Court of Arbitration of the Warsaw Money Exchange (1921-1939)

Abstract

In recent years, suggestions have been made to create a specialized court for the capital market, which would have jurisdiction over disputes that have arisen between participants in the market, as well as to introduce new special judicial procedures to, among other things, protect investors and streamline the settlement of stock market disputes. These suggestions are primarily due to the recognition of the peculiarities that characterize trade in the capital market (with particular emphasis on the stock market). Economic transactions in the broadest sense of this term are a dynamic phenomenon and, because contractual relationships constantly change and repeatedly form the basis for further transactions, disputes arising under commercial law require the quickest possible resolution. Therefore, it can be said that trade at stock exchanges is the quintessence of these dynamics and complexities of the legal relationships such trade involves, and this requires even greater efficiency and diligence in protecting the interests of its participants, including by ensuring the right of recourse to a court. In addition, the settlement of disputes arising in the capital market requires not only knowledge of procedural law, but, most importantly, expertise in the trade in financial instruments. These issues and the resulting needs were recognized long ago, soon after Poland regained its independence in 1918, when the first exchanges were established on Polish soil to operate under national legislation. The commodity and stock exchange law enacted at the time provided for the need to ensure adequate protection of the interests of exchange members by, among other things, allowing them to assert their rights in courts. Although the status of the arbitration courts established pursuant to the provisions of the law was unclear, as they were a sort of intermediate solution between a court exercising coercive powers and an arbitral court, they certainly contributed to the implementation of exchange trade participants’ right to recourse to a court and to ensuring high ethical standards in the conclusion of transactions. One such court operated between 1921 and 1939 at the most important Polish exchange of the interwar period in terms of trading volume - the Warsaw Money Exchange. The purpose of this article is to introduce this institution, also by discussing how the court was appointed against the background of the organization of the exchange and by presenting the scope of competence and the proceedings before the court. The authors also focused on presenting and analyzing data on the activities of the said institution.