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Seeking damages under the Warsaw Decree

Even though it has been nearly 70 years since Warsaw properties were nationalised, some former owners or their legal successors may still seek return of their property or at least damages. But damages do not include lost benefits.

Enforcement of the rights of former owners or their legal successors with respect to real estate taken under the Decree on Ownership and Usufruct of Land in Warsaw dated 26 October 1945 (popularly known as the “Warsaw Decree”) requires pursuit of administrative and judicial proceedings that are often complicated and last many years.

The former owner or legal successors first have a claim for return of the nationalised property in kind. If return of the property itself is not possible, then, after exhausting the administrative procedures, they may seek damages in a proceeding before the state court.

Award of perpetual usufruct—restitution in kind

  • Grounds under the decree and review proceedings

A basic condition for a claim for return of property to arise is that an application for the right of perpetual tenancy (now known as perpetual usufruct) was filed with the municipal authorities of Warsaw within 6 months after the municipality came into possession of the property (Art. 7(1) of the Warsaw Decree). The authorities were required to grant the application if continued use of the land by the prior owner was compatible with the zoned use of the land (Art. 7(2)). An application under Art. 7(1) of the decree could be refused only on the basis of a finding that the continued use of the land was incompatible with the zoning plan. If a decision was issued under the decree refusing to award perpetual usufruct to the former owner, but the decision was made without conducting a thorough analysis of the zoning plan in force at the time or without determining whether continued use of the land by the prior owner was truly incompatible with the zoned use, there are grounds to apply for a decision recognising the decision under the decree to be invalid, pursuant to Administrative Procedure Code Art. 156 §1.

  • Reconsideration of decree application

When the negative decision on the decree application is held to be invalid, the previous decision is eliminated from legal circulation retroactively, which means it is necessary for the competent authority (in this case the Mayor of Warsaw) to reconsider the decree application based on the zoning plan that was in effect at that time for the property in question.

If it is not possible to award perpetual usufruct, for example because the property has been permanently transferred to third parties, the authority will issue a negative decision on return of the property. Under Art. 7(4) of the decree, in the event of a negative decision the municipality is required to offer the prior owner substitute property. If substitute property is not offered (which was and still is generally the case), the proceedings under the Warsaw Decree, i.e. concerning all of the claims provided for in the decree, are complete.

It should be pointed out that failure to issue a decision on an application under the decree does not prevent the claimant from applying to the state court for damages, upon fulfilment of the other conditions for seeking damages. It may, however, be grounds to stay the judicial proceeding until the decree procedure is completed.

Claim for damages

Once the former owner of real estate or the owner’s legal successors obtain a review decision holding the negative decision under the decree to be invalid, they will hold a claim for damages under Administrative Procedure Code Art. 160.

Prior to 1 September 2004, a claim for damages under Art. 160 was pursued in two stages. A party who suffered a loss as a result of issuance of a decree decision in violation of Administrative Procedure Code Art. 156 §1, or confirmation of invalidity of such decision, could follow the administrative route to seek damages from the authority which issued the wrongful decision. If the party was unsatisfied with the damages awarded, or if damages were refused (which was generally the case), the party could apply to the state court for damages.

If a decree decision is held to be invalid on or after 1 September 2004, it is no longer necessary to seek damages before the administrative and obtain a preliminary ruling in the form an administrative decision refusing to award damages. The grounds for applying to the state court for damages are a holding under Administrative Procedure Code Art. 156 §1 that the decree decision was invalid.

A claim for damages under Art. 160 becomes time-barred 3 years after the decision holding the negative decree decision to be invalid becomes legally final. If the decision was held to be invalid prior to 1 September 2004, the limitations period runs from the date of issuance of the decision refusing to award damages through the administrative route.

The basis for seeking damages before the state court is Administrative Procedure Code Art. 160 §1. Damages payable under Art. 160 §1 include actual loss, but do not include lost benefits, if the final defective administrative decision was issued prior to entry into force of the current Polish Constitution (17 October 1997), even if the loss of such benefits occurred after entry into force of the Constitution.

A finding of the invalidity of the decree decision or a finding of issuance of the decision fulfils one of the basic conditions for liability in damages. The party seeking damages must also prove the occurrence of the loss, the amount of the loss, and an ordinary causal relationship between the defective decision and the occurrence of the loss.

The party to be sued in a claim for damages arising out of a legally final administrative decision is the State Treasury. If the defective decision under the Warsaw Decree was issued by an authority at the province level, the State Treasury will be represented by the province governor of Mazovia, or in the case of a decision issued by a government minister, by the current competent minister.

The amount of damages corresponds to the value of the right of perpetual usufruct of the lost property, based on the condition of the property as of the date of issuance of the defective decision under the Warsaw Decree, but reflecting today’s prices.

Barbara Majewska, Reprivatisation Practice, Wardyński & Partners