CMS Case Study: Declaratory Arbitral Award Małgorzata Surdek, FCIArb | 18 May 2017
The Dispute (2012-2014) between a JV company (Claimant) and a public side (Respondent) arouse out of an agreement for the construction and operation of a motorway in Poland (Concession Agreement) related to a bonus for an early opening of a section of the motorway Małgorzata Surdek, FCIArb | 18 May 2017 2
The Public Private Partnership Shareholders Agreement Shareholder 1 Shareholder 2 Shareholder 3 Shareholder 4 EPC Contract Concession Agreement JVC EPC Public side Contractor Financing Agreements Operator Independent E ngine er Banks Małgorzata Surdek, FCIArb | 18 May 2017 3
Dispute Resolution Mechanism Multi-tier mechanism: negotiations – expert determination – arbitration Arbitration clause: ‒ ad hoc under UNCITRAL Rules ‒ arbitration place: Gdańsk , Poland Applicable law: Polish law Małgorzata Surdek, FCIArb | 18 May 2017 4
The Bonus The EPC Contract provided for a bonus due to the EPC Contractor from JVC for completing construction works before contractual deadlines (conversely, in the event of belated completion contractural penalties were due from the EPC Contractor to JVC) The Concession Agreement did not explicitly provide for a bonus for JVC for an early opening of a section of the motorway, however the mechanism for calculating such bonus was ”hidden” in the Financial Model of the motorway constituting a schedule to the Concession Agreement The Concession Agreement provided for contractual penalties due from JVC to the public side in case of belated opening of the motorway Małgorzata Surdek, FCIArb | 18 May 2017 5
The Request for Relief sought by the Claimant (1) Determination of the Phase 2 Scheduled Opening Date Confirmation that the JVC has the right to a bonus for an early opening of a section of the motorway Determination of the source of funding the bonus (out of two alternatives presented by the Claimant) Małgorzata Surdek, FCIArb | 18 May 2017 6
The Request for Relief sought by the Claimant (2) Interpretation of the Concession Agreement Confirming the entitlement (right) of the Claimant to the bonus and the method of funding thereof No payment was sought (legal interest? problems with enforcement in the future? binding effect?) Małgorzata Surdek, FCIArb | 18 May 2017 7
The Award The Respondent did not challenge the Claimant’s request for relief on the ground that requesting declaratory award is not admissible or on the ground of lack of legal interest The Arbitral Tribunal determined, inter alia, the Phase 2 Scheduled Opening Date and ordered the Respondent to acquiesce to the funding of half of the bonus by loan disbursements (project cost) The Award did not include any comment on the declaratory nature of the award Małgorzata Surdek, FCIArb | 18 May 2017 8
The Post – Arbitration Proceeding The Regional Court in Warsaw recognised the Award in its entirety and dismissed the Claimant’s motion as to declaring the decision on cost of arbitration enforceable (I Co 178/14) The Appell ate Court in Warsaw changed the Regional Court’s judgement and declared the part of the Award including the decision on costs enforceable (I ACz 358/15) Interestingly, the Appellate Court in Warsaw explicitly referred to and agreed with the position of the German Federal Tribunal (Bundesgerichtshof) which confirmed that the decision on costs can be enforced even if the operative part of the award does not explicitly state any amount Małgorzata Surdek, FCIArb | 18 May 2017 9
The Award and further dilemmas Next arbitration in respect of the quantum? What if the new Arbitral Tribunal does not reach the same conclusion as to the Claimant’s entitlement to the bonus? Will the Award have a binding effect on the subsequent Arbitral Tribunal? The Polish Supreme Court of 13 April 2012 (I CSK 416/11): „ if the parties and the arbitral tribunal want that the award produces the same effects as a state court judgement, then they have to take into consideration the fact that in the same matter between the same parties an earlier award was rendered. If this earlier award was recognised or declared enforceable by the state court ( … ) then the state court deciding on recognising or declaring enforceability of the subsequent award would be bound by the earlier decision of the state court recognising or declaring enforceability of the earlier award. ” Małgorzata Surdek, FCIArb | 18 May 2017 10
Takeaways – Polish Law position on declaratory arbitral awards The requirement stipulated in the Code of Civil Procedure in respect of declaratory reliefs (demonstrating legal interest) does not seem to apply in the arbitration proceedings The Appellate Court in Cracow explicitly confirmed that the parties may request that arbitral tribunals issue declaratory awards (I ACo 52/16) Parties who seek confirmation of their right to monetary compensation before seeking the actual payment should have the award recognised by the state court before commencing the dispute on quantum in order to benefit from the binding effect of the earlier award in subsequent arbitration (Supreme Court, I CSK 416/11) Małgorzata Surdek, FCIArb | 18 May 2017 11
Your free online legal information service. Your expert legal publications online. A subscription service for legal articles In-depth international legal research on a variety of topics delivered by email. and insights that can be personalised. www.cms-lawnow.com eguides.cmslegal.com CMS Legal Services EEIG (CMS EEIG) is a European Economic Interest Grouping that coordinates an organisation of independent law firms. CMS EEIG provides no client services. Such services are solely provided by CMS EEIG’s member firms in their respective jurisdictions. CMS EEIG and each of its member firms are separate and legally distinct entities, and no such entity has any authority to bind any other. CMS EEIG and each member firm are liable only for their own acts or omissions and not those of each other. The brand name “CMS” and the term “firm” are used to refer to some or all of the member firms or their offices. CMS locations: Aberdeen, Algiers, Amsterdam, Antwerp, Barcelona, Beijing, Belgrade, Berlin, Bogotá, Bratislava, Bristol, Brussels, Bucharest, Budapest, Casablanca, Cologne, Dubai, Duesseldorf, Edinburgh, Frankfurt, Geneva, Glasgow, Hamburg, Hong Kong, Istanbul, Kyiv, Leipzig, Lima, Lisbon, Ljubljana, London, Luxembourg, Lyon, Madrid, Mexico City, Medellin, Milan, Moscow, Munich, Muscat, Paris, Podgorica, Prague, Rio de Janeiro, Rome, Santiago, Sarajevo, Seville, Shanghai, Sofia, Strasbourg, Stuttgart, Tehran, Tirana, Utrecht, Vienna, Warsaw, Zagreb and Zurich.. cms.law Małgorzata Surdek, FCIArb | 18 May 2017 12
Recommend
More recommend
