to this Convention and it is also widely ratified throughout the rest of the world.

While in general the arbitration exclusion of the Regulation has allowed arbitration in the Member States to develop on the basis of the New York Convention and national law, difficulties have been reported concerning the relation of arbitration and court proceedings. In fact, there are situations in which state courts may be requested to intervene in disputes which have been submitted to arbitration. For instance, courts may be seized to grant interim relief*, to assist in setting the arbitration in motion or to evaluate the validity of an arbitration agreement. In the latter case, the party challenging the validity of the arbitration agreement will usually request the court to decide also on the merits of the case. This can lead to parallel proceedings and irreconcilable decisions between courts and arbitral tribunals where the agreement is held invalid in one Member State and valid in another.

1 Cf. Oxford Study on Civil Justice Systems in Europe, Fn. XX above, question 49.



7

This problem was recently illustrated in the West Tankers2 case. The parties to a commercial contract had agreed to arbitration in London; nevertheless an action for damages was introduced in the Italian courts (where the damage had occurred), based on the argument that the arbitration agreement was invalid. The question arose whether the Italian proceedings were covered by the scope of Regulation Brussels I. The Court of Justice held that if a party to an arbitration agreement introduced court proceedings on the merits in which the invalidity of the arbitration clause was raised as an preliminary question, such proceedings fall within the scope of Regulation Brussels I. This means that the subsequent judgment circulates freely within the EU under the Regulation and can prevent the continuation of arbitral proceedings on the same issue or the later recognition and enforcement of the arbitral award. This situation creates an incentive for a party wishing to escape from an arbitration agreement to claim (possibly in bad faith) that the agreement is invalid and to bring proceedings on the merits in a Member State where it is likely to obtain a favourable decision.

The West Tankers decision thus revealed a real risk for abusive litigation tactics under the Regulation. The fact that a bad faith claimant can escape from an arbitration agreement by bringing an action on the merits in a "friendly" jurisdiction jeopardizes the effectiveness of arbitration in the European Union. The current situation may encourage parties to arbitrate in countries outside the EU which provide more legal certainty for arbitral proceedings, thereby undermining the attractiveness of arbitration within the European Union.

2.4.1.2. Who is affected?

The main stakeholders concerned are large European companies which opt for arbitration to resolve disputes with their commercial counterparts and European arbitration centres.

2.4.1.3. Scope of the problem

The current legal framework does not sufficiently protect the effectiveness of arbitration agreements in the EU. It entails a risk of parallel court and arbitration proceedings which are not only costly and time-consuming for the companies concerned but also create the risk of conflicting outcomes. The reactions received in the public consultation and examples of cases discussed in legal literature clearly show that the problem exists, although its exact extent is difficult to quantify notably due to the confidentiality of arbitral proceedings.

The effectiveness of arbitration is of key importance for a significant number of notably larger companies and multinationals which use this method of dispute resolution on a regular basis. Surveys show that about 63% of large European companies prefer

2 Case C‐185/07. A summary of relevant judgments of the ECJ may be found in Annex VII.



8

arbitration over litigation to resolve their business disputes; this is mainly due to the confidentiality and speed of arbitration proceedings3. Where they have a choice, European companies prefer to arbitrate within the EU: their most popular seats of arbitration are London and Paris, followed by Geneva, Stockholm and New York4. The attractiveness of arbitration in Europe is also important for European arbitration centres which assist the parties with the arbitration process, e.g. choosing the arbitrators, organising the hearings and finalising the award and which charge fees for these services. In 2009, European arbitration centres administered 4,453 international arbitration cases with a total value of over € 50 billion; the tendency is growing5. Judging by the value of the claim (and leaving apart sector-specific centres such as the London Maritime Lawyers' Association), the most important arbitration centre in the EU is the International Chamber of Commerce in Paris, followed by the London Court of International Arbitration6. But also smaller centres such as the Vienna International Arbitration Centre, the Netherlands Arbitration Institute, the German DIS and the Stockholm Chamber of Commerce make important contributions to the European arbitration industry7. The total value of the arbitration industry in the European Union can be estimated at €4 billion8. The European arbitration industry faces increasing competition from emerging arbitration centres in Asia. Notably, the Singapore International Arbitration Centre is one of the fastest growing arbitral institutions, having increased its case-load by over 300% over the past 9 years and currently handling the fifth largest number of cases worldwide9. Objectives

The specific objective is to ensure a transparent and predictable coordination of court and arbitral proceedings which preserves and improves the attractiveness of the European Union as place of arbitration. The operational objective is to avoid parallel court and arbitration proceedings and to reduce the possibilities of undermining arbitration proceedings through abusive litigation tactics.

2.4.2. Need for EU action (Subsidiarity)

The problems described above are caused by the delimitation of the scope of Regulation Brussels I, as interpreted by the case-law of the Court of Justice. Any modification to the scope of the Regulation, whether extending or limiting it, therefore requires the intervention of the European legislator and, by definition cannot be 3 Oxford Study on Civil Justice Systems in Europe, question 48, 49; 95% of the companies questioned have more

than 250 employees. 4 CSES study, p. 90, 91. 5 CSES study, p. 86. 6 CSES study, p 88. 7 CSES study, p. 90, 91. 8 CSES study, p. 88. 9 CSES study, p. 89.



9

achieved by the Member States alone.

2.4.3. Description of policy options

Policy Option 1: Status quo

If the status quo were maintained, arbitration would generally remain excluded from the scope of the Regulation. However, in light of the case law of the European Court of Justice, court proceedings on the merits of the case and in which the validity of the arbitration agreement is raised as a preliminary question would be covered by the Regulation, thus allowing parallel proceedings, possibly conflicting outcomes of the dispute and enabling a party seeking to escape from an arbitral agreement to "sabotage" the arbitral proceedings.

Policy Option 2: Extend the exclusion of arbitration from the scope

Under this policy option, the exclusion of arbitration from the scope of Regulation Brussels I would be extended to cover not only arbitration proceedings but also any court proceedings

related to arbitration proceedings, notably proceedings in which the validity of an arbitration agreement is contested. The recognition and enforcement of a subsequent judgment would not be governed by the Regulation but by national law.

Policy Option 3: Enhance the effectiveness of arbitration agreements

This option would enhance the effectiveness of arbitration agreements by including common rules for certain aspects of arbitration in Regulation Brussels I. Essentially, a rule on lis pendens would be inserted into the Regulation which provides that a court seised with a dispute involving an arbitration agreement would have to stay proceedings if a court at the seat of the arbitration or an arbitral tribunal is seised with the question of the existence, validity or effects of the arbitration agreement. As a result, it would always be possible for the parties to an arbitration agreement to ensure that only the arbitral tribunal or the court at the seat of the arbitration is hearing the case. This would prevent parallel proceedings and the use of tactical litigation manoeuvres to "sabotage" arbitration proceedings as outlined above. This element could be implemented on its own (Option 3A) or in combination with an improved system for the recognition and enforcement of arbitral awards which would go beyond the 1958 New York Convention (Option 3B). Such a system could be limited to establishing a uniform procedure for recognition and enforcement, similar to the existing exequatur system for court judgments, while retaining the grounds of refusal of the 1958 New York Convention, or it could restrict the grounds for refusal beyond those in the New York Convention and also deal with situations of irreconcilable court judgments and arbitral awards.



10

2.4.4. Discarded Policy Options

Following the public consultation, Option 3B was discarded because there was little support for it. Stakeholders generally feel that the 1958 New York Convention works satisfactorily for the recognition and enforcement of foreign arbitral awards and that there is no need to regulate this issue on the European level. It would therefore not make sense to pursue this option further.

2.4.5. Analysis of impacts of retained Policy Options

2.4.5.1. Policy Option 1: Status quo

(a) Effectiveness to achieve objectives: Maintaining the status quo would not contribute to the objectives outlined above. Businesses which have opted for arbitration in one country would continue to run the risk that the arbitration agreement is set aside by a court of another, possibly less "arbitration-friendly" country. (b) Key impact: (i) Economic impact: Although the total number of arbitration cases in the EU is relatively modest, the average value of these cases is very high (more than € 1 mio per case). Where such significant amounts of money are at stake, businesses need to be sure that their choice of the dispute resolution method cannot be jeopardized by their opponent's abusive litigation tactics. In particular, the potential consequences of the West Tankers decision are perceived as very negative by the arbitration community; stakeholders emphasize the need for reform10. Given that the West Tankers decision is a fairly recent one, there is not yet hard evidence pointing to EU arbitration centres losing out to non-EU ones but there is a concern that this is beginning to happen11. If business

moves away from arbitration in Europe, the European arbitration industry risks losing a significant part of its current €4 bio value. Moreover, those European companies which currently go for arbitration in the EU would need to incur lawyers' costs for adapting their dispute resolution strategies. (ii) Fundamental Rights: The risk of parallel proceedings between courts and arbitral tribunals and of "sabotage" of the arbitral proceedings would subsist. This situation could have negative impact for the efficiency of justice and for the freedom to conduct a business because it does not ensure that appropriate effect is given to the will of the parties. (iii) Third countries: Today, European arbitration centres attract not only European companies but also companies from outside the EU. If the legal framework for arbitration becomes less attractive following the West Tankers decision, non-EU companies would re-orientate their dispute resolution to arbitration centres outside the EU.

10 CSES study, p. 105. 11 CSES study, p. 105.



11

2.4.5.2. Policy Option 2: Extend the exclusion of arbitration from the scope

(a) Effectiveness to achieve objectives: This option would partially achieve the objectives outlined above. Doubts over the effectiveness of agreements to arbitrate in the EU would be removed and businesses within the EU would be able to arbitrate without the threat of costly delaying tactics against them. However, the general problem of parallel court and arbitration proceedings and risk of conflicting decisions would remain. Moreover, the total exclusion of all judgments in cases involving an arbitration agreement from the scope of the Regulation would enable cynical litigants to "torpedo" the recognition and enforcement of a judgment simply by claiming that the parties have concluded an arbitration agreement. Furthermore, option 2 would go against the overall objective of creating a genuine area of justice in the European Union because it would re-nationalise part of the rules which are today harmonised on the European level. Judgments which currently circulate under Regulation Brussels I would cease to do so; their recognition and enforcement in another Member State would again be governed by the national laws of the 27 Member States. This would constitute a step backwards in the creation of a European area of civil justice which should be avoided. (b) Key impact: (i) Economic impact: Essentially, the risks linked to the possibilities for abusive litigation tactics which have been illustrated by the West Tankers decision will be eliminated. However, the risk of parallel court and arbitration proceedings would continue to exist. Arbitration in the EU would be more attractive for European companies than under Option 1. Equally, the attractiveness of arbitration centres in Europe would be better ensured than under Option 1, although the deficiencies in the current legal framework may still make them less attractive than certain competitors outside the EU (ii) Financial costs: Costs for implementing the modification would be minimal. (iii) Fundamental Rights: Under this Option, the question whether a court can hear a case in which an arbitration agreement has been concluded would depend entirely on national law. The risk of parallel proceedings would therefore subsist with the negative impact for the efficiency of justice and for the freedom to conduct a business outlined above. The attractiveness of arbitration in the European Union would be consolidated.

2.4.5.3. Policy Option 3A: Enhance the effectiveness of arbitration agreements

(a) Effectiveness to achieve objectives: This policy option would fully achieve the objectives outlined above. It would ensure the effectiveness of arbitration agreements by eliminating the risk of parallel proceedings and by reducing the possibilities of abusive litigation tactics. It would also ensure that all judgments that currently circulate within the EU continue to do so. (b) Key impact: (i) Economic impact: As in Option 2, Option 3A would eliminate the risk of abusive litigation tactics, with the economic benefits outlined above. In addition, Option 3A would eliminate the risk of parallel court and arbitration proceedings, thereby significantly



12

improving the attractiveness of arbitration in the EU and of European arbitration centres. The European arbitration industry would be able to maintain their current business or expand it. (ii) Financial costs: As for Option 2, the modification of the Regulation would entail only minimal implementation costs for Member States. (iii) Fundamental Rights: This option would improve the effectiveness of the remedy before a tribunal (article 47 of the Charter) for companies wishing to challenge (in good faith) an arbitration agreement because it would establish a clear and transparent legal framework for such challenges while defining clear rules to improve legal certainty and avoiding dilatory tactics. It would also contribute to ensure that throughout the Union, maximum effect is given to the will of the parties which enhances their freedom to contract and freedom to conduct a business as referred to in Article 16 of the Charter. (iv) Third countries: It may be expected that the attractiveness of arbitration in the European Union would be increased.



13

II.

By Beata Gessel-Kalinowska vel Kalisz

“The European Parliament draft Resolution on Brussels 1: A return to the pre-

West Tankers era?”

It is hard to disagree with Prof. Van Houtte’s statement back in 2005 that arbitration

probably did not get from the EU authorities the attention it deserved. As a result of the

work carried out by the Commission in the course of last year, there was little doubt that

this policy would change. Of particular importance in giving arbitration in the EU a solid

foundation was the Commission’s focus on excluding any legal basis for parallel

proceedings auxiliary to the arbitration proceedings (Commission Proposal to the

Parliament and the Council on the Regulation on jurisdiction and the recognition and

enforcement of judgments in civil and commercial matters, COM (2010) 0748.).

The now-famous West Tankers case demonstrated clearly how parallel court

proceedings and forum shopping “devices” can paralyse arbitration proceedings even

where the arbitration process itself is fast and of good quality.

It is therefore surprising to see the European Parliament, in its draft Legislative

Resolution of June 28, 2011 concerning the Brussels I Regulation (2010/0383(COD))

refusing to follow the Commission’s proposals (and indeed the ECJ’s findings in West

Tankers) and, by amendment of art. 1.2.(d) of the Regulation, excluding from its scope

of application not only arbitration but also all “judicial procedures ruling on the validity or



14

extent of arbitral competence as a principal issue or as an incidental or preliminary

question“.

Is the Parliament’s proposal to be regarded as a step back in the development of the

EU process of harmonization of judicial instruments? We posit that it is, and that it is

open to criticism, inter alia for the following reasons:

a. It goes against the findings based on the Commission’s far-ranging analysis of

the problem in practice as set out in the Impact Assessment of Dec.14, 2010

(SEC (2010 1547 Final), also endorsed by the European Economic and Social

Committee on May 5, 2011;

b. It goes against the fundamental EU principle of mutual trust amongst the courts

of the Member States and allows a return to the pre-West Tankers era of anti-

suit injunctions;

c. It cuts off any discussion about the potential right of an arbitration panel to have

access to the Court of First Instance for preliminary rulings (bearing in mind that

a breach of EU law may constitute a ground for challenge of awards); Arbitration

has been put outside of the EU harmonized legislative framework.

d. And, finally, it breaches the party autonomy principle, the very basis of

arbitration, in allowing for unpredictable seizing of jurisdiction by Member States’

courts, contrary to the arbitration clause agreed between the parties. Having

chosen arbitration as an instrument of dispute resolution, parties want to be sure

that their case will be heard by courts identified in advance and not once the

dispute arises. This is a very substance of party autonomy principle and the



15

Commission proposal had enhanced it. By choosing the place of arbitration

parties usually choose the jurisdiction of the courts of the seat.

“To exclude or not to exclude” arbitration-related proceedings from the Brussels I

Regulation caused intense discussions amongst the arbitration community. The

major argument in favour of exclusion was centered on the efficiency and credibility

of the regimes of the New York and Geneva Conventions, also mentioned as the

justification for the draft Parliamentary resolution. There appears to be a lack of

realization that none of the existing regimes is really solving the issues of

jurisdiction. The proposal of the Commission, although some of its details might be

open to question, in general was solving the jurisdiction problem by prorogating

jurisdiction of the court of the place of arbitration, which is compatible with the

general views of the arbitration community. In the discussions point of the users of

arbitration, who of course expect clear and simple rules, was really missing.

As a final comment I would like draw attention to the fact that the Committee on

Legal Affairs very recently has prepared a draft report, which includes a motion for a

European Parliament Resolution on alternative dispute resolution in civil,

commercial and family matters (2011/2117 (INI)), where there is expressed intention

to provide some harmonization for ADR, including business to business sector.

However the policy of the EU until now has been to exclude arbitration from the

scope of ADR, this time it is not so clear. Content of point 10 of this proposal and in

particular such wording “arbitration and mediation proceedings and in certain other

ADR situations” suggests now that ADR may encompass much more then only

mediation. The report recognizes common standards for ADR like: contractual



16

nature of any ADR, impartiality, independence and confidentiality, also creating a

professional privilege (which is yet another debated issue in the context of

arbitration), enforceability of agreements resulting from ADR. The authors of the

report call on the Commission to develop existing schemes and encourage Member

States to increase funding, bearing in mind that ADR, while providing parties with a

low –cost alternative, must not be “justice on the cheap”. Also it is assumed that

preparing a universal Code of Conduct for all ADR is necessary. More important,

the Committee is convinced that speedy and inexpensive enforcement of

agreements resulting from ADR is indispensable, including cross-border and calls

for legislative measures to this end. If assuming that arbitration is meant now to be

ADR, it might mean that arbitration will be regulated more in detail, but in a separate

instrument, together with other ADR instruments.



17

III.

ANALYSIS OF THE “ARBITRATION IN POLAND” SURVEY RESEARCH

CARRIED OUT AS PART OF DEBATE: “ARBITRATION IN POLAND AND EUROPE IN THE 21st CENTURY - DECLINE OR

DEVELOPMENT?”

held in Warsaw on the 15th of April 2011. The summary of the debate may be found in Arbitration E–Review no. 3(6)/2011 issued by the Arbitration Court Lewiatan:

http://www.sadarbitrazowy.org.pl/en/eczasopisma;id-19

The Court of Arbitration at the Polish Confederation of Private Employers Lewiatan has carried out a survey research among Polish courts of arbitration and law offices which was aimed at analyzing the number of disputes settled before arbitration courts as compared to the number of disputes resolved before common courts, the number of appeals against arbitration court awards, and the length of such proceedings. It has examined answers to five enquiries, sent in by the following Polish arbitration courts: Arbitration Court at the Gdynia Cotton Association, Court of Arbitration at the Nowy Tomyśl Chamber of Commerce, Internet Domains Arbitration Court at the Polish Chamber of Information Technology and Telecommunication, Court of Arbitration at the Polish Financial Supervision Authority, and Court of Arbitration at the Polish Confederation of Private Employers Lewiatan.

1. NUMBER OF CASES SETTLED BY MEANS OF ARBITRATION

The analysis of answers provided to the enquiries and of materials from press sources (”Rzeczpospolita” daily) shows that in 2010, requests for proceedings were filed with six Polish institutional arbitration courts in 552 cases. As regards individual arbitration courts and ad hoc proceedings, the said number is as follows: Arbitration court 2010 2009 Court of Arbitration at the Polish Chamber of Commerce *

440 No data



18

Ad hoc proceedings (estimation)** 300 300 Internet Domains Arbitration Court at the Polish Chamber of Information Technology and Telecommunication

74 83

Court of Arbitration at the Polish Confederation of Private Employers Lewiatan

25 15

Court of Arbitration at the Nowy Tomyśl Chamber of Commerce

13 11

Arbitration Court at the Gdynia Cotton Association

0 0

Court of Arbitration at the Polish Financial Supervision Authority

0 4

Court of Arbitration at the Polish Bank Association

No data

No data

Total

852

*Source: ”Rzeczpospolita” daily of April 8, 2011. ** K. Stefanowicz, Krajobraz Arbitrażowy w Polsce, [in:] Arbitraż w Polsce, red. B. Gessel-Kalinowska vel Kalisz, Warszawa 2011. The Ministry of Justice* statistics show the following numbers of commercial dispute cases brought to Polish common courts:

*Source: Register of cases by legal subjects at common courts in 2009 and 2010, data as of 23.02.2011, available on www.ms.gov.pl

Comments

Considering the above presented data, being mostly estimates, it can be seen that only 0.1% of all commercial disputes in Poland are settled by means of arbitration.

The situation is slightly better in Austria as far as domestic commercial disputes are concerned. Ca. 1% of them are recognized in arbitration proceedings. As regards international disputes, ca. 33% of cases are submitted to arbitration (source: Freshfields, Vienna). More arbitration proceedings are conducted in Germany. It is estimated that the sole number of ad hoc proceedings reaches ca. 1000 a year and in 2010, one of the biggest courts of arbitration Deutsche Institution für Schiedsgerichtsbarkeit, DIS (source: Gleiss Lutz, Stuttgart) received 155 requests for proceedings.

Additionally, courts of arbitration often serve as a platform for amicable settlement of disputes through a kind of negotiations or mediation (for example, Arbitration Court at the Gdynia Cotton Association).

2010 2009 1,025,815 945,366



19

2. LENGTH OF PROCEEDINGS

The analysis of the answers to the enquiries received from courts of arbitration and of the data concerning requests for proceedings shows that the length of arbitration proceedings is as follows (from filing the request to granting the award):

Arbitration court 2010 2009 Arbitration Court at the Gdynia Cotton Association

- -

Internet Domains Arbitration Court at the Polish Chamber of Information Technology and Telecommunication

3 months

3 months

Court of Arbitration at the Polish Confederation of Private Employers Lewiatan

6 months 9 months

Court of Arbitration at the Nowy Tomyśl Chamber of Commerce

7 months 5 months

Court of Arbitration at the Polish Financial Supervision Authority

10 months 6 months

Court of Arbitration at the Polish Chamber of Commerce

No data

No data

Court of Arbitration at the Polish Bank Association

No data

No data

The above presented numbers are only average ones. However, the data shows that the length of arbitration proceedings is 6 months on the average.

Comments

The difference of the average length of proceedings may arise from impossibility to analyze the ah hoc proceedings and the data concerning other arbitration courts.

3. ARBITRATION CLAUSES

Since April 2010, the Court of Arbitration Lewiatan has been making a sonda on its website which concerned including arbitration clauses in contracts. The question is asked ”Do you include arbitration clauses in contracts?” The answering options are: “Always”, “Often”, “Rarely”, “Never”, “I don’t know”. As the sonda has been available on the Court of Arbitration website, the replies have come from persons who have already had contact with arbitration or who, being interested in that subject, have mad visits at the Court website. By April 13, 2011, internet visitors have provided 122 replies.



20

The analysis of the internet replies shows that since 2011 the number of arbitration clauses in contracts has been rather big and remained stable.

Additionally, the analysis shows that since November 2010 the number of „Always” replies regarding including arbitration clauses in contracts has grown, at the same time the numbers of “Rarely” and “Never” replies have decreased. Two factors may have contributed to that. Firstly, the Court of Arbitration Lewiatan could have become more popular among those who use arbitration methods for dispute resolution (include arbitration clauses in contracts), who used to visit the Court website and have taken part in the sonda. Secondly, it may have been a result of the ”Promotion of amicable methods of commercial dispute resolution” program, co-financed by the European Social Fund, which is aimed at promotion of arbitration and which has been conducted since November 2009.

Do you include arbitration clauses in contracts?

0%

5%

10%

15%

20%

25%

30%

35%

Always Often Rarely Never I don’t know

V - X 2010 XI 2010 - III 2011



21

Documents

ARBITRATION - AN EMBLEM OF CIVIL SOCIETY