Arbitration as a solution to COVID-19-related court delays

Like in other countries, restrictions imposed by the COVID-19 pandemic have affected the functioning of the court system in Poland, causing massive delays in the ongoing proceedings. It will be no different for the proceedings which are about to start shortly. The solution to this difficult situation might be the use of out-of-court dispute resolution mechanisms such as arbitration.

The situation in the national courts

Due to the ongoing state of the epidemic threat in Poland, public institutions have been forced to limit their activities. This also applies to the courts, which – to reduce the risk of coronavirus spread – have restricted direct communication with the public (some of them have even been entirely closed). Hearings scheduled for Mach and April have been canceled, except for the most urgent cases. Many courts not only have stopped setting up new hearing dates, but they also have refrained from issuing documents imposing procedural deadlines, effectively suspending their jurisdiction.

This does not mean that the parties are unable to pursue their claims. The post offices and the courts’ lodgment offices continue to operate, albeit to a limited extent, which allows submitting a pleading, motion, or any other document. Some courts have even created special email addresses to which the scanned copies of the documents can be sent and only later, presumably after the state of the epidemic threat ends, supplemented by providing the hard copies. Interestingly, the government has dropped the idea of introducing regulation on lodging and servicing procedural documents online. Anyway, the key question is when the submission will be registered and further actions will be taken. Another question is when the judge will be able to hear the case. And the answer to these questions would be rather tricky given the partial lockdown of the courts as well as the fact that many judges are taking their parental leave due to the closure of schools, preschools, and nurseries.

Considering the current coronavirus situation in Poland, and, among other things, the fact that according to most sources, Poland is still before the peak of infections, it will probably take months before the work of courts could back to normal. Those who are in the middle of ongoing disputes must, therefore, prepare for months of delays in handling their cases. It will be no different for those who are planning to initiate the proceedings in the near future. In such uncertain times, the solution may be to use the out-of-court dispute resolution methods, especially including arbitration, which – as more flexible and at the same time better suited for conducting the proceedings remotely – has proven to be less affected by the difficulties caused by COVID-19 than the judiciary.

Arbitration: a brief description

Arbitration is a process where the resolution of a dispute is entrusted to an independent and impartial arbitrator or group of arbitrators. These are usually individuals with expertise in the area of the conflict, which guarantees professionalism and a good understanding of both the background of the dispute and the interests of the parties. At the same time, the parties maintain their impact on the conduct of the arbitration proceedings, which are governed by the rules found in the parties» arbitration agreement. Another key feature of arbitration is that it provides for a final settlement of the dispute and the issuance of the award enforceable under the applicable regulation.

Possibility of resolving disputes through arbitration

Contrary to popular belief, the parties can refer their dispute to arbitration even if they have not concluded an arbitration agreement (which typically has a form of a clause in a contract stating that any disputes related to the contract would be resolved through arbitration). Arbitration is a consensual method of dispute resolution, which means that the parties are free to agree upon its use at any time, even post factum, i.e. after the dispute has arisen. This can also be done in the course of the ongoing legal proceedings.

The condition is, however, for the arbitration agreement (or clause) to be conducted in writing (this requirement is met if the agreement or clause is contained in an exchange of letters or statements made using distance communication which makes it possible to record their content), whereas for the dispute to be “arbitrable”, i.e. being able – according to relevant national legislation – to be settled through arbitration. Fortunately, the majority of commercial disputes can be referred to arbitration.

Arbitral institutions in a time of the pandemic

While national courts have limited their activities to only urgent cases, Polish arbitral institutions remain fully operational. An example of this is provided by the Court of Arbitration at the Polish Chamber of Commerce in Warsaw, which held its first online hearing in early April, thereby proving that the COVID-19 pandemic does not stand in the way of conducting arbitration proceedings. The Court of Arbitration at the Lewiatan Confederation, on the hand, informed on its website that pleadings may be submitted online, whereas their paper version should be submitted within 10 days after declaring the end of the epidemic.
The same applies to the international arbitral institutions (including London Court of International Arbitration, ICC International Court of Arbitration, Stockholm Arbitration Institute of the Stockholm Chamber of Commerce, International Centre for Settlement of Investment Disputes, and others), who – in a recent joint statement – invited parties and arbitrators to use the full extent of the institutions’ respective rules and any case management techniques that permit to continue the proceedings despite any impediments caused by the pandemic, including remote hearings as well as electronic filing and service of documents.

For more detailed information or legal assistance, please contact a DT lawyer.

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2020-04-27 17:44

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