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New litigation management tools for judges

Two conditions must be met for a civil dispute to be resolved effectively: at the earliest stage of the case it must be precisely defined what is truly disputed between the parties, and the proceeding should be planned so that those issues can be focused on. If this can be achieved, the parties and the court can devote their energy and attention to the truly relevant issues. This will improve the speed and quality of judicial decisions, legal certainty, and security of commerce.

This is why in countries where civil trials function well, the procedure forces the parties to formulate their positions (also before the case reaches the court, in pre-suit correspondence), and behave throughout the litigation, so that the essence of the dispute is identified early and the course of the proceeding can be planned. If the parties present their positions objectively, it usually turns out that the dispute between them boils down to just a few essential issues. This means that even in complex cases, the number of cases the court must resolve is usually short. Many cases never reach the court at all or end with withdrawal of the claim or settlement at an early stage, and cases that still require hearings and involvement of the court are heard in accordance with a plan prepared in advance, and with due attention.

Hearing plan

The reform of Polish civil procedure also aims in this direction. It assumes that in every case the court and the parties will plan the course of the entire proceeding. To this end, after exchanging their positions in the statement of claim and the response, the parties are to meet at a preliminary session. In a less formal process, they should discuss the possibilities for amicable resolution of the dispute, and if that is not possible they should define the true nature of the dispute between them and plan the course of the rest of the proceeding. The hearing plan should identify the essence of the dispute, the evidence to be introduced, and the timetable for the case.

This is a beguiling vision. The question, however, is what has truly changed in the procedure to enable this vision to be achieved. Proceedings will not be conducted efficiently and according to plan just because it is so decreed in the Civil Procedure Code. Without concrete tools motivating the parties to formulate their positions clearly, objectively and consistently, and enabling the court to combat abuses, it will not be possible to properly conduct a preliminary session and plan the course of the proceeding.

Combating abuse of procedural rights

The amendment to the code has introduced instruments to combat abuses of procedural rights. This primarily has to do with situations where clearly groundless claims are filed with the court, which nonetheless have to be processed, and situations where the parties pursue measures aimed purely at prolonging the proceeding and not at protecting their legitimate interests.

The amendment has introduced a general ban on abuse of procedural rights. This is intended to shut down the previous disputes over whether the conception of abuse of rights applied at all in procedural law. The very fact that this was disputed and had to be explicitly laid down in the code demonstrates what a long way we still have to go. In most Western countries and in international law there has never been any doubt that procedural rights can be abused, and that such abuses are unlawful and prohibited.

The reformed code in Poland provides concrete sanctions for abuse of procedural rights.

For pursuing measures aimed at delaying resolution of the case, the courts can primarily order financial sanctions, by imposing fines on the parties or charging them with trial costs regardless of the result in the case. On top of this, trial costs can be increased (as much as doubled), as can the interest on delay (to as high as twice the maximum statutory rate). These financial sanctions are mainly intended to exert a deterrent effect, so that the use of dilatory tactics ceases to pay off. The effectiveness of these solutions will largely depend on how judges employ the instruments entrusted to them. To date, judges have very cautiously applied instruments for punishing disloyal parties.

The amendment has also introduced tools for dealing with plainly groundless claims and repeated interlocutory appeals impeding consideration of the merits of the case. If an obviously groundless claim is filed, the court will no longer have to process the claim further, but will be authorised to reject it. The court’s decision will be subject to appellate review, but nonetheless this should cut the need to schedule hearings in cases that are obviously groundless. The same will be true in the case of a “chain” of interlocutory appeals. When repeated review is sought, adding nothing to the case but delay, the amendment allows the court to refuse to consider such appeals. With such instruments as well, judges will need to bravely but responsibly exercise the powers vested in them. This approach should unburden the legal system from handling gratuitous matters asserted only for delay.

What is the amendment lacking?

We regard the changes introduced in the amendment as a step in the right direction. But they leave much to be desired, and raise concerns that this step was not adequately prepared. There are several tools missing which have been tested abroad and in arbitration and which could contribute to efficient handling of proceedings. Their absence may result in the overall reform hindering rather than helping the efficient conduct of cases.

The courts should have more weapons at their disposal to combat abuses of the right to resort to the courts. The possibility of denying an obviously groundless claim or appeal in closed session is not enough. The court should be authorised to grant a claim against which the defendant has not raised any meaningful arguments. The court should also be able to reject elements of the party’s position that are obviously unwarranted or not stated objectively enough. In the UK this is done through an order to “strike out” an entire statement of claim or defence, or only certain clearly meritless arguments by the party.

Amicable resolution of disputes should be encouraged by a more effective system of incentives and sanctions. The solutions introduced in the amendment are inadequate. An effective mechanism sanctioning unreasonable rejection of settlement offers is needed. Such a mechanism functions in English civil procedure, where it is called a “Part 36 offer.” In this solution, a party may submit a settlement to the adversary with the reservation that it will remain confidential until the case is resolved, and after the judgment it may be disclosed to the court. A party who does not obtain a resolution at trial more favourable than the earlier settlement proposal may then, in a separate ruling, be charged with much higher trial costs of the adversary. This encourages reasonable settlement offers and discourages hasty rejection of offers. It forces litigants to calculate whether their case is strong enough that they will receive more than offered, and how much they can lose if the court awards less than now being offered by the adversary. This encourages amicable resolution of disputes while unburdening the courts of cases that can be settled.

The number of unnecessary court cases would also decline if the law required the parties to exchange arguments and basic evidence before taking the case to court. Solutions of this type known as “pre-action protocols” also function well in the UK.

Better means of interim protection are also needed. Today it takes too long to obtain temporary legal protection. An application for interim relief may not be considered for weeks or even months. Such applications should be considered immediately, in urgent cases even the very same day by the judge who is on duty. Interim relief granted weeks later often proves moot.

There is also no justification for applications for interim relief to be considered, as a rule, without the participation of the opposing party (ex parte). Involvement by the adversary should be the rule, while maintaining the possibility of granting relief ex parte in exceptional circumstances—for example when it is necessary to surprise the adversary by seizing assets which it might conceal if it knew of the pending application. But in many cases involving interim relief, when there is a need to regulate the status quo pending resolution of the principal dispute, both parties should have a right to be heard. The time allowed to present the parties’ positions should be brief, but this would eliminate the unevenness in granting security, often resulting from selective presentation of the facts.

Another trend that is functioning well around the world is establishment of specialised courts. In foreign jurisdictions commercial courts are sprouting up where the proceedings can be held in English, as well as cyber courts specialising in high-tech cases. The option for commercial courts to handle cases in English would raise the confidence of foreign businesses in entrusting their disputes to Polish jurisdiction. Such businesses would better understand the course of the proceedings. The scale of foreign investments in Poland and its strong position in the EU allows us to consider establishing such a court. Specialised courts would also foster the development of precedent-setting rulings and attract specialised judges and lawyers, which would in turn foster scientific innovation. The speed of technological changes is forcing courts to rule on issues which the legislature has not yet had an opportunity to address.

Stanisław Drozd, adwokat, Łukasz Lasek, adwokat, Dispute Resolution & Arbitration practice, Wardyński & Partners