Scientific Council:

dr hab. ukasz Baszczak, prof. dr hab. Maria Dragun-Gertner, dr Beata Gessel Kalinowska vel Kalisz,
prof. dr hab. Jadwiga Pazdan, prof. dr hab. Jerzy Poczobut, prof. dr hab. Jerzy Rajski
prof. dr hab. Marek Michalski, prof. dr hab. Andrzej Szumaski

Editorial Board:

Main Editor: prof. dr hab. Jadwiga Pazdan

dr ukasz arnowiec

Editorial Committee:

Przemysaw Krzywosz
ucja Nowak
Jadwiga Pazdan
ukasz arnowiec

Secretary Editor:

Agnieszka Ralska-Kucal, arozalska@pkpplewiatan.pl

Maria Dudziska, mdudzinska@pkpplewiatan.pl

ISSN: 2083-8190

Court of Arbitration at PCPE Lewiatan

ul. Zbyszka Cybulskiego 3
00-727 Warszawa
Phone: (+48 22) 55 99 970
Fax (+48 22) 55 99 910 (with a note dla Sdu)
e-mail: sadarbitrazowy@pkpplewiatan.pl
www.sadarbitrazowy.org.pl
 Issue No. 1(8)/2012:

EDITORIAL
Przemysaw Krzywosz, ucja 5
Nowak, Jadwiga Pazdan, ukasz
arnowiec

ANALYSES & OPINIONS

Why arbitrate? Philip L. Bruner 6

Multiple Parties in the Construction Litigation Dominik Gakowski, Kamil 13

and Arbitration Proceedings Comparative Case Zawicki, Olga Horwath
Study

Effectiveness of contractual time-bars in Fidic con- Agnieszka Lizer-Klatka 22

tract under Polish Law

The Period for Giving Notice of Contractors Claims Piotr Bytnerowicz, Magda 29
Set Out in Sub-Clause 20.1 of the FIDIC Conditions Kofluk
in Light of Polish Law

Awarding In-House Counsel costs in arbitration Adam Olszewski, Ewelina 38

Czerniawko

Partnering and Dispute Management an instru- Peter Tr Nielsen 43

ment for Polish construction and Project industry?

Alternative methods of resolution of construction Vlodymyr Yaremko 51

disputes in Ukraine
 CASE LAW

The legal nature of a consortium in the con- Compile Agnieszka Ralska- 56

text of creditors joint and several liability Kucal

Limitations period relating to a FIDIC-based Compile Agnieszka Ralska- 58

construction contract in the context of partial
Kucal
delivery of works

A construction contract or a contract for the Compile Agnieszka Ralska- 60

performance of a specific task? Kucal

LEWIATAN ARBITRATION MOOT COURT

Introduction Anna Maria Pukszto 64

Ist Edition of The Competiton Photos Tomasz Szczepek, Robert 66

Gardziski, Compile Maria Du-
dziska
 EDITORIAL

Dear Readers,

We have a pleasure to present the new e-Review. This time, we have devoted the whole number
to building industry matters, including, specifically, the FIDIC based contracts.
In the context of the infrastructure development in our country and of the disputes arising out of
the contract performance, we expect that this topic will attract the interest of a broad range of practi-
tioners, and that the Readers will benefit from this form of consolidation of provided material that
has been aimed at enabling them having many interesting viewpoints available to them at one place.
We have made efforts to select the most interesting articles presenting issues that involve doubts in
practice or that give rise to different interpretations. We have also added items dealing with arbitra-
tion and foreign practice developments in belief that they will enable the Readers to get acquainted
with other countries approaches and to apply their experiences in everyday work.
This study suits well the subject matter of and, in our opinion, may be a good supplement to, the
material of the several conferences organized in Poland, which show the interest paid in the region
and in the arbitration aspects involved in the building industry, such as the very successful FIDIC
(KIG) Regional Conference held in April or the workshops organized by SIDIR in May, that discuss
the conditions of changing the terms of FIDIC-based building contracts.
Let us point out that the articles we publish express only their authors opinions and are not the
opinions of the Court or of the editorial board neither may they be put down to them.
The review also contains extracts from selected Arbitration Courts awards we will be trying to
continue this practice in order to disseminate arbitration awards. There is also a part about Lewiatan
Arbitration Moot Court organized by Lewiatan Court of Arbitration and Young Arbitration
Practiotioners in Poland.
This new issue of the e-Review is a good occasion and forum to present its new Scientific Council:
dr hab. ukasz Baszczak, prof. dr hab. Maria Dragun-Gertner, dr Beata Gessel Kalinowska vel Kalisz,
prof. dr hab. Jadwiga Pazdan, prof. dr hab. Jerzy Poczobut, prof. dr hab. Jerzy Rajski, prof. dr hab. Ma-
rek Michalski, prof. dr hab. Andrzej Szumaski.
We wish you having a good reading and invite you to paying interest in the next e-Review in
which we will presenting sports issues.

Editors:

Przemysaw Krzywosz
ucja Nowak
Jadwiga Pazdan
ukasz arnowiec

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 5 |

 ANALYSES & OPINIONS

Why Arbitrate?
Philip L. Bruner
Any inquiry into the wisdom of engaging in binding arbitration must begin with consideration
of the celebrated advice of U.S. Supreme Court Chief Justice Warren E. Burger, who in 1985 said this:

The obligation of the legal profession is, or has long been thought to be, to serve as healers of human
conflicts. To fulfill that traditional obligation means that there should be mechanisms that can produce
an acceptable result in the shortest possible time, with the least possible expense and with a minimum
of stress on the participants. That is what justice is all about.
One thing an appellate judge learns very quickly is that a large part of all litigation in the courts is an
exercise in futility and frustration. A large proportion of civil disputes in the courts could be disposed
of more satisfactorily in some other way.

Chief Justice Burger then went on to propose
another way, and said:
My overview of the work of the courts from
a dozen years on the U.S. Court of Appeals
[for the District of Columbia] and now six-
teen in my present position, added to twenty
years of private practice, has given me some
new perspectives on the problems of arbi-
tration. ( ) My own experience persuades
me that in terms of cost, time and human
wear and tear, arbitration is vastly better
than conventional litigation for many kinds
of cases (...) I emphasize this because to find
precisely the judge whose talents and expe-
rience fit a particular case of great complexi-
ty is a fortuitous circumstance. This can be
made more likely if two intelligent litigants
agree to pick their own private triers of the
issues. 1
The objectives of this article are: (1) to
review binding arbitration as a method for re-
solving complex construction disputes, (2) to
discuss what cures exist for perceived prob-
lems with arbitration, and (3) to propose how
best to utilize the binding arbitration process to
1
Warren E. Burger, Using Arbitration to Achieve Justice, 40 Arb.
J. 3 (1985).
achieve Chief Justice Burgers vision of arbitra-
tion as an ADR method most suitable in com-
plex cases for producing acceptable results in
the shortest possible time with the least possi-
ble expense and with a minimum of stress on
the participants.
To set the stage, let me begin by review-
ing why it is that disputes and claims, so en-
demic to the construction industry, have been
perceived since the late 1800s to be more suit-
able for resolution by arbitration rather than
court litigation. Six points favoring both domes-
tic and international arbitration over litigation
stand out:
First, construction has been for genera-
tions and continues to be the largest segment of
the production sector of the United States
economy, and quite likely of the world econo-
my. The industry comprises millions of compa-
nies that employ many millions of people. In-
dustry size alone will produce sizable numbers
of disputes amenable to resolution in a non-
judicial forum.
A second reason favoring arbitration
over litigation is that construction is technolog-
ically complex. Construction comprises a host
of applied science disciplines, such as architec-
ture, engineering sciences such as civil, soils,

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 6 |


structural, electrical, mechanical and others,
materials sciences that govern the formulation
and manufacture of building materials, and
principles of construction and construction
management that address the practical building
process. Constructions technological complexi-
ty is amplified by the uniqueness of each pro-
ject, which usually is built to a unique design,
on a unique site location, by a unique aggrega-
tion of companies, operating without econo-
mies of scale in an uncontrolled environment
where productivity is affected by weather, ge-
ology, local labor skills and availability, local
building codes, and site accessibility.
Construction has achieved a legendary
reputation for complexity, which the judiciary
embellishes. As just one example, a 1999 opin-
ion of the Supreme Court of California said:
The owners may have hoped to build their
dream house and live happily ever after.
But there is a reason that tagline be-
longs only in fairy tales. Building a house
may turn out to be a stress-free project; it
is much more likely to be the stuff of urban
legends the cause of bankruptcy, marital
dissolution, hypertension and fleeting fanta-
sies ranging from homicide to suicide. As
Justice Yegan noted below: No reasonable
homeowner can embark on a building pro-
ject with certainty that the project will be
completed to perfection. Indeed, errors are
so likely to occur that few if any homeown-
ers would be justified in resting their peace
of mind on its timely or correct completion.
A third reason arbitration is perceived
as better suited for resolution of construction
cases is that, as a consequence of constructions
increasing technological complexity, law gov-
erning construction necessarily has become
more complex, and has evolved into what some
in the judiciary describe as a separate breed of
animal. Construction law today comprises cen-
turies-old legal theories fortified by statutory
law and seasoned by contextual legal innova-
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
tions reflecting broad factual realities of in-
dustry experience, custom and usage, special-
ized language and unique foreseeable risks
perceived as invoking the law of the shop ra-
ther than the law of the courts. Construction
law addresses the complex legal relationships
between and among the multitude of parties
involved in a construction project owners,
architects, engineers, contractors, subcontrac-
tors, material suppliers and manufacturers,
sureties, insurers, code officials, lenders invoke
a multitude of legal relationships and concepts
to address legal rights and remedies arising out
of a common dispute. Types of legal relation-
ships include: (1) express and implied contrac-
tual relationships, (2) tort relationships in the
absence of contractual privity, (3) equitable
principles governing surety rights and obliga-
tions, (4) statutory rights and obligations cre-
ated by statues governing mechanics liens,
claims against surety bonds, sale of goods un-
der the Uniform Commercial Code, (5) public
duties created by building codes, licensing laws
and health and safety laws, and (6) specialized
damage concepts unique to construction, such
as the doctrines of substantial performance,
economic waste, betterment, and other ap-
proaches to damage measurement that recog-
nize constructions imperfect world. As one U.
S. Federal judge observed in 1974:
Construction contracts are a separate breed
of animal, and, even if not completely sui
generis still the law must be stated in princi-
ples reflecting underlying economic and in-
dustry realities. Therefore, it is not safe to
broadly generalize. True, general principles
of contract law are applied to construction
contracts, but they are applied under differ-
ent operative conditions. Care must be tak-
en, then, not to rely too uncritically on such
cases as those arising from the sale of real or
personal property. And even within the larg-
er rubric of construction contracts it is
manifest that the law, if sensitive to the un-
str. 7 |
 ANALISES & OPINIONS
derlying realities, will carefully discriminate
between, say a contract to construct a home
and a contract to construct a fifty-story of-
fice building this is, generally, what one finds
when he reviews the actual development of
the law.
A fourth reason favoring arbitration
over court litigation is that, because of con-
structions complexity and uniqueness, legal
proof of causation and quantification of damag-
es necessarily relies heavily upon opinion tes-
timony of experts a fact of life that can be
frustrating to judges inexpert in construction
and mesmerizing to jurors. Illustrative of this
fact of life is the advice offered by a federal
judge to the parties during a pre-trial confer-
ence:
Being trained in this field of construction,
you are in a far better position to adjust your
differences than those untrained in its relat-
ed fields. As an illustration, I who have no
training whatsoever in engineering, have to
determine whether or not the emergency
generator system proposed to be furnished
() met the specifications, when experts
couldnt agree. This is a strange bit of logic
(). The object of litigation is to do substan-
tial justice between the parties litigant, but
the parties litigant should realize that, in
most situations, they are by their particular
training better able to accomplish this
among themselves.
A fifth reason favoring arbitration is
that arbitration is amenable to maintaining
business and personal relationships, and has
been said to be well-suited to the task of blur-
ring the distinction between victor and van-
quished, so that the parties could continue their
relations within the business community.
A sixth reason favoring arbitration is
that local fact finders are known sometimes to
hold views reflecting local prejudices and bias-
es. Arbitration can place disputes beyond the
reach of such local biases and prejudices. This
str. 8 |
is a principal reason why international parties
choose arbitration rather than local courts as
the forum for resolution of their disputes.
It is no wonder, then, that for genera-
tions both the courts and the construction in-
dustry have perceived construction disputes to
be best suited to be settled by arbitrators or
mediators experienced in the construction pro-
cess and expert in the law of the shop as well
as the law of the courts. The U. S. construc-
tion industrys century-old historical prefer-
ence for arbitration goes back for well over 100
years. Beginning with the 1888 Uniform Con-
tract, which was the first national construction
contract negotiated between and co-sponsored
by the fledgling American Institute of Archi-
tects and the National Association of Builders
(predecessor of the Modern Associated General
Contractors of America), the American con-
struction industry mandated that disputes aris-
ing out of the building process should be re-
solved under legally enforceable non-judicial
dispute resolution processes employing ex-
perts and ADR methods offering fair and rapid
resolution of disputes. The Industrys early
ADR approach placed the design professional
as the professional peace keeper between the
owner and contractor with authority to make
final decisions on disputes between the own-
er and contractor involving the scope and in-
tent of the plans and specifications, and author-
ized either party to refer other disputes to a
panel of arbitrators appointed by the parties.
This arrangement worked so well that as late as
1967 a study of the legal profession in the Unit-
ed States and England concluded that, regard-
ing U.S. construction industry disputes, law-
yers and courts will probably remain relatively
unimportant to this sphere of conflict resolu-
tion.
Yet 40 years later in 2007, this time-
honored U. S. construction industry approach
to ADR was turned on its head. The 2007 edi-
tions of the standard industry forms of the
e-Przegld Arbitraowy nr 1(8) 2012 r.

American Institute of Architects (AIA) and the
ConcensusDocs jettisoned arbitration as the
mandated ADR method, and prescribed court
litigation as the dispute resolution default op-
tion. The AIA Documents also allowed the par-
ties to appoint their own initial decision mak-
er in lieu of the architect. The apparent pur-
pose of those changes was to force parties to do
their own early ADR planning upon pain of end-
ing up in court litigation. Thus, now for the first
time in over a century, the construction indus-
try and its lawyers are obliged to craft and
agree upon ADR methods if they wish to avoid
resolving disputes by court litigation. The fa-
vored industry objective now is Rapid Resolu-
tion - employing the right ADR method for the
particular dispute at an early time. The indus-
try has developed a number of non-binding
rapid resolution ADR methods that can be
tailored to the needs of each particular project
and dispute, such as structured negotiations,
project neutral, initial decision maker, expert
determination, dispute review board, media-
tion, adjudication, and non-binding mini-trial/
arbitration. The industry has demanded, and
the legal profession is beginning to prescribe
by contract, various ADR methods aimed at
utilizing specialized expertise, innovation, effi-
ciency and flexibility to rapidly resolve complex
construction disputes.
So what has caused this sea change in
construction ADR? Although each party has its
own list of horrible, a major cause of mount-
ing dissatisfaction with the arbitration process
arises out of long-standing tensions between
competing demands for economic efficiency
and for legal due process. Arbitration today is
viewed by many as having become
judicialized and as expensive as litigation, due
to over-lawyering, unlimited discovery, exten-
sive motion practice, liberal hearing due pro-
cess, inefficient arbitration administration,
and post-award disputes over confirmation.
Complaints also point to unsatisfactory arbitra-
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
tor selection procedures, where candidates are
limited to a small list submitted by a low-level
case manager for the ADR provider, and sug-
gest that arbitrators too often lack requisite
subject-matter and process expertise, fail to
control the process, and end up splitting the
baby. Complaints also suggest that arbitration
disrupts business relationships by encouraging
parties to accumulate disputes until the end of
the job for resolution in a single arbitration
proceeding, rather than resolving them
promptly and fairly as they arise.
Below is a list of eleven key initiatives
being used by parties and their counsel to en-
hance arbitrations efficiency and cost-
effectiveness of arbitration.
1. Planning for Conflict Management.
First, parties must expect to plan ahead if they
wish to avoid court litigation as the default op-
tion. Failure of parties to plan for and apply
business management principles to the resolu-
tion of business disputes has made arbitration
a scapegoat for lack of planning. Systematic
management of conflicts requires constant at-
tention to specific ADR methods most suitable
to resolution of particular disputes. The mes-
sage of the 2007 amendments to the AIA and
ConcensusDocs general conditions is that one
size of ADR does not fit all and those parties
need to plan for and include ADR methods suit-
able to specific contracts and particular dis-
putes. In many jurisdictions, counsel has a pro-
fessional obligation to advise clients about al-
ternatives to litigation that may be in the cli-
ents best interest. Thus, an affirmative agree-
ment to arbitrate, rather than consent by de-
fault, now is the required pre-condition to en-
gage in binding arbitration in the construction
industry.
2. Drafting a Good Arbitration Agree-
ment. A second initiative is to have parties (not
str. 9 |
 ANALISES & OPINIONS
just their lawyers) focus on business objectives
and on comparative balancing of economic effi-
ciency and legal due process. It is the parties
themselves who have the most to say about just
how efficiently the arbitration will be conduct-
ed, and how many arbitrators ought to hear the
matter. In crafting the arbitration clause and
governing rules, parties need to understand
that the cost-effectiveness of the arbitration
process is not furthered by prescribing discov-
ery rules mirroring litigation practice.
Drafting and agreeing upon arbitration
rules is crucial. This calls for the parties to craft
efficient rules, or at least review and tailor ADR
provider rules, that best promote cost-efficient
arbitration. For example, such rules can deline-
ate the scope of powers granted to the arbitra-
tors to decide issues and award types of relief
and damages; can impose limits on pre-hearing
discovery; can invoke time limits for pre-
hearing activities, for the hearing itself and for
rendition of the award; and, can limit relief to
particular remedies and damages. Effective
expert arbitrators willing to enforce such
agreed limitations typically will not allow ei-
ther party to impede case progress except for
extraordinary good cause normally concurred
with by the other party.
Even when both parties have agreed to
extend an established schedule, however, effec-
tive expert arbitrators usually seek the concur-
rence of the parties themselves rather than rely
solely on the requests of counsel for it is the
parties themselves who will suffer the econom-
ic consequences of a delayed award.
3. Selecting the Right Arbitration Rules.
A third initiative is to select the most appropri-
ate arbitration rules. Both complex case and
expedited case rules are available from ADR
providers. Although expedited rules are used
primarily for disputes involving limited issues
or smaller dollar amounts presented to a single
arbitrator, they offer good delineation of con-
str. 10 |
cepts for consideration in crafting an arbitra-
tion agreement to assure cost-effective and
timely resolution of disputes. JAMS, AAA and
CPR all offer rules governing both complex and
expedited (JAMS $250,000, AAA $75,000, CPR
no limit) arbitration, but they each are different
in certain respects.
4. Selecting Arbitrators With Requisite
Subject-matter and Arbitration Management
Expertise and Available Time. This fourth initi-
ative is perhaps the most crucial factor in as-
suring satisfaction with the arbitration process,
and that is selection of one or three respected
arbitrators with stellar expertise (1) in the sub-
ject-matter of the disputes and (2) in arbitra-
tion pre-hearing and hearing management, and
(3) with time to hear the case without extended
interruptions. All too often, parties end up with
arbitrators who lack expertise in one or both
areas of expertise or who simply do not have
the time to hear the arbitration without inter-
ruption.
Resolution of construction industry
disputes, for example, demand arbitrators with
expertise in construction practices and in con-
struction law critical to the complex factual
and legal issues, such as: (1) whether the own-
er or the contractor was the first to materially
breach the contract, (2) whether the contract
was properly terminated, (3) whether encoun-
tered soil conditions varied materially from
those represented in the contract documents,
(4) whether delay to the project critical path
was inexcusable, excusable, or compensable,
and so forth. These examples of disputed issues
of fact and law can best be resolved by arbitra-
tors who are expert in the subject matter.
But, subject matter expertise alone is
not enough. Arbitrator expertise in manage-
ment of the arbitration process also is essential,
because lack of proper control and timely re-
sponsive rulings leads inexorably to significant
delay and added cost.
e-Przegld Arbitraowy nr 1(8) 2012 r.

A major arbitrator selection problem is
inherent in the practice of some ADR providers
who submit lists of names of little-known arbi-
trators and, if parties fail to agree on arbitrator
selection from such lists, administratively ap-
point the arbitrators themselves. Requisite ex-
pertise and appropriate number of arbitrators,
usually either one or three, is crucial to such
selection decisions. To avoid problems in major
cases, parties usually compile their own lists of
arbitrators in disregard of ADR provider lists,
and typically agree either to appoint a single
arbitrator or agree each to appoint a neutral
arbitrator, with their two selected arbitrators
appointing the panel chair. In compiling such
lists themselves, parties look for the best arbi-
trators anywhere in the world without regard
to provider lists.
5. Requiring Detailed Statements of
Claim. A fifth initiative for promoting arbitra-
tion efficiency is requiring parties to present
detailed factual statements of claim rather than
brief notice pleading as allowed in common law
courts. This helps the parties prepare their
cases, and helps the arbitrators to focus on spe-
cific issues in dispute and consequent need for
discovery. Rule 9 of the JAMS expedited con-
struction rules, for example, provides that the
claim submission shall include the material
facts to be proved, legal authority relied on,
documents initially relied on, and names of all
witnesses and experts likely to testify at the
hearing. Similar specificity of pleading is re-
quired by most international arbitration rules.
6. Limiting Document and Deposition
Discovery to the Issues. A sixth initiative is lim-
iting document and deposition discovery to
critical issues and witnesses. Effective expert
arbitrators know how to control and cut
through broad, open-ended discovery requests
to focus on salient facts. Initially parties usually
are required to exchange classes of documents
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
(which may include some electronic docu-
ments) relevant to issues in dispute. Unless the
parties have agreed expressly to open-ended
deposition discovery in their arbitration
agreement, effective expert arbitrators normal-
ly exercise their inherent authority to limit
deposition discovery to key people and issues.
7. Allowing pre-Hearing Dispositive Mo-
tions. A seventh initiative is to encourage dis-
positive motions. Effective expert arbitrators
are much more willing than those less expert to
consider, when authorized, and grant where
appropriate, motions dispositive of all or part
of the case. All too often, arbitrators are unwill-
ing to grant dispositive motions out of fear that
courts may vacate an award.
8. Promoting Joinder of Parties. An
eighth initiative is to promote joinder of inter-
ested and related parties. One inhibition to use
of arbitration has been arbitration clauses that
limit joinder of relevant parties. Parties in civil
litigation have broad joinder rights, and the
same broad rights are finding their way into
arbitration by careful arbitration clause draft-
ing or by legal concepts of estoppel and vouch-
ing in.
9. Controlling the hearing. A ninth initi-
ative calls on the arbitrators themselves to ex-
ercise better control over the hearing. Effective
expert arbitrators work with the parties to re-
duce significantly the time required for hear-
ings by making effective use of (1) written wit-
ness statements for direct testimony, subject to
live witness cross-examination; (2) employing
a chess clock to maintain discipline in presen-
tation of the case within the confines to time
limits agreed upon; (3) reversal of admissibility
rules by allowing admissibility of offered doc-
umentary evidence, unless expressly objected
to; (4) joint examination of expert witnesses;
(5) not allowing delay or continuance without
str. 11 |
 ANALISES & OPINIONS

extraordinary just cause; and (6) providing to agree to a de novo review of the award, not
convenient break-out space for the parties, and by the courts, but by one or more expert appel-
refreshments and lunches so that parties do not late arbitrators. JAMS rules provide for such an
have to leave the premises. appellate review where the parties have so
agreed.
10. Requiring a Reasoned Award. A In conclusion, arbitration, when
tenth initiative is to require a reasoned award unjudicialized, is still preferred over litigation
in all cases, unless both parties agree other- because of the expertise that competent arbi-
wise. A reasoned award is essential to main- trators can bring to resolution of the dispute
taining confidence of the parties, without re- and to the efficiency of the proceedings. Win-
gard to the result, that the arbitrators have ston Churchills characterization of Democracy
carefully considered and decided all issues as the worst form of government, except for all
submitted. JAMS rules require a reasoned other forms, can also be said of arbitration.
award unless the parties agree otherwise: AAA ADR need not be an acronym for another day
rules are the reverse. To assure that no issue ruined rather than another dispute resolved.
submitted is overlooked, effective expert arbi- As my JAMS colleague Professor Tom
trators usually require the parties to submit at Stipanowich discusses in his article on Arbitra-
the close of the hearing final lists or score- tion The New Litigation, there are numerous
cards of the issues for decision. This cuts down ways that arbitration can be made more infor-
on later arguments that the arbitrators failed to mal and cost-efficient.
decide all submitted issues.
Philip L. Bruner*
11. Appealing the Award, and Scope of
Judicial Review. An eleventh initiative is to al-
leviate concern over the limited scope of judi-
cial review of an arbitration award by provid-
ing for appellate review of the award by a panel
of appellate arbitrators. For example, in the
United States, this initiative addresses the issue
decided by the U.S Supreme Court in Hall
Street Associates v. Mattel (2008), which ruled
that the statutory scope of judicial review un-
der the Federal Arbitration Act may not be al-
tered by agreement of the parties. Under some
state arbitration acts, however, courts follow-
ing the Supreme Court of California precedent * Philip L. Bruner: International Arbitrator and Mediator,
in the Cable Connection v. DirectTV (2008) may Fellow, Chartered Institute of Arbitrators, Director, Glob-
al Engineering & Construction Group, JAMS - The Resolu-
allow the parties to broaden by agreement the tion Experts!, London UK and New York NY,
statutory scope of judicial review to include pbruner@jamsinternational.com
everything from de novo review of errors of law
and findings of fact. Since virtually all major
construction projects involve interstate com-
merce, however, the Federal Act will preempt
contrary state law. The solution is for parties

str. 12 | e-Przegld Arbitraowy nr 1(8) 2012 r.

 ANALYSES & OPINIONS

Multiple Parties in the Construction Litigation and

Arbitration Proceedings Comparative Case Study
Dominik Gakowski, Kamil Zawicki, Olga Horwath

Dispute resolution in the case of construction contracts may prove to be a challenging and complex
process. When an investor enters into a construction contract with a general contractor, there are, as a
rule, several other parties involved in the process, such as: an architectural design studio and sub-
contractors. These parties are, as a rule, bound by several contracts. The existence of multiple parties
and multiple contracts is a key characteristic of the construction process. From the perspective of
disputes that might arise in connection with such contracts it is equally important that technologies
used in many construction projects can be described as a novelty and there are no common
standards for applying them. Also, faults in the buildings construction are often revealed after several
years and also under unusual, often extreme circumstances.

From the procedural perspective, both Fact Pattern

in the case of national courts and in arbitration,
the main risk that emerges from such a
complexity of arrangements is that multiple
parties are likely to commence multiple
litigations or arbitrations, which can eventually
lead to the existence of parallel proceedings
between the same parties or concerning
identical issues and, in consequence,
contradictory awards or rulings.
The existence of multiple parties in a
single arbitration or litigation raises both legal
and practical questions. In this article we would
like to address some of them, from the
perspective of Polish procedural laws as well as
from the perspective of arbitration. As it is our
intention to address the issues in a practical
manner, we would like to discuss an example of
such challenging multi-party and multi-
contract proceedings extracted from our
practice.
In our model case an investor decided to build
a hospital ward. Innovative architectural
solutions were proposed in the new buildings
design. The modern design resulted, however,
in the need to use a very advanced construction
technology, as the sloping roof was designed to
have a bend into the building. The design was
provided by a well-known architectural design
studio. Similarly, the construction works were
entrusted to a large, renowned, construction
company (general contractor). The sub-
contractor of the construction company, whose
task was to build the roof, was also a well
known, highly specialized company. After the
construction works were finished and the
hospital ward was open to the public, the roof
started leaking. As a result of heavy rainfall and
the resulting inundation, the hospitals
expensive medical equipment was damaged.
Three litigations followed the event,
which concerned: (i) a dispute between the
general contractor and the investor regarding
payment for the construction works, (ii) a dis-

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 13 |

 ANALISES & OPINIONS
pute between the investor and the architectural
design studio, and (iii) a dispute between the
main constructor and the sub-contractor. In the
first of the proceedings, the investor claimed
that the constructor carried out the works in-
correctly- inconsistently with the newest tech-
nology- which resulted in the leaks and de-
struction of the equipment. The construction
company claimed that the investor presented
the company with incorrect documentation and
also that the newest technology applied for
building the roof could not have been verified
by the company, as such a novelty was beyond
standard professional knowledge at the time.
There were three judgments hin this litigation
(the judgment that was unfavorable to the
construction company was quashed twice). A
court experts independent opinion indicated
that the fault was on the side of the
construction company, but the defects were
present both in the project and its completion.
According to the last decision in these
proceedings, the fault was divided equally
between the architectural design studio and the
contractor. Eventually, the dispute ended in a
settlement between the parties. In the second
litigation, the investor demanded
compensation from the architectural design
studio. The two independent opinions provided
by court experts indicated that the completion
of the project, but not the design itself, was
defective. In the third proceedings the sub-
contractor demanded payment from the
general contractor. an andependent expert
opinion was also delivered in this litigation. It
stated that it was the design of the building that
was defective and the construction company
was ordered to pay the sum indicated in the
contract. All these disputes were conducted in
the same Regional Court, as it had jurisdiction
over all participants; each of the proceedings,
however, was decided separately.
str. 14 |
Identification of the Legal Issues
It is apparent from the facts pattern described
above that the parties faced a paradoxical
situation, in which court experts opinions were
radically different and neither the parties, nor
the courts, undertook any steps in order to
consolidate proceedings. The above-mentioned
case can provide a good basis for further
consideration of how a national court in Poland
(or the parties) could have acted, as the
national provisions
of law generally allow for the consolidation of
the proceedings if similar claims are disputed.
The regulations of the Code of Civil Procedure
(CCP) will be the basis of the analysis regarding
the ordinary civil proceedings as well as the
separate norms concerning commercial
disputes. We will briefly relate to the new regu-
lations of the CCP which will be in force as of e
the 3rd of May 2012. The further part of this
article concerns the possibilities available to
the parties in the arbitration proceedings. The
practical question of the reasonableness of
appointing several different experts in
proceedings that share a common factual
background lies outside the scope of this
comparison. It is characteristic for construction
disputes involving a great number of
technological and construction issues that they
are in fact decided on the basis on court
experts opinions. The fact pattern described
above should just serve as a model provided for
a discussion of a more systematic nature.
Multiple Parties in Litigation before
National Courts
The Polish legislator introduced several
possibilities for parties to add new participants
to the proceedings in the capacity of a claimant
or respondent in the CCP. The CCP also
contains mechanisms that allow, at least in
theory, for the proceedings that are related to
one another to be harmonized. We will discuss
e-Przegld Arbitraowy nr 1(8) 2012 r.

them below, in light of the fact pattern
described above.
Joint Participation and Joinder (Citation)
In Article 72 of the CCP, the Polish legislator
regulated the institution of joint participation,
when more than one person is joined as
claimant or respondent (formal joint
participation and substantive joint
participation). However, the courts would not
be able to apply this institution in the above-
mentioned case, as the premises for joint
participation have not been fulfilled.
Consequently, also the regulations regarding a
facultative citation (Art. 194.3 of the CCP) or
court summons of a third party (Article 195 of
the CCP) would not be applicable, because the
possibility of using the institutions mentioned
above could be, theoretically, considered only
in a different setting of participants of the
litigations; for instance, if the investor acted in
the capacity of the claimant in all proceedings.
Even in such a configuration, it might be
difficult to prove that the rights and obligations
of all parties involved are common or share the
same factual or legal basis (material joint
participation), or were of the same kind, or
were based on the same factual or legal
grounds (formal joint participation).
In the case of a special procedural mode for
commercial cases (in which most construction
disputes would be decided), paradoxically, the
situation is even more unfavorable. According
to Article 4794 2 of the CCP, the changes to
the subjects taking part in the proceeding are
inadmissible. It must be noted, however, that
the commercial mode was abolished by the
legislator and new provisions will be in force as
of 3 May 2012.
Counter-claim according to Article 204 of
the CCP
The institution of the counter-claim, regulated
in Article 204 of the CCP, would not be helpful
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
either, because in the above-mentioned case,
neither of the participants acted parallel in
different procedural capacities (as a claimant
or respondent) in different proceedings. A
further analysis of such a possibility would be
groundless. In the commercial mode, a counter-
claim would not be admissible (Article 47914.3
of the CCP).
Technical Consolidation of the Proceedings
The consolidation of the proceedings does not
create a separate case, but is a technical,
procedural device used by the courts in order
to increase economic efficiency of the trial. The
judgment made by the court in a consolidated
case contains decisions regarding each of the
joined proceedings separately1. The most
important advantage of consolidation is that it
allows contradicting judgments and the
multiplication of the procedural activities of the
same kind (for example testimonies of the same
witnesses, courts experts opinions) to be
avoided. According to Article 219 of the CCP
separate cases can be consolidated if: (i) the
cases are related to one another (or could fall
within the scope of one lawsuit), (ii) the cases
belong to the same procedural mode, (iii) the
cases are decided before the same court. Let us
presume that the both latter premises are
fulfilled in order to concentrate on the relation
between the cases. According to legal scholars,
such a relation should be understood similarly
to Article 204 of the CCP, which here means
that the claims have to result from the same
legal relationship or have the same factual
basis2. Ascan be seen, the consolidation of cases
is not always a simple matter. The reasoning
behind the procedural obstacles is to prevent
consolidation from being used as a tool to delay
the proceedings. In the analyzed fact pattern,
1 A. Zieliski, Kodeks postpowania cywilnego.
Komentarz do artykuw 150514. Tom I, Warszawa
2005, p. 619.
2 P. Telenga [in:] A. Jakubecki, Kodeks postpowania
cywilnego. Komentarz, Warszawa 2010, p. 293.
str. 15 |
 ANALISES & OPINIONS
such action on the part of the court or the par-
ties would be, in our opinion, the most ade-
quate. The final decision, whether to
consolidate the cases lies within the
prerogatives of the court as such a decision
cannot be challenged by the parties.
Main Intervention
The main intervention is regulated in Article 75
of the CCP as a specific type of a lawsuit. It
helps to increase uniformity in a dispute
between several parties as it provides a
possibility to uniformly decide in one
proceeding to whom a right or a thing belongs
(i.e. if it belongs to one of the parties of the
proceedings or to the intervener).
Consolidation of cases commenced by
the interveners suit with the main proceedings
can also be an aditional result of bringing the
main intervention(Article 219 of the CCP).
Another possibility is that the court will
suspend the proceedings of the main case until
a binding judgment is issued in the main
intervention case (Article 177 1 S.2 of the
CCP).
It is apparent that this institution -
although useful in practice - would not be
applicable in the case described at the
beginning of this article, as the distribution of
claims between the participant does not allow
any of them to file a lawsuit based on the
institution of the main intervention.
Accessory Intervention
According to Article 76 of the CCP, the subject
who has a legal interest in deciding the case in
favor of any of the parties taking part in the
proceedings can join the proceedings. This
general clause of the CCP is supplemented by
Article 81 of the CCP, which regulates
independent intervention when it is apparent
from the nature of the case or stipulated by law
that the judgment will have a direct result
between the intervener and the other party to
str. 16 |
the proceedings. In such a case the provisions
of Article 73 2 of the CCP, which stipulates
that the procedural actions of joint participants
are valid also for joint participants who chose
not to take part in the proceedings or not to
undertake this procedural action. Accessory
intervention in both of these forms can and
should be broadly applied in the proceedings in
order to achieve the efficiency of the trial, not
only as the judgment would have a res iudicata
effect to the independent intervener but also
due to the limitation of the intervener to claim
that the procedural actions were faulty in
regards to the party that joined the proceeding.
(Article 82 of the CCP).
There is a question, whether in the
configuration of entities involved in the facts
pattern, a legal interest exists that would allow
for accessory intervention or whether it is only
a factual interest? According to scholars, a legal
interest exists in the case of an ordinary
accessory intervener when there is a legal
relationship of such a kind between him and
the party to the proceedings to which he
accedes that (based on the legal provisions of
substantive law) the judgment that will be
made in the proceedings can have
a positive or negative impact on the legal
sphere of the intervener. However, the legal
interest of an independent intervener exists
when the intervener is a party to the legal
relationship that is the subject-matter of the
proceedings and he remains in such legal
relationship with the party to the proceedings
to which he accedes that the judgment made
those proceedings can have a positive or
negative impact on the legal sphere of the
intervener.
As the above shows, an evaluation and a
decision as to whether the legal interest exists
can be complicated.
e-Przegld Arbitraowy nr 1(8) 2012 r.

Third-Party Notice
The third-party notice, regulated in Article 84
of the CCP, is an institution that allows the
subject that could be bear regressive liability
against one of the party of the proceedings to
be informed about the pending proceedings.
The third-party notice allows a time period, in
which such a person is to join the proceedings
in the capacity of an intervener. It also entails
the limitation of the possibility of the interven-
er to claim that the party to which he acceded
caused failures in the conduct of the proceed-
ings that had a negative impact on the third
party (Article 82 of the CCP) .
Suspension of the Proceedings
Article 177 S.1 point 1 of the CCP also foresees
the possibility of the facultative suspension of
proceedings ex officio (such a decision may be
inspired by a motion of a party) if the adjudica-
tion of the case depends on the result of other
pending civil proceedings (suspension for pre-
judicial considerations). Pursuant to Article
178 of the CCP, the Court can suspend proceed-
ings at the agreed request of the parties (such a
possibility, which is rather peculiar, does not
regard proceedings in commercial cases - Arti-
cle 4794 3 of the CCP.
The finding that the case is of a prejudicial na-
ture for another case, resulting in the possibil-
ity of suspension of the latter, is not arbitrary.
In the legal doctrine, it is accepted that we are
dealing with prejudiciality when the subject of
prejudicial proceedings constitutes an element
of the factual bases of the adjudication in the
other of the cases. In other words, when the
adjudication of a given case is not possible
without prior adjudication of the prejudicial
issues, adjudicated in a different case.
Conclusion
The Polish Code of Civil Procedure does not
provide for a tailored regulation which would
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
provide a construction allowing for making a
decision in all of the above-mentioned claims in
only one proceeding that would result in one
decision concerning all the participants. This
results from the high degree of formalism in the
civil procedure applied in national courts. Such
a situation prevents the courts from
unconstrained action only procedural actions
provided for in the CCP are allowed.
Multiple Parties in Arbitration Proceedings
As a general rule, as far as arbitration is
concerned, the parties are not supposed to call
further parties to the proceedings, unless the
arbitration clause specifically binds all of the
participants. Arbitration is based on the
consent of all parties and is characterized by a
high level of confidentiality3. The prevailing
view is that a multi-party arbitration is not
possible unless all the relevant parties have
consented to arbitration4. Parties may oppose
an intervention5 or a joinder6 of another party,
because such a solution could expose sensitive
commercial information. Introducing other
participants to the arbitration proceedings
without the previous consent of the other
parties may be judged as an infringement of
their individual rights, especially with regard to
to due process7. Another problematic issue
involves the appointment of arbitrators, in a
3 See also A. Redfern, M. Luther, N. Blackaby, C.
Partasides, Law and Practice of International
Arbitration, London 2004, p. 200; Gary B. Born,
International Commercial Arbitration, Kluwer Law
International 2009, p. 2071.
4 B. Hanotiau, Complex Arbitrations, Multiparty,
Multicontract, Multi-issue and Class Actions, Kluwer
Law International 2005, p. 165.
Under the intervention the situation should be
understood as a party, which is not a contracting
party, may wish to intervene with the proceedings.
6 When a contracting party acting as a respondent
wishes to join another contracting
party which has not been named as the respondent in
the proceedings.
See also: C. Yannaca-Small Consolidation of Claims: A
Promising Avenue for Investment Arbitration [in:]
International Investment Perspective, p. 237; D. St. J.
Sutton, J. Gill, M. Gearing, Russel on Arbitration,
London 2007, p. 108.
str. 17 |
 ANALISES & OPINIONS
situation where there arew no previously
agreed rules8. If all the parties agreed on an
arbitration court, it is difficult to commence a
multi-party arbitration when there is no
agreement addressing the consolidation of the
proceedings. On the other hand, the
consolidation of the proceedings can be
beneficial with respect to the efficiency of the
arbitration process and may help prevent the
risk of having several conflicting arbitration
awards9.
Can Arbitration Provide Equally or More
Effective Solutions?
The situation is slightly different when parties
decide to select institutional arbitration
because then the relevant provisions of the
arbitration rules of a given institution can
provide a solution. Various arbitration
institutions adopt different approaches to the
problem of intervention and the issuance of a
joinder. Some of the regulations of arbitration
courts do not foresee such a possibility at all.
Therefore, it is essential for the parties drafting
a contract to inspect the regulations of the
institutions taken into consideration.
The Rules of the International Court of
Arbitration at the International Chamber of
Commerce (ICC), effective as of 1 January 2012
, determine that a party wishing to join an
additional party in an arbitration shall submit
its request for arbitration against the additional
party (Request for Joinder) to the Secretariat.
The specific requirements for the Request of
Joinder are stipulated in Article 7.2 and 7.3 of
8 Gary B. Born, International Commercial Arbitration,
Kluwer Law International 2009, p. 2071.
9 See also A. Redfern, M. Luther, N. Blackaby, C.
Partasides, Law and Practice of International
Arbitration, London 2004, p. 200; D. St. J. Sutton, J. Gill,
M. Gearing, Russel on Arbitration, London 2007, p.
108; Gary B. Born, International Commercial
Arbitration, Kluwer Law International 2009, p. 2069
2070.
str. 18 |
the ICC Arbitration Rules10. The date on which
the request is received will count as the date of
commencement of the arbitration against the
additional party. No additional party may join
after the confirmation or appointment of any
arbitrator, unless all parties, including the
additional party, agree otherwise. The
Secretariat may set a deadline for filing the
Request for Joinder. The additional party to the
proceedings may submit an answer in
accordance with the provisions of Articles 5.1.
5.4. If an arbitration has multiple participants,
claims may be made by any party against any
other party, but no other claims are made after
the Terms of Reference are signed or approved
by the Court without the authorization of the
arbitral tribunal (Article 8). Claims arising from
or in connection with more than one contract
may be made in a single arbitration,
irrespective of whether such claims are made
under one or more than one arbitration
agreement under the ICC Arbitration Rules
(Article 9). The Court has a prerogative to
consolidate two or more arbitrations pending
under the ICC Arbitration Rules, into a single
arbitration proceeding if, alternatively: the
parties agree to consolidation, or all of the
claims in the arbitrations are made under the
same arbitration agreement, or the claims in
the arbitration are made under more than one
arbitration agreement, the arbitrations are
between the same parties, the disputes arise in
connection with the same legal relationship,
and the Court finds the arbitration agreements
to be compatible. When making the decision on
consolidation, the Arbitration Court can take
into account any circumstances which it finds
relevant (Article 10 of the ICC Arbitration
Rules).
According to Article 15 of the
Arbitration Rules of the Vienna International
10
http://www.iccwbo.org/uploadedFiles/Court/Arbitra
tion/other/rules_arb_english.pdf.
e-Przegld Arbitraowy nr 1(8) 2012 r.

Arbitral Centre (2006)11, the claim will be
considered admissible only if three premises
are jointly fulfilled: (i) the Centre has
jurisdiction over all Respondents, (ii) all
Claimants have nominated the same arbitrator
and also (iii) one of the following must
alternatively occur: (a) the applicable law
positively provides that the claim is to be
directed against several persons, (b) all
Respondents are, by applicable law, in legal
accord or are bound by the same facts or are
joint and severally bound, (c) the admissibility
or multi-party proceedings have been agreed
upon, (d) all Respondents submit to multiparty
proceedings and, in the case of proceedings
before an arbitral tribunal, all Respondents
nominate the same arbitrator, (e) one or more
of the Respondents on whom the claim was
served fails or fail to provide the particulars
according to Article 10.2.b and c of the VIAC
Arbitration Rules (Article 15.1.). In the event
the multi-party proceedings are admissible, the
Respondents need to agree upon the number
and the person of the arbitrator; if they fail to
reach agreement, the Secretary General will
make a decision for them. In the event the claim
cannot be served on all Respondents, the
Claimant may apply to continue the
proceedings against those Respondents on
which the claim could be served, whereas the
proceedings against the remaining
Respondents may be subject to separate
proceedings. In cases other than those
stipulated in Article 15.1 of the Arbitration
Rules, the consolidation of multiple disputes
may be admissible only if the same arbitrator
or arbitrators have been appointed in all these
disputes which are to be consolidated and upon
the consent of all parties, as well as the
arbitrator(s).
11 See also: http://internationales-
schiedsgericht.at/images/stories/documents/en/VIA
C_Arbitration_Rules_2006_1.pdf.
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
The Arbitration Rules of the London
Court of International Arbitration contain a
similar, but less comprehensive provisions12.
Its Article 8 provides that where the
Arbitration Agreement entitles each party
howsoever to nominate an arbitrator, the
parties to the dispute number more than two
and such parties have not all agreed in writing
that the disputant parties represent two
separate sides for the formation of the Arbitral
Tribunal as Claimant and Respondent
respectively, LCIA Court will appoint the
Arbitral Tribunal without regard to any partys
nomination. The arbitration clause will then be
read for all purposes as incorporating a written
agreement by the parties for the appointment
of the Arbitral Tribunal by the LCIA Court.
The arbitration rules of the Japan
Commercial Arbitration Association also give
the power to consolidate multiple requests for
arbitration, in the event the claims are
essentially and mutually related, to the
tribunal13. The request of the parties must
result from the same arbitration agreement,
and not from the consent of the parties
subsequent to the commencement of the
proceedings.
The UNCITRAL Arbitration Rules14, as
revised in 2010, provide for a specification of
the mode of appointing an arbitrator, in the
event there are multiple parties as claimants or
respondents (Article 10). Unless the parties
agreed on another method, the multiple parties
acting as the claimant or as a respondent must
jointly select an arbitrator.
Also, the Polish Court of Arbitration at
the Polish Confederation of Private Employers
12 See:
http://www.lcia.org/Dispute_Resolution_Services/LCIA_Arbitr
ation_Rules.aspx.
13 See:
http://www.jcaa.or.jp/e/arbitration/docs/e_shouji.pdf.
14 See:
http://www.uncitral.org/pdf/english/texts/arbitration/arb-
rules-revised/pre-arb-rules-
revised.pdf.
str. 19 |
 ANALISES & OPINIONS
Lewiatan15 embraces respective regulations. In
its newest Arbitration Rules provisions
concerning multiple parties were added16.
According to Article 7 of the Arbitration Rules,
if multiple parties act as Claimant or
Respondent and the issue is litigated before
three arbitrators, these multiple parties have to
agree on the person of the arbitrator (if not, the
Nomination Committee will make the
appointment). In the case of one arbitrator, all
parties must agree on such person, failing
which the Nomination Committee will appoint
the arbitrator, according to Article 6.4 of the
Arbitration Rules.
Conclusion
The approach presented in the arbitration is
more flexible. Therefore, in complicated
construction disputes this mode of dispute
resolution should be preferrable, especially
when certain measures at the contract drafting
stage are undertaken (see below).
Recommendations
There are several methods for preventing
parallel proceedings arising from the contracts
concluded in connection with the construction
process. As long as there is consent between
the parties, even after the dispute arises, a
range of solutions is at hand (such as the
appointment of the same arbitrator or a
consensual intervention, joinder or
consolidation of the proceedings). However,
the most effective method for preventing the
risks of multiple proceedings is to draft an
arbitration clause (or a stand-alone dispute
resolution protocol) that would address the
problem of multiple parties, as well as multiple
contracts17.
15 See:
http://www.sadarbitrazowy.org.pl/en/homepage.
16 The Regulation is available at:
http://www.sadarbitrazowy.org.pl/upload/Regulami
n1marca2012.pdf.
17 See D. St. J. Sutton, J. Gill, M. Gearing, Russel on
Arbitration, London 2007, p. 108109.
str. 20 |
From the perspective of the issue of
multiple contracts, it is crucial to ensure that
the same arbitration clause is incorporated into
all project-related contracts. The consent of all
parties is the key element of a joinder or
intervention or consolidation in arbitration
proceedings. It is also crucial that the
arbitration clause provides for the same
approach to the place of arbitration, language,
substantive law, the jurisdiction of the
appointed tribunal, as well as the person of the
arbitrator or the arbitration institution. The
parties may also address the question of
consolidation, as a preventive measure, if
parallel proceedingsoccur.
As far as multiple parties are concerned,
the clause should at least contain an agreement
on: (i) the arbitration clause that refers to any
dispute arising from the construction contract
and related contracts, (ii) a joinder as an
additional party to any proceedings
commenced in connection to the arbitration
clause, (iii) allow for the intervention of
another party to the arbitration commenced
under the arbitration clause.
One can also consider a general clause
which binds the parties to undertake pro-
arbitration steps, in the event of conflicting
positions or doubts.
Additionally, the clause should include
the method for the selection of an arbitrator by
multiple parties, unless the parties decided to
chose an institution and surrender to its
regulations, in which specific rules are
provided. Also, the parties should specify that a
notice of any proceedings commenced under
the clause would be given to each contracting
The recommendations for drafting arbitration clauses
for the multi-party arbitration as well as the
multi-contract arbitration can be found in the IBA
Guidelines for Drafting International Arbitration
which also provide the wording of an arbitration
clause. Compare respectively paragraphs 97105 and
106113 at:
http://www.ibanet.org/Publications/publications_IB
A_guides_and_free_materials.aspx#drafting.
e-Przegld Arbitraowy nr 1(8) 2012 r.
 ANALISES & OPINIONS

party regardless of whether it is named as

respondent or not (the time limit for applying
for intervention following receipt of a notice of
arbitration should be specified, as well as the
prohibition on the appointment of an arbitrator
before the lapse thereof).

Dominik Gakowski*
Kamil Zawicki
Olga Horwath

*
Dominik Gakowski: attorney at law, KKG Partner
Kamil Zawicki: attorney at law, KKG Partner
Olga Horwath: LLM, associate

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 21 |

 ANALYSES & OPINIONS

Effectiveness of contractual time-bars in Fidic contract

under Polish Law

Agnieszka Lizer-Klatka, PhD

The FIDIC Conditions of Contract (1999 edition) both for Plant and Design-Build (the so-called Yellow
Book) as well as for Construction (the so-called Red Book) include several provisions imposing an
obligation, both on the Contractor and on the Employer, to notify diverse circumstances or claims re-
garding the performed and contracted Works. Simultaneously, consequences of infringement of the
notification obligations have been regulated diversely, depending on the entity obliged to make
a notification and depending on the type of a given obligation.

In the FIDIC Conditions of Contract, the
obligations of the Employer regarding the pe-
riod within which he is obliged to raise claims
have been defined relatively simply. In pursu-
ance of the Sub-clause 2.5 of both said versions
of the Conditions of Contract if the Employer
considers himself to be entitled to any payment
under any clause of the Contract or otherwise
in connection with the Contract, as a rule, he
should notify the Contractor about his claims as
soon as practicable after the Employer became
aware of the event or circumstances giving rise
to the claim. Infringement of this obligation
does not entail any sanction in the FIDIC Condi-
tions of Contract .
A different regulation is stipulated for
the claims raised by the Contractor. In line with
the Sub-clause 20.1 of both versions of the
FIDIC Conditions of Contract as regards
claims for the so-called extension of time for
completion and claims for any additional pay-
ment, under any Clause of the Conditions of
Contract or otherwise in connection with the
Contract, the Contractor shall give notice to the
Engineer, describing the event or circumstance
giving rise to the claim as soon as practicable,
not later than 28 days after the Contractor be-
came aware, or should have become aware, of
the event or circumstances. Should the Contrac-
tor fail to give notice of a claim within the said
28-day period, he would lose his entitlement to
a given claim, and simultaneously, the Em-
ployer would be discharged from all liability in
connection with the claim. As regards other
time-limits for claims and notices provided in
the FIDIC Conditions of Contract, the FIDIC
Conditions of Contract do not stipulate any
sanctions for failure to meet various specified
time limits for notification in the form of loss of
a given claim.
The sanction in the form of a loss of right
to assert a claim is also provided for in Sub-
clause 14.14 of both versions of FIDIC Condi-
tions of Contract. In compliance with this Sub-
clause, the Contractor loses its right to raise
any financial claims from the Employer under
or in connection with the Contract or execution
of the Works, if the claim is not disclosed in the
so-called Statement of Completion (in line with
the Sub-clause 14.10) and in the Final State-
ment (in line with Sub-clause 14.12), unless the
Employer committed a fraud, is in deliberate

str. 22 | e-Przegld Arbitraowy nr 1(8) 2012 r.


default as regards any contractual obligation or
in case of the Employers reckless misconduct.
Special regulation regarding the time-
bars for raising claims of any kind both by the
Employer and by the Contractor is to be found
in Sub-clause 20.4 of both versions of the FIDIC
Conditions of Contract. The provision refers to
the possibility of appealing against decisions
awarded by the Dispute Board and introduces
a 28-day time limit, which starts on the day
when such a decision is received, for giving
a Notice of Dissatisfaction by any of the Parties
dissatisfied with the contents of the settlement.
After the lapse of the time limit, the dissatisfied
Party forfeits the right to bring the claim for a
settlement by an arbitration court in line with
the Sub-clause 20.6, and the DBs decision be-
comes final and binding on the Parties.
In accordance with the above stipula-
tions of the FIDIC Conditions of Contract, fail-
ure to meet certain time limits for exercising
specified activities results in the expiration of
a given right. Such a contractual legal construc-
tion that conditions existence of a given claim
on exercising certain acts of due care (lodging
a notification, filing a claim within the time
limit) may be differently classified under legal
norms of the law applicable to the Contract.
In the Anglo-Saxon legal system, the so-
lution adopted in Sub-clause 20.1 of the FIDIC
Conditions of Contract whose essence is to
condition the possibility of asserting certain
claims by the Contractor on its fulfilling the
obligation to notify circumstances or events
resulting in a claim for extension of time or any
additional payment is treated as setting
a condition precedent1. In line with the formula
assumed in the case Bremer Handelsgesell-
schaft mbH v Vanden Avenne Izegem nv
1 J. Glover, S. Hughes: Understanding the new FIDIC red book, A
clause-by-clause commentary, London 2006, p. 378; J. Glover:
FIDIC an overview: the latest developments, comparisons,
claims and a look into the future, www.fenwickelliott.co.uk,
2008, p. 14; N. Gould: Making claims for time and money,
www.fenwickelliott.co.uk, s.17, p. 3.
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
(1978)2, the effectiveness of setting the condi-
tion of making claims by one of the parties to
the contract depends on two premises:
a contractual clause must specify precisely the
time limit for notification, and moreover, it
should make an express reservation that after
the time limit a given right expires. Such an in-
terpretation of Sub-clause 20.1 of the FIDIC
Conditions of Contract, that a condition prece-
dent is set which extinguishes the Contractors
claims if the notification obligation is not met
has been also assumed by the authors of the
FIDIC Conditions of Contract in the 1999 ver-
sion3.
Although, initially the admissibility and
effectiveness of the solution adopted in Sub-
clause 20.1 regarding the Contractors claims
gave rise to doubts in English law, at present
this issue is not so disputable. The possibility of
contractual stipulation of time bars to notify
the claims upon pain of losing them has been
finally confirmed in the ruling given in Multi-
plex Construction v Honeywell Control Systems
[2007]4 and in the ruling in Streia Ltd v Sigma
Wireless Communications Ltd [2008]5. At pre-
sent, only the problem of executing the condi-
tion precedent in specific circumstances of the
case is disputable, especially the problem of
loss of the Contractors claims due to reasons
attributable to the Employer, or resulting from
faulty action or negligence attributable to the
Employer. Some authors allow in these specific
circumstances the possibility of challenging the
effectiveness of contractual stipulations being
in the nature of a condition precedent6.
2 2 Lloyds Rep. 113, O(HL) per Lord Salon
3 Seppala: Contractors claims under the FIDIC Contracts for
Major Works, p. 17; see also: H. Lal: The rise and rise of time-
bar clauses, Management, Procurement and Law, z. 160, p. 26.
4 EWHC 447 (TTC); quotation of J. Glover: FIDIC an overview,
p. 98 s. 16;
5 CILL 2544 per HHJ Davies QC; quotation of J. Glover: FIDIC an
overview, p. 100, s. 16;
6 H. Lal: The rise and rise of time-bar clauses s. 28; por. te J.
Glover: FIDIC an overview, p. 110-112, s. 18;
str. 23 |
 ANALISES & OPINIONS
Under Polish law, classification of con-
tractual clauses setting time limits for the exe-
cution of specified acts of due care upon pain of
losing a given right or claim by the entitled
party may give rise to doubts. Most notably,
classifying the contractual constructions of that
type as setting a condition precedent seems
groundless.
In the Polish academic literature, A.
Wolter advocates the admissibility of introduc-
ing contractual time-bars for the execution of
specified acts of due care (notifica-
tions)upon pain of losing a given right. He is of
the opinion that introduction of the time-bars
for complaints (that is the time-bars for notifi-
cation about a claim) does not denote the set-
ting of a preclusive time limit for making
claims, but it conditions the retention of the
right on the performance of a specified act. He
claims that the parties that are permitted by
the statute to make the consequences of the
entire legal transaction conditional, may set
a contractual condition for the occurrence or
termination of certain rights resulting from the
legal relationship under the contract7. So far,
this is the only opinion in the Polish academic
literature that enables contractual clauses of
that type being classified as a condition prece-
dent.
It seems that at present classifying the
clauses that introduce contractual time-bars for
complaints upon pain of losing the entitlement
or claims as setting the condition precedent is
groundless. In line with the dominant opinion
in the jurisprudence of the Supreme Court, in
pursuance of Article 89 of the Civil Code,
a condition cannot constitute an event, covered
with the debtors obligation, the fulfilment of
7 A. Wolter: Glosa do wyroku Sdu Najwyszego z dnia
1.07.1958 r. I CR 683/57/Gloss to the decision of the Supreme
Court from 1 July 1958 ref. no. I CR 683/57/, OSPIKA 1960, item
187, p. 420; cf. also J. Ignatowicz [in:] System prawa cywilnego
Tom I, Cz oglna pod red. S. Grzybowskiego /Civil law sys- Z. Radwaski [in:] System prawa prywatnego. Tom 2, Prawo
tem, volume I, General Part, ed. by S. Grzybowski, 1985, p. 847,
footnote 224.
str. 24 |
which depends entirely on his will (the so-
called inadmissible protestative condition)8.
Undoubtedly, the notification by the Contractor
is an event that depends entirely on its will.
Without embarking on a polemic about the
stand assumed, in principle, in jurisprudence,
though its correctness gives rise to doctrinal
disputes and is also an object of divergent
judgements of the Supreme Court9, it may be
assumed for the present that both the admissi-
bility and assessment of the effectiveness of
contractual clauses introducing time-bars for
performing acts of due care which make the
retention of the right conditional should not
be assessed under the regulations of the Civil
Code regarding the condition.
The Polish academic literature also ex-
pressed the quite superficial opinion that the
contractual time-bars for complaints provided
for in the Sub-clause 20.1 are de facto contrac-
tual time limits to sue similar in their construc-
tion to the statute of limitations. In the opinion
of some authors, preventing the Contractor
from making claims under the Contract due to
the lapse of time limits for notification is
equivalent in its function to the regulations on
the statute of limitations. Based thereon, the
opinion was expressed that setting a time limit
of that type is either expressly contrary to the
contents of Article 119 of the Civil Code which
forbids the shortening of the limitations period,
or is aimed at evading the regulations regard-
ing the statute of limitations, and as such is
8 See, for instance, the ruling of the Supreme Court of
5 June 2002, II CKN 701/00, OSP 2003, no. 10, item 124; the
ruling of the Supreme Court of 11 October 2002, I CKN
1044/00, Lex no. 75270; the ruling of the Supreme Court of
24 April 2005, V CK 799/04, Lex no. 152457; the judgement of
the Supreme Court of 23 February 2011, V CSK 277/10, Lex no.
786398.
9 See, for instance, the ruling of the Supreme Court of
27 June 1995, I CR 7/95, OSNC 1995/12/183; the ruling of the
Supreme Court of 8 March 2002, III CKN 748/00, OSNC
2003/3/33; the ruling of the Supreme Court of 29 April 2009, II
CSK 614/08, OSNC 2010/2/32 and the ruling of the Supreme
Court of 31 March 2005, V CK 490/04, Lex no. 277115; cf. also
cywilne cz oglna, Warszawa 2002 /Private law system.
Volume 2, Civil law general part, Warsaw 2002/, p. 276;
e-Przegld Arbitraowy nr 1(8) 2012 r.

subject to the sanction of invalidity based on
Article 58(1) of the Civil Code10.
Statutory time limits for the perform-
ance of acts of due care, inclusive of notifica-
tions in order to retain the right, are not con-
sidered under Polish law the time-bars for the
statute of limitations. In principle, the legal na-
ture of the so-called statutory time-bars for
complaints gives rise to no doubt. It is com-
monly assumed that the time limits for com-
plaints, including but not limited to, the ones
resulting from Article 563(1) of the Civil Code,
are a kind of non-judicial time bars and thus
they do not constitute time limits for asserting
claims11. Some authors draw attention to the
fact that the time-bars for complaints are pre-
liminary towards actions for which the statute
provides for the judicial time bars or the time
limit for the statute of limitations12. Time bars
of that type differ significantly from the time
10 J. Kosiski: FIDIC a polskie prawo /FIDIC and Polish law/,
Biuletyn Informacyjny Konsultant 2009, no. 14, p. 9; cf. also T.
Latawiec: FIDIC a polskie regulacje prawne. Czy stosowanie
warunkw kontraktowych FIDIC przeszkadza w sprawnej
realizacji kontraktw /FIDIC and Polish legal regulations. Does
the application of the FIDIC Conditions of Contract hinders the
efficient execution of contracts?/, Biuletyn Informacyjny Kon-
sultant no. 12/2009, p. 10. such a standpoint may be substan-
tiated taking into account the judgement of the Supreme Court
dated 18 February 2011, I CSK 358/10, Bulletin of the Supreme
Court from 2011, np. 6, item 10 in line with which contractual
stipulations forbidding, also indirectly, waiving the charge of
the statute of limitations are not legally admissible as being
contrary to Article 117 (2) of the Civil Code.
11 B. Kordasiewicz [in:] System prawa prywatnego. Prawo cy-
wilne cz oglna, t.2, Warszawa 2002/Private law system.
Civil law general part, volume 2, Warsaw 2002/, p. 628; J.
Ignatowicz [in:] System prawa cywilnego /Civil law system /,
p. 841; S. Rudnicki [in:] Komentarz do kodeksu cywilnego.
Ksiga pierwsza. Czc oglna, Warszawa 2009 /Commentary
to the civil code. The first book. General part, Warsaw 2009/, p.
495; S. Wjcik: Z problematyki przedawnienia i terminw zawi-
tych w prawie cywilnym /Selected problems related to statute of
limitations and final dates in civil law/ [in:] Studia z prawa
cywilnego i gospodarczego. Ksiga pamitkowa dedykowana
profesor Czesawie uawskiej, Krakw 2000 /Studies in civil
and business law. Commemorative book dedicated to Prof.
Czesawa uawska, Krakow 2000/, p. 59; T. Zieliski:
Przedawnienie i terminy zawite na tle ustawy z dnia 17 lutego
1961 r. o spdzielniach i ich zwizkach, Studia Cywilistyczne, t.
XIX, Warszawa-Krakw 1971 /Statute of limitations and final
dates based on the Act of 17 February 1961 pertaining to co-
operatives and their associations, Civil law studies, volume XIX,
Warsaw-Krakow 1971/, p. 37; see also a resolution of the Su-
preme Court 7s dated 19 May 1969, III CZP 5/68.
12 B. Kordasiewicz: System prawa prywatnego, s. 631;
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
limit for the statute of limitations and from the
judicial time bars for making claims and, as
a rule, no solutions of relevance to the time
limit for the statute of limitations are applied
even by analogy to the regulations regarding
complaint related proceedings. The above in-
cludes, but is not limited to, the regulations
regarding suspension or discontinuance of the
running of the limitations period. Thus, there
are no grounds to compare the stipulations of
Sub-clause 20.1 of the FIDIC Conditions of Con-
tract directly to the regulations of the Civil
Code governing the institution of the statute of
limitations. Such a broadly understood analogy
is groundless as the time bars for notification
stipulated by the FIDIC Conditions of Contract
do not refer to the actions to be taken before
the court.
It seems that the time bars provided for
in Sub-clause 20.1 of the FIDIC Conditions of
Contract most resemble, as regards their con-
struction, the statutory time bars for com-
plaints one of the statutory time bars. The
Ineffective lapse of the time limit for a specific
notification results in the loss of entitlement.
The contractual clauses that stipulate the con-
sequence of the loss of entitlement should one
of the parties fail to fulfil its obligation within
the time limit provided for in the contract may
be classified as the so-called contractual time
bar, or the so-called purely contractual time
bars. Article 353(1) of the Civil Code might be
the only normative basis for the admissibility of
the clauses of that type. 13
The concept of the so-called contractual
time bars is not completely new in the Polish
academic literature. The classification of con-
tractual clauses of that type and an appraisal of
13 B. Kordasiewicz: System prawa prywatnego /Private law
system/, p. 650-652; A.Stangret-Smoczyska: Umowne termi-
ny zawite /Contractual final dates/, Przegld Sadowy 2011
/Court Review 2011/, no. 1, p. 57; see also M. Jamka, A. Bar-
czewski: Arbitra w sprawach budowlanych wybrane pro-
blemy praktyczne /Arbitration in building cases selected prac-
tical problems/ [in:] Arbitra w Polsce, Warszawa 2011
/Arbitration in Poland, Warsaw 2011/ p. 47;
str. 25 |
 ANALISES & OPINIONS
their admissibility under Polish law was also
the subject of a few incoherent rulings of the
Supreme Court14. However, the problem of
functioning of purely contractual time bars in
the transactions has been dealt with in only
few publications and there are no available in-
depth considerations thereon. The authors who
deal with the admissibility and appraisal of
contractual time bars usually conclude that
under Article 353 (1) it is possible15 (or impos-
sible) to introduce the contractual time bars
conditioning the retention or the occurrence of
the entitlement on meeting the time limits
specified in the Contract. However, there are no
express statements in the doctrine regarding
the possibility for introducing into the contract
contractual time bars for complaints upon pain
of expiration of that right. Most notably, aca-
demic literature does not tackle the issue of the
effectiveness of contractual time bars for mak-
ing claims pertaining to the non-performance
or improper performance of the contract by the
other party to the civil law relationship.
The lack of relevant considerations re-
garding the potential scope of admissibility of
time bars is connected most of all with the fact
14 For instance the judgement of the Supreme Court of
30 June 1980, I CR 206/80, OSNC 1981, no. 4, item 63 in which
the Supreme Court adjudicated that failure to collect the award
within the time limit specified in the Regulations may lead to
the expiration of the claim; the judgement of the Supreme Court
of 20 September 2007, II CSK 241/07, Lex no. 487506 in which
the Supreme Court opted for the possibility of including
a clause linked with the time limit in the contract; the judge-
ment of the Supreme Court of 3 February 2011, I CSK 282/10,
Lex no. 7983229 in which the Supreme Court adjudicated that
it is admissible, under the freedom of contract principle, to
introduce the time limit into the preliminary contract after
which the obligation to conclude the preliminary contract shall
expire; see also the judgement of the Court of Appeal in Biay-
stok of 19 February 2003, I ACa 14/03, OSA 2003, no. 8, item
36 in which the court ruled that making a reservation in the
general terms and conditions of the contract regarding the
termination of the contract in case of failure to pay a premium
within the time limit goes beyond the limits of the freedom
given to the Parties under Article 3531 of the Civil Code;
15 In the Polish academic literature, the possibility of establish-
ing contractual final dates was supported, among others, by B.
Kordasiewicz: System prawa prywatnego /Private law sys-
tem/, p. 632; A.Stangret-Smoczyska: Umowne terminy
zawite /Contractual final dates/,p. 58; cf. also T. Padyna:
Przedawnienie w polskim prawie cywilnym, Warszawa 2010
/Statute of limitations in Polish civil law, Warsaw 2010/, p. 98;
str. 26 |
that the standpoint prevailing in the Polish
academic literature is such that the issue of a
time lapse, namely the statue of limitations and
time bars constitutes a domain reserved exclu-
sively to statutory regulations16. There is
a general rule in Polish law that property
claims are subject to the statute of limitations,
unless the regulations of the statute provide
otherwise (Article 117 (1) of the Civil Code).
However, there is no such rule pertaining to the
rights and entitlements other than claims. The
majority of authors are of the opinion that the
consequence of the above is that the claims and
other rights are subject to the operation of the
time bars only in the cases provided for in the
statute and only after the lapse of time limits
specified in specific regulations.17In particular,
S. Wjcik states his standpoint categorically. In
his statements, he underlines many times that
time limitation through time bars applies only
to those civil law rights which are expressly
provided for as such by statute18.
To justify his standpoint he stated that
the regulations providing for the time bars be-
long - due to the general purposes which they
serve, even to a greater extent than the ones
governing the statute of limitations to the
iuris cogentis norms. This means, for instance,
that the parties cannot set any preclusive time
limits for making claims or other rights before
16 T. Padyna: Przedawnienie /Statute of limitations/, p. 94;
17 J. Ignatowicz [w:] System prawa cywilnego /Civil law sys-
tem/,p. 845).
18 S. Wjcik: O potrzebie i sposobie uregulowania cywilno-
prawnych terminw zawitych /About the need and method of
regulating the civil law final dates/ [in:] Prace cywilistyczne.
Ksiga pamitkowa dla uczczenia pracy naukowej profesora
Jana Winiarza, Warszawa 1990 /Civil law works. Commemora-
tive book devoted to the scientific work of Prof. Jan Winiarz,
Warsaw 1990/, p. 390; the same author: Z problematyki
/Selection of problems /, p. 61; the same author: W sprawie
metody oglnego uregulowania terminw zawitych /Regarding
the method of general regulation of final dates/ [in:] Studia z
prawa prywatnego gospodarczego. Ksiga pamitkowa ku czci
Profesora Ireneusza Weissa /Studies in private business law.
Commemorative book devoted to Prof. Ireneusz Weiss/, Zakamy-
cze 2003, p. 439.
e-Przegld Arbitraowy nr 1(8) 2012 r.

the body established for that purpose19. It is
also considered that the parties are not allowed
to agree on the length of the time bar stipulated
by statute, or on the moment the said time limit
starts. The ban is derived from the rule in-
cluded in Article 119 of the Civil Code: as it is
not permissible to agree on moderating the
time limits for the statute of limitations, and the
preclusive time limits are to be a more strict
method of affecting the execution of the right in
question, all the more so they should not be
changed by the will of the parties. In the opin-
ion of some representatives of the doctrine, the
ban on contractual modifications does not refer
fully to non-judicial preclusion20.
An analysis of the admissibility of the
contractual time bars for complaints was also
the subject of a 1958 ruling of the Supreme
Court. Although the said ruling refers to regula-
tions that are no longer in force, the considera-
tions of a general nature that are presented in
the reasons for the ruling may be useful also for
an appraisal of current civil law relationships.
In the opinion of the Supreme Court, to settle
whether the contractual clauses establishing
the time limits for making complaint claims
should be deemed effective and if so - to what
extent, it is important that acknowledging the
full effectiveness of similar contractual clauses
would make it possible to make the expiration
of the rights or claims to which the parties are
entitled subject to the will of the parties. How-
ever, such dependence could not be reconciled
with the principle that establishing the condi-
tions whose occurrence entails the statute of
limitations as regards the claim or deprivation
of the right to enforce it in court (let alone the
conditions whose occurrence causes its expira-
tion) may be introduced only as a legal regula-
19 J. Ignatowicz [in:] System prawa cywilnego /Civil law sys-
tem/, p. 846; B. Kordasiewicz: System prawa prywatnego
/Private law system/, p. 632.
20 J. Ignatowicz [in:] System prawa cywilnego /Civil law sys-
tem/, p. 846; cf. also B. Kordasiewicz [in:] System prawa pry-
watnego /Private law system/, p. 632, footnote 3 and p.
634).
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
tion. However, in the opinion of the court it
does not mean that such a condition was totally
ineffective in legal terms. In particular, failure
to make a complaint may constitute the basis
for demanding compensation for the damage
which the defendant could suffer due to failure
to comply with the stipulations of that contrac-
tual condition21.
While analysing the admissibility of es-
tablishing the contractual time bars it shall be
kept in mind that the opinions, expressed both
in the jurisprudence as well as in the academic
literature, objecting to any autonomy of the
Parties will as regards setting time bars mostly
date from the period before the change of the
political system in Poland and before the intro-
duction of Article 3531 into the Civil Code. At
present, the standpoint objecting to the func-
tioning in legal transactions of contractual time
bars limiting in time the existence of contrac-
tual entitlements seems to be unnecessarily
rigorous. In professional transactions, reserv-
ing contractual time limits for the execution of
contractual entitlements seems to be justified,
and in this scope the will of the Parties ex-
pressed in this way should be respected.
However, it seems debatable to allow
the possibility of setting the time limits for
making claims or for notification upon pain of
forfeiting the claim in a situation when they
are based on the charge of non-performance or
improper performance of the contract. The es-
sence of the contractual obligation of notifica-
tion of the claims attributable to the other
Party to the contract or to the circumstances
for which the other Party is liable limits the
possibility of such claims being asserted by the
authorised Party before the court. There is also
no axiological justification for stipulations of
that kind, as the Party infringing the Contract
should have the same knowledge regarding
circumstances leading to liability, without be-
21The judgement of the Superior Court dated 1 July 1958, I CR
683/57, OSPIKA 1960, item 187.
str. 27 |
 ANALISES & OPINIONS

ing separately informed about by the aggrieved

party. Thus such stipulations may be deemed
contrary to the nature of the legal relationship
and, as such, may be invalid.
The formula of making claims by the
Contractor described in Sub-clause 20.1 of
FIDIC covers both contractual entitlements (for
instance, to extend the time for performance)
as well as any financial claims, inclusive of
claims for indemnity under breach of Contract
by the Employer. Thus, it is not possible to give
explicit information whether the time limits
provided for notification by the Contractor
should be respected with all the consequences
stipulated by the contract. In my opinion, there
is no reason why one should not fully take into
account a sanction in the form of expiry of the
claim in the part regarding the Contractors
entitlement provided for in the contract, and
which does not result from the circumstances
related to the non-performance or improper
performance of the Contract by the Employer.
However, the Contractors failure to fulfil the
notification obligation should not result in the
expiration of the Contractors claims for in-
demnity from the Employer due to breach of
Contract. Failure to comply with the time limits
for notification also should not provide the ba-
sis for ignoring the Contractors charges against
the Employers claims.

Agnieszka Lizer-Klatka*

*Agnieszka Lizer-Klatka: PhD, legal advisor, ADP

Popioek Adwokaci i Doradcy Partner, Lewiatan Court of
Arbtration Arbitrator

str. 28 | e-Przegld Arbitraowy nr 1(8) 2012 r.

 ANALYSES & OPINIONS

The Period for Giving Notice of Contractors Claims Set

Out in Sub-Clause 20.1 of the FIDIC Conditions in Light of
Polish Law
Piotr Bytnerowicz, Magda Kofluk

1. The Period of 28 Days for Giving Notice of Contractors Claim Pros and Cons
Sub-Clause 20.1 of the FIDIC Conditions1 provides for a period of 28 days for the contractor to give
notice to the engineer about the circumstances giving rise to a claim for extension of the time for com-
pletion of works or any additional payment. This period is counted from the moment the contractor
became aware or should have become aware of the circumstances giving rise to the claim. Pursuant to
the second paragraph of Sub-Clause 20.1, if the contractor fails to give notice of a claim within the 28-
day period, the time for completion shall not be extended, the contractor shall not be entitled to addi-
tional payment, and the employer shall be discharged from all liability in connection with such a de-
layed contractors claim.

Both in Polish and international practice
the sanction for a contractors failure to give
notice of a claim within the period of 28 days
gives rise to controversy. Some commentators
recommend that the parties modify the FIDIC
Conditions by removing the wording which
provides for such a sanction.1 This is because it
is questionable whether a stipulation of such a
severe sanction as the forfeiture of a claim can
be effective. In some jurisdictions, this possibil-
ity does not cause serious concern, while in
others it is admissible only on certain condi-
tions, and in still others it is legally excluded.2
In the Polish literature, there are two
opposing views. According to the first view, the
effects of the stipulation of a sanction for the
failure to comply with the time limit in the form
of the forfeiture (expiration) of a claim are
1 B. Totterdill, FIDIC users guide. A practical guide to the 1999
red and yellow books, 2006, p. 291.
2 Cf., e.g., E. Baker, B. Mellors, S. Chalmers, A. Lavers, FIDIC
Contracts: Law and Practice, London 2009, pp. 320-321; T.
Latawiec, FIDIC a polskie regulacje prawne [FIDIC and the
Polish Legal Regulations], Inynieria Bezwykopowa, July - Au-
gust 2009, p. 77.
similar to the shortening of the period of limita-
tion (termin przedawnienia) of a claim. Pursu-
ant to Article 119 of the Polish Civil Code, the
periods of limitation cannot be shortened by
the parties. In view of the above, the provisions
of the FIDIC Conditions providing for the forfei-
ture of a contractors claims in the event of a
failure to give notice of such claims within 28
days are invalid. Consequently, the intended
effect (the Contractors forfeiture of its claims)
does not occur.3
Another view is that Sub-Clause 20.1 of
the FIDIC Conditions does not modify the pe-
riod of limitation of claims, but provides for a
contractual prescription period (termin zawity)
for asserting them. In the opinion of the propo-
3 See: T. Ciaowicz, Zgodno warunkw kontraktowych FIDIC z
przepisami polskiego prawa [The Consistency of the FIDIC Con-
ditions of Contract with the Provisions of Polish Law]
(http://www.taxfin.pl/artykul,724,Zgodnosc_warunkow_kontr
aktowych_FIDIC_z_przepisami_polskiego_praw
a.html); T. Latawiec, FIDIC a polskie regulacje prawne [FIDIC
and the Polish Legal Regulations], Inynieria Bezwykopowa,
July - August 2009, p. 77.

str. 29 | e-Przegld Arbitraowy nr1(8) 2012 r.

 ANALISES & OPINIONS
nents of that view, this is admissible under Pol-
ish law. Therefore, the provisions of Sub-Clause
20.1 excluding the possibility of a contractor
asserting its claims after the expiration of the
period of 28 days are fully effective.4
So far, this issue has not been clearly
settled in Polish case law or extensively ana-
lysed in the literature. This article is an attempt
to summarize and evaluate the arguments pre-
sented to support both opposing views and to
point out the ones which, in the authors opin-
ion, are prevalent.5 First, we discuss the argu-
ments presented to support the thesis on Sub-
Clause 20.1s effective stipulation of the con-
tractual prescription period for asserting
claims. Next, we present the arguments in fa-
vour of concluding that the period of 28 days
for giving notice of a claim, with the claim oth-
erwise being forfeited, cannot be effectively
stipulated.
2. The Period for Giving Notice of a
Claim as a Prescription Period
2.1 General Comments
The view on the effectiveness of the stipulation
of the period of 28 days for a contractor to give
notice of a claim or otherwise forfeiting it, as
provided for in Sub-Clause 20.1, and its consis-
tency with Polish law is derived from the prin-
ciple of freedom of contract. Pursuant to Article
3531 of the Polish Civil Code, the parties may
arrange their legal relationship at their discre-
tion, provided its content or purpose is not in
contradiction to its nature, the law or the rules
4 See: A. Olszewski, Kontraktowe procedury rozwizywania
sporw w umowach o roboty budowlane opartych na wzorach
umownych FIDIC w wietle prawa polskiego [Contract Proce-
dures of Settlement of Disputes in Contracts for Construction
Works Based on The FIDIC Contract Forms in Light of Polish
Law], Monitor Prawniczy 21/2010, Radca Prawny 2/2010.
5 The views expressed in this article are the private views of its
authors (and not of White & Case which the authors cooperate
with) and do not constitute legal advice.
str. 30 |
of social coexistence6. According to this princi-
ple, Polish civil law permits the construction of
contractual prescription periods.
On the basis on the above assumptions, A. Ol-
szewski has expressed the view that the period
of 28 days for a contractor to give notice of a
claim is a contractual prescription period ad-
missible in light of Polish law under the princi-
ple of freedom of contract.7 That author is of
the opinion that such a period must not be
identified with the period of limitation of
claims. This is because the expiration of the
period of limitation does not result in the expi-
ration of the claim, but only its transformation
into a natural obligation which cannot be effec-
tively pursued before a court when the other
party raises the defence of limitation, but in
some situations may set-off. On the other hand,
the consequence of failing to give notice of a
claim within the period provided for under
Sub-Clause 20.1 is not the transformation of a
claim into a natural obligation, but its expira-
tion. Thus, the formal and legal effects of failing
to meet such notice periods are different.
Because of such different effects pro-
duced by the expiration of the period of limita-
tion and the failure to comply with the notice
period under Sub-Clause 20.1, A. Olszewski
concludes that the period under Sub-Clause
20.1 is not a period of limitation, but a contrac-
tual prescription period. For this reason, the
introduction of a period for giving notice of a
claim under Sub-Clause 20.1 is not in contradic-
tion to Article 119 of the Polish Civil Code,
which does not permit the shortening or ex-
6 The rules of social coexistence is a Polish law concept. For the
purposes of this article, it can be assumed that these rules are,
more or less, an equivalent of good customs.
7 A. Olszewski, Kontraktowe procedury rozwizywania sporw w
umowach o roboty budowlane opartych na wzorach umownych
FIDIC w wietle prawa polskiego [Contract Procedures for
Settlement of Disputes in Contracts for Construction Works
Based on the FIDIC Contract Forms In Light of Polish Law],
Monitor Prawniczy 21/2010, Radca Prawny 2/2010.
e-Przegld Arbitraowy nr 1(8) 2012 r.

tending of periods of limitation by way of par-
ties consent.
The consequence of adopting these arguments
is the conclusion that the limitation of the con-
tractors right to assert its claims to the period
of 28 days as a contractual prescription period
under Sub-Clause 20.1 is admissible and legally
effective. Such a view seems to be difficult to
accept, first of all because of the nature and
rules governing prescription periods which,
therefore, need to be briefly discussed.
2.2 Characteristics of Prescription Periods
The notion of prescription periods is usually
associated by the doctrine with the periods
indicating the time limits for performing spe-
cific acts. Prescription periods are considerably
rigorous, since failure to meet a deadline often
results in the expiration of a right or entitle-
ment.8 Upon the expiration of such a period, the
possibility of evoking a right limited by a pre-
scription period or any other use of that right
expires. Furthermore, it is impossible to set-off
a claim after the expiration of its prescription
period and, in principle, it is inadmissible to
acknowledge a prescribed debt.9 In view of the
foregoing, in accordance with the long-
established view, prescription periods, in prin-
ciple, except for the exceptions discussed be-
low, are not left to the parties discretion.10
Prescription periods may be either
statutory or contractual. Statutory prescrip-
tion periods are those for which a statutory
provision is the source of existence of the pe-
riod itself, its length and the effects of its expi-
ration.11 Statutory prescription periods are di-
vided into two main groups: periods of court
8 A. Stangret-Smoczyska, Umowne terminy zawite [Contractual
Prescription Periods], Przegld Sdowy 1/2011, pp. 52-53.
9 Ibidem, p. 53.
10 B. Kordasiewicz [in:] System Prawa Prywatnego [The Private
Law System]. Vol. 2. Prawo cywilne cz oglna [The Civil
Law - A General Part], ed. Z. Radwaski, Warsaw 2008, Legalis.
11 A. Stangret-Smoczyska, Umowne terminy zawite [Contractu-
al Prescription Periods], Przegld Sdowy 1/2011, p. 52.
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
and out-of-court preclusion. Contractual pre-
scription periods are divided into contractual
prescription periods sensu largo (in the
broader sense) and contractual prescription
periods sensu stricto (in the strict sense).
Contractual prescription periods sensu
largo are the periods whose application, effects
and usually length are provided for in the Pol-
ish Civil Code, with a certain area being left to
the parties discretion. This area, however, is
very limited and the non-interference of the
parties is of no relevance for the existence of
the period itself and its effects. This is because
statutory provisions are applicable, unless oth-
erwise agreed by the parties. Such periods are
also sometimes called dispositive. They in-
clude, for example, the period for pursuing
claims under warranty or the period for exer-
cising the right of pre-emption. The group of
contractual prescription periods sensu largo
also includes periods whose length is not speci-
fied by statute, which leaves this issue to the
will of the parties (mixed contractual peri-
ods). In the case of such periods, the source of
entitlement to stipulate the period, the princi-
ples of its course and effects of its expiration
arise from statutory law. The length of the pe-
riod and the fact of it being stipulated result
from the will of the parties. The period for ac-
cepting an offer may serve as an example in this
respect (Article 66, 2 of the Polish Civil Code).
Contractual prescription periods sensu
stricto in turn are the periods for which the
will of the parties is the only basis of their exis-
tence and determination of the effects of their
expiration. They are also defined as pure
contractual prescription periods (and this is
the term that we will be using hereinafter).
Their creation is accepted under the freedom of
contract principle.12
12 Ibidem, pp. 52-57.
str. 31 |
 ANALISES & OPINIONS
If we assume that the period for giving
notice of a contractors claim, as set out in Sub-
Clause 20.1, is a prescription period, then that
period should be classified as a pure contrac-
tual prescription period since it has no statu-
tory source. The will of the parties (consisting
of incorporating a FIDIC form into the content
of their legal relationship) is the only basis of
its existence. In order to decide if a pure con-
tractual prescription period, with the effects as
specified in Sub-Clause 20.1 (expiration of
claims), may be effectively stipulated, it is nec-
essary to thoroughly analyse the principles ap-
plicable to such periods.
In principle, it is admissible to introduce
pure contractual prescription periods (i.e., ones
having no specific statutory basis). However, it
is also pointed out that contractual periods
which limit pursuing claims, directly or indi-
rectly, before a court or any other authority ap-
pointed to this end, should be considered inad-
missible. This matter is reserved for statutory
regulations, including primarily the institution of
the statute of limitations [], which is not of a
dispositive nature due to the wording of Article
119 of the Polish Civil Code.13 Thus, in accor-
dance with a well-established view in the doc-
trine [] the parties must not establish preclu-
sive periods for pursuing claims or any other
forms of subjective rights before competent au-
thorities [].14
This view should be accepted. It is a
logical consequence of the principles governing
prescription periods. It is a rule that the pre-
scription periods which limit the possibility of
pursuing claims before a court or any other
competent authority are derived from statutes
(they are statutory prescription periods). On
the other hand, [] in the group of contractual
13Ibidem, p. 59.
14B. Kordasiewicz [in:] System Prawa Prywatnego [The Private
Law System]. Vol. 2. Prawo cywilne cz oglna [The Civil
Law - A General Part], ed. Z. Radwaski, Warsaw 2008, Legalis.
str. 32 |
prescription periods appointed on the basis of
statutory provisions (by the identification of the
possible situations and entities authorised to
stipulate the period) [i.e., contractual prescrip-
tion periods the authors note], there are no
periods for asserting claims or any other enti-
tlements before a court or any other authority.
This matter is regulated by the periods of court
preclusion derived exclusively from the stat-
ute.15 Thus, the parties to contract obligations
clearly have not been given any statutory right
of having an impact on the periods for asserting
rights and claims before the competent authori-
ties. The more so, there are no grounds to ac-
cept the possibility of introducing such periods
by the will of the parties alone.
For these reasons, treating the period of
28 days under Sub-Clause 20.1 as a contractual
prescription period does not mean that the
above Sub-Clause is consistent with Polish law
with respect to the effects of exceeding the pe-
riod for giving notice of a claim set out in that
Sub-Clause. As can be seen from the above
comments, there are strong arguments in fa-
vour of concluding that the effects of exceeding
the period of 28 days for giving notice of a
claim set out in Sub-Clause 20.1 in the form of
expiration of the claim cannot be effectively
stipulated if a contract is governed by Polish
law.
Furthermore, even if one assumes that
the introduction of a contractual prescription
period for giving notice of claims under Sub-
Clause 20.1 is, in principle, consistent with Pol-
ish law, it would not automatically mean that
the effects of a failure to comply with that no-
tice period could be effectively evoked in every
case. The effectiveness of the stipulation of the
effects of failing to comply with the notice pe-
riod and the possibility of evoking them would
then have to be evaluated on the grounds of the
15A. Stangret-Smoczyska, Umowne terminy zawite [Contractual
Prescription Periods], Przegld Sdowy 1/2011, p. 54.
e-Przegld Arbitraowy nr 1(8) 2012 r.

circumstances of each individual case. This is
because pure contractual prescription periods
and, in particular, their effects, are subject to
evaluation in terms of the mandatory provi-
sions of law, the nature of a given contract obli-
gation and the rules of social coexistence (good
customs).16
2.3 Contractual Prescription Periods and the
Defence of Abuse of Rights
Moreover, if we were to conclude after such
evaluation that the period for giving notice of a
claim under Sub-Clause 20.1 was effectively
stipulated, we should consider the possibility of
the contractor raising a defence of abuse of
rights.
There is controversy in the doctrine and case
law as to the possibility of applying the defence
of abuse of rights with respect to prescription
periods.17 The doubts in this respect, however,
pertain chiefly to statutory prescription peri-
ods, and not to contractual ones.18 In particular,
the possibility of raising the defence of abuse of
rights should not cause doubts with respect to
pure contractual prescription periods. Intro-
duction of a prescription period into a contract
by the will of the parties only, its effects and
principles of its course should be evaluated on
the same principles as any other element of the
contract.19 Consequently, raising of a defence of
abuse of rights could allow either for a denial to
take into account the expiration of the prescrip-
tion period at all or modifying the effects of its
expiration.20
In order to evaluate the grounds for
making an effective defence of abuse of rights,
16 Ibidem, p. 58.
17 A. Stpie-Smorek, F. Smorek, Przedawnienie i terminy zawite
[The Statute of Limitations and Prescription Periods], Lex
Polonica, Chapter 4.2.
18 A. Stangret-Smoczyska, Umowne terminy zawite [Contractu-
al Prescription Periods], Przegld Sdowy 1/2011, p. 59.
19 Ibidem, p. 59.
20 B. Kordasiewicz, [in:] System Prawa Prywatnego [The Private
Law System], Vol. II, C. H. Beck 2008, p. 697.
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
it is necessary to take into account, among
other things, the purpose of the introduction of
the period of 28 days for giving notice of con-
tractor claims into the FIDIC contractual forms.
This purpose was specified by the authors of
the FIDIC forms as follows:
After much reflection, the conclusion of
the FIDIC drafting committee was that
there must be a notice of claim within 28
days [] so that all involved are aware
that there is an event or circumstance
where extra payment or time may be due
to the contractor.21
Additionally, commentators emphasise
that the purpose of mutual notice of claims
given by the parties to the contract is to make it
possible to settle disputes, if possible, during
the term of the contract.22 This means that the
introduction of the period for giving notice of a
contractors claim was aimed at, among other
things, improving communication between the
parties and preventing a situation where the
employer is taken by surprise by the contrac-
tors claims after the completion of the con-
tract. A question arises, however, if the un-
doubtedly right and justified interest of the
employer in avoiding unexpected claims upon
the completion of the contract is sufficient to
deprive the contractor of its claims if the con-
tractor fails to give notice of them within 28
days from the date when the contractor became
aware or should have become aware of the
event or circumstance giving rise to its claim. In
particular, it is doubtful whether such interest
of the employer prevails over the interest of the
contractor in receiving payment for the addi-
tional costs caused by circumstances beyond
the contractors control or obtaining an exten-
21 C. Seppala, Contractors Claims under the FIDIC Contracts for
Major Works, (2005) 21(4) Construction Law Journal, p. 287,
quote after: E. Baker, B. Mellors, S. Chalmers, A. Lavers, FIDIC
Contracts: Law and Practice, London 2009, p. 311.
22 J. Glover, S. Hughes, Understanding the New FIDIC Red Book.
A clause-by-clause commentary, 2009, p. 378.
str. 33 |
 ANALISES & OPINIONS
sion of time for the completion of works when
the works are delayed as a result of such cir-
cumstances.
Furthermore, it will be necessary to con-
sider, on a case-by-case basis, whether the failure to
give notice of a claim actually resulted in the fact
that the employer was not aware of the circum-
stances or events which could give rise to a claim
for additional payment or an extension of time. In
other words, if, in spite of the absence of a notice,
the purpose which that notice is intended to serve
has not been nevertheless achieved in full or in part.
In contracts carried out under the FIDIC forms, the
employer has its representative the engineer (a
member of the employers personnel Sub-Clause
1.1.2.6), who is regularly present on site and has
up-to-date knowledge of the progress of the works
and related issues. The engineer should, therefore,
in many cases be aware of the circumstances which
may give rise to a claim regardless of the fact
whether the contractor gives notice of such circum-
stances or not. This is because the engineer partici-
pates in construction councils, is in permanent di-
rect contact with the contractor and conducts regu-
lar correspondence with the contractor (which does
not always take the form of formal notices of a
claim under Sub-Clause 20.1). The engineer also
often appoints resident engineers (contract engi-
neers assistant Sub-Clause 3.2) who should have
the latest news from the construction site. For these
reasons, the employer will be often aware of the
events or circumstances which may give rise to a
claim because it will obtain such knowledge from
the engineer. In such a case, the employers reliance
on the absence of timely notice of a claim, in a situa-
tion where the engineer was fully aware of the cir-
cumstances giving rise to the claim, could be con-
sidered an abuse of rights (especially in a situation
where the contractors notice is only slightly de-
layed).
A similar situation may occur when the
knowledge of the circumstances giving rise to a
claim is in the public domain or is otherwise
known to the employer, or when the employer
was notified of such circumstances by the con-
str. 34 |
tractor other than by a formal notice of a claim
made pursuant to Sub-Clause 20.1. These situa-
tions may include, for instance, cases in which
the contractor must stop working because of
the actions of the employer itself or the occur-
rence of unforeseeable circumstances a risk
attributable to the employer. Examples include:
a) work delays caused by the au-
thorities;
b) engineers instruction to suspend
works, e.g., because of the neces-
sity to carry out archaeological
works;
c) unforeseeable operation of the
forces of nature, such as floods;
d) the employers failure to give the
right of access to the construc-
tion site to the contractor.
Naturally, in such cases the employer
may argue that, even though it was aware of
the given circumstances, it did not associate
them with the possibility of contractor claims
being raised or, in the absence of a notice, con-
cluded that the contractor was not going to
pursue its claims on this account. Such issues as
whether the employer had sufficient knowl-
edge of the circumstances giving rise to a claim
and if the employer should have associated
them with the emergence of a contractors
claims or could have assumed that such claims
would not arise or the contractor would not
intend to pursue them require an independent
evaluation on a case-by-case basis.
One can also speak of an abuse of rights if the
contractors claim originates from the non-
performance or improper performance of a
contractual obligation by the employer or a
person for whom the employer is liable.23 In
such cases, it would be particularly difficult to
accept the possibility of the employer relying
23See: A. Sandberg, A Contractors View on FIDIC Conditions of
Contract for EPC Turnkey Projects, International Construction
Law Review, 1999, p. 47
e-Przegld Arbitraowy nr 1(8) 2012 r.

on the expiration of the claim as a result of the
contractors failure to give notice on time. Such
activities could not be reconciled with the prin-
ciples of fairness (social coexistence / good
customs) under which no one can benefit from
its own misconduct.
It is also pointed out in the literature
that the very introduction of the period, as well
as its length or excessively grave effects of a
failure to comply with it could constitute an
abuse of rights. The period of 28 days set out in
Sub-Clause 20.1, taking into account that it ap-
plies to construction works, often of a complex
nature and on a large scale, is relatively short.
Furthermore, in Polish practice, it is sometimes
additionally shortened (e.g., the General Direc-
torate of National Roads and Motorways24 of-
ten shortens it to 14 days in the Particular Con-
ditions). Also, the effects of failure to comply
with that period are extremely grave the con-
tractor forfeits its claim. Certainly, in many
cases there would be strong arguments in fa-
vour of concluding that depriving a contractor
of its claims because it exceeded the deadline
for giving notice of them is an abuse of rights
(especially when the delay is only minor). All
the more so, since it is pointed out in the doc-
trine that limiting the claims of only one party
to a contract by a prescription period (which is
the case, e.g., in the FIDIC Red Book) can consti-
tute an abuse of rights25. The employer, pursu-
ant to Sub-Clause 2.5, should give notice of a
claim as soon as practicable. However, no
sanction is provided for the failure to comply
with this imprecise deadline. The European
International Contractors (EIC) have concluded
that it is a manifestation of unequal treatment
of the parties and unfair distribution of obliga-
24 Generalna Dyrekcja Drg Krajowych i Autostrad.
25 A. Stangret-Smoczyska, Umowne terminy zawite [Contractu-
al Prescription Periods], Przegld Sdowy 1/2011, p. 59.
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
tions imposed on the contractor and the em-
ployer.26
For these reasons, the view whereby the
stipulation of the period of 28 days for giving
notice of a contractors claim under Sub-Clause
20.1, with the claim otherwise expiring, is in
fact the appointment of a contractual prescrip-
tion period does not provide sufficient grounds
for concluding that the solution adopted in Sub-
Clause 20.1 is effective and consistent with Pol-
ish law.
3. The Period of Giving Notice of a Claim
and Periods of Limitation of Claims
In accordance with the Polish Civil Code, pecu-
niary claims are barred by the statute of limita-
tions in the periods specified by law. The pe-
riod of limitation for claims under construction
contracts connected with the business activity
of an authorised party is three years.27 Article
119 of the Polish Civil Code stipulates that pe-
riods of limitation cannot be shortened or ex-
tended by the parties. The statute of limitations
is mandatory, which takes the question of limi-
tation of claims, in principle, totally out of the
hands of the parties.28
Some argue that Sub-Clause 20.1 intro-
duces a 28-day period of limitation of claims
under contracts for construction works, which
is contrary to the mandatory provisions of the
civil law (Article 118 in connection with Article
119 of the Polish Civil Code). Therefore, the
stipulation of the effects of a failure to comply
with the period of 28 days for giving notice of a
26 EIC Contractors Guide to the FIDIC Conditions of Contract
for Construction, 2002, p. 20, quote after: E. Baker, B. Mellors, S.
Chalmers, A. Lavers, FIDIC Contracts: Law and Practice, London
2009, p. 311.
27 Cf. the Ruling of the Supreme Court of July 11, 2001, file No. V
CKN 357/00, LEX No. 52487.
28 B. Kordasiewicz, [in:] System Prawa Prywatnego [The Private
Law System], Vol. II, C. H. Beck 2008, p. 579.
str. 35 |
 ANALISES & OPINIONS
claim made in Sub-Clause 20.1 should not be
legally effective.29
The above view seems only partly cor-
rect. One should agree with A. Olszewski that,
strictly speaking, the period under Sub-Clause
20.1 is not a period of limitation. This is due to
the fact that the effects connected with the ex-
piration of the period set out in Sub-Clause 20.1
are different from the effects of limitation of a
claim.30 However, this does not change the fact
that Sub-Clause 20.1 stands in contradiction to
Article 118 in connection with Article 119 of
the Polish Civil Code.
The effect of the expiration of the period
of limitation is not the expiration of a claim, but
only its transformation into a natural obliga-
tion. Thus, the claim continues to exist, but a
debtor may raise the defence of limitation
which releases the debtor from the duty to per-
form. Therefore, the expiration of the period of
limitation does not deprive the creditor of its
claim, but only creates the debtors entitlement
to raise the defence of limitation and thus re-
lease itself from the obligation to perform. The
expiration of the period set out in Sub-Clause
20.1, in accordance with its literal wording, is
to result in the expiration of a claim. Thus, the
expiration of the period for giving notice of a
claim set out in Sub-Clause 20.1 has a farther-
reaching effect than the expiration of the period
of limitation.
In line with the rules of legal inference, if
one is not allowed to do little, all the more so
29See: T. Ciaowicz, Zgodno warunkw kontraktowych FIDIC z cerning the period for giving notice of claims
przepisami polskiego prawa [The Consistency of the FIDIC Con-
ditions of Contract with the Provisions of the Polish Law]
(http://www.taxfin.pl/artykul,724,Zgodnosc_warunkow_kontr
aktowych_FIDIC_z_przepisami_polskiego_praw
a.html).
30 A. Olszewski, Kontraktowe procedury rozwizywania sporw
w umowach o roboty budowlane opartych na wzorach
umownych FIDIC w wietle prawa polskiego [Contract Proce-
dures of Settlement of Disputes in Contracts for Construction
Works Based on The FIDIC Contract Forms In Light of Polish
Law], Monitor Prawniczy 21/2010, Radca Prawny 2/2010.
str. 36 |
one is not allowed to do more than little (ar-
gumentum a minori ad maius). It is not allowed
to shorten the periods of limitation, while the
effect of their expiration is weaker than the
expiration of a claim. Therefore, it is all the
more difficult to admit a possibility of the par-
ties voluntarily introducing pure contractual
prescription periods, shorter than the applica-
ble limitation periods, the expiration of which
results in the further-reaching effect of expira-
tion of the claim. Therefore, there are strong
arguments for holding that the introduction
into a contract of a period shorter than the pe-
riod of limitation for a given type of claims,
which limits, directly or indirectly, the pursuing
of claims before a court or any other authority,
is contrary to the provisions of substantive law
specifying the period of limitation of a given
claim in connection with Article 119 of the Pol-
ish Civil Code.
In accordance with Article 58 1 of the
Polish Civil Code, a legal act contrary to the law
is invalid, unless the applicable statutory provi-
sion provides for a different effect, especially
that the invalid provisions of a legal act are re-
placed by the relevant statutory provisions.
However, when only part of a legal act is inva-
lid, in principle, the remaining part remains in
force. An entire act will only be invalid when
the circumstances indicate that the act would
not have been performed at all without the in-
valid provisions (Article 58, 3 of the Polish
Civil Code).
The provisions of Sub-Clause 20.1 con-
and the effects of exceeding this period are not
of a type making it possible to claim that in
their absence the parties would not have con-
cluded the contract at all. This is especially be-
cause the FIDIC Conditions constitute a con-
tract form, and the parties, in principle, do not
incorporate them into the content of their legal
e-Przegld Arbitraowy nr 1(8) 2012 r.
 ANALISES & OPINIONS

relationship due to the wording of individual tions and the effects of their non-performance.
clauses of the FIDIC Conditions. These effects will depend of the circumstances
It would also be too far-reaching to de- of a given case.
clare the whole Sub-Clause 20.1 invalid because
the entire Sub-Clause is not contrary to the law. Piotr Bytnerowicz*
Only the provision of Sub-Clause 20.1 which Magda Kofluk
provides that the contractors claim expires if it
is not notified within 28 days may be deemed
invalid.

4. Final Comments
In view of all the above comments, it seems that
the arguments in favour of acknowledging the
invalidity of the stipulation of the sanction of
expiration of a claim in the case of a failure to
comply with the time limit for giving notice of
the claim, as set out in Sub-Clause 20.1, are
stronger than those in favour of the admissibil-
ity of stipulating such a sanction under the rule
of freedom of contract. This matter, however,
has not been explicitly settled by case law and
there is little Polish legal writing on this issue.
In view of the absence of established domestic
case law and divergent views expressed by
commentators, we suggest that the provisions
of Sub-Clause 20.1 should not be ignored. To
the contrary, it is by all means advisable to
comply with the period for giving notice of a
claim whenever possible. It should be remem-
bered that only the effect of failure to meet the
deadline for giving notice of a claim (i.e., expira-
tion of the claim) may be deemed invalid, but
not the very fact of stipulation of such deadline.
Therefore, irrespective of the possible invalid-
ity of the sanction stipulated in Sub-Clause
20.1, when a contractor gives notice of a claim
after the expiration of the period of 28 days * Piotr Bytnerowicz is an attorney at law (adwokat) at the
Department of Litigation and Arbitration of the Warsaw
without reasonable cause, it is in breach of Sub-
office of White & Case. He is a member of the Chartered
Clause 20.1. The effects of such a breach of the Institute of Arbitrators (ACIArb).
procedure specified in the contract for giving Magda Kofluk is a trainee legal advisor (aplikantka
notice of claims should be evaluated on the radcowska) at the Department of Litigation and Arbitra-
grounds of the provisions of the Polish Civil tion of the Warsaw office of White & Case. She is a mem-
ber of the Chartered Institute of Arbitrators (ACIArb).
Code concerning the performance of obliga-

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 37 |

 ANALYSES & OPINIONS

Awarding In-House Counsel costs in arbitration

Adam Olszewski, Ewelina Czerniawko

It is usual in commercial proceedings, when parties are legally represented, for costs to be awarded
against an unsuccessful party. Both practice and principle are clear about when an external lawyer is
retained. But what about the costs borne by a company for the involvement of an in-house counsel in
proceedings; is he entitled to claim legal costs? If the answer is affirmative, how should these costs be
substantiated, considering that salaried employees usually take advantage of comprehensive legal as-
sistance or there is a permanent legal service provided with a lump sum without involvement in a spe-
cific matter?

This article addresses several key fac-
tors that attorneys and their clients should
consider when seeking to recover legal costs
for an in-house counsels arbitration work. This
issue is especially important in construction
arbitration disputes where in-house lawyers,
including state lawyers, are often involved.
As far as proceedings before Polish
courts are concerned, a full-time legal advisor
may count on legal representation costs being
a multiple of the minimum remuneration pro-
vided for in the Order of the Ministry of Jus-
tice1. These rules, however, will not be applica-
ble to arbitration proceedings because the reg-
ulation concerns merely proceedings before
the state court. Institutional arbitration courts
do not have such detailed schedules of legal
representation costs of their own.
An examination of the practice of
awarding costs, including the costs of in-house
legal staff, is quite difficult since there are few
published awards (or their excerpts covering
this aspect). The reason might be that arbitra-
tion proceedings are conducted by external
lawyers or the costs of in-house legal staff are
not claimed in arbitration proceedings.
Most of the literature and the judicature
that we analyzed concern the International
Court of Arbitration of the International Cham-
ber of Commerce in Paris (hereinafter ICC
Court). Prokuratoria Generalna Skarbu
Pastwa (hereinafter Prokuratoria
Generalna)2 is conducting several cases before
the ICC Court, therefore we are interested in
the practice of this Court also as to the costs of
the proceedings. Prokuratoria Generalna also
has experience as regards Polish arbitration
courts, such as The Court of Arbitration at The
Polish Chamber of Commerce in Warsaw
(hereinafter also as KIG) or The Court of Ar-
bitration at The Polish Confederation of Private
Employers Lewiatan (hereinafter also as
Lewiatan) as well asthe ad hoc arbitration
courts.

1 Order of the Ministry of Justice dated of 28 September 2002
(O.J. 2002 No. 163, item 1349 with amendments.) on legal advi-
sors fees or Order of the Ministry of Justice dated of 28 Sep-
tember 2002 (O.J. No. 163, item 1348 with amendments) on
attorneys fees.
2 The Polish State Treasury Solicitors Office which is an institu-
tional attorney ad litem of the State Treasury, representing it in
court and arbitration proceedings, founded by the Act dated 8
July 2005 on Prokuratoria Generalna Skarbu Pastwa (O.J. No.
169, item 1417 with amendments).

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 38 |


The approach to the costs of in-house
legal staff borne as arbitration costs of the par-
ties has evolved during the last decades.
Still, in the 1990s, it was not generally
accepted that the costs of in-house legal staff
could be awarded as part of the parties arbi-
tration costs.
In ICC Case No. 50293 the Arbitral Tri-
bunal arrived at the conclusion that legal costs
did not include any allowance for the time
spent on the arbitration by the party itself or
its directors, employees, representatives, and
agents.
Arbitration inevitably takes up time of the
parties themselves and their staff, but, in the
Arbitral Tribunals opinion, the cost of such
time is not a part of the legal costs of the
proceedings. Normal legal costs do not in-
clude any allowance for the time spent by
the Defendants executives and other staff
on this arbitration. The same ruling applies
to the time spent by the Defendants agents,
including ABC, the Defendants engineer for
this project.
Similarly, in-house counsels costs were
fully rejected by the Arbitral Tribunal in ICC
Case No. 62934, although as it flows from the
published excerpts it was duly substantiated,
on the following grounds,:
Claimant has claimed compensation for
time of its personnel involved in preparation
of its case. This claim does not in my view
form part of the costs of arbitration in the
sense of being part of Claimants normal
legal costs, contemplated in Article 20(2) of
the ICC Rules. It is really a separate head of
damages claimed by the Claimant and must
be rejected together with its other damage
3 ICC Case No. 5029 (1991), ICC International Court od Arbitra-
tion. Bulletin , Vol. 4 (1993), p. 32.
4 ICC Case 6293 (1990), ICC International Court od Arbitration.
Bulletin, Vol. 4 (1993), p. 43., See also: HANOTIAU Bernard, The
parties costs of arbitration, Dossier of the ICC Institute of World
Business Law: Evaluation of Damages in International Arbitra-
tion, 2006, p. 3
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
claims. Assuming, however, that Claimant
had proven that it was entitled to damages
as a result of the breaches complained in
this arbitration. I do not consider that the
twenty-three man-days claimed for its four
employees involved in preparation of the
case should be compensated. The per diem
sum claimed for each employee whether for
salary alone or salary plus overhead, does
not represent a special cost incurred by it
for purposes of the arbitration but is part of
its normal operating expenses. It is for the
same reason that such amounts cannot, in
my opinion, form part of its legal costs.
As to in-house lawyers it is said that a
company will employ in-house lawyers wheth-
er they conduct proceedings or not. This argu-
ment is wrong since in-house lawyers are em-
ployed to conduct proceedings, arbitration or
litigation. Should a company have no in-house
lawyers, it would engage an external lawyer.
There was a turning point in ICC Case
No. 6564 of 1993.5 The Arbitral Tribunal de-
cided that the costs were admissible in princi-
ple and also gave some directions as to the
principle and discussed certain directions, but
refused to grant them on the following
grounds:
In the Arbitral Tribunal view in-house legal
costs form part of partys normal legal cost
incurred in the conduct of case. It is for each
party to decide whether it wishes to retain
outside counsel or prepare and argue the
case by its own staff. There is no justification
to privilege a party in terms of costs for the
sole reason that it retained outside counsel.
So, the Tribunal expressly said that the costs of
in-house lawyers may be awarded.
A claim for a partys internal costs is admis-
sible in principle also in those cases where
5ICC Case 6564 (1993), ICC International Court od Arbitration.
Bulletin , Vol. 4 (1993), p. 46., See also: HANOTIAU Bernard,
op.cit., p. 3.
str. 39 |
 ANALISES & OPINIONS
outside counsel has been retained. A party
must be free in allocating the work between
its outside counsel and its own services. A
party which decides to perform most of the
preparatory work for the case by its own le-
gal and technical departments should not be
placed at disadvantage compared to ona
which confers all work to outside counsel and
experts
So, the Arbitral Tribunal agreed that the
costs of in-house lawyers may be taken into
consideration also when legal services were
provided in cooperation with in-house law-
yers.
However, at the end of the day, the Arbi-
tral Tribunal spoiled the whole barrel with one
bad apple:
There is, however, an important difference
between the costs for outside counsel and
those incurred in-house: the former are ex-
penditures and can be clearly identified and
evidenced; in the case of the latter this is not
always the case. In view of this difference it
appears justified to require some more sub-
stantiation inter alia with respect to the na-
ture of cost, the personnel involved and the
type of work performed. In the present case,
neitherthe party satisfied there requirements.
Their claims are too general to permit an as-
sessment of the justification and reasonable-
ness of the costs claimed. Therefore, no al-
lowance will be made for internal costs of the
Parties.
Unfortunately, since the costs were not
evidenced properly or the Arbitral Tribunals
requirements were not met, the costs were not
awarded.
There is only one award (ICC Case No. 8786 of
19976) in which the Arbitral Tribunal allowed
6 ICC Case 8786 (1997), 20 ASA Bulletin 1 (2002), p. 68. See
also: DERAINS Yves, SCHWARTZ Eric. A., A Guide to the New
ICC Rules of Arbitration Kluwer Law International 2005, p.
366.
str. 40 |
costs for in-house counsels, apparently as a
matter of course. As commentators say, legal
representation costs were awarded without
any particular justification. It does not stem
from the published excerpt of the award what
the grounds for such ruling were.
Thus, there is still no clear pattern as to how
the costs of in-house legal staff should be justi-
fied in order to be awarded by the Arbitral Tri-
bunal.
The costs of in-house lawyers can be
claimed for work carried out by them on the
same basis as costs claimed for work carried
out by external lawyers - according to proper
time records. In the foreign legal realm, the so
called lodestar method refers to the method
of computing attorney's costs whereby the
number of hours reasonably spent by a trial
counsel is multiplied by a reasonable market
hourly rate. But, as far as this method is con-
cerned, the problem is what the appropriate
market rate for work of an in-house lawyer
should be. One may refer to the rates of exter-
nal lawyers; however, diversification of exter-
nal lawyers rates in Poland is huge. What is
more, in Poland, except for large law firms, the
standard is that the remuneration of external
lawyers is in line with the amount in dispute.
Prokuratoria Generalnas experience
shows that legal representation costs in cases
conducted by Prokuratoria Generalna may be
awarded. Prokuratoria Generalna is formally a
kind of an in-house lawyer since it is an agency
of the Polish State Treasury to the state entities
it represents.
In proceedings before Polish permanent
arbitration courts, such as KIG or Lewiatan or
ad hoc arbitration, when the Arbitral Tribunal
consists of Polish arbitrators only,
Prokuratoria Generalna refers by analogy to
the regulations of the Order of the Minister of
Justice mentioned above. Surely, the provisions
of the Order of the Minister of Justice do not
e-Przegld Arbitraowy nr 1(8) 2012 r.

apply directly as the regulation concerns mere-
ly proceedings before state courts; however,
local tariffs on attorneys costs are applied as a
yardstick for the reasonableness of the claimed
costs. Such tariff costs are deemed as low or
reasonable. So far there has been no case
where such justification for awarding costs
with reference to the Order of the Minister of
Justice would not be taken into account. Usual-
ly, in justification of the award one may find an
explanation that the Arbitral Tribunal consid-
ers such an amount as justified; sometimes the
Arbitral Tribunal refers to an analogous appli-
cation of the Order of Minister of Justice.
Such practice is an important signal for
in-house lawyers, who consider including an
arbitration clause in a contract. As far as Polish
permanent arbitration courts are concerned,
there should not be a problem to get the costs
awarded if a party, represented by an in-house
lawyer, is not able to evidence precisely its
costs of in-house lawyers. Anyway, it should
reconsider whether to include in the rules of
permanent arbitration courts that, upon a par-
tys request, the Tribunal may consider award-
ing legal representation costs in accordance
with the said order of the Minister of Justice.
In proceedings before arbitration
courts, when the Arbitral Tribunal is interna-
tional, and probably is not familiar with
thepractice of awarding legal representation
costs by the state courts in Poland, the other
practice of awarding legal costs is used. That is
the case as far as costs born by Prokuratoria
Generalna is concerned. Below we show the
methodology used.
Legal representation costs are calculat-
ed with regard to the budget of Prokuratoria
Generalna. The methodology is as follows. We
divide the annual costs of the Solicitors Office
by the number of solicitors employed by the
State Treasury Solicitors Office in a given year
and we receive an approximate annual cost of
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
the work of one solicitor. This cost, except for
the salary, contains the respective proportion
of other costs intertwined with the functioning
of the office, such as the costs of assistance,
secretaries and paralegal service, copying,
postal services, phone and fax costs. Next, we
apply a percentage representing the propor-
tion of time spent for representation in arbitra-
tion case to the annual cost per solicitor in or-
der to determine the cost of representation in
said arbitration case per solicitor in a particu-
lar year.
Naturally, this cost is an approximate
estimation; however, this method is transpar-
ent and based on data that can be verified. The
budget of Prokuratoria Generalna as well as
the number of solicitors employed at
Prokuratoria Generalna is public information.
Engagement of one solicitor is also an estima-
tion but it can be easily verified by arbitrators
whether the percentage is correct. If a solicitor
points out that (s)he contributed 10 per cent of
the time to a particular case, one has to answer
the question whether ten similar cases in a giv-
en year constitutes lawyers normal workload.
This method was accepted by the Arbitral Tri-
bunal in ICC case No. 15282 conducted by
Prokuratoria Generalna. In the justification, the
Arbitral Tribunal said:
The fees and expenses of lawyers are calcu-
lated with regard to the budget of
Prokuratoria Generalna in the respective
years and reduced to reflect the percentage of
time worked on this case. According to docu-
mentation provided by the Respondent on 15
March 2010, the Arbitral Tribunal has no
reason to conclude that this amount is exces-
sive or unreasonable.
This method may be applicable also in
companies that take advantage of comprehen-
sive legal assistance provided on the basis of
an employment contract if, in the structure of
the organization, there is a singled out financial
str. 41 |
 ANALISES & OPINIONS

unit that deals with legal services. This is a

well-known method of so-called cost centers,
where each cost centre in this case the inter-
nal legal department has its own budget (ex-
penses limit) and such budget, may be the ba-
sis for evidencing the costs incurred.
It is important in this method to take in-
to account the budget of the unit, whose sole
task is to provide legal services, while the cost
structure of the unit that deals with production
or other aspects of functioning of the company
may differ significantly per employee.

Adam Olszewski*
Ewelina Czerniawko

*Adam Olszewski: Director of the Arbitration Depart-

ment in the State Treasury Solicitors Office
Ewelina Czerniawko: LL.M. solicitor of the State Treasury
Solicitors Office

str. 42 | e-Przegld Arbitraowy nr 1(8) 2012 r.

 ANALYSES & OPINIONS

Partnering and Dispute Management an instrument for

Polish construction and Project industry?

Peter Tr Nielsen

The author was a pioneer in his native country, Denmark, in developing partnering and dispute man-
agement programs. Based on a concrete case story developed by himself the expansion of Billund
Airport in Western Denmark he analyzes if these tools and systems could be beneficial in Poland.

Back in the late 90s the management of
Billund Airport faced a big challenge. The air-
port the second largest in Denmark after Co-
penhagen, organized as a publicly owned joint
stock company and situated next to world-
famous Legoland was to move completely and
expand the terminal, platforms and taxiways.
The only airport component that was given
only a facelift was the runway itself. All the rest
was to be abandoned and replaced with com-
pletely new facilities on the opposite side of the
runway.
This was a project for DKK 1 billion
(PLN 600 million) which was to take place on
an airport in operation, a factor limiting the
flexibility. On the other hand the circumstances
increased the flexibility as the old terminal was
still there as a reserve so that the airport suf-
fered only limited exposure to the risk and con-
sequence of delays.
The management could find alarming in-
formation and experience in the then just com-
pleted expansion of Copenhagen Airport, ter-
minal 3, which ended with substantial excesses
of the budget and prices per sq. meter and oth-
er unit prices far above what the Billund man-
agement could afford within their budget. Also
they could look at the recently completed
Storeblt Western Bridge, which also had sub-
stantial excesses of the budget and ended with
numerous big and expensive court and arbitra-
tion cases and even a grim competition/public
procurement case.
How to satisfy the ambitions as to size
and quality of the planned facilities within the
limits of the budget? How to at the same time
treat the contractors in a commercial but still
ethically decent way? How to avoid the costs,
frustrations and burdens of disputes during or
after the project? How to avoid cartels (mean-
ing higher costs), which were obviously present
in certain trades at that time?
The project
Basically the most complicated and main part
of the project the terminal - was organized
with approx. 21 trades of independent contrac-
tors. In addition there were another approx. 20
so-called black boxes, meaning supply and de-
livery of technical equipment to be fitted into
the building, such as escalators, air condition-
ing, baggage handling system, communication
system etc. So with some 45 independent con-
tractors with the terminal under the leadership
of the airport and its engineers and architects,
there was some potential for conflicts.
Danish weather is tough. So the first
move of the management was to merge the first
5 trades/contracts into one. This meant that all
of the underground work, structural work,

str. 43 | e-Przegld Arbitraowy nr 1(8) 2012 r.

 ANALISES & OPINIONS
walls, roof etc. was performed by one contrac-
tor securing the others better working condi-
tions and thereby less risk as could result from
the a.m. bad weather.
This left 16 contracts (plus all the black
boxes) to be administered by the airport pro-
ject management.
Such a contract-organization gave the
airport as owner a very high degree of control
over matters like quality, materials, design etc.
It basically also meant lower prices as the pric-
ing is more transparent when taken trade by
trade and there are less intermediaries.
Those days in Denmark all competitive
bidding in the building sector was regulated by
national law according to which it was not al-
lowed to negotiate with the bidders at all, ex-
cept for to accept or refuse the bids. The airport
as a public utility had a duty also to obey the
then Utilities directive of the EU, according to
which the negotiated procedure was allowed
in addition to public or restricted tendering.
The rules of the directive are normally
created to prevent nepotism or favoring of cer-
tain bidders in the process and as the negotiat-
ed procedure is seen as possessing the highest
risk for such phenomena the use of this proce-
dure is restricted.
The airport used the negotiated proce-
dure (thereby violating Danish law, but refer-
ring to the superiority of the EU law) in order
to increase competition and efficiency, by nego-
tiating and clarifying with all bidders in a man-
ner transparent for everybody, then gradually
in stages - excluding the least competitive bid-
ders until the winner was found.
In the beginning the bidders were of
course suspicious, but they found out that they
could optimize with all what they learned
through the negotiations themselves and
through the information about their competi-
tors and their work that they gained via trans-
parency.
str. 44 |
Also misunderstandings and rocks on
the road were clarified and removed during
such discussions, so the end result for the win-
ner was that the scope of services and works
was very precisely defined together with the
airport and that the price was sharp and com-
petitive.
Negotiating this way requires that the
bidders act in a different way than usual. If they
are not open and constructive (but they should
not be nave, of course) they are simply unable
to be competitive and are usually the losers of
the race.
This procedure could expose the owner
to cartel style agreements or concerted practic-
es to a higher extent than in normal bidding
procedures, as, although forbidden by law, car-
tels and similar arrangements were present in
certain trades.
In the tendering materials the airport
therefore included a comprehensive statement
to be signed by the contractor, assuring that the
contractor was not neither participant in nor
knowledgeable of any cartels or similar re-
striction of competition that would affect the
bidding procedure in question. Also, the con-
tractor acknowledged that if now or later it was
revealed that some cartel or the like was pre-
sent then this would be regarded as a gross
breach of contract with those usual conse-
quences that has according to law, rescission of
contract and damages included.
By demanding the signatures of the bid-
ders ultimate (or parent company) senior
management on this statement cartels or other
restrictions of competition were to the best
knowledge of the airport excluded.
The bottom line was a saving of 20 % on
the terminal building as compared to the (al-
ready tight) budget and a bit less saved on the
other works around the terminal. In one quite
big trade (where the unit prices were quite
e-Przegld Arbitraowy nr 1(8) 2012 r.

easy to calculate) the final bid was almost 50 %
below the budget.
Some of this money was used for sav-
ings, some for improvements of the elements of
the project that were removed in the planning
phase for financial reasons. The rest was used
for a bonus to the contractors (see further be-
low)
For the entire project as such the rela-
tive price level (e.g. per m2 of the terminal etc.)
was a bit less than 50 % of the equivalent pro-
ject in Copenhagen Airport, terminal 3.
So it seemed that there was more than
enough money to satisfy the visions and ambi-
tions of the owners and management of the
airport.
As it appears the pricings of the contrac-
tors were quite sharp.
This of course makes it necessary that
the construction process runs smoothly and
efficiently and that all disputes, from the small-
est on the site to the biggest at the top-level
negotiation table, are avoided or strongly lim-
ited. Otherwise the contractors would be forced
to present claims against the airport or each
other (=trouble and cost) in order not to lose
money.
Therefore the airport decided to initiate
the first Danish partnering and dispute man-
agement program valid throughout the con-
struction time.
At the inauguration of the new airport several
years later the spokespersons for the contractors
(i.e. the top directors) expressed their satisfac-
tion with the project, the economical aspects and
the partnering and dispute management pro-
gram included. It was recognized, that although
prices were low the contractors got a normal
profit out of it, thanks to the way the process had
run.
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
The contractors also on top got a further bo-
nus of approx. 3 % of their respective contract
prices. (see below).
The partnering and dispute management
program
Inspiration to the program was first of all found
in the publications of the US Army Materiel
Command. The army buys for billions literally
every type of goods and services and has also
long standing and development aimed contrac-
tual relationships with its contractors.
The disputes are therefore not only a
question of time and money but also a threat to
the continued cooperation and relationship,
both on personal and institutional level. For
this reason in the 90s the army started devel-
oping the partnering concept. Its main publica-
tion Partnering for Success now in the se-
cond edition can be found on
http://www.amc.army.mil/pa/PartneringForS
uccess.pdf or
http://www.daytonaero.com/Files/resource/7
8.pdf
Back in Denmark the team of top man-
agers who ran the Storeblt Bridge project did
not want to see a repetition of all the disputes
arising from this project. The almost same team
took over a new project, the Danish Swedish
resund Bridge project and they developed the
very first Scandinavian partnering program and
carried through successfully the entire project
avoiding the disputes. They opened for the air-
port the access to look into their know how and
experiences.
The result of the inspiration collected
was the first Danish partnering project, Billund
Airport.
Already during the tender and negotia-
tions the contractors were getting used to a
different atmosphere as described above.
str. 45 |
 ANALISES & OPINIONS
Partnering Agreement
A partnering agreement was entered into with
each and every of the successful bidders.
The main contents was:
a general commitment to partner and to
solve all problems in the partnering
spirit
an obligation to participate with per-
sonnel from the site and from the man-
agement in one or more partnering sem-
inars where:
o the basic partnering concept and
spirit was defined
o a Rocks on the road procedure
was discussed and agreed
o a Conflict Escalation Procedure
was discussed and agreed
o alternative dispute resolution
procedure (ADR) was discussed
and agreed (without prejudice to
the standard Danish building ar-
bitration clause in the construc-
tion contracts)
o a Success Bonus was agreed
Provisions binding the parties to certain
rules in connection with the above men-
tioned, including that disputes must
NOT delay or disturb the project and
progress.
The airport itself together with its advisers
took the role of facilitators and coordinators of
the partnering project.
Partnering seminar
The successful contractors were called to a
partnering seminar where the above men-
tioned elements were highlighted by the air-
port together with advisers and external, neu-
tral experts. It was carefully checked that the
contractors (and the airport itself of course)
were represented by appropriate people.
str. 46 |
After that the participants were put in
groups in order to discuss how they could
commit and contribute to a smooth and dis-
pute-free performance of the whole project.
The groups were rotated so that people met
and discussed with as many as possible.
After the groups went back to the plena-
ry meeting, all elements developed by each and
every group were highlighted and discussed
and boiled down to some bullet points that eve-
ryone could agree to in the partnering spirit.
These points were then signed by all the per-
sons present in the form of the Partnering
Charter.
This showed later to have an enormous
effect, as when someone forgot the partnering
spirit it was easy to remind the relevant per-
sons of their personal obligations to partner.
It is important to point out that the obli-
gation to partner did not mean that the con-
tractor just had to say yes to whatever the
airport asked. It just meant that the parties had
to work for solutions and find them at the low-
est level possible and as fast as possible.
The rule was that any big problem you
face was a small problem once upon a time
meaning that the earlier it was solved the more
smoothly and cheaper it could be solved.
Rocks on the Road
Also the continuous activities within the Rocks
on the Road program were promoted to en-
courage relevant parties and persons to work
together in order to have any problems (legal,
technical, financial) or challenges in the project
highlighted and discussed/solved as early as
possible.
The idea was that if people directly in-
volved could not solve the problem then the
Conflict Escalation Procedure entered into
force and the directly involved people were
e-Przegld Arbitraowy nr 1(8) 2012 r.

thus excluded from dealing any more with the
specific problem.
The rule was that in a discussion or ne-
gotiation of a topic one party declares that here
is a dispute not solved, there is a problem. The
discussion was then moved away from the per-
sons involved and they did not participate any
more in the discussion/solving of the dispute.
The persons directly involved were thus given
the time to look after the project and the pro-
gress and they instead of thinking further about
the dispute.
The Conflict Escalation Procedure (the Conflict
Staircase)
If one of the discussion/negotiation partners
gave up and declared that here is a dispute then
the dispute passes to the next level e.g. the site
management of both parties or the project
management back in the headquarters of the
parties or first the one then the other if two
steps are wanted.
Again, if one party declares that agree-
ment cannot be reached the conflict moves to
the next level and the persons in the previous
level are excluded.
The ultimate step on the staircase could
be the CEOs of the parties.
All the representatives of the parties on
the different levels are mentioned by name in
the agreement and it is up to the parties to look
after formalities, if the identity of such person
changes e.g. due to job rotation.
The idea is that the persons involved are
motivated to find a solution as they are risking
losing control and/or prestige when/if the dis-
pute goes to the next level. They are of course
also obliged to act and negotiate in the partner-
ing spirit.
Before reaching the end of the Conflict
Escalation Procedure more than 99 % of dis-
putes were solved amicably.
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
Dispute Resolution Board (DRB)
The airport in its capacity as the owner and
facilitator constituted in due course a Dispute
Resolution Board comprising of two neutral
senior persons with commercial and technical
expertise (a consultant engineer and a CEO of a
construction company - not involved in the pro-
ject) as members and an external lawyer with
expertise in ADR as the chairman.
The DRB met at regular intervals not-
withstanding whether there were disputes up-
coming or not - in order to be updated at all
times with the project and so that the parties in
doubt also could consult informally with the
board.
In no event the construction process
could have been delayed by a dispute.
If a dispute could not be solved with all
the previous steps the DRB held a very fast
procedure with the parties (with lawyers or
other experts as they might desire) to find and
recommend a solution of the dispute which
could at the end of the day be accepted by both
parties.
If this within the tight deadlines -
could not be reached, the parties were obliged
to follow the directions given in the construc-
tion project and by the DRB as such, and then
the parties would have to subsequently have
the financial outstanding solved by traditional
arbitration in accordance with the construction
contract.
In the airport project the DRB had a few
informal consultations and one formal proce-
dure which ended with an amicable settlement.
It should be strongly emphasized that
any partys right to refer to arbitration is not
waived. However before arbitration the parties
involved are obliged to complete the previous
steps described above in an attempt to reach an
amicable settlement.
str. 47 |
 ANALISES & OPINIONS
Partnering Success Bonus
It is obvious that from the owners point of
view the partnering-project generates substan-
tial advantages by dramatically increasing the
chances of having the project delivered on time
and free of defects. Also, as pointed out above,
the owner gets some direct savings and, if suc-
cessful, avoids the costs and frustration of hav-
ing arbitration cases.
The advantages from the point of view the
contractors are less clear and obvious.
Therefore the airport decided, and included
in the agreements, that a bonus of approx. 3 %
of the contract sums (including approved extra
works etc.) would be payable at the end of the
project on the following conditions:
o the project would be delivered (by all of
the contractors respectively) in time and
free of substantial defects as to quality
and craftsmanship,
o within a short time after the final deliv-
ery all relevant parties should declare
formally that they had no further claims
towards the owner or each other than
those already settled (defects punch list
and warranty obviously excluded). Ac-
cording to the Danish construction law it
is already so, that there is a tight dead-
line for the final presentation of claims,
so it was easy to adapt this to the rou-
tines.
o no outstanding claims or arbitration
cases existed as of the closing dates be-
tween the owner and the contractors or
between the relevant contractors inter-
nally. This did not include subcontrac-
tors.
o the above should be fulfilled by all con-
tractors. If one failed then the bonus for
everyone would be annulled. A joint
and several right and risk.
str. 48 |
The bottom line was that all 16 contractors got
their bonus and praised the airport and the
project. The airport got what it wanted within
the time and (lowered) budget. And no parties
had to suffer afterwards from the headaches of
court or arbitration disputes.
Partnering something for Poland?
Seen from the point of view of a foreign con-
struction lawyer in Poland, programs, and not
the least partnering/dispute management pro-
grams like the Billund Airport program, in
principle would be very beneficial as far too
many projects are delayed or disrupted by dis-
putes and similar trouble.
Authorities
In Poland, however, it is also common that pro-
jects are delayed or disrupted by decisions (or
lack of decisions) from the relevant authorities
This happens to an extent which for a Scandi-
navian professional is extreme.
I guess there is a reason why Polish au-
thorities put a sign on the site of infrastructure
projects saying closed as from . and avoid-
ing the more relevant closed until ...
The contracting authorities and other
(private included) employers must be willing to
take the risk to committing to something. How
else could they seriously demand some proper
fulfillment from their contracting partners?
Balancing between fulfilling some for-
mal conditions (in 100 %) and preventing the
usage of e.g. an important infrastructure, has to
be changed dramatically in Poland.
Disregarding all other legal or political
arguments Poland simply cannot afford such
use/waste of resources for which nothing
beneficial to the society or the employer is ob-
tained in return.
As long as the authorities and the au-
thorities handling of matters remain this way,
whether justified or not, it can block the whole
e-Przegld Arbitraowy nr 1(8) 2012 r.

project due to the lack of fulfillment of a small
detail in some approval or specification, it
makes no or less sense for the contracting par-
ties to initiate a partnering program from a tra-
ditional point of view.
So in my opinion the government and
the authorities would have to improve the leg-
islation, the procedures and the interpreta-
tion/administration of the law dramatically in
order to avoid or limit the many senseless situ-
ations and paralysis and senseless waste of re-
sources occurring in projects of all kinds.
There must be a willingness and ability
by the public hand to balance the interests so
that e.g. a few deficient windows in a building
do not prevent the use of the building for long
periods.
But this takes time. What to do in the
meantime in order to avoid further waste of
resources?
The contracting parties attitudes
The experience from Denmark shows that the
partnering projects, which are the most suc-
cessful are those initiated and controlled by the
owner/employer part (such as the resund
Bridge and Billund Airport). Programs initiated
by contractors or consultant engineers etc.
normally are not able to survive the process of
construction, mainly due to the reason that
they are regarded as unbalanced and beneficial
to one party only.
Furthermore, if a partnering project is to
be beneficial as compared to the resources
spent on it, experience shows that the project
has to have a certain size and complexity.
Under the right circumstances it is how-
ever possible to benefit from a reduced part-
nering project even in smaller projects simply
by using relevant components of what is de-
scribed above.
It is however a very important pre-
condition that the employer himself upfront
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
makes up his mind and changes to a REAL
partnering spirit and imposes it on his employ-
ees and consultants also by a.o. education etc.
If the employer cannot manage this, the
partnering project is doomed to fail as contrac-
tors and other parties will see it as just a uni-
lateral optimization measure, only in the inter-
est of the employer and his budget.
In Poland many public and even private
employers show a fight to the very end atti-
tude which is hard to combine with partnering.
If the attitude of the employer, as it is often in
Poland, is so aggressive that (s)he would (have
to) go so far as to contest even an arbitration
award after having lost, (s)he should forget
about partnering.
Even before starting the employer has to
hold up the mirror in front of himself asking
whether (s)he is able to carry through in a de-
cent partnering spirit being fair, balanced and
decent even in situations where (s)he would
have to take the burden of some problems.
But on the other hand if you study the
extent of savings and avoidance of delays and
trouble triggered by partnering projects like
resund and Billund (and those of the Ameri-
can Army) any authority or government re-
sponsible for projects or private companies
ought to be VERY interested and motivated.
Partnering/dispute managing programs for
handling of authority interference?
As mentioned above some trouble, paralyzing
of the project included, are triggered by some
authority withholding or denying a permit or
approval, or imposing something on the con-
tracting parties, sometimes justified, some-
times not.
Very small things will then trigger
enormous negative consequences and this is
most likely to be far too expensive when bal-
anced with the benefit. In such situations it is
commonly seen that all parties lean back and
str. 49 |
 ANALISES & OPINIONS

defend their own interests instead of the inter-

ests of the common goal and the project.
The result is substantial expendi-
ture/waste of resources/delays for which no
benefits are generated. Meaning too expensive
for the employer or the general society.
Could the contracting parties develop a
methodology to handle such situations in
common and in the common interest of the
project? Or in other words to stand shoulder to
shoulder in handling the authority causing the
problem thereby creating a better opportunity
for fast and cheap solutions?
I could propose a procedure like the
Conflict Escalation Procedure (Conflict Stair-
case) for handling the problem between the
parties and showing the necessary strength vis-
-vis the relevant authority. In bigger projects
the Dispute Resolution Board too could play a
role, maybe even vis--vis the authority in
question.
A partnering success bonus (joint and
several as described above) to the contractor
parties involved, which is lost in case of delays,
deficiencies and disputes, could be the motivat-
ing factor for the contractors forcing them to
regard the problem as a common one and forc-
ing them to work (together) for a solution ben-
eficial for the project instead of just optimizing,
each of them for themselves.
The benefit for the employer is obvious:
savings in time and money. So that motivation
should be enough for the employer.

Peter Tr Nielsen*

*Peter Tr Nielsen: MCIArb, Founder and Senior Part-

ner, Peter Nielsen Partners Law Office, Warszawa

str. 50 | e-Przegld Arbitraowy nr 1(8) 2012 r.

 ANALYSES & OPINIONS

Alternative methods of resolution of construction dis-

putes in Ukraine
Volodymyr Yaremko

Spory budowlane na Ukrainie s zazwyczaj rozwizywane na drodze sdowej. Jednoczenie, arbitra

staje si powszechn metod efektywnego rozwizywania midzynarodowych sporw handlowych.
Coraz wiksza ilo duych projektw budowlanych, realizowana na Ukrainie z udziaem zagranicz-
nych wykonawcw. Wzorce umowne oraz sposoby rozwizywania sporw, do ktrych s przyzwycza-
jone ukraiskie spki, nie mog w takiej sytuacji dominowa. Coraz waniejsze staje si pytanie, czy
uznawane midzynarodowe standardy i najlepsze praktyki przemysu budowlanego sprawdz si na
Ukrainie, biorc pod uwag nadchodzce Mistrzostwa Europy w Pice Nonej EURO 2012, ktre przy-
cigny na Ukrain znaczn ilo projektw infrastrukturalnych. Jednym z kluczowych postanowie
w umowach budowlanych jest efektywna klauzula dotyczca rozwizywania sporw.

In this article, the readiness of Ukraine for the
settlement of construction disputes by interna-
tionally recognized mechanisms, namely those
introduced in FIDIC forms of contract, is dis-
cussed.
I. International construction pro-
jects in Ukraine and international
forms of contract (FIDIC)
The Ukrainian construction market was badly
hit by the global financial crisis. Starting from
2008 there was a decline in that sector. The
construction market finally recovered in 2011.
The sectors recent upturn is mostly driven by
infrastructure development thanks largely to
the preparations for the Euro 2012 Football
Championship which have entered the decisive
phase. Major infrastructure projects are often
financed by international institutions, such as
the World Bank and the European Bank for Re-
construction and Development (EBRD), which
apply internationally recognized standard
forms of construction contracts. The most pop-
ular standard forms are those developed and
published by the International Federation of
Consulting Engineers (FIDIC).
FIDIC contracts are not popular in
Ukraine and are typically used only in large-
scale projects involving foreign funding. Local,
and quite often foreign, contractors still prefer
to use the established schemes and are not will-
ing to resort to sophisticated legal instruments,
such as FIDIC forms of contracts. The specific
features of Ukrainian regulations sometimes
require significant amendments to FIDIC
standard forms for adaptation and use in
Ukraine.
At the same time, Ukrainian law does
not prohibit the use of foreign forms of contract
and there are even certain signs that such use is
becoming increasingly popular. For instance, in
order to ensure the good quality of road repair
and construction works, the State Motorways
Agency is considering setting up and develop-
ing a system for controlling and ensuring the
good quality of motorways, including by applica-

str. 51 | e-Przegld Arbitraowy nr 1(8) 2012 r.

 ANALISES & OPINIONS
tion of the FIDIC conditions of contract1. The
Ukrainian Cabinet of Ministers notes that the
institutional changes and the development of
legal principles for the road industry shall be
aimed at the construction of, repairs and rede-
velopment of roads by tender procedures using
the international standards for concluding civil
engineering works contracts (FIDIC)2. Besides,
the actions aimed at ensuring the good quality
of works on motorways planned by the Ukrain-
ian State Motorway Agency include: drafting
and adopting new legal instruments and amend-
ing those remaining in force with regard to
payments between the Employer and the Con-
tractor and the acceptance of works performed
pursuant to the FIDIC (International Federation
of Consulting Engineers) during construction of
motorways in order to hire independent groups
of engineering experts (whether Ukrainian or
foreign) for work quality control purposes3.
The above cited legal instruments at
least show the will of the Ukrainian authorities,
in particular in the motor roads industry, to
implement the FIDIC standards, i.e. best prac-
tices, in Ukraine. This is a good sign, if one con-
siders the conservative stand of practitioners in
this area, who, as mentioned above, prefer con-
tracting in accordance with the established
construction contracts.
The Ukrainian state authorities and con-
tractors should understand that they cannot
play only by their rules in the present-day
globalized world, i.e. in accordance with
Ukrainian law and Ukrainian forms of contract,
especially if foreign financing is involved. Near-
1 Order of the State Agency of Motor Roads no. 37 dated 09
February 2006 On adopting a plan for a scientific and technical
policy in the Ukrainian road industry for 2006-2010.
2 Decree of the Ukrainian Cabinet of Ministers no. 710 dated 03
August 2005 On adopting a State program for the develop-
ment of motorways for 2007-2011.
3 Order of the State Motorways Agency no. 513, dated 29 De-
cember 2010, On adopting an action plan for improving the
quality of motorway works.
str. 52 |
ly all large-scale construction projects in
Ukraine now include the so-called foreign el-
ement in the form of a foreign contractor, in-
vestor etc. This undoubtedly leads to increased
use of internationally recognized standard
forms of construction contract. For instance,
the contract between Boryspil International
Airport State Enterprise and the Turkish joint
venture Dou inaat ve Tic. A.. - Alsim Alarko
Sanayi Tesisleri ve Ticaret A.. - YDA naat ve
Sanayi Ticaret A.., concluded on 26 September
2008 for the construction of a new Terminal D
at Kyiv-Boryspil Airport, as part of the prepara-
tions for the EURO 2012 Football Champion-
ship, was based on the FIDIC standard form4.
Another example includes the Illichivsk
Sea Commercial Port Infrastructure Develop-
ment Project, which is financed by the EBRD.
The procurement documentation for the recon-
struction of existing berths nos. 7, 8 and 9 pro-
vides for the execution of a FIDIC-based con-
tract with the general contractor.
The Ukrainian local requirements for
construction projects are set out primarily in
3 Part 61 Construction Works of the Civil
Code of Ukraine, dated 16 January 2003, Part
33 Capital Construction of the Commercial
Code of Ukraine, dated 16 January 2003 and the
General Conditions for the Conclusion and Per-
formance of Contracts in Capital Construction,
adopted by the Ministry of Regional Develop-
ment and Construction of Ukraine on 1 August
2005 (General Conditions). Besides, there is a
local model construction contract approved by
the Ukrainian Ministry for Construction, Archi-
tecture and Facilities on 27 October 2005, the
use of which during contraction works is not
obligatory. However, it should be taken into
4 See e.g. para. 3 of the Order of the Ukrainian Cabinet of Minis-
ters no. 1219-p, dated 21 November 2011, On certain issues
regarding the construction of Terminal D at the State-Owned
Enterprise Boryspil International Airport State.
e-Przegld Arbitraowy nr 1(8) 2012 r.

account when negotiating a construction
agreement involving state authorities.
Article 323 of the Commercial Code of
Ukraine stipulates that large-scale construction
contracts involving a foreign party, should be
concluded and performed in the manner stipu-
lated therein , in international agreements and
in the General Conditions. Thus, the same re-
quirements of Ukrainian law apply to local and
foreign companies.
Moreover, the General Conditions in Ar-
ticles 119-126 contain the Specific terms and
conditions for concluding and performing con-
struction contracts involving foreign compa-
nies. In particular, Articles 120 and 122 pro-
vide as follows:
While concluding international construction
contracts, the parties have the right to apply
international customs and recommendations of
international organizations.
The terms and conditions of an international
construction contract may be based on model or
standard templates for international construc-
tion contracts, previously concluded contracts,
etc.,
Article 120 of the General Conditions
emphasizes that an international contract for
works may be declared invalid by a court, if it
was concluded in breach of the national legisla-
tion or the applicable international agreements.
As can be seen, Ukrainian law enables
the use of FIDIC forms of contracts for con-
struction projects in Ukraine. Construction
works performed on the basis of FIDIC con-
tracts are becoming increasingly common in
Ukraine. Having said that, adapting FIDIC con-
tracts to Ukrainian realities and Ukrainian law
requires significant legal expertise in order for
numerous local mandatory regulations to be
observed.
e-Przegld Arbitraowy nr 1(8) 2012 r.
ANALISES & OPINIONS
II. The FIDIC disputes resolution
method in Ukrainian reality
Ukraine is a party to all major international
instruments in the area of international com-
mercial arbitration, including the New York
Convention on the Recognition and Enforce-
ment of Foreign Arbitral Awards of 1958 and
the European Convention on International
Commercial Arbitration of 1961. The Law of
Ukraine On International Commercial Arbitra-
tion was adopted in 1994 on the basis of the
UNCITRAL Model Law 1985. That said, Ukraine
is still considered an arbitration-unfriendly
jurisdiction, and often with good reason. The
lack of efficient cooperation between arbitral
tribunals and state courts constitutes one of
the main problems restraining the develop-
ment of arbitration in Ukraine . Moreover, state
court judges are often unfriendly toward arbi-
tration or simply do not recognize arbitration
and its fundamental principles. This results in
the lack of their practical experience with
granting interim measures in support of arbi-
tration, in parallel court and arbitral proceed-
ings, interim measures blocking arbitrations
and frequent decisions to annul or to refuse to
enforce awards in Ukraine.
Nevertheless, despite the wide-spread
criticism of the Ukrainian judiciary, arbitration
remains the best way of resolving international
commercial disputes concerning or otherwise
related to Ukraine. This is also true of interna-
tional construction disputes.
FIDIC contracts provide for a multi-tier
mode of dispute resolution , unusual in
Ukraine, requiring that the dispute should be
submitted to the Disputes Adjudication Boards
(DAB) before it is referred to arbitration.
Ukrainian law is silent on DABs and includes
no regulations concerning their operation, the
enforcement of their decisions etc. Local com-
panies are not used to this type of dispute reso-
str. 53 |
 ANALISES & OPINIONS
lution mechanism, either. Ukrainian courts
would most probably not acknowledge a DABs
decision as final and binding. Moreover, courts
usually apply a very formalistic approach to the
interpretation of arbitration agreements and
may find an arbitration clause inoperative if it
contains a minor mistake. In International Port
Services Ltd. v. Odessa Maritime Commercial
Port, the Ukrainian Supreme Court annulled the
arbitral award on the grounds that the parties
had failed to meet a simple negotiation re-
quirement before the matter was referred to
arbitration5.
The formalistic approach of Ukrainian
courts also leads to the strict interpretation of
pre-arbitration requirements agreed by the
parties. The pre-arbitration procedure on
which the parties usually agree is recognized
by Ukrainian courts. Consequently, it is only an
arbitral award issued under the procedure set
forth in the arbitration clause, which may be
effectively enforced in Ukraine.
Such an attitude of Ukrainian courts has
a positive effect on the implementation in
Ukraine of the dispute resolution mechanism
prescribed in FIDIC contracts. Under FIDIC
standard forms of contract, a dispute should be
considered by the DAB before it is referred to
arbitration. Subsequently, the disputants may
appeal the DABs decision, which is not yet final
and binding, under the Rules of Arbitration of
the International Chamber of Commerce. Oth-
erwise, Sub-Clause 20.4 of the FIDIC 1999 Red
Book, the 1999 Yellow Book and the 1999 Sil-
ver Book, provides:
If the DAB has given its decision as to a matter
in dispute to both Parties, and no notice of dis-
satisfaction has been given by either Party with-
in 28 days after it received the DABs decision,
5International Port Services Ltd. v. Odessa Maritime Commercial
Port, Decision of the Ukrainian Supreme Court, dated 21 Octo-
ber 2009, in case no. 6-1863407.
str. 54 |
then the decision shall become final and binding
upon both Parties.
Due to the fact that that practically no arbitral
award in Ukraine is enforced on a voluntary
basis, the possibility of the DABs decision be-
ing enforced is next to nil, especially as it has
much lower legal force than an arbitral award.
In such circumstances, sub-Clause 20.7 applies,
which stipulates that:
In the event that:
(a) Neither Party has given notice of dissatis-
faction within the period stated in Sub-
Clause 20.4 [Obtaining Dispute Adjudica-
tion Boards Decision]
(b) the DABs related decision (if any) has be-
come final and binding, and
(c) a Party fails to comply with this decision
then the other Party may, without prejudice to
any other rights it may have, refer the failure
itself to arbitration under Sub-Clause 20.6 [Arbi-
tration]. Sub-Clause 20.4 [Obtaining Disputes
Adjudication Boards Decision] and Sub-Clause
20.5 [Amicable Settlement] shall not apply to
this reference.
Given the Ukrainian legal culture, namely the
lack of a tradition of amicable dispute resolu-
tion or voluntary execution of decisions, one
may assume that almost every dispute under
FIDIC contracts, which involves a Ukrainian
party - particularly as the respondent - would
lead to arbitration.
On the face of it, the DABs decisions might
seem useless, as they would always be ap-
pealed by the losing party or by the winning
party due to the losing partys failure to comply
with the decision. However, that is not the case
due to the following reasons:
(i) due to the strict time-frames envis-
aged in FIDIC contracts, the DABs are
undoubtedly faster (and often much
cheaper) than arbitration;
e-Przegld Arbitraowy nr 1(8) 2012 r.
 ANALISES & OPINIONS

(ii) in time, Ukrainian companies should successfully implemented in practice for the
become accustomed to DABs, and purposes of efficient settlement of construction
the number of the DABs decisions disputes.
performed on a voluntary basis
should increase; Volodymyr Yaremko*
(iii) the DABs are undoubtedly more effi-
cient in resolving small and medium-
sized disputes arising during con-
tract implementation;
(iv) if a party has appealed the DABs de-
cision, the decision will become a
good starting-point for the arbitral
tribunal, as some of the work will
have already been performed by the
DAB;
(v) if a party fails to comply with the
DABs decision, the arbitral tribunal
will not have to decide the dispute
on the merits; rather, it will only re-
solve the failure to execute the
award saving time and reducing the
costs of arbitration.
The dispute resolution mechanism introduced
into FIDIC contracts is undoubtedly unusual for
Ukrainian companies which prefer to resolve
construction disputes by litigation or one-tier
arbitration. However, given its advantages and
due to the fact that foreign construction project
participants insist on using it, Ukrainian com-
panies should apply such best practices to their
construction projects and duly observe this
type of dispute resolution procedure.

III. Conclusion

Arbitration is the right way of resolving inter-

national construction disputes in Ukraine.
FIDIC forms of contracts are not very popular
in Ukraine, but they are used with increasing
frequency and will be even more common in
the future. The multi-tier dispute resolution
mechanism introduced into FIDIC contracts is *Volodymyr Yaremko: Associate and Attorney-at-Law at
not often used in Ukraine. However, it may be the Lviv office of Arzinger law firm (Ukraine)

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 55 |

 CASE LAW

The legal nature of a consortium in the context of credi-

tors joint and several liability
Acting as the Claimant in the present case was a consortium composed of several companies which
jointly brought a claim for payment. The Arbitral Tribunal had to determine the nature of the consor-
tium under Polish law and to establish whether the companies composing it might assert their claim
for payment on the basis of creditors joint and several liability.

Award published in: 2009
Award rendered in: Warsaw
Object of dispute: Claims under additional
works on a construction project
From the reasons:
(...) To begin with, one should determine the
legal relationship by which the Claimants, re-
ferred to collectively as the Contractors in the
Contract, were bound. The relationship in ques-
tion arose from the Contract concluded by the
Parties. A legal assessment of the Contract
should be made on the basis of Polish law. In
the Contract, the Contractors are also referred
to as a consortium. In principle, consortium
does not function as a legal concept in Polish
law (S. Wodyka [in:] S. Wodyka (ed.), System
prawa handlowego [The system of commercial
law], Volume 5, p. 806; J. Hilla, Prawne
problemy funkcjonowania konsorcjum [Legal
problems with the operation of a consortium],
Radca Prawny no. 5 of 2005, p. 35 and the writ-
ings cited therein). No in-depth analysis of the
Contract was required for the purposes of the
present arbitration in order to determine
whether the Contract contained the features of
a consortium agreement identified by legal
commentators. It sufficed to state, at least with-
in the scope under consideration, i.e. from the
viewpoint of an assessment of the legal rela-
tionships between the Parties, that the provi-
sions on the partnership agreement (Polish:
umowa spki, Art. 860 et seq. of the Code of
Civil Procedure) should be applied to the Con-
tract. Such a conclusion may be drawn from,
among others, the description of the mutual
economic objective, i.e. construction of the
structure defined in the Contract, the detailed
description of the mode of cooperation, a de-
scription of the partners shares in profit, as
well as the use of the term partner with refer-
ence to the parties to the agreement, which
corresponds to the notion of partnership ac-
cepted in Polish law. Accordingly, one should
determine the nature of a debtors obligation
toward partners in a civil partnership (Polish:
spka cywilna).
Under Art. 369 of the Civil Code, an obli-
gation is referred to as joint and several if it
results from statutory law or from a legal act.
Joint and several liability is an exception to the
rule that an obligation is divided into parts if
the object of an obligation is divisible and in-
volves multiple entities. The provisions on the
civil partnership provide only for the joint and
several liability of partners for obligations of
the partnership, but not for the liability of third
parties. There is no other statutory basis for
assuming that the Claimants bear joint and sev-
eral liability as creditors. Nor does such liability
result from the legal act, as there is no such
provision in the Contract.
The above discussion and findings seem
to lead to the conclusion that, if the Claimants

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 56 |


are entitled to claims for payment against the
Respondent in the present case, the said claims
were divided into two parts by operation of
law, in accordance with Art. 3791 of the Civil
Code. In the absence of any circumstances to
the contrary, the two parts are equal (Art.
3791 of the Civil Code, 2nd sentence). Such
division of the obligation is also confirmed by
the stipulation in the contract of the Parties
about equal shares in the partnership.
However, adoption of such ex lege divi-
sion of an obligation, whereby partners in a
civil partnership as understood by Art. 860 et
seq. of the Civil Code constitute one of the
parties, raises serious doubts. In accordance
with a commonly held view, the joint property
of partners during the life of a civil partnership
is in the nature of joint co-ownership whereby
the shares of partners are not specified and the
co-owners may not dispose of them at their
discretion. Unlike the articles of associations of
companies limited by shares, the civil partner-
ship agreement does not give rise to a separate
legal entity. In principle, it only triggers conse-
quences inter partes. This is the reason why the
contractual clause about equal shares is irrele-
vant from the viewpoint of any possible deter-
mination of shares in a claim. Such a clause is
only binding upon the parties to the agreement
concerned.
Legal commentators note that a sui gen-
eris joint claim arises in relation to claims
constituting the object of the joint co-
ownership of partners in a civil partnership (M.
Litwiska, Skuteczno umowy spki cywilnej of a payment to one of the creditors had to be
wzgldem osb trzecich [Effectiveness of a civil
partnership in relation to third parties],
Przegld Prawa Handlowego no. 9 of 1997, p.
38). This should lead to the conclusion that if
the debtor remits payment to one of the part-
ners, the obligation is discharged with respect
to all other partners. This view is also con-
firmed by S. Grzybowski, among others (S.
e-Przegld Arbitraowy nr 1(8) 2012 r.
CASE LAW
Grzybowski (ed.), System Prawa Cywilnego.
Prawo Zobowiza. Cz szczegowa [System
of Civil Law. The Law of Obligations. Detailed
Part], Volume III, part 2, Wrocaw 1976, p.
814): A claim is treated as if only one creditor
existed, i.e. the partnership, not all partners.
Such an interpretation entails far-reaching con-
sequences. A partner may not demand that the
partnerships debtor pay any portion of the debt
to it. Consequently, only all partners are enti-
tled to demand payment from the partnerships
debtor, provided that such payment should be
made in a manner which is most suited to the
specific nature of the partnership originating,
in particular, from the joint co-ownership of the
partners with respect to the partnerships as-
sets, including claims.
In the judgment of January 17, 1997, I
CKN 42/96, the Supreme Court held that [t]he
provision of a consideration to one of the part-
ners of a civil partnership constitutes due per-
formance of the obligation, unless the civil
partnership agreement, known to the debtor,
stipulates that shareholders determined the
manner of managing the partnerships affairs
and of its representation other than provided
for in Art. 865 and 866 of the Civil Code. The
Arbitral Tribunal concurs with this legal view.
The Parties are jointly seeking payment in the
statement of claim, acting as the partners of a
partnership in this regard. This justifies the
conclusion that the awarded sum may be paid
to any one of them. Due to the specific nature of
the claim, a statement about the consequences
made in the dispositive section of the award.
str. 57 |
 CASE LAW

Limitations period relating to a FIDIC-based construction

contract in the context of partial delivery of works

A plea of limitation concerning payments for works performed and delivered in stages was raised dur-
ing the consideration of a dispute over additional construction works. The Arbitral Tribunal had to
decide whether the plea was justified.

Award published in: 2009
Award rendered in: Warsaw
Object of dispute: Claims for payment for ad-
ditional construction works
From the reasons:
(...) In order to determine whether a plea of
limitation is justified, it is crucial to establish
when the limitations period began to run. Oth-
erwise, it is beyond dispute that, in accordance
with Art. 118 in fine of the Civil Code, the limi-
tations period lasts 3 years.
In principle, the limitations period begins to
run once the claim has become due (Art. 1201
in principio of the Civil Code). As regards a con-
struction contract, unless the parties do not
agree otherwise, the contractors claims be-
come due upon the delivery of works (judg-
ment of the Court of Appeal in Katowice, dated
January 16, 1991, I ACr 118/90, OSA
1992/1/10). Moreover, it is worthwhile to cite
the view expressed by the Supreme Court in its
judgment of April 16, 2007, III CSK 366/06,
with which the Arbitral Tribunal fully concurs:
partial delivery and payment of a portion of re-
muneration merely signifies the confirmation by
the investor, for remuneration payment purpos-
es, that a certain portion of works has been per-
formed. Such a manner of settlement does not
prevent the parties from settling their accounts
definitively and in full after the delivery of the
entire facility by the contractor and the ac-
ceptance thereof by the investor (see also the
judgments of the Supreme Court, dated January
23, 2007, III CSK 275/06, and September 4,
2002, I CK 1/02). The above is the result of the
indivisible nature of the consideration prom-
ised in the construction contract. The said na-
ture is not altered by the admissibility of partial
deliveries specified in detail in the Contract,
which was stipulated in Art. 654 of the Civil
Code.
Interim Payment Certificates do not
change the maturity date of the Claimants
claims because they are not definitive in nature
and may be modified by the Contract Engineer
in accordance with Sub-clause 60.4. Under
Sub-clause 60.6 of the Conditions of Contract,
the sums recognized as due to the contractor
are definitively determined only in the Final
Statement, so that the contractor may not fore-
see which of its claims will not be acknowl-
edged and should be asserted in arbitration
proceedings.
It follows from the above that a contrac-
tual stipulation of payment for partial deliver-
ies does not determine the maturity date of a
claim. Therefore, the question one should ask
is: Did the Parties agree a different maturity
date for a claim? In answering this question,
one must conclude that the Respondent was to
make payments to the Claimants on the basis of
the Final Payment Certificate (as provided for
in clause 60.8 of the Conditions of Contract)

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 58 |

 CASE LAW

which the Contract Engineer should have is-

sued within 20 business days following receipt
of the Final Certificate and of the Written
Statement. Under Sub-clause 60.10, payments
should be made within 45 business days fol-
lowing delivery of the Final Payment Certificate
to the Ordering Party. The maturity date there-
fore falls on the day following that period.

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 59 |

 CASE LAW

A construction contract or a contract for the perfor-

mance of a specific task?
A plea of limitation was raised in a case relating to a claim for payment for construction works involv-
ing the delivery, installation, launch and arrangement for delivery by the competent authority of an
escalator and lifts as well as free-of-charge cooperation on a transparent lift shaft design in an infra-
structure project. In order to decide if the plea was justified in light of various limitations periods, the
Arbitral Tribunal had to determine whether the works in question were actually conducted under a
construction contract (Polish: umowa a roboty budowlane) or a contract for the performance of a
specific task (Polish: umowa a dzieo).

Award published in: 2011
Award rendered in: Warsaw
Object of dispute: Claim for payment for con-
struction works on an infrastructure project
From the reasons:
Legal classification of the Contracts with X.
In order to assess the claims under Invoices
Nos. 1 and 2, in the context of the effectiveness
of the related set-off, it was crucial to establish
whether the Contracts with X constituted con-
tracts for the provision of services, as referred
to in Art. 750 of the Civil Code; contracts for the
performance of a specific task, as provided for
in Art. 627 et seq. of the Civil Code; or construc-
tion contracts, as defined in Art. 647 et seq. of
the Civil Code. Determining the legal nature of
these contracts was important in that, under
Art. 751 Point 1 of the Civil Code, claims for
payment of the remuneration for services of a
business entity become time-barred after two
years. The two-year limitations period, starting
from the day the work is delivered, is also ap-
plicable to claims under a contract for the per-
formance of a specific task (Art. 646 of the Civil
Code); while, due to the lack of lex specialis,
construction works claims become time-barred
in accordance with the general principles laid
down in Art. 118 of the Civil Code, i.e. after
three years (as stated in the judgment of the
Supreme Court of January 11, 2002, III CZP
63/01).
Contracts with X as result-based agree-
ments. While a service provision contract rep-
resents a due diligence agreement, a contract
for the performance of a specific task, like a
construction contract, constitutes a result-
based agreement. An analysis of the Contracts
with X leads to the conclusion that X committed
itself to the delivery, as well as the full installa-
tion, launch and arrangement for delivery by
the competent authority of escalators and lifts
within the Structure as well as to free-of-charge
cooperation on a transparent lift shaft design in
the scope of issuing guidelines and checking the
design. This means that the main obligation of
X was result-oriented (in the scope of the deliv-
ery of escalators and lifts, including the installa-
tion, launch and arrangement for such deliv-
ery), with the auxiliary part of the main obliga-
tion being a due diligence commitment (in the
scope of cooperation on a lift shaft design). Ac-
cordingly, we shall deal with the legal classifi-

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 60 |


cation of the Contracts with X as result-based
agreements exclusively in the context of a con-
tract for the performance of a specific task and
a construction contract.
The contracts with X in light of Art. 647 of
the Civil Code. The Arbitral Tribunal held the
view that the construction works specified in
the Building Law might be performed under a
construction contract or a contract for the per-
formance of a specific task. This statement is
consistent with the view expressed by the Su-
preme Court in the judgment of September 16,
2009 (II CSK 104/09). That being said, one
should agree with the Claimant that, under
Art. 65 2 of the Civil Code, an assessment of
the nature of a contract depends on the actual
content thereof, as well as the purpose and the
mutual intention of the parties, not on the con-
tracts name. Under Art. 647 of the Civil Code,
in concluding a construction contract, the con-
tractor commits itself to delivering the con-
tracted-for structure, to be built in accordance
with the design and the rules for building ex-
pertise, and the investor undertakes to perform
the tasks required by the applicable regulations
in order for the works to be prepared or, more
specifically, to hand over the construction site
and deliver the design, to take delivery of the
structure and to pay the remuneration agreed.
The following elements of the above definition
merit particular attention:
a. the contractor undertakes to deliv-
er a structure, i.e. a large-size project pos-
sessing individual features, both physical and
functional, associated with designing and insti-
tutional supervision (cf. judgments of the Su-
preme Court of May 18, 200, I CSK 51/07 and
of January 11, 2002, III CZP 63/01). In the
judgment of July 22, 2004 (II CK 477/03), the
Supreme Court also referred to a structure, as
understood by the provisions governing con-
e-Przegld Arbitraowy nr 1(8) 2012 r.
CASE LAW
struction works, as the specified result of con-
struction works which constitutes an autono-
mous whole in the design documentation and
which can be separated at least in the technical
or technological sense. It should be inferred
from the above that the delivery, installation,
launch and the arrangement for delivery of lifts
and escalators may not be classified as the im-
plementation of a large-size project. Undoubt-
edly, it is the construction of the entire struc-
ture the Structure under discussion which
constitutes such a project, not the delivery, in-
stallation and launch of some of the facilities
within the Structure. As regards exercising the
institutional supervision referred to in the Su-
preme Courts rulings, construction supervision
tasks are performed, in accordance with the
Building Law (Art. 80 et seq.), by construction
supervision authorities viz. the district, re-
gional or chief construction supervision inspec-
tor. Under the Contracts with X, the works per-
formed thereunder were to be supervised by
the Office of Technical Inspection (UDT), an
authority tasked with technical inspection, not
building supervision.
b. the construction works are to be
performed by the contractor in accordance
with the design, with the proviso that the appli-
cable clause subsequently provides that the
investor is obliged to deliver the said design.
Pursuant to the Supreme Courts judgment, a
construction contract which is not accompa-
nied by the delivery of a design by the investor
constitutes a contract for the performance of a
specific task, to which the provisions on con-
struction works do not apply (judgment of the
Supreme Court of October 6, 2004, I CK 71/04).
In this regard, it should be noted that some le-
gal commentators are of the view that, even if it
is the contractor which is obliged to deliver a
building design under the contract, the said
contract does not cease to be a construction
str. 61 |
 CASE LAW
contract (such a view was expressed by Janusz
A. Strzpka, Ewa A. Zieliska, Glosa aprobujca
do wyroku Sdu Najwyszego z dnia 11 stycznia
2002 r. [Approving gloss to the judgment of the
Supreme Court of January 1, 2002], III CZP
63/01, OSP 2002/10/125). In the present case,
the works under the contracts with X were not
performed on the basis of any design, and Xs
commitment under Art. 1 to free-of-charge co-
operation on a transparent lift shaft design or,
more specifically, on issuing a set of guidelines
and on checking the design, by no means con-
stitutes any obligation to deliver a design or Xs
obligation to perform the works contemplated
by the contracts with X in accordance with a
design. That being said, it should be added that
the very undertaking to install lifts and an esca-
lator, i.e. to adapt them to the existing infra-
structure, does not mean that the works were
performed on the basis of the Claimants de-
sign. Quite the contrary, Xs obligation was per-
formed in accordance with the contractors de-
sign and technology.
c. as part of the tasks related to the
preparation of works, the investor is obliged to
hand over the construction site in addition to
being obliged, as mentioned above, to deliver a
design. In this regard, the Arbitral Tribunal re-
fused to accept the position expressed by the
Respondent, that the timely commencement
and conclusion of the installation of the par-
ticular facilities depend on the timely prepara-
tion of the work front (pursuant to the Con-
tracts with X), in support of its contention that
the Contracts with X were essentially construc-
tion contracts. The term construction site
(Polish: teren budowy), as used in Art. 647 of
the Civil Code, is not identical to work front
(Polish: front robt), a concept which has a dif-
ferent meaning, not necessarily connected with
a construction site. In fact, construction site is
defined by the Building Law as the area in
str. 62 |
which construction works are carried out, in-
cluding the area occupied by backup facilities
(Art. 3 Section 10 of the Building Law). The
term work front is not confined to the con-
duct of construction works and it denotes the
creation of appropriate conditions in order for
the given activities to be conducted.
Other issues related to the legal classifica-
tion of the Contracts with X
(...) In this scope, the Arbitral Tribunal stated
that, in order to determine that the facilities
constitute part of the structure, as a construct
which came into existence under a construction
contract as understood by Art. 647 of the Civil
Code, it is necessary to determine that they
represent a component thereof i.e. a tangible
object connected with another tangible object,
operating as the superior (main) object (this
view was expressed by M. Bednarek, [in:] M.
Bednarek, Mienie. Komentarz do art. 44-55(3)
Kodeksu cywilnego [Property. Commentary to
Art. 44-55(3) of the Civil Code], Zakamycze,
1997). The result of the finding that a given
facility constitutes a component of the main
object (the structure) is that in accordance
with Art. 47 of the Civil Code the facility in
question may not constitute a separate object
of ownership (property) from the structure.
Under the Contracts with X, the facilities con-
templated in those Contracts were not to be-
come the property of the Claimant until it had
performed its payment obligations. The stipula-
tion that ownership was not to be obtained un-
til the price had been paid suggests that the
facilities in question may not constitute a com-
ponent of the Structure, and thus may not con-
stitute a structure within the meaning of Art.
647 of the Civil Code.
As regards the issue of a building permit,
the Building Law (Art. 28 Section 1) provides
that construction works are performed on the
basis of a final building permit. In this case, the
e-Przegld Arbitraowy nr 1(8) 2012 r.

Arbitral Tribunal did not agree with the Re-
spondent that the works were performed by X
on the basis of a decision concerning a building
permit and approving the building design. In
point of fact, the works under the Contracts
with X were carried out on the basis of the
Conditions for commencing the installation,
for conducting works and for taking delivery of
lifts in accordance with the Lifts Directive (LD)
95/16/EC. The fact that a building permit for
the Structure in M. was issued does not yet
mean that the works were performed by X on
the basis of a final decision concerning a build-
ing permit. In fact, the building permit present-
ed by the Respondent does not refer to the
conditions for performing works involving the
installation of lifts or an escalator.
The Contracts with X may not be classi-
fied as construction contracts concluded with
the contractor under Art. 6471 1 and 2 of the
Civil Code. The above Article provides that a
contract with a subcontractor constitutes an
element of a greater whole, i.e. of a construc-
tion contract entered into with the general con-
tractor and, in order to be valid, it requires the
investors consent and the delivery of the de-
sign documentation concerning the given part
of the structure. These elements are nowhere
to be found in the Contracts with X. The above
arguments prove that the Contracts with X may
not be classified as construction contracts. The
works performed by X should be regarded as
furnishing works (Polish: prace o charakterze
wyposaeniowym) (see the judgment of the Su-
preme Court of March 25, 1998 , II CKN
653/97). At this point, it is necessary to cite the
view expressed by the Supreme Court in its
judgments of November 6, 2002 , III CKN
997/00 and of May 18, 2007, I CSK 51/07 that,
if a party fails to demonstrate that a given con-
tract contains features which enable it to be
classified as a construction contract, it is cor-
rect to infer that the parties were bound by a
e-Przegld Arbitraowy nr 1(8) 2012 r.
CASE LAW
contract for the performance of a specific task.
Which is exactly how the Arbitral Tribunal clas-
sified the Contracts with X.
Incidentally, the Arbitral Tribunal
wishes to add that it is irrelevant for the finding
that the Contracts with X constitute contracts
for the performance of a specific task that, in
accordance with the definition of construction
works provided in Art. 3 Section 7 of the Build-
ing Law, the works in question may involve,
among others, installation and that the struc-
ture may also include technical facilities under
Art. 3 Section 1 of the Building Law. Likewise,
one should disregard, as irrelevant to the case
at hand, the fact that the site manager is a con-
struction process participant under Art. 17 of
the Building Law, even though it was the site
manager who signed the Material Inspection
Certificate on behalf of the Claimant, which
constitutes proof that X has taken delivery of
the works. As noted above, the fact that specific
works are classified as construction works
within the meaning of the Building Law does
not yet mean that they were performed under a
construction contract, as defined by Art. 647 of
the Civil Code. It should be noted that, other
than the site manager, the Contracts with X do
not mention any other participants typical of
the construction process, such as the inspector,
investor supervision inspector or designer. In
accordance with the judgment of the Supreme
Court of May 25, 1998 (II CKN 653/97), an as-
sessment of how the investment project was
implemented under the Building Law require-
ments serves as the main criterion for differen-
tiating between a contract for the performance
of a specific work and construction contract.
str. 63 |
 LEWIATAN ARBITRATION MOOT COURT

The opening edition of the Lewiatan Arbitration Moot Court, Polands first moot
court competition for bar trainees, organized by the Lewiatan Court of Arbitra-
tion and Young Arbitration Practitioners in Poland at the Lewiatan Court of Arbi-
tration (YAPP) finished on May 31, 2012.

The competition consisted of two parts: written
and oral. In the written part, competing teams
drafted a statement of claim and a statement of
defense, whereas in the oral part, they acted as
counsel and took part in a moot arbitral hear-
ing before a panel consisting of three arbitra-
tors. The moot case concerned a construction
dispute in connection with the construction of a
football stadium for the EURO 2012 champion-
ship, to be resolved under the new Rules of the
Lewiatan Court of Arbitration, effective as of
March 1, 2012. A selection of photographs
from the oral part of the competition are in-
cluded below.
When we organized the competition, we
did not expect such immense interest from jun-
ior lawyers, as over 100 teams and 250 bar
trainees from all across Poland took part in the
competition. The response to the Lewiatan
Arbitration Moot Court will imbue all profes-
sional arbitrators with a hefty dose of opti-
mism, as it confirms a growing interest in arbi-
tration among the younger generation of law-
yers, and demonstrates their genuine interest
in enhancing their professional skills. The par-
ticipants highly rated the educational dimen-
sion of the competition and appreciated being
able to receive advice and comments from re-
nowned arbitrators. For many of them, the
competition was their first opportunity to try
their hand at arbitration and to appear before a
panel of arbitrators. Professional arbitrators
stressed that all participants were well pre-
pared, that the briefs they drafted and the
pleadings they made were of very good quality
and generally praised them for outstanding
elocution skills.
Organizing such a large competition was
a real challenge. The scale of the project was
unprecedented, as was shown by the impres-
sive number of teams and participants as well
as other indicators. For example, the partici-
pants briefs and pleadings were assessed by
approximately 150 arbitrators, and over 70
hearings took place in the oral phase. Organiz-
ers obtained invaluable help from sponsors and
the authorities of the Polish bar associations
(legal counsel and advocate bars). Major con-
tributors to the project include the Polish Arbi-
tration Association (the competitions main
supporting partner), Polish and international
law firms, as well as Regional Chambers of Le-
gal Counsel and Regional Chambers of Advo-
cates from across the country. The competition
was held under the honorary patronage of the
President of the National Board of Legal Coun-
sel, Maciej Bobrowicz and President of the Na-
tional Board of Advocates, Advocate Andrzej
Zwara, as well as the Chartered Institute of Ar-
bitration (CIArb) in London.

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 64 |

 Not only was the competition an oppor-
tunity to promote arbitration as a dispute reso-
lution method, but also it served to integrate
the Polish arbitration community and bar
trainees from different regions of the country.
The Lewiatan Arbitration Moot Court stands a
fair chance of becoming the Polish equivalent of
international competitions, including the fa-
mous Willem C. Vis International Commercial
Arbitration Moot, thus becoming a permanent
fixture in the annual calendar of arbitration
events.

Once again we would like to extend our

heartfelt thanks to everybody who contributed
to the wonderful success of this project and to
encourage them to take part in the same com-
petition again next year.

Anna Maria Pukszto

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 65 |

 LEWIATAN ARBITRATION MOOT COURT

Ist Edition
of the Lewiatan Court Competition for young lawyers
On May 30-31, 2012, the Lewiatan Arbitration Competition finale and the formal announcement of its
results were held. The competition was the first arbitration moot court competition in Poland ad-
dressed to trainee advocates or trainee attorneys all over Poland. Such a competition takes the form of
common moot court or arbitration moot court proceedings. The competition has received much inter-
est (100 teams, over 250 lawyers, have responded to it). This shows great interest in and much need
for advancing knowledge in the area of alternative ways of dispute resolution. The subject matter of
the competition case was dispute resolution of disputes involved in the process of carrying out a
building investment.

The Finale took place at the Warsaw University Library. In the Arbitral Tribunal were Mec. Jolanta
Nowakowska-Zimoch, Profesor dr hab. Stanisaw Sotysiski i Profesor dr hab. Jerzy Rajski. An-
nouncement of the results was held at the Arbitration Picnic in the Gardens of the Warsaw University
Library. The winners are: Alicja Zieliska i Pawe Kwiatkowski (team: KAL129).

The Information Point for Teams (Warsaw Towers)

The Information Point for

teams was situated in Warsaw
Towers.

Announcement of results of
the Eliminations.

Photo:. Tomasz Szczepek

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 66 |

 Photo: Robert Gardziski
The Welcoming: Mec. Anna Pukszto Vicepresident of Lewiatan Court of Arbitration and Mec.
Agnieszka Wojciechowska President of Young Arbitration Practitioners In Poland

The Arbitral Tribunal: (after

exlusion of herself dr Beata
Gessel Kalinowska vel Kalisz):
Mec. Jolanta Nowakowska-
Zimoch, Profesor dr hab. Stani-
saw Sotysiski and Profesor dr Photo: Robert Gardziski
hab. Jerzy Rajski

Photo: Robert Gardziski

Team KAL3: ukasz Lasek and Jeremiasz Ku- Team KAL129: Alicja Zieliska and Pawe
mierz Kwiatkowski

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 67 |

 Photo: Robert Gardziski

The Arbitration Picnic

The Best Statement of Claim The Best Speaker (Mec. Maciej

(Mec. Wodziemirz Chrcik
handing the prize to Aleksandra
Jankowska from the KAL9 Team)
The Best Reply to The Statement Bobrowicz handing the prize to
of Claim (Mec. Anna Pukszto Jeremiasz Kumierz)
handing the prize to the KAL89
Team: Elbeta Bogucka, Patrycja
Bolimowska, Andrzej Gsior)

Photo: Robert Gardziski

The announcement of results: (from left) P. Kwiatkowski, A. Zieliska, dr B. Gessel Kalinowska
vel Kalisz, prof. S. Sotysiski, mec. J. Nowakowska-Zimoch, prof. J. Rajski, . Lasek, J. Kumierz

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 68 |

 Konkurs Arbitraowy Lewiatan

Handing of prizes Photo: Robert Gardziski

Photo: Robert Gardziski

The Arbitration Picnic Photo: Robert Gardziski

e-Przegld Arbitraowy nr 1(8) 2012 r. str. 69 |