The Possibility of Reaching a Settlement as a Condition of Arbitrability: Irrelevance whether the Subject of Dispute (Settlement) Is a Property or Non-Property Right

Decision of the Supreme Court (Sąd Najwyższy) No II CSK 670/09 of 21 May 2010 (parties unknown)

Rationes Decidendi:

The wording “may be subject to settlement” applies to disputes on both property and non-property rights. It is common ground under doctrine and case-law that the parties may seek the award of certain enforcement, a declaration of the existence of a relationship or a right (a declaration of whether or not a right exists here) or the establishment of a particular legal relationship before an arbitral tribunal.
A grammatical interpretation of Article 1157 k.p.c. [POL]2 shows that, from the perspective of this legislation, it is of fundamental significance whether a dispute on a property or non-property right may be subject to settlement. By contrast, it is entirely irrelevant [...] whether or not the conclusion of a particular settlement (in terms of its content) would be admissible. [...] The valid conclusion of a settlement is subject to a party’s abstract capacity to dispose of its rights (claims arising from them), rather than just to the possibility of concluding a particular settlement. In other words, it is immaterial whether, within the limits of specific [factual and to some extent legal] circumstances, the parties may conclude a settlement on particular enforcement (content) where such arrangements, from an abstract aspect, may include a legal relationship or rights which may be disposed of by the parties. The content of such arrangements may, in a particular case, be in conflict with applicable law or rules on social co-existence (Article 58, § 1 and 2, k.c. [POL])3. Any consideration of the arbitrability of a dispute cannot include an assessment of whether a specific settlement and its content would be inconsistent with the law and whether the precondition of “mutual concessions” within the meaning of Article 917 k.c. [POL]4 has been met.
The fact that a dispute concerns the question of the existence (absence), validity (invalidity), or other defect of a legal act has no effect on an assessment of arbitrability.

keywords
arbitrability
disposal of rights
court-approved settlement
existence of a legal act
existence of a legal relationship
interim arbitral award
legal circumstances
factual circumstances
validity of a legal act
rules on social coexistence
rights which may be disposed of
property right
non-property right
subject to settlement
admissibility of a settlement
conflict with applicable law
particular settlement
mutual concession
action for enforcement
action for a declaration
about the authors

Univ. Professor, Dr.iur., Mgr., Dipl. Ing. oec/MB, Dr.h.c. Lawyer admitted and practising in Prague/CZE (Branch N.J./US), Senior Partner of the Law Offices Bělohlávek, Dept. of Law, Faculty of Economics, Ostrava, CZE, Dept. of Int. and European Law, Faculty of Law, Masaryk University, Brno, CZE (visiting), Chairman of the Commission on Arbitration ICC National Committee CZE, Arbitrator in Prague, Vienna, Kiev etc. Member of ASA, DIS, Austrian Arb. Association. The President of the WJA – the World Jurist Association, Washington D.C./USA.

e-mail: office@ablegal.cz


Mgr. Tomáš Řezníček (*1978) works as a legal trainee in the Law Offi ces of Bělohlávek, Prague, Czech Republic. Graduated from the Law Faculty of Charles University in Prague in 2007, also absolved foreign studies at the Law Faculty of Jagiellonian University in Krakow. Coauthor of various articles with prof. A. Bělohlávek published in professional periodicals in the Czech Republic. Field of interest: Commercial Law, Private International Law, Pharmaceutical Law.

e-mail: tomas.reznicek@ablegal.cz