Why are state courts a problem for businesses?

The average duration of cases in state courts is over 7 months. And that's just in one instance. During this time, businesses have to endure the fact that debtors are using their money. Additionally, collection lawyers generate costs and the prospect of recovering overdue payments quickly recedes. Collection agencies have long determined that after two months, there is still a 90% chance of recovering debts. After a year, these chances drop to 10%.

Cases drag on for a long time and it's not going to get better

The problem of court proceedings' delay cannot be solved by 'normal' means. It's not simply possible to change the law and customs, computerise procedures, or educate lawyers. The current state is dire. Anyone who wishes can practically extend court cases indefinitely. It suffices to hire a resourceful lawyer and bid for proof from witness testimonies. Preferably from abroad. The state judiciary system simply does not know ways to prevent resulting delays.

Solution: online arbitration

Smart Businesses are aware of this and increasingly turning to online arbitration. The law provides that any dispute – instead of going to state court – can be referred to arbitration. Arbitration is thus a legitimate alternative to state courts. The condition is merely to include an appropriate clause in the contract with the client in advance. However, if this is achieved, businesses in arbitration can expect a completely different reality. General procedural laws applicable in state courts do not apply there. The arbitration court can develop its own rules of procedure.

Average case duration: 22 days. How is it possible?

The Electronic Arbitration and Mediation Centre at Ultima RATIO. was created by lawyers who are also entrepreneurs. Thus, the proceedings rules were arranged so that arbitration is modern, simple, and convenient. At the same time, care was taken to prevent cases from being prolonged.

This is guaranteed by the following rules:

• Proceedings are conducted exclusively online

• The plaints, responses, and positions are submitted using online forms

• Arbitration fees are paid by both the claimant for the claim and the defendant for the response to the claim

• The exchange of arguments occurs on specially designed case profiles

• Participants have a case chat for communication with the other party and the arbitrator

• Ultima RATIO. verifies participants' data through a trusted profile (login.gov.pl), thereby ensuring certainty and enforceability of judgments

• Evidence is solely digital – PDFs, screenshots, messages, photos, videos, audio recordings, etc.

• The evidence is immediately available on case profiles and arbitrators can review them 'on the go'

• Under an agreement with the Polish Association of Valuers and Court Experts in Warsaw, expert opinions are prepared within 10 days from the order date

• The plaints are delivered by email (to the address provided in the contract, CEiDG or KRS) and only additionally by registered mail

• Witness testimonies are submitted in writing

• There are no physical files and physical buildings

• Consequently, there are no physical trials and hearings

As a result, just a few seconds after filing a plaint, the defendant can respond! The average duration of proceedings has been reduced to 22 days, and the longest case in the Centre's history lasted... 68 days.

What does the entry look like?

The arbitration clause usually takes the form of a paragraph in a contract made at the start of cooperation. It can be inserted into all types of B2B contracts. However, it most frequently appears in loan, credit, work, or mandate agreements. It's also popular in construction, IT, or courier service contracts. Such contracts with these provisions are signed by both large and small companies.

The most commonly encountered clause has the following form:

“Disputes from this contract shall be resolved by the common court in the district where X is located or the Electronic Arbitration and Mediation Centre on the Ultima RATIO platform - with the choice of arbitration court or state court by the claimant being binding for the defendant.”

Smart Businesses have noticed that by introducing such a clause into contracts with clients, they are not committing to anything. They are merely securing themselves for the future. They gain an additional option to take the case to arbitration alongside what they already have: state courts. They make their decision only at the point of filing a plaint.

The list of arbitrators covers various specialisations

Cases that go to Ultima RATIO. are handled by arbitrators who are primarily experienced legal advisors and advocates. The list of arbitrators is getting longer. Current arbitrator specialisations include: 

• commercial real estate, 

• industry and manufacturing, 

• corporate disputes, 

• insurance, 

• intellectual property protection, 

• succession/family foundations,

• banking/financing/loans,

• IT/media/advertising/telecommunications,

• construction contracts/infrastructure, 

• transport/courier services, 

• utilities supply 

• civil disputes.

Final judgments and to bailiffs

Judgments from Ultima RATIO. are final. Proceedings are single-instance and there is no appeal. Once enforcement clauses are granted, Ultima RATIO. judgments have the legal power of state court judgments, which derives from Article 1212 of the Code of Civil Procedure. Companies can then refer them to bailiffs. Since 2019, the Centre's arbitrators have issued thousands of arbitration judgments. So far, 100% of them have obtained enforcement clauses.

Below this text you can download a sample Ultima RATIO. judgment with an enforcement clause.

Time for a new approach

In the business world, time is money and efficiency is key to success. Ultima RATIO. e-arbitration not only eliminates frustrating court delays but also redefines the way Smart Businesses pursue overdue payments. The average duration of proceedings reduced to 22 days, low costs, lack of paper bureaucracy, and the ability for quick response are just some of the benefits. 

If your Smart Business would like to learn more about cooperation with Ultima RATIO., please send a message through the contact form. Your contracts are worthless if you cannot enforce them.