Can a foreign company be summoned to attempt settlement negotiations in Poland? | In Principle

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Can a foreign company be summoned to attempt settlement negotiations in Poland?

Sometimes when the same case is presented to different courts, the courts take mutually exclusive positions. This was what happened in the case of an Italian company summoned to attempt settlement negotiations in Poland. Two courts reached the opposite conclusion on Polish jurisdiction.

Our client is an Italian company which was summoned in two cases to attempt to reach a settlement. The two applications were filed by the same plaintiff concerning the same alleged violation of the Act on Combating Unfair Competition and the identical claim arising out of the alleged practice. But the applications were filed in two different courts. One of the courts dismissed the application and the other directed the parties to mediation. Which court was right?

The application was considered by courts in different cities in Poland. Under Art. 5(3) of the Brussels I Regulation (44/2001), in tort cases, the defendant may be sued in the courts for the place where the harmful event occurred or may occur. Here the plaintiff alleged that our client has committed several tortious acts, in different locations, and therefore filed its application for a summons to settlement negotiations in different courts in Poland, with the intention of interrupting the running of the statute of limitations on the claim. Filing such applications for this purpose is a common practice in Polish commercial litigation, although under recent case law the effectiveness of this tactic has been called into question.

In this case the plaintiff was probably surprised that one of the courts dismissed the application before holding any mediation session. That court was in Warsaw. By order issued in closed session, the court dismissed the application, holding that Poland lacked jurisdiction in the case. In the justification for the order, the court pointed out that there are no regulations in force concerning the jurisdiction over proceedings to summon a defendant to settlement negotiations, although under the general rule, the courts of the state where the defendant is domiciled should have jurisdiction. Here the Italian company did not have its registered office in Poland, and thus the case should be dismissed under Civil Procedure Code Art. 1099. Art. 5(3) of the Brussels I Regulation, cited above, permits a person domiciled in a member state to “be sued” in another member state where the alleged tortious act occurred, but, the court found, an application to summon the defendant to enter settlement negotiations is not a suit. The court also raised the issue of whether Polish litigants are placed in a worse position than foreign litigants, because in the case of the former the statute of limitations may be tolled by filing an application for a summons to settlement negotiations, but this possibility does not exist with respect to parties from other member states. The court concluded, however, under the most recent line of case law, that filing an application for a summons to settlement negotiations does not interrupt the running of the statute of limitations, because otherwise creditors would enjoy a lawless ability to manipulate the length of the limitations period. Under that view, there was no imbalance in the treatment of the litigants.

The court in Poznań took a completely different view. Not only did it serve on our client a copy of the application for a summons to settlement negotiations, it went ahead and held a mediation hearing.

Which court was right? In a resolution of a three-judge panel in this case dated 28 March 2014 (Case No. III CZP 3/14), the Supreme Court of Poland held that the regulations on the jurisdiction of Polish courts apply in a proceeding seeking a summons to settlement negotiations. What exactly this position will mean for such proceedings will not be clear until the court issues the justification for the resolution within the next few months. The wording of the resolution itself indicates, however, that in the opinion of the Supreme Court, the use of the phrase “may be sued” in the Brussels I Regulation and the phrase “cases heard at trial” in the Civil Procedure Code does not exclude the application of these regulations to a proceeding seeking a summons to attempt settlement negotiations.

Zuzanna Rudzińska-Bluszcz, Dispute Resolution & Arbitration Practice, Wardyński & Partners