Source: http://arbitration-poland.com/publications/31,grounds_and_effects_of_the_stay_of_enforcement_of_an_arbitration_award.html
Timestamp: 2018-01-16 15:02:38
Document Index: 568358369

Matched Legal Cases: ['Art. 1214', '§1', 'Art. 766', 'Art. 357', '§2', 'Art. 13', '§2', 'Art. 795', '§2', 'Art. 388', '§1', 'Art. 1210', 'Art. 189', 'Art. 1214', '§2', 'Art. 1210', 'Art. 388', '§1', 'Art. 777', '§1', 'Art. 388', '§4', 'Art. 396', 'Art. 360', 'Art. 777', '§1', 'Art. 521', '§2', 'Art. 388', 'Art. 388', 'Art. 820', 'Art. 521', '§2', 'Art. 1210', 'Art. 388', 'Art. 1210', 'Art. 1210', 'Art. 783', '§1', 'Art. 1210', 'Art. 1210', 'Art. 1210', 'Art. 1210', 'Art. 396', 'Art. 396', 'Art. 1210', 'Art. 396', 'Art. 388', 'Art. 388', 'Art. 1210', 'Art. 396', 'Art. 388', 'Art. 388', 'Art. 1210', 'Art. 1210', 'Art. 396', '§2', 'Art. 388', 'Art. 396', '§2', 'Art. 1210', 'Art. 396', 'Art. 365', '§1', 'Art. 206', '§1', 'Art. 148', '§2', '§2', 'Art. 189', 'Art. 1']

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Grounds and effects of the stay of enforcement of an arbitration award
An arbitration award often ends only the first stage of the dispute between parties in conflict. If the party against whom the award is issued does not voluntarily comply with the award, by performing the award or accepting its effects, then the party that obtained a favourable award, if it seeks to make effective use of the award, will be required to file an application for recognition or enforcement of the award. Meanwhile, the party disputing the arbitration award may file a petition to set aside the award and an application to stay enforcement of the award. The subject of the analysis in this article is the application to stay the enforcement of an arbitration award, which presents a number of interesting theoretical and practical issues.
Stay of enforcement before a ruling on enforcement
The first issue associated with an application to stay enforcement of an arbitration award concerns the ability to stay enforcement of an award before a ruling is issued on enforcement of the award. This issue arises from the model for post-arbitration proceedings adopted in Polish law. The proceeding upon application for recognition or enforcement of an arbitration award is generally conducted at the first instance without the active participation of the respondent. The court does not serve the application for recognition or enforcement on the respondent before ruling on the merits of the application.1 The court considers such applications in closed session. In the case of a proceeding for recognition of an award, this clearly follows from Civil Procedure Code Art. 1214 §1,2 and in the case of a proceeding for enforcement of an award, from Civil Procedure Code Art. 766,3 as applied to a proceeding for enforcement of an award.
The ruling on an application for recognition of an arbitration award is issued in the form of an order. The order is served on both parties to the proceeding (Civil Procedure Code Art. 357 §2 in connection with Art. 13 §2). A party has a week from service of the order in which to file an interlocutory appeal.
The court also rules on enforcement of an arbitration award by issuing an order. A holding of enforceability occurs through issuance of an enforcement clause for the award. The arbitration award endorsed with the enforcement clause is the basis for commencing execution. The executing authority notifies the losing party of commencement of execution by sending it a copy of the arbitration award endorsed with the enforcement clause. The seven-day period for filing an interlocutory appeal against the order on enforcement of the arbitration award runs from the date of service of a copy of the award (Civil Procedure Code Art. 795 §2).
The party that lost in arbitration will thus learn that the unfavourable arbitration award may be used against it when the winning party has taken measures based on the arbitration award (i.e. has commenced execution) or may take such measures (by taking advantage of the preclusive effective of an arbitration award that has been recognized). The losing party is then entitled to an interlocutory appeal against the order on recognition or enforcement. However, due to the ability of the adversary to make use of the arbitration award during this time, and the limited review of the court in a proceeding for recognition or enforcement of an arbitration award, this measure may not prove very effective.
Stay of enforcement of the arbitration award is another measure which the losing party may pursue, by filing an application for a stay with the court considering the petition to set aside the award. The question that should be raised is whether the court may stay enforcement of the award before issuance of a ruling on recognition or enforcement of the award? The answer to this question is of great legal and practical importance. This issue is interesting from a theoretical point of view, as it concerns such concepts as effectiveness, enforceability and legal finality, the substance of which is controversial in the legal literature.4From a practical point of view, the answer to this question has real significance for the party that obtained an unfavourable decision from the arbitration court. If such a party could seek a stay of enforcement of the arbitration award prior to a ruling on its recognition or enforcement, it may effectively oppose the negative effects of use of the award by the winning party. A negative answer would mean that the losing party has to wait for commencement of execution or service of the order on recognition, which in practice would mean that prior to consideration of the application for stay of enforcement of the award, the award could be used in a manner that would render the stay moot.
So far the Supreme Court of Poland has not addressed the ability to stay enforcement of an arbitration award prior to recognition or enforcement of the award, and the literature has little to say on this issue.
Ł. Błaszczak and M. Ludwik clearly deny the permissibility of a stay of enforcement of an arbitration award before it has been held enforceable. They argue that one may not stay enforcement of an award that is not enforceable.5
Statements in favour of the ability to stay enforcement, regardless of a ruling on enforcement, may also be found in the doctrine.
T. Ereciński and K. Weitz write that “as in the case of Civil Procedure Code Art. 388 §1, it appears that the state court should stay enforcement of an arbitration award until the end of the proceeding on the petition to set aside the award, if the party could suffer irreparable harm as a result of enforcement of the ruling. The need for a stay of enforcement should also be considered when the arbitration award has already been held enforceable.”6 In our opinion, this position should be understood to mean that a finding of enforceability is an argument in favour of a stay of enforcement of an arbitration award, and not a condition for the stay (the same as with a risk of causing injury).
M. Łaszczuk and J. Szpara point, however, to the significance of Art. V(1)(e) of the New York Convention7when considering the time from which a stay of enforcement of an arbitration award is permissible. This section provides that one of the grounds for refusal of recognition or enforcement is the suspension of the award in its country of origin. If stay of enforcement under Civil Procedure Code Art. 1210 constitutes grounds for refusal of enforcement of the ruling under Art. V(1)(e) of the New York Convention, this speaks in favour of the position that enforcement of an award that has not been held to be enforceable may be stayed.8
A. Zieliński9 and W. Głodowski10 indicate the independence of proceedings seeking a stay of an award and proceedings seeking enforcement of the award. This independence, in our view, means that enforcement of an award that has not been held enforceable may be stayed.
Enforceability, enforcement and effectiveness of rulings
Consideration of the issue of the ability to stay enforcement of an arbitration award before it has been held enforceable should begin with a review of the meaning of enforcement, enforceability and effectiveness.
These concepts and their substance have so far been considered chiefly with respect to judgments by state courts.
It is commonly accepted that enforceability is an attribute of a ruling indicating the possibility of enforcing it by compulsion upon fulfilment of additional conditions. Meanwhile, W. Siedlecki and E. Wengerek define effectiveness as all the effects of a ruling apart from enforceability and legal finality.11 In this conception, effectiveness carries with it the possible effects of a ruling other than enforceability, including more specifically its further effects consisting for example of the ability to make entries in public registers, such as civil registry deeds (e.g. on a divorce decree, annulment of a marriage, or naming a child) or land and mortgage registers. According to these authors, effectiveness and enforceability are thus disjunctive concepts.
Sometimes enforceability is understood as a specific form of effectiveness, occurring only with respect to rulings of a certain type. Under this conception, effectiveness is a broader notion than enforceability.12
Sometimes enforcement is distinguished from enforceability. Enforcement is understood to mean the very result, including compulsory or voluntary realization of the adjudged relief.13
In our opinion, enforceability and effectiveness are characteristics of a ruling arising in the first order from its linguistic properties as a normative statement. This applies to both state court judgments and arbitration awards. A ruling upholding a claim expresses a concrete norm (sententia facit ius inter partes), and creates or bindingly establishes the rights between the parties to the dispute (a ruling denying the claim excludes the binding force of a specific individual norm). We will refer hereinafter only to rulings deciding affirmatively on the relief sought in the statement of claim. The main consequence of issuance of rulings by state court deciding negatively on the relief sought by the plaintiff is res judicata. Although arbitration awards negatively ruling on the relief sought by the claimant are not characterized by res judicata, their very issuance (and thus performance of the arbitration clause) means that the arbitration clause may not be the basis for another arbitration of the same dispute.14 The effects of discharge of the arbitration clause and res judicata are thus similar.15
The norm positively ruling on the relief sought in the statement of claim may, due to its linguistic properties, be capable of enforcement, as in the case of judgments awarding a benefit or ordering removal from premises. There are also judgments that are not capable of enforcement due to their linguistic properties, i.e. the substance of the norm expressed. This applies, for example, to declaratory judgments establishing a legal relationship pursuant to Civil Procedure Code Art. 189.
Also arising out of the linguistic properties of a ruling are its potential effects: the ability to make a certain use of a ruling in light of its substance. Effectiveness understood in this way (or enforceability) is not tied to use of the ruling in a specific manner. As A. Miączyński writes: “Enforceability is only the potential ability to exert an effect in the form of enforcement. This effect does not occur by itself; in order to begin it, it is necessary to issue an enforcement clause for the ruling or make it immediately enforceable. Only then may the effect in the form of enforcement occur, consisting of realization of the adjudged benefit.”16
It is precisely in this way that enforceability should be understood: as the potential of a ruling. This potential does not necessarily have to wait until an execution proceeding to come to fruition. Thus when the defendant voluntarily carries out the ruling, it is not an undue performance, because it occurs in accordance with the substance of the norm already expressed in the ruling. Contrary to the view presented by A. Miączyński, in our view, enforceability is not an external manifestation of formal legal finality. Rulings that are not legally final also have the potential capacity to exert an effect in the form of enforcement. Whether and what conditions the ruling must fulfil in order that these effects may be realized are arbitrarily fixed by statute. In the Civil Procedure Code, such additional conditions are that the ruling become legally final or be made immediately enforceable. We refer to these conditions as arbitrary because it does not follow from the nature of enforceability or the nature of legal finality that rulings that are not legally final cannot be enforced. When, and upon fulfilment of what conditions a ruling may be compulsorily enforced depends on the choice of the Parliament.17 However, enforceability as an immanent characteristic, the potential of the ruling, does not depend on fulfilment of such conditions. In the ordinary course of affairs, rulings that are not legally final may not exert effects, but the Civil Procedure Code provides for numerous exceptions to this rule, for example in the case of orders for payment as writs of security, judgments that are made immediately enforceable, and non-adversarial orders which are subject to enforcement upon issuance. This confirms that enforceability as a characteristic of a ruling is not connected with its legal finality.
The Civil Procedure Code governs the manner in which the potential enforceability and effectiveness of a ruling pass to enforcement of the ruling during the course of execution, or most often to another use of its effects. Formal legal finality is a condition for realization of effectiveness and enforceability. Then, however, rulings subject to execution must be endorsed with an enforcement clause. The effectiveness of rulings not subject to execution should be connected, in turn, to a finding of their legal finality:18 “A finding of the legal finality of the ruling is necessary with respect to those rulings for which specific legal effects are tied to their becoming legally final.”19 After this stage, the conditions for enforcement of a ruling or exertion of its other effects no longer concern the ruling itself, but its use: filing an application for execution, entry in the land and mortgage register or other register, or submission of the ruling in another proceeding.
Enforceability of arbitration awards—the potential of the award
Arbitration awards, like state court judgments, may be characterized by effectiveness and enforceability. As in the case of state court judgments, effectiveness and enforceability here have several stages. The first stage is effectiveness and enforceability as linguistic characteristics of the rulings, as explained above. The further sequence of realization of the enforceability and effectiveness of an arbitration ruling proceeds similarly to the case of a state court ruling.
An arbitration award adjudging a benefit will be the basis for execution after its enforceability is confirmed (new Art. 1214 §2 of the Civil Procedure Code).20 Similarly, a state court judgment awarding a benefit will be able to serve as the basis for execution only if it is issued an enforcement clause. However, immediately upon issuance such rulings may be enforced in the sense that upon fulfilment of certain actions execution may be conducted on the basis of the rulings.
The same applies to the effectiveness of rulings. An arbitration award not capable of enforcement will exert other effects upon recognition. A state court judgment other than one awarding a benefit will exert such effects upon a finding of its legal finality. From the moment of issuance of such rulings, however, they are characterized by effectiveness, i.e. the capacity to exert effects other than compulsory enforcement.
Recognition and a finding of legal finality are necessary for realization of specific effects, but do not change the nature of the ruling itself, which includes effectiveness. Ascribing the force of a state court judgment to an arbitration award via recognition of the award is necessary for realization of most of the effects of the ruling, but realization of the effects as such is different from the capacity to exert the effects.
We thus take the view that a stay of enforcement of an arbitration award may occur prior to a finding of its enforceability. As prior to a finding of enforceability, an arbitration award may be characterized by enforceability, it may be temporarily deprived of such enforceability (it may be stayed). Stay of enforcement of an arbitration award prior to a finding of its enforceability means depriving the award of the potential to be enforced, as if the award did not express a concrete norm capable of compulsory realization. We believe that the expression “stay of enforcement” used by the Parliament in Civil Procedure Code Art. 1210 means suspension of enforceability. Enforceability concerns the potential of a ruling, while enforcement concerns realization of that potential. Stay of enforcement thus means staying the capability of realization of the potential of the ruling, that is, temporary suspension of its enforceability.
Stay of enforcement before a finding of enforceability—systemic interpretation
The theoretical discussion so far is supported by a systemic analysis of the Civil Procedure Code provisions concerning the ability to stay the effects of rulings. In proceedings before the state court, the following provisions of the code govern the institution of stay of the effects of rulings:
Art. 388 §1 concerns stay of enforcement of legally final judgments. Such judgments are writs of execution (the beginning of Art. 777 §1(1)) and—after endorsement with an enforcement clause—constitute grounds for execution.
Art. 388 §4 concerns stay of the effects of legally final judgments that are not subject to enforcement but exert other (external) effects.
Art. 396 is addressed to orders that are effective upon issuance (Art. 360) and to orders which are not legally final but which are made immediately enforceable.21 The former orders exert external effects from the moment they are issued. The later constitute grounds for execution once they have been endorsed with an enforcement clause (the end of Art. 777 §1(1)). In turn, Art. 521 §2 permits stay of enforcement of non-adversarial orders which under the code are subject to enforcement before they become legally final.
In Art. 388 and 396, previous issuance of an enforcement clause, ascription of immediate enforceability, or a finding of legal finality is not a condition for stay of the effects. Based on Art. 388, the court of second instance may stay the enforcement or effectiveness of a judgment that has been challenged in a cassation appeal, regardless of whether the judgment has been endorsed with an enforcement clause or has been held to be legally final, or if execution on the judgment has commenced. If the stay of enforcement occurs prior to issuance of an enforcement clause, then, in our view, an enforcement clause may not be issued for such ruling. If the stay occurs after issuance of an enforcement clause, it will be grounds to stay the execution proceeding (Art. 820).
In Art. 521 §2, prior enforceability (or effectiveness) of the ruling is a condition, but this results from the specific assumption of this provision: if not for the prior enforceability or effectiveness of the rulings covered by this section, there would be no danger that they would exert effects despite filing of an appellate instrument.
As demonstrated by a review of the regulations, stay of effectiveness or enforcement of a ruling primarily serves a security function. It enables the court in a specific case to modify the decision by the Parliament to enable enforcement or other use of a ruling at a given time. The institution of stay of the effectiveness or enforceability of a ruling consists of the temporary suspension of the capacity of the ruling to exert external legal effects. The ability to take actions on the basis of the ruling—entries in registers, execution, or issuance of a ruling for which the prior ruling serves as precedent—is stayed.
Art. 1210 should be interpreted similarly. First and foremost, the wording of this provision does not condition the possibility of stay of enforcement of an arbitration award on a prior holding of its enforceability. We thus see no reasons that this provision should be interpreted differently or lead to different conclusions than the interpretation of other provisions governing stay of the effects of rulings. In the case of application of Civil Procedure Code Art. 388 or 396, there is a stay of the potential effects of rulings—regardless of their actual use (that is, regardless of whether the holder has, for example, obtained an enforcement clause, which would demonstrate a desire to seek compulsory enforcement of the ruling). Similarly, Art. 1210 should be understood as staying the potential effects of an arbitration award regardless of whether the holder has filed an application for a finding of enforceability or has already obtained it.
Stay of enforcement before an award is held enforceable—New York Convention
An analysis of the New York Convention leads to similar conclusions.
Following the reasoning of M. Łaszczuk and J. Szpara, we take the view that stay of enforcement pursuant to Civil Procedure Code Art. 1210 is identical to suspension of an award under Art. V(1)(e) of the New York Convention. [The English version of New York Convention Art. V(1)(e) provides that recognition and enforcement of an award may be refused if “[t]he award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.”]
There is no doubt from the Polish text of this provision (Że orzeczenie nie stało się jeszcze dla stron wiążące, albo że właściwa władza kraju, w którym lub według prawa którego orzeczenie zostało wydane, uchyliła je lub wstrzymała jego wykonalność) that stay of enforcement on the basis of Polish civil procedure constitutes grounds for refusal of recognition or enforcement of an arbitration award issued in Poland.
The authentic versions of the convention we are familiar with—English, French and Spanish—all refer to suspension of an award (suspended, suspendue, suspendida). However, A.J. van den Berg ties suspension of the award under the New York Convention to the “suspension of the enforceability or enforcement of the award.”22 This interpretation appears correct. This is indicated by the earlier documents cited by van den Berg concerning the New York Convention, revealing the intention of the parties on this issue. This is also confirmed by the presumed purpose of the provision: non-enforcement of awards that may not be enforced in the country of origin, whether as a result of setting aside or suspension of enforceability.
This supports the thesis of the permissibility of stay of enforcement of arbitration awards that have not been held to be enforceable. Such awards may also exert negative legal effects for the challenger in other countries without being held enforceable in Poland; for example, they may constitute grounds for execution there. But stay of enforcement in Poland may prevent such effects.
Stay of enforcement prior to a finding of enforceability—summary
A different interpretation, requiring first that an arbitration award be held enforceable before enforcement of the award may be stayed, would result in limiting the real legal protection of the party against whom the award was issued. A proceeding seeking a holding of enforceability of an arbitration award, like a proceeding seeking an enforcement clause, generally is conducted without the participation of the other party. The party against whom execution is to be commenced learns of issuance of an enforcement clause for a judgment upon service on the party of notice of commencement of execution. From this moment, the party is entitled to file an interlocutory appeal against the order on issuance of the enforcement clause or the holding of enforceability of the arbitration award. An interpretation under which stay of enforcement of an award would be possible only upon issuance of an enforcement clause for the ruling would make it difficult for a party who may seek stay of enforcement of the ruling to make use of this form of legal protection. Practically speaking, the party could not file an application to stay enforcement of the ruling until it was notified of commencement of execution. Meanwhile, execution would proceed, and the interested party would not be able to oppose it. Only after obtaining a stay of enforcement of the ruling could the party seek a stay of execution. Suspension of execution at this time may no longer have any practical significance, and thus the very concept of the institution of stay of the effects of the ruling would be defeated.
We do not agree with the argument that the enforcement of an arbitration award that has not been held enforceable may not be stayed because there is nothing to stay.
Firstly, the possibility of enforcement by way of execution is a characteristic that belongs to awards regardless of whether they have been held enforceable by the court. While it is true that issuance of an enforcement clause is necessary for enforcement of an award by way of execution, this does not change the properties of the award.
Secondly, the very issuance of an enforcement clause may already be regarded as an element of enforcement of the award. In our view, an enforcement clause may not be issued for an award whose enforcement has been stayed. This follows from the nature of the enforcement clause itself: pursuant to Civil Procedure Code Art. 783 §1, it contains a holding that the writ entitles the holder to execution, which is untrue in the case of rulings whose enforcement has been stayed.
Thirdly, a requirement for a prior holding of enforceability does not appear from the express wording of the code. Supposedly such a requirement would be dictated by functional considerations. It thus appears that this basically has to do with a lack of interest in seeking stay of enforcement of an award before it has been held to be enforceable. However, such an interest does exist, in factual terms (the risk of rapid execution as soon as the award is held enforceable) as well as legal terms (enforcement of the award in other countries, and a substantive legal claim for performance of the award).23
Grounds for stay of enforcement
This leads to the more general question of what are the grounds for stay of enforcement of an arbitration award. In our view, only one condition for the permissibility of stay of enforcement of an arbitration award may be drawn from the Civil Procedure Code. A contextual interpretation of Art. 1210 (argumentum a rubrica) leads to the conclusion that a condition for stay of enforcement of an arbitration award is filing of a petition to set aside the award. This follows from the placement of Art. 1210 in the title of the code devoted to the petition to set aside an arbitration award. It should be concluded from the placement of this provision that the court that may stay enforcement of an award is precisely the court that is considering a petition to set aside the award.
It should also be pointed out that in all of the provisions governing the institution of stay of the effects of a ruling, a condition for stay of the effectiveness or enforcement of a ruling is the possibility of challenging the ruling or even taking measures seeking to challenge it. In the case of a legally final state court judgment, stay of the effects of the judgment is possible only in the event of filing of a cassation appeal, or in the case of an order, filing of an interlocutory appeal. The legislative intent is to protect the interests of the party against whom the ruling may be used. While a proceeding seeking to vacate or amend a ruling is pending, the ruling may be enforced or used in some other way, sometimes irreversibly thwarting the effects of the ultimate setting aside or amendment of the ruling.
Filing of a petition to set aside the arbitration award is the only necessary condition for stay of enforcement of the award, but this does not mean that mere filing of a petition to set aside the award justifies the stay of enforcement. Stay of enforcement of the award should be dictated by the prevailing arguments in the specific case, such as the risk of irreparable harm, the great likelihood that the award will be set aside, or the amount awarded. Such arguments may not be treated as conditions for stay of enforcement, however. It should be pointed out particularly that the risk of irreparable harm is not a condition for stay of enforcement of an arbitration award. The wording of Art. 1210 is clear in this respect. The Parliament left it to the court’s discretion to assess and select the arguments for and against a stay of the effects of an arbitration award.
Civil Procedure Code Art. 1210 is thus similar in its construction to Art. 396, under which the court of first instance may stay enforcement of an order against which an interlocutory appeal has been filed. Apart from filing of an interlocutory appeal, Art. 396 does not provide any other conditions for stay of enforcement of the order. Art. 1210 and Art. 396 thus clearly differ from the other regulation providing for the possibility of staying the enforcement of a ruling, i.e. Art. 388. Art. 388 permits stay of enforcement of the judgment of the court of second instance if enforcement could cause irreparable harm.
In our view, the differences between the provisions concerning stay of enforcement of rulings—Art. 1210 and Art. 396 on the one hand and Art. 388 on the other—are the result of a conscious decision by the drafters of the code. The Parliament left greater discretion with the courts when deciding on stay of enforcement of an arbitration award or an order than in the case of stay of a legally final state court judgment. The reason for these differences is clear.
Art. 388 provides grounds for staying the enforcement of a legally final judgment of a state court—a ruling that is issued after the case has been considered twice by the state courts. The Parliament thus assumed that following proceedings at two instances, the likelihood that the judgment will be vacated or amended is small, and as a rule the winning party should be able to enforce such a judgment. Therefore stay of enforcement of such a judgment was saddled with the additional condition of irreparable harm.
The situation is different in the case of orders and arbitration awards. The Parliament recognized that stay of their enforcement should be more freely granted, as the involvement of the authority of the state courts in issuance of such rulings is less (in the case of orders) or non-existent (in the case of arbitration awards). An arbitration award is issued without the involvement of the state court, and an order whose enforcement may be stayed is issued after consideration of the matter by the court of one instance.
In consequence, Civil Procedure Code Art. 1210 does not provide additional conditions for stay of enforcement of an arbitration award. Nonetheless, as indicated above, the court considering an application to stay an arbitration award may, and should, take into consideration such circumstances as the justification and chances for success of the petition to set aside the award, the risk of harm, and the irreversibility of the effects of enforcement of the award.
Effects of stay of enforcement
Stay of enforcement means that the ability to enforce the ruling is suspended. The most important manifestation of this is the inability to conduct execution. But if the ruling has not yet been issued an enforcement clause, stay of enforcement also temporarily prevents issuance of an enforcement clause. The effects of stay of enforcement of an arbitration award thus appear clear. It should also be considered, however, whether under Civil Procedure Code Art. 1210 it is also permissible to stay the effectiveness of an arbitration award.
Civil Procedure Code Art. 396, 521 §2 and 1210 refer solely to stay of enforcement, while Art. 388 distinguishes stay of enforcement and stay of effectiveness. It may be debated whether the lack of such a distinction under Art. 396, 521 §2 and 1210 limits the application of these provisions to rulings that are capable of enforcement, or whether this means that the concept of stay of enforcement under these provisions should be interpreted broadly to include also stay of effectiveness. Under the law as it now stands, it appears proper to interpret Art. 1210 expansively to enable also the stay of effectiveness, as the Supreme Court has done analogously under Art. 396.24
Stay of effectiveness of a ruling means that the ability of the ruling to exert effects is suspended. This entails temporarily depriving the ruling of its binding force, which constitutes one of the effects of the ruling and enables use of the ruling in other proceedings.
This concept of binding force may be controversial. Binding force may be treated as an aspect of res judicata, in line with the maxim that “a thing adjudged must be taken as truth” (res judicata pro veritate accipitur). Under this concept, a matter that has already been determined in a legally final ruling may not be considered again in another proceeding, even as a precedent. It might be suggested that binding force cannot be suspended, because it is an effect of a legally final ruling regardless of its content.
This position does not appear to be correct. We take the view that binding force constitutes an element of the effectiveness of a judgment, and as such, is subject to suspension together with effectiveness. Similarly, if a ruling is capable of immediate effectiveness, that also means immediate binding force. Otherwise, the immediate effectiveness would be illusory, as its judicial security would not exist. The practical need for suspension of the preclusive effect which the ruling could exert in other proceedings also speaks in favour of the stay of binding force being included within the stay of effectiveness.
The position of A. Miączyński is worth citing at this point. This author, while including binding force among the effects of a ruling, at the same time excludes the possibility of staying the binding force. However, he does admit the possibility of the stay of a finding of legal finality, and also specific effects (“indirect effects”) such as making entries in registers or pursuing third-party indemnity claims.25 We do not agree with this conception. The ability to make entries in registers or pursue third-party indemnity claims results from the preclusiveness of the judgment,26 i.e. its binding force. There do not appear to be any barriers preventing suspension of binding force as such—particularly since there is no difference between suspension of effectiveness in the sense of suspension of the ability to exert any and all further effects, and suspension of effectiveness in the sense of suspension of binding force. Binding force is exhausted in the further effects of the ruling: beyond such effects, it is an empty concept. A ruling may be preclusive in another proceeding only insofar as the ruling has binding force. Binding force between the parties, as referred to also in Civil Procedure Code Art. 365 §1, has no meaning if it need not be respected by the courts or other authorities considering the parties’ rights.
However, one may not suspend the res judicata effect of a state court judgment or reinstate the binding force of an arbitration clause after it has already expired upon issuance of the arbitration award, because this would result in temporary abolition of the judgment (or award) instead of suspension of its effects. This would open the way to challenging the ruling, rather than securing the legal situation before a ruling is issued on its lawfulness. Stay of enforcement or effectiveness is supposed to result in temporary freezing of the legal situation. The winner may not use the ruling but the loser may not obtain a new one. The fate of the ruling remains to be decided. Meanwhile, stay of the res judicata effect (of a judgment) or reinstatement of the binding force of the arbitration clause would create a new legal situation. Until issuance of the ruling, a new claim may not be asserted due to the pendency of the case, in the case of state court judgments, or in arbitration because of performance of the arbitration clause.27 After issuance of a legally final ruling a new claim may not be asserted due to res judicata effect or due to termination of the arbitration clause as a result of its exhaustion in this respect. Meanwhile, stay of res judicata effect or reinstatement of the binding force of the arbitration clause would change the legal situation, opening the way to reconsideration of the case anew.
It should also be stressed that stay of the effects of a ruling does not consist in stay of a specific use of the ruling, e.g. stay of execution or stay of the ability to make an entry in the land and mortgage register. It has to do with temporary suspension of attributes of the ruling—enforceability and effectiveness—as if the ruling did not possess such attributes. For this reason, it is irrelevant whether the ruling whose effects are to be stayed was issued an enforcement clause, was held enforceable, or was recognized with legal finality, or if this has not yet occurred, or also whether execution proceedings have already begun. Stay of effectiveness or enforcement may occur at any of these stages. Stay of enforcement or effectiveness before a ruling obtains these attributes prevents it from obtaining them, while a stay occurring after the ruling has obtained these attributes results in their suspension. The inability to use the ruling is only a consequence of such suspension.
1 There is no specific provision requiring the court to make such service. Civil Procedure Code Art. 206 §1 requires service of the statement of claim together with the scheduling of the hearing. Application of this provision as relevant to other proceedings means, in our view, that the court will serve the pleadings commencing a proceeding in which an open session of the court will be scheduled. In the case of pleadings commencing a proceeding in which the ruling is issued in closed session, absent a specific provision the pleading is not subject to service on the other party to the proceeding before it is considered on the merits. The pleading is served on the other party along with the copy of the ruling on the merits of the case.
2 The court may schedule a hearing in this event, however, pursuant to Civil Procedure Code Art. 148 §2, applied as relevant on the basis of Civil Procedure Code 13 §2. Then it will be necessary to serve the application for recognition or enforcement on the respondent and notify it of the hearing.
3 As enforcement of an arbitration award occurs through issuance of an enforcement clause for the award, the provisions concerning a proceeding for issuance of an enforcement clause apply as relevant to a proceeding for enforcement of an arbitration award.
4 See W. Siedlecki, “Orzeczenia konstytutywne w postępowaniu cywilnym” (“Constitutive rulings in civil proceedings”), in Księga pamiątkowa ku czci Kamila Stefki (Essays in honour of Kamil Stefko), Warsaw & Wrocław 1967; E. Wengerek, Postępowanie egzekucyjne w sprawach cywilnych (Execution proceedings in civil cases), Warsaw 1961; K. Korzan, Orzeczenie konstytutywne w postępowaniu cywilnym (A constitutive ruling in a civil proceeding), Warsaw 1972; A. Miączyński, “Skuteczność orzeczeń w postępowaniu cywilnym” (“The effectiveness of rulings in a civil proceeding”), Zeszyty Naukowe UJ CCCLXXVII, Prace Prawnicze, vol. 67; Supreme Court of Poland order dated 4 September 2009, Case No. I CZ 83/09, Lex No. 558797.
5 Ł. Błaszczak & M. Ludwik, Sądownictwo polubowne (arbitraż) (Arbitration), Warsaw 2007, p. 288.
6 T. Ereciński & K. Weitz, Sąd arbitrażowy (Arbitration court), Warsaw 2008, p. 408.
7 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, made at New York on 10 June 1958 (promulgated in Poland at Journal of Laws Dz.U. 1962 No. 9 item 41, annex 7).
8 M. Łaszczuk & J. Szpara, in A. Szumański (ed.), System prawa handlowego, Arbitraż handlowy (The system of commercial law: Commercial arbitration), Warsaw 2010, vol. 8, p. 633.
9 A. Zieliński, in A. Zieliński (ed.), Kodeks postępowania cywilnego. Komentarz (Civil Procedure Code: Commentary), Warsaw 2008, p. 1691.
10 W. Głodowski, “Postępowanie na skutek wniesienia skargi o uchylenie wyroku sądu polubownego” (“Proceedings upon filing of a petition to set aside an arbitration award”), in H. Dolecki & K. Flaga-Gieruszyńska (eds.), Ewolucja polskiego postępowania cywilnego wobec przemian politycznych, społecznych i gospodarczych (The evolution of Polish civil procedure in light of political, social and economic transformations), Warsaw 2009, p. 180.
11 W. Siedlecki, supra n. 4, at p. 303; E. Wengerek, supra n. 4, at pp. 184-185; similarly, K. Korzan, supran. 4, at p. 124.
12 A. Miączyński, supra n. 4, at pp. 18 ff.
13 Id. at p. 29.
14 M. Łaszczuk & J. Szpara, supra n. 8, at p. 652.
15In this respect, we believe that in the case of state court judgments, effectiveness and enforceability should be distinguished from res judicata. The latter is manifest in the fact that the given case may not commenced again. Res judicata is not a feature of a specific ruling, but the effect of the formal legal finality ascribed to the ruling by the law regardless of the substance of the ruling. However, what other effects may be exerted by the ruling—including whether it can be performed—will depend on the substance of the ruling.
16 A. Miączyński, supra n. 4, at pp. 23-24.
17 These are typically conditions for involvement of state compulsion on behalf of the plaintiff in the form of execution by the bailiff.
18 P. Telenga, in A. Jakubecki (ed.), Kodeks postępowania cywilnego. Komentarz (Civil Procedure Code: Commentary), Warsaw 2008, p. 488: “Obtaining such a finding is realized specifically in instances where the ruling will not be enforced by way of execution (e.g. a judgment under Art. 189), although a finding of the legal finality of rulings that are subject to endorsement with an enforcement clause is permissible (but not necessary).”
19 M. Jędrzejewska & K. Weitz, in T. Ereciński (ed.), Kodeks postępowania cywilnego. Część pierwsza. Postępowanie rozpoznawcze (Civil Procedure Code. Part One: Proceeding on the merits), Warsaw 2009, vol. 2, p. 99.
20 The change made by Art. 1(131) of the Act Amending the Civil Procedure Code and Certain Other Acts of 16 September 2011 deprived an arbitration award of the attribute of a writ of execution. Now an arbitration award may be a writ of enforcement (once it is held enforceable), but is not a writ of execution. According to the justification for the bill amending the code (accessible via the Lex system), the reason for the change was the view that “an arbitration award or settlement concluded before an arbitration court, in light of its legal character as a private document, does not meet the accepted criteria for a writ of execution before it is held to be enforceable.” The reason for the change was thus doubts concerning whether an arbitration award is similar in nature to other writs of execution. This change is irrelevant to the discussion in this article, however. Although an arbitration award may not be a writ of execution, it may—like a state court judgment—be a writ of enforcement, which means that it is also characterized by enforceability, i.e. the potential to be enforced.
21 Supreme Court of Poland order dated 4 September 2009, Case No. I CZ 83/09, published at OSNC 2010 No. 5 item 78).
22 A.J. van den Berg, The New York Convention of 1958, The Hague 1981, p. 351.
23 In arbitration clauses the parties often undertake to perform the arbitration award (voluntarily).
24 Supreme Court of Poland order dated 4 September 2009, Case No. I CZ 83/09, published at OSNC 2010 No. 5 item 78.
25 A. Miączyński, supra n. 4, at p. 25.
26 See also K. Korzan, “Skutki orzeczeń rozstrzygających sprawę co do istoty (prawomocność, wykonalność i skuteczność)” (“The effects of rulings resolving a case on the merits (legal finality, enforceability and effectiveness)”), Rejent 4/2005, pp. 124-125.
27 This is a consequence of recognition of an arbitration clause as an agreement. Since the agreement which is the arbitration clause is currently being performed, there is no basis to demand that it be performed a second time by commencement of a parallel arbitration proceeding. The conception of performance of the arbitration clause constitutes a logical complement to the conception of exhaustion of the arbitration clause: the former makes it possible to achieve an effect similar to pendency of a case, and the latter, an effect similar to res judicata.
Published in: ADR. Arbitraż i Mediacja, No 3/2012