In September 2009, the Polish Supreme Court ruled that state courts cannot review the merits of the tribunal's decision, including whether a tribunal had properly applied the substantive law or correctly established the facts of the case (see Legal update, Judicial review of arbitral awards).

In this case, the claimant applied to the Polish state court to annul an arbitration award on the ground that it was contrary to the fundamental rules of public policy under Article 1206(2) of the Polish Code of Civil Procedure (CCP). The court of first instance held that the tribunal's finding that the arbitration agreement in question was binding on the parties had violated public policy. However, the Court of Appeal disagreed and dismissed the claim for annulment. It held that the court of first instance had exceeded its powers of judicial review of an arbitral award and confirmed that the courts were not permitted to review awards on their merits. The Supreme Court upheld the decision of the Court of Appeal.

The decision confirms previous decisions of the Polish Supreme Court on this issue and aligns Poland with prevailing international practice.

On 2 October 2009, Poland and the Dutch Insurer Eureko announced the settlement of their eight year long dispute concerning Powszechny Zaklad Ubezpieczsen (PZU), the leading insurance group in Poland (see Legal update, Dutch insurer Eureko, Polish government settle investment dispute, setting up IPO for Poland's state-owned insurer).

In furtherance of its privatisation policy, Poland had signed a Share Purchase Agreement (SPA) with Eureko and another buyer for 30% of the share capital of PZU. Eureko was to buy 20% of the shares, and it later acquired the shares of the other buyer, thus holding a 30% stake in the company. The SPA also signalled the intention of Poland to hold an Initial Public Offering (IPO) for all or part of the remaining shares of PZU as soon as practicable, unless the local market conditions made it impossible to do so. The IPO would have allowed Eureko to gain majority control over PZU.

On 11 February 2003, Eureko initiated UNCITRAL arbitral proceedings against Poland under the Poland-Netherlands bilateral investment treaty. Eureko alleged that Poland had persistently and wrongly postponed holding the IPO on the basis that the market conditions were not appropriate.

The tribunal, sitting in Brussels and consisting of former International Court of Justice Judge Stephen Schwebel, Polish Professor Jerzy Rajski and Canadian arbitrator Yves Fortier, found in favour of Eureko in a controversial award (Jerzy Rajski dissenting). Damages were to be assessed in a subsequent award. Eureko claimed 35.6 billion Zlotys in damages (equivalent to around US$ 12.6 billion).

The arbitration was suspended in May 2009 to facilitate settlement negotiations and a settlement agreement was signed on 2 October 2009. Under the terms of the settlement, Eureko will receive a payment of 4.77 billion Zlotys (US$ 1.6 billion) and in return has agreed to withdraw its claims in the arbitration proceedings and to gradually reduce its stake in PZU. Poland will pay this sum partly from a special dividend payout by PZU, and partly from the sale of a 5% stake in PZU in an IPO to be held jointly by Poland and Eureko in the first half of 2010 on the Warsaw Stock Exchange. Ahead of the IPO, Poland and Eureko are each to put 5% and 10% of PZU shares respectively into a special investment vehicle that will conduct the listing, with all proceeds going to Eureko. The IPO is expected to create one of the largest companies in Poland in terms of market capitalisation. Following the IPO, Poland will own 50% of PZU and Eureko 18%, which it would be able to gradually reduce after the listing.

The settlement has been viewed positively in Poland. It has allowed Poland to regain control over PZU and has effectively reduced potential monetary damages by about US$ 11 billion. It also signals a return of favourable investment conditions in Poland after the dispute had arguably damaged Poland's reputation in the eyes of foreign investors.

In November 2009, the Warsaw Court of Appeal overturned the decisions of first instance, granting recognition and enforcement of an LCIA award. It is understood that the Court of Appeal held that "incapacity" for the purposes of Article V.1(a) of the New York Convention was restricted to defects existing at the time the agreement was formulated rather than any subsequent loss of capacity to act in pending arbitration proceedings, so that Art V(1)(a) of the Convention. The court also confirmed that the recognition of an arbitral award rendered after a declaration of bankruptcy of a Polish party in a country whose laws allow for continuation of arbitration does not infringe public policy. For further discussion, see Legal update, Enforcement of the LCIA Award in Elektrim v. Vivendi.