Choosing between arbitration and litigation

A Warsaw-based technology company signs a distribution agreement with a German partner. Eighteen months later, a payment dispute arises worth over EUR 800,000. The parties face an immediate question: should they pursue arbitration before the Court of Arbitration at the Polish Chamber of Commerce, or file a claim with the District Court in Warsaw? The answer shapes everything – cost, duration, confidentiality, and enforceability across borders.

Polish law offers two main routes for resolving commercial disputes: state court litigation under the Kodeks postępowania cywilnego (Code of Civil Procedure, KPC) and arbitration governed by the same code's arbitration title. Arbitration requires a valid written clause or submission agreement. Litigation is available without any prior agreement and remains the default path when no arbitration clause exists. Each route carries distinct timelines, cost structures, and enforcement consequences that businesses must weigh before a dispute materialises.

This guide walks through the decision step by step. It covers the procedural framework for both paths, the cost and timeline comparison, three business scenarios illustrating when each route fits best, and the most common mistakes companies make when choosing. A FAQ section addresses the questions our clients ask most often.

What are the procedural foundations for each route in Poland?

Polish commercial litigation runs through the state court network supervised by the Sąd Najwyższy (Supreme Court of Poland). First-instance claims above PLN 75,000 go to the district court (sąd okręgowy). Appeals reach the court of appeal (sąd apelacyjny), and a further cassation may reach the Supreme Court. The Krajowy Rejestr Sądowy (National Court Register, KRS) serves as the official register for company identity verification, which courts rely on at the outset of every commercial case.

Arbitration in Poland operates under two models. Institutional arbitration uses a permanent arbitral institution – the Court of Arbitration at the Polish Chamber of Commerce (Sąd Arbitrażowy przy Krajowej Izbie Gospodarczej, SA KIG) in Warsaw being the most prominent. Ad hoc arbitration lets parties design their own procedure. Both models require a written arbitration clause. The clause must identify the seat of arbitration; most institutional clauses name Warsaw as the seat, bringing Polish arbitration law to bear on procedural questions.

Enforcement paths differ sharply. A Polish state court judgment is enforceable across the European Union under Regulation Brussels I Rebus. An arbitral award requires a separate recognition and enforcement proceeding before a Polish state court before domestic execution can begin. For cross-border enforcement outside the EU, the New York Convention – to which Poland is a signatory – covers arbitral awards in over 170 countries, often making arbitration the stronger choice for international contracts.

State court: no prior agreement needed; three-instance appeal structure
Institutional arbitration: permanent rules, experienced secretariat, faster procedural timetable
Ad hoc arbitration: maximum flexibility, but higher coordination burden
KIO appeal: a specialist public-procurement track separate from both main routes
Seat of arbitration determines the supervisory court jurisdiction

How do timelines and costs compare between arbitration and litigation in Poland?

Timeline is often the deciding factor. Warsaw district court commercial cases average 18 to 36 months at first instance. Adding an appeal extends that to 36 to 60 months in contested matters. Institutional arbitration at SA KIG typically concludes within 12 to 18 months from the constitution of the tribunal. That gap – sometimes three years – can be commercially decisive for a business waiting to recover a trade receivable.

Court fees in state litigation are proportional to the value in dispute. For a PLN 3m claim, the court filing fee is PLN 150,000 (5% of the claim value, subject to a statutory cap). Arbitration registration fees at SA KIG follow a separate tariff; for the same PLN 3m claim, the arbitration fee is roughly PLN 90,000 to PLN 120,000 depending on the number of arbitrators. At first glance, arbitration appears cheaper for mid-sized claims. However, parties also pay arbitrator fees directly, which can add PLN 50,000 to PLN 200,000 per case.

We secured a reversal of a contractual penalty exceeding PLN 2.5m for a manufacturing client in the Mazowieckie region (autumn 2025). The case settled 14 months after filing – a timeline only achievable through institutional arbitration rather than state court proceedings, which had already been pending for two years on a parallel ancillary matter.

Litigation costs are more predictable. Court fees are fixed by statute. Legal fees in arbitration can escalate because the parties bear the full administrative cost of the tribunal. For disputes below PLN 500,000, state court litigation is frequently the more cost-efficient route. For disputes above PLN 2m with an international dimension, arbitration's enforceability advantages often outweigh the higher direct cost.

Which route fits each business scenario?

Three scenarios illustrate how the choice plays out in practice. Each involves a different company profile, and each produces a different answer.

Manufacturing company – domestic supply chain dispute. A Silesian manufacturer disputes a EUR 400,000 invoice with a domestic supplier. No arbitration clause exists in the contract. Litigation before the district court is the only available route. The court fee is approximately PLN 100,000. Expected duration: 24 to 30 months at first instance. The manufacturer should file promptly, because the general limitation period for commercial claims under Polish civil law is three years from the due date.

IT company – cross-border software licence dispute. A Warsaw-based software company has an arbitration clause in its standard licence agreement, naming SA KIG and Warsaw as the seat. Its German licensee withholds EUR 1.2m in licence fees. Arbitration is the correct path. The award will be enforceable in Germany under the New York Convention without a second full proceeding. Confidentiality also matters: the dispute involves proprietary source code, and arbitration proceedings are private by default.

Foreign investor – joint venture exit. A Dutch investor holds a 40% stake in a Polish joint venture and disputes the exit valuation. The shareholders' agreement contains an ICC arbitration clause with a Paris seat. Polish courts would have supervisory jurisdiction only for emergency measures. The investor should file for arbitration under ICC rules and simultaneously consider interim relief before the Warsaw court to freeze the target company's assets pending the award. Sanctions compliance checks on the counterparty are advisable before any filing – a point our disputes team flags in every cross-border instruction.

What are the most common mistakes when choosing between arbitration and litigation?

The most costly mistake is discovering that no arbitration clause exists after a dispute has already arisen. At that point, both parties must agree in writing to arbitrate – a submission agreement. In a live dispute, the respondent rarely consents. The claimant forfeits the speed and confidentiality advantages of arbitration and must proceed through state courts. This outcome is irreversible once limitation periods begin to run.

Our team obtained interim protective measures over assets worth over EUR 3m for a German investor's subsidiary in Lower Silesia (spring 2026). The application succeeded because the arbitration clause was drafted correctly and the Warsaw court accepted jurisdiction to grant interim relief in support of foreign-seated arbitration. A defective clause would have precluded that result entirely.

A second common error is choosing ad hoc arbitration for complex multi-party disputes. Without institutional rules, procedural disagreements consume months. Parties underestimate the coordination cost of appointing arbitrators, setting timetables, and managing document production without a secretariat. Institutional arbitration adds structure that pays for itself in disputes above PLN 1m.

A third mistake involves the KIO (Krajowa Izba Odwoławcza, National Appeals Chamber) track. Companies in public procurement disputes sometimes attempt to use state court litigation before exhausting KIO remedies. KIO is a mandatory first step for procurement appeals. Bypassing it forfeits the right to challenge the procurement decision, and that forfeiture is permanent.

Draft the arbitration clause before signing – not after a dispute arises
Specify the institution, seat, language, and number of arbitrators
For domestic disputes below PLN 500,000, default to state court litigation
For international contracts, prefer institutional arbitration for enforcement certainty
In procurement matters, exhaust KIO before approaching state courts

Choosing the wrong forum can also affect the recoverability of legal costs. State courts apply a statutory cost scale that frequently under-compensates actual legal fees in complex cases. Arbitral tribunals have wider discretion to award full legal costs to the successful party – a material consideration when fees exceed PLN 300,000.

For guidance on enforcing foreign judgments once proceedings conclude, the firm's step-by-step articles on enforcing a Luxembourg judgment in Poland and enforcing a Slovakia judgment in Poland address the post-award recognition process in detail. For situations where a corporate restructuring intersects with a dispute, the guide on liquidation of a sp. z o.o. explains how ongoing litigation is handled during voluntary winding-up.

What should you prepare before filing a claim?

Preparation before filing determines the pace and cost of the entire proceeding. A dispute lawyer reviewing the file at the pre-filing stage can identify weaknesses that, left unaddressed, create procedural delays or reduce the recoverable amount. The checklist below applies to both arbitration and litigation.

Original signed contract with the dispute resolution clause (or absence of one)
Complete correspondence chain – email, messaging platforms, and any written notices
Invoices, delivery confirmations, and payment records supporting the claimed amount
Corporate documents from the KRS confirming the counterparty's current legal status

For cross-border cases, add a sanctions compliance check on the counterparty. Polish and EU sanctions regimes can restrict the ability to pursue or enforce claims against designated entities. Engaging a dispute lawyer with sanctions experience before filing avoids a situation where the claim is filed but enforcement is blocked by a regulatory prohibition.

Timeline: allow four to six weeks for pre-filing preparation in a mid-sized commercial dispute. That window covers document collection, legal analysis, preparation of the statement of claim, and – in arbitration – constitution of the tribunal. Rushing this phase is the single most reliable predictor of procedural complications later.

The decision matrix is straightforward. Domestic dispute, no clause, claim below PLN 500,000: state court, filing within the three-year limitation window. International contract, existing clause, claim above PLN 1m: institutional arbitration, SA KIG or ICC depending on the clause. Public procurement: KIO first, state court second. Joint venture exit with foreign investor: arbitration with interim relief application to Warsaw court.

Frequently asked questions

Q: Can we add an arbitration clause after a dispute has already started?

A: Yes, but only if both parties agree in writing. This is called a submission agreement. In practice, the respondent in a live dispute rarely consents to arbitration because it removes procedural protections available in state courts. If no clause exists and the counterparty refuses to sign a submission agreement, litigation before the competent state court is the only available path. Drafting the clause before signing the underlying contract is the only reliable way to preserve the arbitration option.

Q: How long does it take to enforce an arbitral award in Poland?

A: Recognition and enforcement of a domestic arbitral award before a Polish court typically takes three to six months if uncontested. If the losing party challenges the award (on limited grounds under the Code of Civil Procedure), the proceeding can extend to 12 to 18 months. For foreign awards, the New York Convention applies, and Polish courts have generally been receptive to enforcement applications, though the respondent's ability to raise public-policy objections adds some uncertainty to the timeline.

Q: Is arbitration always more expensive than litigation in Poland?

A: Not always. For claims between PLN 500,000 and PLN 3m, the total cost of arbitration (filing fee plus arbitrator fees) can be comparable to or lower than the combined cost of a three-year state court proceeding including appeals. For smaller claims below PLN 300,000, state court litigation is almost always cheaper because arbitrator fees form a fixed component that does not scale down proportionally. For large, complex international disputes above PLN 5m, arbitration's enforceability and confidentiality advantages typically justify the higher direct cost.

Specific circumstances require tailored analysis. If your company is weighing arbitration against litigation for an active dispute or preparing contracts for a new commercial relationship, contact info@kordeckipartners.com for an expert assessment of which route best protects your position.

KORDECKI & Partners is a law firm based in Warsaw and Krakow, advising business clients across 30 jurisdictions. Our team combines expertise in Polish and international law with a practical approach to commercial disputes, arbitration, and cross-border enforcement. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.