litigation | In Principle

When is the investor required to pay for the performance of work? How do identified defects relate to this obligation, and when can handover be refused? These questions cause many difficulties in practice and are the basis for numerous, often very complex and long-running disputes. Recently, this issue was addressed by the Supreme Court of Poland. The interpretive direction it affirmed may help market players, including construction contractors, to whom these findings may apply by analogy.

Stanisław Drozd and Konrad Grotowski carry on explaining what to expect if you are a foreigner testifying as a witness before the Polish civil court.

This time Stanisław Drozd and Konrad Grotowski explain what to expect if you are a foreigner testifying as a witness before the Polish civil court. The second part of the film will be published in January next year.
 

Recent amendments to civil procedure in Poland (especially the one dated July 2019) have raised numerous doubts on how to interpret the Civil Procedure Code, in particular provisions on service of court documents, justifications for rulings, and appeals. Some of these ambiguities have caused lots of problems for parties and their counsel, as incorrect application of these regulations can have severe consequences and even result in losing the case on procedural grounds. Some of the doubts concerning justifications for rulings were recently clarified by the Supreme Court of Poland.

The amended regulations on joint and several liability of the investor to subcontractors of construction works have been in force for four years. With the stated aim of facilitating the payment of debts, they tightened the formal requirements for subcontractors seeking payment directly from the investor. Unfortunately, this has not been followed by a change in industry practice, as for various reasons formal notification of subcontractors often does not take place. Is the situation of undeclared subcontractors hopeless?

In the course of a construction dispute, to prove certain facts the parties most often request the examination of evidence not only from documents, but also submit numerous requests to hear witness testimony. However, according to parliamentary findings, witness testimony tends to increase the length and cost of court proceedings, and also allows for procedural manipulations. Therefore, the parliament restricted the admissibility of witness testimony in commercial proceedings. This has had an impact on the day-to-day operations of companies.

The investor and the general contractor are jointly and severally liable for the subcontractors’ fees. However, this does not automatically mean that the provisions of the agreement between the subcontractor and the general contractor will apply directly to the investor. A particular provision is an arbitration clause determining the method for pursuing claims. If the general contractor and the subcontractor have agreed to arbitration, can the subcontractor pursue the investor in arbitration as well, or must the subcontractor file suit in state court?

From August 2019, the fee for an application for interim relief to secure a monetary claim (e.g. for payment of a specific sum of money) made before a legal action is brought to court has increased significantly. Instead of PLN 100, the fee is equal to one-fourth of the fee that would be payable in a suit on the claim (maximum PLN 50,000). Under certain conditions, the fee for an application for interim relief will be set off against the fee on the document instituting the principal proceeding (statement of claim). However, the provisions allowing for this possibility may give rise to problems of interpretation, and thus the need to incur additional costs.

A hard Brexit would leave choice of law rules largely intact, but remove the UK from convenient EU procedures for recognition and enforcement of judgments.

The Supreme Court of Poland has presented to an expanded panel legal questions concerning a summons to attempt a settlement as an action interrupting the limitations period on a claim.

In the judgment of 26 April 2019 (case no. V CSK 80/18), the Supreme Court of Poland held that it is not contrary to the nature of a construction contract to condition the payment of fees on the absence of defects in the structure. Therefore, the parties’ terms requiring payment only after a faultless handover protocol has been obtained are permissible. However, in the Supreme Court’s opinion, such objections may also be included in the terms of the handover protocol. The court approved the possibility for the parties to invoke reservations made in the handover protocol, which constitute additional provisions in relation to the contract.

In a judgment involving compensation under an insurance policy, the Supreme Court of Poland has held that a pro rata provision was invalid because it was disadvantageous to the insured and was included in the insurance conditions unilaterally by the insurer as the party with the stronger contractual position.