I INTRODUCTION TO DISPUTE RESOLUTION FRAMEWORK
In accordance with the rules governing the civil court proceedings system, all civil and commercial law disputes in Poland (as well as commercial, land and mortgage registry, family law, labour law and social insurance, and bankruptcy and restructuring cases) are resolved before the state courts of two instances.
These rules are primarily set out in the Code of Civil Procedure of 17 November 1964,2 as well as in several other statutory provisions and regulations, such as:
- a the Act on Courts Costs in Civil Cases 28 July 2005;3
- b the Act of on Court Bailiffs and Enforcement 29 August 1997;4 and
- c the Act on Courts Hearing Commercial Matters of 24 May 1989.5
The first instance courts are the district and regional courts, whereas the second instance courts are the regional courts and courts of appeal. There are 11 courts of appeal, 45 regional courts and over 300 district courts.
The courts are structured in divisions. There are specialist divisions of district and regional courts and courts of appeal that hear civil law, labour law and social insurance cases. Civil law divisions in the courts of appeal also hear commercial cases, and the district and regional courts also have family law divisions. Although commercial courts are established under separate legislation, they are specialist commercial divisions in the district and regional courts. Selected divisions of the district courts maintain commercial registers and land and mortgage registers, and selected commercial divisions of the district courts hear bankruptcy and restructuring cases. Separate divisions of the Regional Court of Warsaw are constituted by the Court of Competition and Consumer Protection (hearing appeals from administrative decisions of certain regulatory authorities and certain cases in first instance) and the European Union Trademarks and Designs Court.
District courts are the first instance court for most property rights cases up to an overall value of 75,000 zlotys, whereas the regional courts are the first instance court for most personal rights and property rights cases where the overall value exceeds 75,000 zlotys, as well as intellectual and industrial property rights claims, press law disputes, unfair completion cases and disputes over the resolutions of corporate bodies.
A cassation complaint challenging an award in second instance (an extraordinary measure against final, binding and enforceable awards) can be lodged with the Supreme Court in certain personal rights cases, as well as in property rights cases with an overall value exceeding 50,000 zlotys (and 10,000 zlotys in labour law cases, as well as in certain social insurance cases). The Supreme Court also hears complaints on determining the illegal nature of a final and binding award that, due to certain statutory limitations, could not have been challenged with a cassation complaint.
As an alternative to state courts, parties may bring disputes involving property rights, or disputes involving non-property rights that can be resolved by court settlement, except for maintenance allowances cases, before an arbitration court. This can be done by mutual agreement after a dispute arises, or in advance through submission to arbitration.
For criminal matters, claims from victims of criminal offences can be heard by the criminal divisions of district and regional courts, and in the courts of appeal.
Complaints against administrative decisions in the second instance can be made before the administrative courts of two instances (which constitutes the third pillar of the Polish court system, along with civil courts and criminal courts).
Constitutional complaints and other issues of constitutional law are examined by the Constitutional Tribunal.
II THE YEAR IN REVIEW
Over the past five years, the civil court proceedings system has undergone 14 major reforms (including abolishing the previous distinct procedure for commercial matters and introducing the principle that the parties’ submissions following the initial lawsuit and the response to the lawsuit, can only be filed upon the court’s demand or with its consent) and more than 40 minor amendments to the Code of Civil Procedure and related laws.
The year 2017 also saw the adoption of multiple new additions to the Code of Civil Procedure, marking the constant evolution of civil court proceedings in Poland. These involved, among other things, modifications aimed at facilitating the pursuit and enforcement of claims:
- a increasing the value of claims heard in the simplified procedure to 20,000 zlotys (from 10,000 zlotys);
- b extending the validity of an injunction granted pending the proceedings to two months (from one month) after the final resolution of the dispute;
- c introducing the possibility – in the event that enforcement from the debtor’s estate fails – to demand that the debtor disclose any acts by which it disposed of its rights or assets concluded within the five years preceding the institution of the enforcement proceedings, as a result of which its solvency worsened (in order to allow the creditor to file Paulian action claims against third-party beneficiaries of the debtor’s acts).
The year 2017 also brought some interesting awards addressing important procedural issues in civil and commercial matters:
- a In a decision of 19 January 2017, the Supreme Court (Case No. II CSK 459/15) ruled that the lack of a formal decision to accept evidence brought by a party to the proceedings as evidence, does not constitute a procedural error serious enough to annul the ruling, if challenged, as long as it results clearly from the written justification what the evidence material that the court examined was, and what conclusions were drawn from the evidence.
- b In a resolution of 16 February 2017, the Supreme Court (Case No. III CZP 105/16) explained that the respondent must be served with court correspondence using its current first and last name, and if the service was made using out-of-date personal data of the respondent, then the service was irregular and produced no legal effects with respect to the respondent.
- c In a judgment of 13 April 2017, the Supreme Court (Case No. I CSK 270/16) clarified that the court could not sustain claims and rule in favour of the claimant on a different legal basis that was brought by the claimant before advising the parties in advance about the possibility. Otherwise, the respondent has no time to organise its defence properly, meaning that its constitutional right to be heard becomes infringed. The Supreme Court concluded that the court’s decision must not come as a surprise.
- d In a resolution of 24 May 2017, the Supreme Court (Case No. III CZP 18/17) confirmed the majority opinion in the jurisprudence that a request to be served with a judgment along with its written justification must be made after the judgment is issued, or has no legal effect.
- e In a judgment of 23 June 2017, the Supreme Court (Case No. I CSK 625/16) stated, contrary to the existing court practice, that if the respondent defends itself against contractual penalty claims and requests a reduction, among other defences, then the arguments in support of that request must be made in due time in order to allow the claimant to respond, even if the respondent also challenges the validity of the entire contractual penalty claim (i.e., that a request to dismiss the law suit in full does not cover a request for a reduction).
- f In a judgment of 20 July 2017, the Supreme Court (Case No. I CSK 716/16) recalled that a conciliation petition would interrupt the limitation period of the claims it relates to, as long as these claims are detailed enough, and only with respect to the amount claimed. The limitation period would not be interrupted with respect to other claims that might result from the same relationship between the parties that gave rise to the dispute, even if they were generally referred to in the petition.
According to the official statistics published by the Ministry of Justice, in the first half of 2017:6
- a there were over 1.8 million new civil law claims (excluding land and mortgage, labour law, social insurance, and family law claims) and almost 300,000 new commercial claims (excluding registry, consumer and competition protection and EU trademark and design cases) brought before the Polish courts (jointly 33 per cent of all cases brought to the courts;
- b almost 1.8 million civil law cases (excluding the cases mentioned above) and almost 208,000 commercial cases (excluding the cases mentioned above) were concluded before the Polish courts (around 32 per cent of all cases concluded); and the above figures are likely to double by the end of 2017;
- c on average, awards in first instance civil court proceedings were sustained in slightly over 60 per cent of appeals (i.e., the appellants succeeded in less than 40 per cent of their appeals);
- d the average length of first instance civil court proceedings in civil law cases was 5.5 months before the district courts and 7.3 months before the regional courts, whereas the average length of first instance civil court proceedings in commercial cases was 6.5 months before the district courts and 9.1 months before the regional courts; and
- e the average length of first instance civil court proceedings in purely contentious (litigious) matters (exclusive of summary proceedings terminating with the issue of an order for payment on an ex parte hearing) was essentially longer: in civil law cases it ran to 10.8 months before the district courts and 8.4 months before the regional courts, and in commercial cases it was 14.1 months before the district courts and 15.5 months before the regional courts, which gives a better general idea of how fast a simple ordinary case (not involving expert opinions, etc.) is likely to be resolved at first instance.
In general terms, the 2017 statistics show a slight decrease in all the above parameters (i.e., in particular, the proceedings are taking longer) with respect to 2016, and it is likely that the situation will worsen by the end of 2017.
III COURT PROCEDURE
As a general rule, civil court proceedings are either contentious (litigious) proceedings or non-contentious (non-litigious) proceedings. Commercial claims, or similar claims between non-undertakings, are typically settled in contentious proceedings, while non-contentious proceedings are generally dedicated to different sorts of cases that vary in legal nature (such as registry cases, certain family law and matrimonial status cases, personal status and tutelage cases, certain cases pertaining to rights in rem, inheritance matters, etc.) that require court intervention and, due to the choice of the legislator, are resolved in non-contentious proceedings. Often, the interests of participants to ‘non-contentious proceedings’ are very contentious (such as divisions of property or easement cases), and these cases could be heard in contentious proceedings as well, as long as the legislator decided it should be so.
The main difference between the contentious and non-contentious proceedings is that in the former the adversarial principle applies widely, whereas in the latter the court should a priori establish what the objective truth is even if the parties are lacking initiative.
The Code of Civil Procedure also provides for subsidiary proceedings supporting contentious or non-contentious proceedings on the merits, such as injunction proceedings, proceedings for the restitution of lost or damaged court files, proceedings securing evidence, settlement proceedings or cross-border jurisdictional aid proceedings.
Awards concluding contentious proceedings and resolving disputes take the form of judgments, while other measures pending the proceedings, as well as any decisions prematurely discontinuing these proceedings, take the form of court decisions or resolutions of the presiding judge. In non-contentious proceedings, all measures, whether concluding the case or not, take the form of court decisions.
After a final award is issued, and in the event that it is not performed voluntarily, an interested party might initiate enforcement proceedings carried out by the court bailiff or the court, after first obtaining an enforcement clause to the award that constitutes an enforcement title.
i Overview of court procedure
A judgment concluding contentious proceedings at first instance can be challenged with an appeal within two weeks of the pronunciation of the judgment and the issue of written grounds (which need to be additionally requested within seven days following the public pronunciation of the judgment, unless it is issued in a non-public hearing and is then served on the parties along with the written grounds). Final awards in non-contentious proceedings can also be challenged with an appeal, whereas other court decisions taken during contentious or non-contentious proceedings are challengeable with an ordinary complaint, and only when the statutory proceedings provide for such a measure.
In the civil court proceedings system, the proceedings in second instance are structured as ‘full appeal’ proceedings. In other words, they constitute a direct continuation of the proceedings at first instance, where the court of second instance hears the case again (though within the limits of the appeal, in each case taking into consideration the potential invalidity of the proceedings in first instance, whether it has been raised in the appeal or not). This is done on the basis of the evidence gathered in first instance, but also includes any additional evidence that is gathered and examined in the second instance. The court of second instance cannot issue a less favourable award to the appellant unless the other party also appealed the award in first instance. The objective of the second instance proceedings is to sustain or reverse the final award in first instance, while cases where the final award is overturned and the case requires re-examination in first instance are limited to those cases where the essence of the case was not heard, or if reversing the decision would require full evidentiary proceedings to be carried out. The appeal directed to the judgment in first instance prevents it from becoming binding and enforceable unless provisional enforcement is ordered.
A final award in second instance might be subject to a cassation complaint if the nature or value of the claim qualifies it to be challenged before the Supreme Court. Cassation complaints can be made within two months from the final award in appeal being given, along with written reasons. A cassation complaint directed to a judgment in second instance does not affect the possibility of having it enforced, unless the enforceability is suspended at the complainant’s request. Exceptionally, a judgment ordering the re-examination of the case in first instance might be challenged with an ordinary complaint.
The Supreme Court will only allow a cassation complaint to be heard on merits where it is shown that the case involves an important legal issue, or requires the interpretation of ambiguous statutory provisions or provisions that raise controversies in the court jurisprudence, or if the proceedings are invalid or the complaint is manifestly justified. A cassation complaint, as an extraordinary measure, must not question the facts as determined in the first and second instances, or reassess any evidence.
Contentious proceedings provide for certain distinct procedures, with specific rules derogating from the generally applicable rules in certain situations. This applies, for example, to:
- a matrimonial matters (in particular to divorces);
- b certain relations between parents and their children;
- c labour law and social insurance cases;
- d infringement of possession claims;
- e expedited summary proceedings in the form of order for payment proceedings and reminder proceedings;
- f simplified proceedings (for minor contractual claims with a value less than 20,000 zlotys, statutory warranty or quality guarantee claims, as well as apartment lease rents);
- g proceedings in certain regulatory matters;
- h electronic reminder proceedings; and
- i European cross-border proceedings.7
ii Procedures and time frames
The reforms to the civil court proceedings system over the past few years have offered some useful case-management tools that, if applied properly, might expedite proceedings and make them more ‘user friendly’. These tools include innovations such as:
- a the possibility to order the parties to make a sequence of submissions within specified deadlines;
- b the obligation to discuss with the parties the legal grounds that the court considers to constitute the legal framework of the prospective judgment; and
- c the obligation to fix deadlines of consecutive court hearings within a set timeframe, with the objective of concluding the proceedings within these hearings.
Where claimants pursue monetary claims that are not manifestly unjustified or do not raise major concerns, the court can, at its discretion, issue an ex parte order for payment in the reminder proceedings, and deliver it to the respondent while serving him or her with a copy of the lawsuit. If the respondent objects to the order issued in the reminder proceedings within two weeks, then the order becomes repealed by law and the case is heard further on the merits, applying the general provisions of contentious proceedings. If the order is not objected to, then it becomes final and binding and has the force of a judgment.
Where claimants’ claims are evidenced with written recognition of the claim by the respondent or an invoice countersigned by the adverse party, and are being pursued on the basis of a promissory note or a cheque, or with a contract, proof of delivery of an invoice to the adverse party accompanied by proof from the claimant of covering its own costs, then the court will, at the claimant’s request, issue an ex parte order for payment in order proceedings and will deliver it to the respondent along with a copy of the lawsuit. If the respondent does not object to the order within two weeks, then it becomes final and binding and has the force of a judgment. If an objection is submitted then the case is heard further on the merits, applying the general provisions of the contentious proceedings. The order remains in force, however, as injunction relief and the claims sustained in the order might be secured on the respondent’s assets for the duration of the proceedings. The respondent can, however, request that the effects of the injunction be limited or modified.
If the respondent fails to respond to a lawsuit and fails to appear at a court hearing, then the court can issue an award in absentia under the circumstances provided by the claimant in the lawsuit or its further submissions, unless they give rise to doubts. The respondent can object to the award in absentia within two weeks from its notification, if there are no grounds to hear the case in absentia.
As a general rule, the initial submission to court, whether it be the claimant’s statement of claim, the respondent’s response to the statement of claim, the objection against an order for payment in the reminder proceedings or against an order for payment in order proceedings, or an objection against an award in absentia, must provide for all the arguments justifying the case or defence. The initial submission should also offer all evidence in support of its claims or defence. The court can dismiss late arguments or evidence unless it is shown that they could not have been brought or raised earlier, or that their late introduction will not delay the proceedings in any way.
In every case that can be pursued before the courts, a party can request that its claims be secured by the court before or after instituting proceedings (at their every stage) and for the duration of the proceedings. For this to happen, the party must substantiate its claim and prove a legal interest in having its claims secured. A claim is substantiated if it is plausible and the evidence provided in support of the request for interim relief gives a prima facie good chance that the claims will be sustained. The legal interest in obtaining interim relief exists when, in its absence, a petitioner might suffer irreparable harm – for example, if the claims sustained in the final award would no longer be able to be enforced or the objectives of the proceedings otherwise satisfied. Although the interim relief should not result in the claim becoming satisfied, in the case of some non-pecuniary claims (such as prohibition claims) the interim relief might, in practice, satisfy the claim. The court hears the request for interim relief within seven days of it being filed and issues an ex parte decision. If the interim relief is granted before the proceedings commence, then the statement of claim must be filed within two weeks or the interim relief will be repealed by law. The courts can also grant interim relief where the case is or will be heard by the arbitration tribunal. Pecuniary claims can be satisfied through the attachment of assets, rights or receivables, compulsory mortgage or compulsory receivership on the respondent’s business, whereas non-pecuniary claims can be secured in any way the court deems necessary.
iii Class actions
Class actions were introduced to the Polish legal system by the Act on Pursuing Claims in Group Proceedings dated 17 December 2009,8 which entered into force on 19 July 2010. The class action proceedings have been modified with the effect from 1 June 2017. Pursuant to Article 1 Section 1, the Act sets out the legal framework for civil proceedings in cases where a single type of claim is sought by at least 10 individuals, based on the same or similar facts. This Act applies to proceedings in respect of liability for damage caused by a hazardous product and tort, personal injury (in order to determine the liability of the defendant only, claims on quantum should be pursued separately), as well as the non-performance or improper performance of obligations and unjust enrichment, and in consumer protection cases, also in respect of other claims. The 2017 amendment act also clarified that legal entities can also pursue class action claims.
It is admissible to seek both non-pecuniary and pecuniary claims. However, class actions are only really admissible for pecuniary claims when the claim amounts of all group members have been made uniform, taking into consideration the common facts in the case.
A class action claim can only be filed by a group representative who, apart from initiating proceedings, is also obliged to gather the group, to appoint a legal representative or to set out the legal representative’s remuneration. The group representative conducts the proceedings in his or her own name, but on behalf of all the members of the group. To secure the interests of the members of the group, the provisions of law provide for changing the representative and controlling their activities undertaken on behalf of the group.
There are three phases to class actions. The first concerns the admissibility of the case for class actions (at a non-public hearing). The claimant must prove that claims of the members of the group can be subject to the procedure specified in the Act. During the second phase, the composition of the group is finally determined and one of the stages to that is a press announcement on initiating group proceedings. Any individual with a claim fulfilling the set criteria may join the group at a given time, and the respondent may challenge the membership of particular individuals in the group or subgroups, though this would not affect the pace of the proceedings and the possibility of the case being heard on the merits in the meantime. The third phase of class actions is carried out in accordance with the general provisions for court proceedings in civil and commercial matters as set out in the Code of Civil Procedure. It should conclude with an evidence-based verdict on the case subject.
The judgment in first instance is subject to appeal, and the judgment in appeal may be challenged with the cassation complaint.
Class actions are becoming increasingly common (with the first case having already been heard by the Supreme Court), in particular in cases against banks and insurance companies for the use of unfair contractual terms.
iv Representation in proceedings
With the exception of group proceedings and proceedings before the Supreme Court, where a party must be represented by a legal practitioner – an advocate or a legal advisor (with state entity being represented by state treasury solicitors) – any individual or business entity is entitled to represent itself in civil court proceedings. Legal entities or other entities can be represented by members of their executive bodies or commercial representatives.
v Service out of the jurisdiction
As a general rule, a foreign individual is required to mandate a local representative ad litem for the purposes of being served with court correspondence. In the absence of such a representative, all court correspondence addressed to such a person after the proceedings have been duly instituted will be left in the case files and considered duly served.
This rule, however, does not apply to foreign individuals staying or residing in other EU countries. In this case, if the foreign individual does not have a local representative, all documents must be served directly to this person pursuant to Regulation (EC) No. 1393/2007 of the European Parliament and of the Council of 13 November 2007 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (service of documents), and repealing Council Regulation (EC) No. 1348/2000.
The documents initiating proceedings must be duly served on the respondent, along with information about the obligation to mandate a local representative ad litem and the consequences of failing to do so. If the respondent resides in the EU then Regulation 1393/2007 applies (service of court correspondence through local transmitting agencies appointed in each Member State), whereas if not, the relevant international agreements governing the delivery of the court correspondence, if any, might also apply. If there are no such specific international agreements, the courts would apply the provisions of the Code of Civil Procedure, namely deliver court correspondence through local courts or other competent entities, with the intermediation of the Polish embassies or consulates, as the case may be. The court might also serve court correspondence directly with the litigant by registered mail, as long as the laws of the host state authorise this.
The above rules apply equally to individuals and legal entities.
vi Enforcement of foreign judgments
The rules on enforcing foreign judgments in Poland vary, depending on whether the judgment is issued by an EU court or a country that is not an EU member.
In the first case, pursuant to Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, an enforceable judgment given in one Member State is enforceable in other Member States without any declaration of enforceability being required. However, it must be noted that the above rule applies to proceedings initiated on or after 10 January 2015. An obligation to receive a declaration of enforceability remains in place for judgments issued in proceedings initiated before that date. An interested party might apply for the refusal of recognition or enforcement of the foreign judgments on the grounds set out in Article 45 et seq. of Regulation (EU) No. 1215/2012 (gross procedural errors or contrary to public policy).
Different rules apply to judgments issued by non-EU courts, whereby enforceable foreign judgments have to be confirmed by Polish courts. The creditor has to file a petition for a writ of execution for the foreign judgment to the regional court for the place of the debtor’s residence (registered office). If the debtor has no such residence in Poland, then the court in whose area the enforcement is to be conducted is competent to hear the petition. The debtor has two weeks to present his or her stance on the petition. The court issues a decision, which may be appealed against in regular appellate proceedings. The decision of the appellate court may be challenged in a cassation complaint heard by the Supreme Court.
The Polish Court will refuse to enforce or recognise a foreign judgment in cases similar to those set out in Article 45 et seq. of Regulation (EU) No. 1215/2012 (i.e., if gross errors in the proceedings were found to exist or if recognition or enforcement would be contrary to public policy).
vii Assistance to foreign courts
General provisions on assistance to foreign courts are contained in the Polish Code of Civil Procedure, though other regulations that regulate certain issues in detail might also apply before the Polish statutory provisions: namely European legislation (Council Regulation (EC) No. 1206/2001 of 28 May 2001 on cooperation between the courts of the Member States when taking evidence in civil or commercial matters) and international agreements.
Polish courts may take evidence and serve writs at the request of courts and other authorities of a foreign state. District courts are competent in such cases.
If the assistance may involve costs related to the work of expert witnesses, translators, witnesses and other persons, the competent Polish court may only execute the petition of a foreign court if the latter makes an adequate advance payment. Polish courts may also refuse to perform the requested actions if:
- a performing those actions would be contrary to the basic principles of the legal order of Poland (the public policy clause);
- b performing those actions is beyond the scope of the activities of Polish courts;
- c the petitioning country refuses to perform such actions when petitioned by Polish courts; or
- d the case is regarded as falling under exclusive domestic jurisdiction in Poland.
viii Access to court files
There are no general rules authorising members of the public or the press to access the court files of ongoing or already concluded court proceedings.
Members of the public have access to civil proceedings in progress by virtue of the non-confidentiality of proceedings principle expressed in Article 45 of the Constitution of the Republic of Poland. Exceptions to the public nature of hearings may be made for reasons of morality, state security, public order or protection of the private life of a party, or for any other important public interest. Judgments will be announced publicly. This principle is upheld by Article 9 of the Code of Civil Procedure, according to which hearings are held publicly unless specific provisions stipulate otherwise. This non-confidentiality principle is manifested, in particular, by the fact that parties and participants to the proceedings, summoned individuals and the public have the right to take part in hearings. Apart from the parties and the summoned individuals, public hearings can only be attended by adults. Non-public hearings can only be attended by the summoned individuals (Article 152 of the Code of Civil Procedure). As a result, any person of legal age has access to a public hearing and can follow the course of the proceedings.
However, only the parties and participants to the proceedings (e.g., a secondary intervenor) are able to submit pleadings, receive copies of these pleadings and obtain evidence. Pursuant to Article 9 of the Code of Civil Procedure, parties and participants to proceedings have the right to review court files and receive excerpts, copies or extracts from these files. Contents of records and letters may also be made available in electronic form via the IT system for court proceedings, or any other IT system providing access to these records or letters. For non-litigious proceedings, court files are available only to the participants to the proceedings and, with the consent of the director of the court division, to anyone who justifies the need to review them. The same principle applies to:
- a drafting and receiving copies and excerpts from case files; and
- b receiving audiovisual records from case files.
Pursuant to Section 103 of Regulation of the Minister of Justice of 23 February 2007,9 rules of procedure of the common courts, parties and participants to non-litigious proceedings can be granted access to case files and the documents included therein, whether for review or making their own copies. They can receive items or documents submitted in the course of proceedings, or documents issued on the basis of the court files, upon confirming their identity. Other individuals requesting such access or documents must confirm their identity and also demonstrate the existence of a relevant right under the provisions of law. Access to court files is granted with the consent of the director of the court division. Therefore, an individual interested in obtaining access to case files of proceedings (whether pending or concluded) should apply to the relevant divisional director, demonstrating that they have a legal interest in accessing the files.
Access to files from civil proceedings (whether pending or concluded) cannot be granted under the provisions of the Act on Access to Public Information of 6 September 2001.10 Court files are not public information, but a set of documents, to which access is granted pursuant to separate provisions (Article 9 of the Code of Civil Procedure). However, this does not exclude the possibility of requesting access to specific public information included in the files pursuant to the Act on Access to Public Information (Article 5 Section 3). In such a case, the requesting party should specify the precise information they seek.
Records and files of registry cases are open to the public, especially concerning the National Court Register. Any individual has the right to access the data included in the Register via the Central Information system, and may also demand certified copies, excerpts and certificates on the data included in the Register. Registry cases files are made available to the interested persons under the supervision of an authorised court employee.
ix Litigation funding
There are no statutory provisions governing a third party funding civil court proceedings, and such funding would not be very common in practice.
In Poland, the prevailing party will recoup its attorney’s fees from the defeated party only within the limits set out in the Regulations of the Minister of Justice of 22 October 2015 on advocates’ fees and legal advisors’ fees respectively,11 which introduce minimum and maximum attorneys’ fees that the adverse party can be ordered to pay in case it fails in its case.
Therefore, in practice, in complex lengthy and expensive commercial cases, the costs incurred on attorneys’ fees will be recouped only in small portions.
For this reason, an out-of-court agreement with a party to the proceedings, with a third party providing external funding for the costs of the proceedings, including attorneys’ fees, is of no relevance for the decision on the costs of the proceedings contained in the final award.
IV LEGAL PRACTICE
i Conflicts of interest and Chinese walls
Conflicts of interests are regulated in the respective codes of ethics of the legal practitioners – advocates and legal advisers.
The relevant provisions of the code of ethics of advocates apply to advocates individually, whatever the legal form of exercising the profession. If, however, an advocate is a partner in a partnership that provides legal assistance to a client, then it must be assumed that the following provisions applicable to advocates individually also apply to partnerships. An advocate must not take a case when he or she has already advised the adverse party in the same case, or in a related case. An advocate must not take a case if the adverse party is already his or her client, even if on a different case. Finally, an advocate must not represent clients whose interests are contradictory, even with their consent. When the contradictory interests of a client are revealed only while the legal assistance is already being provided, then an advocate can withdraw from advising all the clients involved.
There are no Chinese wall provisions applicable to advocates that would allow for circumventing the above restrictions.
It is not uncommon, however, for advocates to be associated at law firms operating in the form of partnerships, operating on the basis of service agreements (without being partners in the partnership). If the conflict-of-interest provisions were applied to such advocates individually, then it would be possible for them to represent the adverse parties, as long, of course, as full confidentiality is ensured.
In addition to the above deontological rules, the code of ethics of legal advisers distinguishes between representing the client and advising the client. Although the rules on conflicts of interests in cases of representation are as strict as those applicable to advocates, legal advisers can advise clients with contradictory interests, but only as long as they expressly agree to being advised by the same legal adviser.
ii Money laundering, proceeds of crime and funds related to terrorism
Obligations in relation to anti-money laundering, or protecting against dealing in the proceeds of crime or funds related to terrorism under Polish jurisdiction stem from the Act on Counteracting Money-laundering and Financing of Terrorism of 16 November 2000,12 which implements into the Polish legal system Directives 2001/97/EC and 2005/60/EC, among other things.
Article 2(1) of the Act sets out the ‘relevant persons’, namely, the entities responsible for performing duties under this Act. The definition includes the following professionals:
- a notaries within the scope of notarial activity regarding trading in assets;
- b statutory auditors practising their profession; and
- c tax advisers practising their profession;
The definition also includes the following legal practitioners:
- a advocates practising their profession;
- b legal advisers practising their profession outside an employment relationship with agencies serving government and local government authorities; and
- c foreign lawyers providing legal assistance outside their employment relationship.
The obligations of the ‘relevant persons’ are set out in Chapter 3 of the Act. Under its Article 8(5), legal professionals practising one of the professions mentioned above (with the exception of notaries) are excluded from the general rule set out in Article 8 of this Act, which provides that a relevant person who carries out a transaction with a value exceeding €15,000 must register it. In addition, Article 10d of the Act excludes the applicability of many obligations provided under the Act to legal practitioners – advocates, legal advisers and foreign lawyers.
In this context, due consideration should be given, in particular, to Article 8(3), which sets out that a relevant person (covering all the types of professionals mentioned above, including legal practitioners) conducting a transaction that appears to be linked with money laundering or financing terrorism must register that transaction, irrespective of its value or nature.
In addition, Article 8(3a) extends the applicability of the obligation specified above. It sets out a duty for legal practitioners to register suspicious transactions even if they are not actually conducting particular transactions themselves but have gained knowledge of them through performing a contract with the client. However, in relation to advocates, legal advisers and foreign lawyers, this obligation is limited by Article 8(3b), which stipulates that they must comply with this obligation only if they participate in transactions when providing their clients with assistance in planning or conducting transactions regarding:
- a the buying or selling of immoveable properties or enterprises;
- b management of money, securities, or other assets;
- c the opening or managing of accounts;
- d organising payments or additional payments to share capital, organising contributions into the establishment, operation or management of companies; or
- e establishing and operating enterprises in another organisational form and managing their business.
The above are exclusive of cases involving representation under power of attorney in relation to pending proceedings or advice for the purpose of said proceedings.
Information on all transactions registered by legal professionals has to be immediately communicated to the General Inspector of Financial Information.
Legal professionals must keep a register of suspicious transactions, and must keep all suitable documents and information relating to them for a period of five years, starting from the first day of the year following the one in which the most recent record regarding the transaction is made. Finally, legal professionals are obliged to take due diligence measures in reference to their clients. Article 8b(3) Point 1 of the Act imposes an obligation to identify the client and to verify the client’s identity based on documents or publicly available information. The scope of application of that duty is determined based on an assessment of the risk of money laundering and financing of terrorism by taking into account, in particular, the type of the client, the business relationships, the products or the transactions. If a legal professional cannot perform that obligation, then he or she cannot carry out the legal transaction, or must terminate the agreements already made, and is also obliged to communicate the information on that particular client and the planned transaction to the right authority.
Article 6 Section 4 of the Law on Advocacy of 26 May 1982,13 as well as Article 3 Section 6 of the Law on legal advisers of 6 July 198214 expressly preclude the provisions relating to professional privilege in the case of information disclosed under the Act on Counteracting Money Laundering and Financing of Terrorism of 16 November 2000.
iii Data protection
The legal framework governing the processing of personal data is set out by the Polish Act on Personal Data Protection of 29 August 1997,15 (as well as by several regulations issued under the provisions of this Act, covering specific requirements and technical details regarding processing of personal data), which will be heavily revised by Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, repealing Directive 95/46/EC (General Data Protection Regulation). The new EU data protection regulation will apply from 25 May 2018 (it entered into force on 24 May 2016).
According to Article 23 Section 1(5) of the Polish Personal Data Protection Act, the personal data administrator is entitled to process personal data within the scope necessary to fulfil the administrator’s ‘legally justified purposes’.
This entitlement constitutes independent grounds for processing personal data and, as long as the legally justified purposes requirement is met, the requirement to obtain consent for processing personal data does not apply.
Under the explicit wording of the Act, pursuing claims related to business activity conducted by a personal data administrator constitutes one of the ‘legally justified purposes’.
Legal professionals are provided with access to personal data of their clients (or personal data of individuals against whom claims are pursued at the commission of the client) under a written personal data processing agreement concluded between legal professionals and the client, granting authorisation for processing such personal data.
Under the agreement, personal data processing is limited and covers processing personal data only for the purposes and within the scope as defined in the agreement (usually for the purposes of pursuing claims, including access to case files, evidence, etc.). Legal professionals act as personal data processors and the client remains the sole personal data administrator.
The rules on sharing personal data with other law firms, or legal processing outsourcers, both nationally and internationally, depends on the data that is transferred, as well as the purposes of the transfer.
The rules on the transfer of personal data within the European Economic Area are the same as transfers at a national level. Therefore, either a personal data processing agreement is required (if another law firm or outsourcer will act as the processor) or, rarely, the person whose personal data will be transferred should grant his or her consent to the transfer (if a law firm or outsourcer will act as personal data administrator).
The transfer of personal data internationally (to third countries, i.e., outside of the European Economic Area), if a receiving country is not a safe-harbour state, is subject to numerous restrictions, including the need to obtain the consent of the person for such transfer, concluding a processing agreement using standard clauses issued by the European Commission or, on certain occasions, the consent of the national data protection authority.
iv Other areas of interest
Legal professionals – advocates and legal advisors – are generally prohibited from advertising themselves, meaning that their marketing activity must generally be limited to the simple disclosure of selected information identifying their identity, areas of specialisation, etc. Deontological rules applicable to legal advisors are a little less severe than those applied to advocates.
Neither form of legal professionals can carry out activities that restrict their independence, are harmful to the dignity of or confidence in their profession, or that endanger professional secrecy and privilege. In addition, advocates are expressly prohibited from becoming a member of the board of directors or a commercial representative in a commercial company, administering another person’s business and from intermediation in commercial transactions.
Unlike legal advisers, advocates cannot be employed under employment contracts.
V DOCUMENTS AND THE PROTECTION OF PRIVILEGE
The protection of lawyers’ privilege in civil court proceedings results from the interplay of the relevant provisions of the Code of Civil Procedure, the codes of ethics and the statutory provisions relating to the professions of advocates and legal advisers.
Polish procedural law does not have any measures akin to disclosure or discovery of evidence, and authorises requests for the production of specific documents (or material objects) only.
According to Article 6 Sections 1–3 of the Law on Advocacy and, respectively, to Article 3 Sections 3–5 the Law on Legal Advisers, anything that the legal professional learned when providing the legal assistance is covered by full professional privilege that is unlimited in time. The legal professionals must not be released from the professional privilege in any way (even with the client’s consent and in its favour). Although the statutory provisions applicable to criminal proceedings provide for some exceptions to the above rules, the official position (not shared by criminal courts) of the Bars of both legal professions is that the respective provisions of the Law on Advocacy and the Law on Legal Advisors constitute leges speciales to the rules of criminal procedure.
According to Article 261 Section 1 of the Code of Civil Procedure, a witness can refuse to answer a question if answering it would violate professional secrecy. The same rule applies to production of a document containing professional secrets. The Code of Civil Procedure does not provide for any release from the obligation to maintain professional secrecy, and the above rules would apply to legal professionals and their professional privilege.
Additionally, the deontological rules of both legal professions prohibit calling on witness testimony of another legal professional in respect of facts covered by professional privilege.
The problem arises when a legal practitioner, in violation of the deontological rules (not of statutory origin), submits evidence containing privileged information of another legal practitioner, or if a self-representing party submitted such evidence that it obtained legally (e.g., received in copy although as ‘privileged’). The provisions of the Code of Civil Procedure do not preclude such evidence, but it could be argued that relying upon such evidence would be manifestly contrary to the rules of social co-existence.
The above rules also apply to in-house lawyers, as legal professionals (save that in practice only legal advisers employed under an employment contract could be considered as to be in-house lawyers), whereas there are no particular rules on secrecy for non-practising lawyers. Legal professionals working with non-practising lawyers (who are their personnel) must ensure that they will respect the professional privilege of legal professionals.
Foreign lawyers practising in Poland are entered on the lists of foreign lawyers held by the local Bars of advocates or legal advisors. They apply the rules of secrecy and professional privilege of their own foreign legal professions.
ii Production of documents
Virtually the only provision concerning the production of documents in civil court proceedings is contained in Article 248 of the Code of Civil Procedure. (Although the Civil Code now defines a document as any carrier of information that enables its contents to be examined, the Code of Civil Procedure refers in this respect to only text documents that identify their issuer.) According to its provisions, everyone, including a party to the proceedings, is obliged to submit, upon the court’s order, a document that is in his or her possession and that constitutes proof of a fact of vital importance for the adjudication of a case, unless that document contains confidential information. The above duty may be avoided if a person is entitled to refuse to testify as a witness on the facts covered by a document, or if a person holds a document on behalf of a third party who could, for the same reasons, object to the submission of such document. However, if this is the case, the order to submit a document may not be denied if the holder of that document, or a third party, is obliged to do the same at least with respect to one of the parties, or if a document was issued in the interest of the party requesting the taking of evidence. Moreover, a party may not refuse to present a document if the loss he or she would suffer thereby would be the loss of the case.
The above provisions apply to specifically determined documents and not to the general category of documents. There are no provisions or corresponding obligations to review records for the purpose of litigation. The duty to produce a document upon the court’s demand applies regardless of where the document is actually stored. The document might, however, always be produced in a copy certified as true to the original by the party’s attorney ad litem.
Additionally, in accordance with Article 233 Section 2 of the Code of Civil Procedure, the court will assess, at its discretion, the significance of a party’s refusal to present evidence or a party’s interference with the taking of evidence despite the court’s decision. In practice, the most contentious issue in this respect is substantiating that the other party, or a third party, possesses a given document, or that it does not possess the document, despite reasonable expectations that it should have.
The above provisions apply accordingly to any objects that need to be inspected in the proceedings and to audiovisual records.
VI ALTERNATIVES TO LITIGATION
i Overview of alternatives to litigation
The most common alternative to litigation in Poland is arbitration, which constitutes the other (private) method of adjudication.
Of the alternative dispute resolution methods that, unlike arbitration, have no adjudicative character, the most common are mediation, settlement proceedings and expert determination, although these are still not used very frequently.
The Code of Civil Procedure implements the UNCITRAL Model Law on International Commercial Arbitration (1985) and introduces a set of provisions that apply to arbitration proceedings between the parties if they have not agreed on the rules for the proceedings themselves or, more frequently, they have not submitted the resolution dispute to a permanent arbitration institution or have not agreed on non-institutional arbitration rules.
Only some provisions of the Code of Civil Procedure relating to arbitration are considered as matters of public policy – for instance, the principle of equality between the parties, which applies also to the arbitration clause itself (e.g., the submission of only one party to arbitration would not be effective under Polish law).
The two major arbitration institutions in Poland are the Court of Arbitration at the Polish Chamber of Commerce and the Court of Arbitration at the Polish Confederation Lewiatan. Both have adopted their own, quite modern, rules for arbitration, and regularly conduct reviews, but they are also in charge of administering disputes under the ICC, UNCITRAL or other arbitration rules. They hear several hundred cases a year. The arbitration rules of the Court of Arbitration at the Polish Confederation Lewiatan introduce an optional second instance in arbitration.
Arbitration has become increasingly popular and it is quite standard to include arbitration clauses in commercial agreements. However, in particular when the other party to the agreement is a non-Polish entity, the seat of arbitration is often outside of Poland.
Arbitration awards issued in Poland can only be challenged with an appeal to set aside the arbitration award, substantially on the same grounds as those that justify a refusal of enforcement or recognition of foreign arbitration awards under the Convention of 10 June 1958 on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) that Poland adheres to. A complaint to set aside the arbitration award must be submitted directly to the competent court of appeal within two months following the service of the award. A decision of the court of appeal can be challenged with a cassation complaint.
The enforcement of a foreign arbitration award in Poland must be ordered by the court (the relevant court of appeal) at the request of the interested party. The court orders the enforcement after hearing the case in a public hearing, unless, at the request of the adverse party (the respondent in these proceedings), it determines the existence of grounds for a refusal of enforcement or the recognition of foreign arbitration awards under the New York Convention (or, if the award was issued in a state that has not adhered to the New York Convention, on substantially the same grounds as repeated in the Code of Civil Procedure). The decision can be challenged with a cassation complaint.
Poland is becoming increasingly accepting of arbitration, particularly because it reduces the number of instances of application for the enforcement, recognition or setting-aside of arbitration awards (to one instance only, with the right to challenge the decision with a cassation complaint).
Polish courts generally respect the autonomy of arbitration and agree that even errors in applying substantive law would not suffice to set the award aside or justify a refusal to enforce it. However, some decisions on setting aside or refusing the enforcement of awards on the grounds of being contrary to public policy are not positively viewed by the legal doctrine and are only issued sporadically.
Mediation proceedings in civil cases were introduced to the Polish legal system in July 2005, by amendment to the Code of Civil Procedure and certain other acts. The relevant provisions were further amended in order to implement Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters.
The main principle of mediation proceedings is its voluntary character. The mediation is instituted through the execution of a mediation agreement. The mediator is served with a mediation petition before any court proceedings are commenced, or upon the court’s decision at any time during the proceedings. In the latter case, however, either party can refuse to mediate within seven days. Another quality of such proceedings is the impartiality and neutrality of the mediator. Lists of mediators are kept by mediation centres and reported to regional courts. The parties can also choose their mediators from outside of the lists. Mediation is confidential, and the mediator and all the parties to it are obliged to keep the information obtained in its course confidential. Any settlement proposals made during the mediation cannot be validly invoked in further court proceedings. Mediation conducted upon the court’s decision should not last longer than three months, but this deadline can be extended by the court at the parties’ request (or for other important reasons). A settlement agreement concluded before the mediator needs to be validated by the court. The court will refuse to validate the settlement if it is contrary to the law or to the rules of social co-existence or was concluded to circumvent the law.
In Poland, mediation proceedings are not common as a method of dispute resolution. They constitute just a fraction of the general number of proceedings in courts of all instances. The mediation proceedings initiated before any court proceedings on merits are commenced interrupts the limitation period of the claims covered by the mediation proceedings even if the request for mediation is not directly aimed at obtaining satisfaction of a claim, which might potentially be the reason for its increasing popularity.
On 1 January 2016, the Act Amending Certain Acts in Respect of Supporting the Amicable Resolution of Disputes of 10 September 2015 entered into force. This Act is meant to encourage parties to settle disputes amicably before filing a claim with the court, or during the court proceedings. Lawsuits must, from this date, include information on whether the parties made an attempt at mediation or another extrajudicial method of dispute resolution and if they did not, they must provide reasons as to why not. In addition, in justified cases, the court will be authorised to charge the party with court fees in the event of an unjustified refusal to mediate. Although mediation is, in principle, voluntary, the courts will often force the parties to mediate by simply deciding that they should attempt to settle the dispute before a mediator named by the court. Either party can refuse to mediate, but the obligation to justify a failure to attempt to settle is likely to encourage the parties to at least go through the motions of mediation, although hardly any mediation concludes with a settlement.
iv Other forms of alternative dispute resolution
The Code of Civil Procedure allows parties to settle their dispute before a judge prior to any court proceedings on the merits being initiated, upon a settlement petition from either party. Although settlement proceedings are aimed at encouraging the parties to settle the disputes with the assistance of the judge, and to obtain a court settlement confirmed by the court (which can be enforced if not performed voluntarily), this procedure is only really used as a means of interrupting the limitation period of the claims in order to gain more time and to better prepare for the inevitable court proceedings.
In complex transactions documents, in particular where it is necessary to apply a price adjustment mechanism, or under complex construction contracts where certain technical matters need to be resolved swiftly while the works are in progress, the parties often agree on such issues being determined by a third-party expert.
VII OUTLOOK and CONCLUSIONS
The Polish civil court procedure system is undergoing a constant process of digitalisation aimed at, among other things:
- a the full digitalisation of court files and the right to access them online;
- b uniformity of the cases’ numeration at a national level;
- c the service of court correspondence and the parties’ submissions through IT systems;
- d the fast-tracking of enforcement proceedings by taking more measures electronically (such as online auctions); and
- e attendance of court hearings by videoconference from local courtrooms.
Most of the statutory framework is already in place and can be ‘activated’ as soon as the technical measures allow it to happen, and the relevant technical regulations are issued.
On 27 November 2017, a proposal for an act amending the Code of Civil Procedure was published by the Government Legislation Centre. If adopted, it would certainly constitute the most significant reform of the civil court proceedings since 2005. The main proposed changes are the following:
- a reinstating distinct commercial disputes procedure containing much more restrictive provisions for the parties than in ‘normal’ contentious proceedings (e.g., precluding counterclaims), as well as introducing the binding force of evidentiary agreements concluded by the parties before instituting the proceedings or in court (precluding the right to examine certain categories of evidence in the dispute between the parties);
- b introducing a pretrial organisational hearing and the mandatory adoption of the procedural plan, containing not only a timeline of the proceedings and the deadline for issuing the judgement, but also a detailed summary of the parties’ claims and defences, with the evidence brought in support;
- c setting out the right of the parties and their attorneys ad litem to record the course of the proceedings without the court’s authorisation (upon a simple notification of the intent to do so); and
- d dismissing appeals filed by a party represented by an attorney ad litem for which the court fee was not paid (or where the amount paid was irregular), without a prior summons to regulate the default;
- e establishing that conciliation petitions must be accompanied by a draft settlement agreement;
- f setting out general limitations on bringing set-off defences (claims under the same legal relationship that the claimant’s claims result from, save for undisputed claims or claims proven by documents issued by third parties); and
- g introducing the admissibility of written statements at the court’s discretion.
1 Krzysztof Ciepliński is an advocate at Gide Loyrette Nouel.
2 Uniform text, Journal of Laws of 2016, Item 1822, as amended.
3 Uniform text, Journal of Laws of 2016, Item 623, as amended.
4 Uniform text, Journal of Laws of 2017, Item 1277, as amended.
5 Uniform text, Journal of Laws of 2016, Item 723, as amended.
7 Under Regulation (EC) No. 1896/2006 of the European Parliament and of the Council of 12 December 2006 creating a European order for payment procedure, and Regulation (EC) No. 861/2007 of the European Parliament and of the Council of 11 July 2007 establishing a European Small Claims Procedure.
8 Journal of Laws of 2010, No 7, Item 44, as amended.
9 Journal of Laws of 2015, Item 2316, as amended.
10 Uniform text, Journal of Laws of 2016, Item 164, as amended.
11 Uniform text, Journal of Laws of 2015, Items 1800 and 1804, as amended.
12 Uniform text, Journal of Laws of 2017, Item 1049.
13 Uniform text, Journal of Laws of 2016, Item 1999, as amended.
14 Uniform text, Journal of Laws of 2017, Item 1870.
15 Uniform text, Journal of Laws of 2016, Item 922.