Various Possible Solutions

Indeed, it turns out to be so! We asked Professor Jacek Gołaczyński from the University of Wrocław, Chairman of the Scientific Council of Ultima Ratio, to explain this issue.

In the Professor's assessment, the arbitration clause is a contract that, as a rule, is subject to the provisions of substantive law. Of course, the Civil Procedure Code also regulates the procedural effects of the clause. Nevertheless, the principle of freedom of contract applies here, meaning that the parties can freely shape the content of the clause. Limitation of this freedom can only be discussed when such restrictions are provided by law. An example of such limitations, in terms of form and timing of concluding the arbitration clause, are agreements between a business and a consumer, or an employer and an employee. In such agreements, arbitration clauses must be in written form and can only be concluded after a dispute has arisen.

“Variant”, “Combined”, and “Layered” Clauses

However, in common transactions - when neither party is a business - and in professional transactions, these restrictions do not apply. Article 1161 § 1 simply states that submitting a dispute to arbitration requires a contract between the parties. The contract should specify the subject of the dispute or the legal relationship from which the dispute has arisen or may arise in the future. Since the parties have significant freedom in crafting arbitration clauses, various variants of such clauses are also permissible.

In the following video, the Professor discusses the most common types of arbitration clauses - “variant”, “combined”, and “layered” (watching the video will take approximately 8 minutes).

Practical Examples

Let's now discuss these issues using examples. In September 2020, we received a query:

“At this stage, I do not yet want to choose Ultima Ratio over the state court. However, I would like to reserve the right to make this decision at a later date - for example, when I am preparing the lawsuit. Is this possible?”

In such a situation, an ideal solution is to introduce into the contract with the contracting party the so-called “variant clause”. It allows each party to reserve the right to bring a lawsuit either to the competent state court or to Ultima Ratio. The decision should be made later - for instance, at the time of filing the lawsuit and is binding on the other party.

What might such a clause look like? Here is an example:

“Disputes arising from this contract will be resolved by the state court in the district where X is located or by Ultima Ratio, the First Electronic Arbitration Court at the Association of Notaries of the Republic of Poland in Warsaw - at the choice of the claimant, which will bind the other party.”

Numerous Possible Combinations

Then, at the end of 2020, during phone consultations, a company inquired about another possibility. Can a clause be formulated such that part of the claims is pursued before the state court and part before Ultima Ratio? Our interlocutors stated:

“We would like our company to start using e-arbitration, but colleagues from the legal department are concerned about the electronic form of arbitration in high-value cases.”

It turns out that the ideal variation of the arbitration clause in such a situation is the so-called “combined clause”. It involves the parties specifying categories of claims for which the state court is competent. They also specify which matters will be resolved by Ultima Ratio.

Let's look at examples of combined arbitration clauses:

“Disputes over claims up to X zł resulting from this contract will be resolved by the state court in the district where Y is located. Disputes over claims exceeding this amount will be resolved by Ultima Ratio, the First Electronic Arbitration Court at the Association of Notaries of the Republic of Poland in Warsaw.”

and:

“All disputes arising from or in connection with this contract will be resolved by Ultima Ratio, the First Electronic Arbitration Court at the Association of Notaries of the Republic of Poland in Warsaw. This provision does not apply to the pursuit of: [rent, sale price, etc.], for which the competent state court will be in the district where X is located.”

First, Electronic Order for Payment Procedure

However, the most interesting variation of the arbitration clause is the so-called “layered clause”. Let us consider it with a concrete example. A company posed us the following question:

“I file many lawsuits with the e-court in Lublin. However, some defendants file objections to the payment orders. Such cases then go to common courts and take a very long time. Is there a possibility that Ultima Ratio could resolve only these contentious cases?”

According to the Professor's guidelines, it is indeed possible to formulate such a clause. Ultima Ratio can be generally competent to resolve a given case. However, the claimant would previously be authorized to file a lawsuit in common court proceedings electronically. If they decide to do so, they would be able to submit the claim to Ultima Ratio only after the electronic order for payment proceedings have been discontinued for some reason.

It goes without saying how significant such a clause could be in practice. What might its content look like?

“The parties hereby agree that all disputes arising from this contract will be resolved by the Arbitration Court - Ultima Ratio, the First Electronic Arbitration Court at the Association of Notaries of the Republic of Poland. However, to minimize potential claim costs that the parties might incur, the parties agree that the above clause does not preclude filing a lawsuit in the so-called electronic order for payment procedure in a common court. If one of the parties uses this option, the Arbitration Court will only be competent to resolve the matter after the common court has discontinued the electronic order for payment procedure.”

Equal Terms for the Parties

In all the above examples, it is important that the arbitration clause does not violate the principle of equality of the parties. It is not permissible, for instance, to grant only one party the right to bring a lawsuit before Ultima Ratio or a state court (Art. 1161 §2 of the Code of Civil Procedure). In other respects, the parties have considerable freedom and can tailor the clause's content to current needs. We thank Professor Jacek Gołaczyński for explaining these complex issues. The entire conversation with the Professor, which we will return to in future entries of our Academy, can be found HERE.

The Ultima Ratio Team