thanks for your reply.
It was finally solved by changing controllers from main menu in Recalbox.
I couldn't turn the joystick 90º as design did not allow it. Finally I could change it with the help of an USB keyboard.
I read somewhere that I had to plug a button to "mode" socket to make joystick works, but I guess I missunderstood smth as it works perfectly with nothing plugged in there
Problem with this USB encoder is that you can't modify microswitches in different order, as joysticks pins have only 1 way to connect. Solution is to modify controllers from main menu
Thanks for help