Arbitration worldwide is much more popular

Foreign clients of Bebsi are well-acquainted with arbitration courts. They are much more popular worldwide than in Poland. These are essentially private courts which, by the will of the parties, replace state courts in resolving certain disputes. For Bebsi, e-arbitration provides excellent security for payments in case a client proves unreliable or dishonest.

“We were keen on an efficient, convenient, and effective procedure that would allow us to sue Bebsi's contractors in Poland for overdue invoices and obtain final judgments as quickly as possible,” says Attorney Adam Hein from Borucka Hein Łukasik Law Firm in Rzeszow.

A torturous path

The general rules state that if a Polish company sells goods abroad and the partner does not pay, a lawsuit for the overdue payment must be filed in a court abroad. Polish courts do not have national jurisdiction in this case (Article 1099 Code of Civil Procedure).

Roman principles still apply

This stems from a principle known since ancient Rome that a dispute is conducted before the court of the place where the defendant has their residence or headquarters (actor sequitur forum rei). This rule is widely accepted throughout the civilised world. It is invoked not only by international agreements to which Poland is a party but also by EU law, according to which a contractor should be sued before the court of the place where the obligation is to be performed, which - in the case of exports - is usually the place of delivery of goods (Article 7(1b) of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters - the so-called “Brussels I bis”).

Irresponsible debtors in a better position

Attorney Hein realised that Bebsi's debtors are inherently in a better position than his client. They conduct disputes on their own turf. Moreover, foreign litigation costs are extraordinarily high: foreign legal firms, certified translations of documents, and the costs of sending witnesses to a foreign trial.

The solution lies at the end of the Civil Procedure Code

Fortunately, the regulations offer a loophole for domestic exporters. Specifically, the parties to a given contract can agree that disputes arising from it will be resolved by an arbitration court in a specified country.

This is precisely the solution that the lawyers at Borucka Hein Łukasik in Rzeszow opted for by incorporating a clause for Ultima Ratio into the new purchase conditions of Bebsi.

“Arbitration court rulings are recognised in almost all countries of the world with the same authority as state court rulings. The principles of mutual recognition of arbitration awards were agreed upon in the so-called New York Convention of 10 June 1958. Under its provisions, all signatory states, of which there are over 140, must recognise arbitration awards issued in Poland. Recognition means that judgments can immediately be turned over to executors,” says Attorney Adam Hein.

Control over recovering payments

Once Bebsi realised that cases involving overdue payments from foreign contractors could henceforth be conducted in Poland, in Polish, and according to known procedures, they were quick to embrace e-arbitration. This possibility means the comfort of having actual control over the process of recovering overdue payments. Furthermore, proceedings before Ultima Ratio are conducted exclusively online and are very brief. The Court's website states that the current average case duration is just 19 days.

Lawyers do not have to relinquish cases

For Attorney Hein, the ease of conducting proceedings is also crucial. Filing a lawsuit and presenting evidence take place online, and actions can be taken at any time, day or night, without leaving the office.

It's also significant that thanks to Ultima Ratio, the lawyers at Borucka Hein Łukasik in Rzeszow no longer have to "hand over" cases from Bebsi to foreign law firms.

Of course, before matters reach foreign executors, Ultima Ratio's judgments must still be recognised by foreign courts in compliance with international law. However, this is a minor formality compared to the challenges Bebsi faced previously – suing unreliable partners in their own countries and conducting the entire evidence process there.