- Business in Poland -
Commercial arbitration – when it makes sense and how to draft an arbitration clause
Commercial arbitration is a method of resolving B2B disputes through an arbitral tribunal (arbitration court) rather than a state court, based on the parties’ agreement. In Poland, the legal basis is Part Five of the Polish Code of Civil Procedure (Articles 1154-1217), which governs, among other things, the arbitration agreement, the course of the proceedings, and the recognition and enforcement of an arbitral award.
Arbitral tribunal vs state court - key differences for businesses
In practice, the choice between an “arbitral tribunal vs state court” comes down to assessing time, predictability, confidentiality, and costs. Arbitration is usually more flexible from an organisational standpoint, but it requires the procedure to be designed consciously already at the contract stage.
- Speed and case management - deadlines may be shorter and the timetable can be aligned with the availability of the parties and arbitrators; however, in cases with extensive evidence-taking, arbitration can also take a long time.
- Arbitrators’ expertise - the parties may appoint arbitrators with industry experience (e.g., construction, IT, finance), which can be crucial in technical disputes.
- Arbitration and confidentiality - arbitration proceedings are not, as a rule, public in the way court proceedings are; the level of confidentiality depends on the institution’s rules and the contractual terms.
- Two-tier review - in state courts, appeals are standard; in arbitration, review is limited to an application to set aside the arbitral award in the cases listed in Article 1206 of the Polish Code of Civil Procedure.
When commercial arbitration is genuinely worth it
Arbitration is particularly useful when the dispute concerns a high-value contract, has a technical component, and the parties want to reduce reputational risk or the disclosure of business information. As a rule, commercial arbitration is worth considering when:
- confidentiality is important (e.g., know-how, margins, settlement models, quality incidents),
- the ability to appoint expert arbitrators matters,
- the contract has an international element (a foreign counterparty, performance abroad),
- the parties want to reduce delays and excessive formalism,
- a “tailor-made” evidentiary process is needed (e.g., limiting the number of witnesses, prioritising documentary evidence).
At the same time, arbitration may be less attractive in low-value disputes, mass disputes (e.g., hundreds of similar claims), or where interim measures and fast domestic enforcement without additional formalities are critical.
Arbitration costs - what they include and how to estimate them
“Arbitration costs” are not limited to arbitrators’ fees. They typically include:
- a registration and administrative fee charged by the institution (in institutional arbitration),
- arbitrators’ fees (depending on the dispute value and the applicable rules),
- costs of legal counsel, experts, translations, travel,
- organisational costs (hearing rooms, transcripts, remote-hearing platforms).
Compared to state courts, the up-front costs can be higher. However, in high-value disputes and with well-managed proceedings (evidence, deadlines, procedural focus), arbitration can reduce indirect costs such as frozen receivables, project downtime, and management time.
Arbitration proceedings - what they look like in practice
What “arbitration proceedings” look like in detail depends on whether the parties chose institutional arbitration (with a set of rules) or ad hoc arbitration. A standard process includes:
- filing a statement of claim/request for arbitration and a response,
- appointment of the tribunal (a sole arbitrator or three arbitrators),
- agreeing procedural rules and a timetable,
- evidence-taking (documents, witnesses, experts),
- a hearing or a decision made on the papers,
- issuance of the award.
It is worth addressing already in the clause the language of the proceedings, the place (seat) of arbitration, the number of arbitrators, and how they will be appointed. These elements affect time and cost, as well as the later recognition and enforcement of the decision.
How to draft an arbitration agreement - the elements that determine enforceability
An “arbitration agreement” is the parties’ contract that disputes arising out of a given legal relationship will be resolved by arbitration (Article 1161 of the Polish Code of Civil Procedure). The key is for the clause to be clear and complete. A well-drafted “B2B arbitration clause” should include at least:
- scope of disputes - e.g., “any disputes arising out of or in connection with this agreement”,
- designation of an institution or rules - e.g., a specific permanent arbitration court and its rules,
- number of arbitrators - 1 for simpler disputes, 3 for complex or high-value disputes,
- seat of arbitration - affects procedural law and the court competent for supportive measures,
- language - important in cross-border relationships,
- confidentiality rules - if the parties expect a higher standard, it should be specified in the contract.
In practice, common mistakes include naming a non-existent institution, an unclear scope (a dispute “from performance” instead of “arising out of or in connection with the agreement”), failing to provide an arbitrator appointment mechanism, or including conflicting provisions on jurisdiction.
Three exceptions worth keeping in mind
When assessing risk, it is essential to account for three exceptions arising from the law and how it is applied in practice:
- Non-arbitrability - not every dispute can be referred to arbitration; as a rule, arbitrable disputes include property rights disputes and non-property rights disputes capable of being settled in court (Article 1157 of the Polish Code of Civil Procedure).
- Consumers and employees - in consumer relations, the arbitration clause is subject to additional restrictions (Article 11641), and labour-law disputes follow separate admissibility rules (Article 1164). In B2B contracts, it is worth verifying whether the other party is in fact acting as a business in that particular relationship.
- Limited remedies - as a rule, an arbitral award is not subject to a standard appeal like in state court; judicial review is limited to grounds for setting aside (Articles 1205-1211), which increases the importance of clause quality and arbitrator selection.
Arbitral award - recognition and enforcement in Poland
An arbitral award is not always immediately enforceable. As a rule, recognition or a declaration of enforceability by a state court is required under Articles 1212-1214 of the Polish Code of Civil Procedure. In international matters, the 1958 New York Convention is also important, as it facilitates the enforcement of foreign arbitral awards in contracting states.
How to implement arbitration in company contracts and procedures
Arbitration should not be a random clause in a template. From the perspective of management boards and legal departments, it makes sense to:
- map contract types where arbitration has an advantage (e.g., strategic suppliers, infrastructure projects, joint ventures),
- develop a model clause and variants (smaller vs larger disputes),
- set a confidentiality and document-handling standard,
- take a consistent approach to forum selection and governing law, especially in international contracts.
In matters where the proceedings are particularly important for operations or reputation, it is sensible to link the arbitration decision with risk management and the handling of commercial disputes within the company.
This material is for information purposes only and does not constitute legal advice.
If you need to verify whether commercial arbitration is suitable for a specific contract and whether the arbitration agreement is enforceable, it is advisable to commission an analysis and refinement of the clause by the KKZ team by contacting https://kkz.com.pl/.
FAQ: commercial arbitration - when it makes sense and how to draft an arbitration clause
Is commercial arbitration always faster than state court litigation?
Not always. Arbitration can be faster with good case management and a focused evidentiary process, but in cases with many witnesses and experts the timeline may be comparable to state court litigation.
How do you draft an arbitration agreement to avoid invalidity?
You should clearly express the parties’ intent to submit disputes to arbitration, define the scope of disputes, set out the arbitrator appointment mechanism, and refer to specific rules (in institutional arbitration), in line with Article 1161 of the Polish Code of Civil Procedure.
What do arbitration costs include?
They typically include institutional fees (if an institution is chosen), arbitrators’ fees, and the costs of counsel and evidence (experts, translations). The structure depends on the rules and the value of the dispute.
Does arbitration ensure confidentiality?
To a large extent, yes, because there is no general principle of public access as in state courts. However, the scope of confidentiality depends on the arbitral institution’s rules and the contract terms. Sensitive projects should specify confidentiality obligations in the agreement.
How does recognition and enforcement of an arbitral award work in Poland?
As a rule, a state court decision recognising the award or declaring it enforceable is required under Articles 1212-1214 of the Polish Code of Civil Procedure; in foreign matters, the 1958 New York Convention is also relevant.
Can you challenge an arbitral award like an appeal?
Not through a standard appellate route. An application to set aside an arbitral award is available in the situations provided in Article 1206 of the Polish Code of Civil Procedure, which is a limited review based on specific grounds.
Bibliography
[1] Polish Code of Civil Procedure - Part Five: Arbitration (Articles 1154-1217).
[2] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10 June 1958 (the “New York Convention”).
Author: adv. Maciej Zaborowski, Managing Partner
E-mail: m.zaborowski@kkz.com.pl
