Acknowledgement of debt: What does the debtor’s behaviour mean? | In Principle

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Acknowledgement of debt: What does the debtor’s behaviour mean?

Recently, the Supreme Court of Poland commented on the subject of acknowledgement of debt, and at the same time gave some general guidance on how to interpret a debtor’s statements and behaviour. This is a key practical issue, as action by the debtor can cause interruption of running of the statute of limitations on the claim. Therefore, debtors should be cautious about what they state to creditors. Conversely, in many cases, creditors can take advantage of the debtor’s behaviour to improve their legal position.

Acknowledgement of a debt, i.e. confirmation by the debtor that the debt exists, constitutes a basis for interruption of running of the statute of limitations (Civil Code Art. 123 §1(2)). Such acknowledgement may be made:

  • Explicitly (uznanie właściwe), when the debtor directly declares that a certain claim is owed to a person
  • By implication (uznanie niewłaściwe), i.e. inferred indirectly from the debtor’s behaviour or a declaration of the debtor’s knowledge.

The latter means any behaviour (or declaration of knowledge) of the debtor sufficiently revealing an awareness of the existence of an obligation. Such behaviour might be partial payment of a debt (or payment of interest), a promise to fulfil an as-yet unfulfilled portion of a performance in the future, or a request to postpone the deadline for performance or discharge of a debt.

In the judgment of 26 November 2021 (case no. III CSKP 88/21), the Supreme Court reiterated its earlier position that, in principle, acknowledgement of a claim interrupts the running of the statute of limitations even if the debtor raises objections to the amount of the debt. According to the court, if the debtor accepts the debt in principle and at the same time enters into negotiations with the creditor on the amount of the debt (while not manifesting explicitly that it accepts the debt only up to a certain amount), the creditor may believe that the debtor will fulfil the performance in full (as expected by the creditor) if it turns out to be legitimate.

The Supreme Court requires that debtors leave no doubt as to what part of the claim they accept and what part they dispute. Therefore, debtors should express their position to the creditor explicitly to avoid the risk that they have implicitly acknowledged the debt. On the other hand, if the debtor’s statements are equivocal, the creditor may insist that the limitation period has been interrupted. Indeed, if not protected by appropriate reservations, the parties’ negotiations can lead to serious legal consequences the parties may not even be aware of.

In addition to interrupting the statute of limitations, acknowledgement of a debt can provide a procedural advantage to the creditor. Made explicitly and in writing, express acknowledgement is a prerequisite for issuance of an order for payment in payment order proceedings (postępowanie nakazowe) (Civil Procedure Code Art. 485 §1), which initially are conducted without the debtor’s knowledge and end in issuance of an order for payment without a hearing, served on the debtor together with the statement of claim. In such a situation, the debtor learns about the court case when there is already an order for payment issued against it. At the same time, the order for payment constitutes a preservation order (tytuł zabezpieczenia), on which basis the creditor can for example attach the debtor’s bank account. Revocation of such an order is difficult and requires the filing of charges subject to a court fee. Compared to standard proceedings, in payment order proceedings, the debtor’s situation is much more difficult.

On the other hand, implicit acknowledgement can lead to issuance of an order for payment in summary proceedings (postępowanie upominawcze). This is less harsh on the debtor than payment order proceedings (an order for payment in summary proceedings does not constitute a preservation order, for example), but nonetheless improves the creditor’s procedural posture and makes it easier for the creditor to pursue the claim.

In the judgment of 22 January 2021 (case no. III CSKP 25/21), the Supreme Court provided guidance on how to determine whether a statement by the debtor constitutes implicit acknowledgement of a debt. The court found that this requires a detailed analysis of the circumstances, properly applying the principles developed under Art. 60 of the Civil Code. This provision states that the will of a person performing a legal act may be expressed by any behaviour of the person sufficiently revealing the person’s intention.

However, the Supreme Court has held that for this purpose, the debtor’s behaviour cannot be interpreted liberally. On the contrary, this assessment requires strictness and rigour, to maintain clarity surrounding the limitations period. Thus, the freedom of interpretation of statements of the debtor’s knowledge is not unlimited, and must take into account the seriousness of the limitations period as a defence causing the extinction of a claim.

Agata Jóźwiak, attorney-at-law, Dispute Resolution & Arbitration practice, Wardyński & Partners