Answer ... Most local franchising systems use the Polish common courts for dispute resolution; whereas foreign franchisors tend to choose either foreign courts or arbitration tribunals (local or international).
In franchise disputes, the parties can choose between litigation and alternative dispute resolution (ADR) – that is, arbitration or mediation.
Polish courts: In an agreement, the parties can decide on which common court has jurisdiction to decide in the event of a dispute.
Litigation in Poland remains slow. The duration of proceedings at first instance may be approximately 20 to 30 months. In addition, the COVID-19 pandemic has caused legal proceedings to become even more protracted.
ADR: Arbitration is the most common form of ADR. Arbitration clauses are generally enforceable in Poland. The arbitration clause should be executed in writing.
Mediation can be conducted on the basis of a mediation agreement or a court order directing the parties to engage in mediation. Mediation is voluntary and is not conducted if one of the parties does not agree to it.
In Poland, permanent arbitration courts do exist, the most established of which are:
- the Court of Arbitration at the Polish Chamber of Commerce; and
- the Court of Arbitration at Polish Confederation Lewiatan.
An arbitration court may also be established on an ad hoc basis. Usually, proceedings at the arbitration court have a single instance, but the parties may agree otherwise in the contract. Arbitration is usually faster than proceedings before the common courts, with the average length of arbitration proceedings being nine months.
Arbitration courts are not bound by procedural rules, so less complex procedures can be used. However, arbitration proceedings must comply with the fundamental principles of the law; otherwise, they may be considered contrary to the basic principles of the legal order of the Poland and their rulings may be set aside by a court.
Arbitration fees are usually higher than court fees, but the total cost of the proceedings is usually lower in arbitration, as arbitration is statistically quicker and more specialised.
From an international franchisor’s perspective, it is important to note that Poland is a signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which means that foreign arbitral awards are enforceable in Poland. Also, as Poland is an EU member state, the Polish courts will recognise and enforce court judgments from other EU member states (in accordance with EU regulations).