Confidentiality agreement with an employee

Anna Miśtal-Kluś        17 October 2017        Komentarze (0)

If you are doing business in Poland, you may wonder how to protect your different important business information which is known to your employees. There are many sorts of confidential information connected with your undertaking, such as e.g. commercial, financial, technological or organizational information including sales volume, production volume, distribution, know-how, contractors, development plans, production process management, advertising campaigns and personal data of employees.  In order to prevent their leakage out of your firm it is advisable to oblige your employees to confidentiality. The Labour Code admittedly provides a general confidentiality obligation of an employee, however the scope of the confidentiality may not be certain for an employee, if not specified in the contract directly.

Confidentiality agreement

Therefore what you need is to sign a confidentiality agreement. You may include provisions concerning the confidentiality in the employment contract signed with your new employee, as well as in the separate confidentiality agreement concluded with your previous employees. In the contract it is to be specified what kind of information is confidential, what is the scope of confidentiality and you may indicate your employees the effects of the breach of confidentiality provisions as well. They will be usually different during the employment relation and afterwards – after the expiry or termination of the employment contract.

Disclosure of confidential information

The disclosure of confidential information by a current employee may be treated not only as a breach of contract obligations, but also as an act of the unfair competition, as well as the breach of general employment obligations and cause the liability towards the employer on basis of the Labour Code and the Unfair Competition Act. It is to be underlined that the material liability of an employee for damages incurred by an employer is always limited by the Labour Code only to the amount of three month’s pay of an employee if he has acted unintentionally. In case of intentional acting of an employee such limitation of liability does not exist, then an employee has an obligation to compensate for full damage.

Post-employment obligations

The contract with an employee may provide the confidentiality obligations also after expiry or termination of the labour relation. Such provisions should indicate the period when they are binding. However, the confidentiality provisions might be binding for an indefinite period of time as well, what means in practice that the former employee is obliged to confidentiality as long as certain information is still secret (i.e. if it has already been revealed by others it is not secret any longer).

The material liability for breach of confidentiality after the expiry or termination of labour relation may be governed by general rules of liability for damages based on civil law, as well as by contract provisions – e.g. the contract may provide a contract penalty in the given amount of money for breach of confidentiality. In the event of non-performance or improper performance of an obligation to confidentiality, contract penalty is due to the employer in the stipulated amount regardless of the value of the damage suffered by him.  A demand for compensation in excess of the stipulated contract penalty is admissible if such entitlement of an employer was provided in the contract.

 

A final and valid judgment stating that a debtor has to pay to the creditor a given amount of money is not yet a full success. What you need as a creditor is to have a possibility to execute the judgment effectively. If the debtor does not pay the adjudged amount voluntarily, you need to know if he owes any property which will be sufficient to satisfy your claims. It might happen that the debtor, knowing that he will be obliged to perform the court judgment, removes his property from his estate. A quite common situation is that a debtor sells out or gives away e.g. his real estate being the only component of significant value within his property, which makes it impossible for the creditor to receive his money. A Polish Civil Code (CC) provides a certain protection fot creditors being in such situation.

According to Art. 527 § 1 CC if, as a result of a legal act performed by a debtor to the detriment of creditors, a third party gains a financial benefit, each of the creditors may demand that the said act is  declared ineffective with respect to him, if the debtor acted knowingly to the creditors’ detriment, and the third party knew or, having used due care, could have learned of it. Art. 527 § 2 CC provides that a debtor’s legal act is performed to the creditors’ detriment if, as a result of such act, the debtor becomes insolvent or becomes insolvent to a greater degree than he was before performing the act.

 

A legal suit – an actio pauliana claim

This regulation means that the creditor has to file a legal suit to the court against the third party (an action pauliana claim) and he needs to prove the above mentioned circumstances. However, the third party may indicate existing property of the debtor that would be sufficient to satisfy the creditor’s claim and in this way may prevent declaring the legal act to be ineffective. The situation of the creditor in such legal proceedings is easier if one or more of the following circumstances provided by Art. 527 – 529 CC occur:

– if the third party is in a close relationship with the debtor, it is presumed that such person knew that the debtor had acted knowingly to the creditors’ detriment,

– If, as a result of a debtor’s legal act performed to the creditors’ detriment, a financial benefit is gained by an entrepreneur having permanent economic relations with the debtor, it is presumed that he knew that the debtor had acted knowingly to the creditors’ detriment,

– If, as a result of a debtor’s legal act performed to the creditors’ detriment, a third party gains a financial benefit free of charge, the creditor may demand that the act is deemed ineffective even though the person did not know and, having used due care, could not have learned that the debtor had acted knowingly to the creditors’ detriment,

– If, at the time of a donation, a debtor is insolvent, it is presumed that he is acting knowingly to the creditors’ detriment. The same applies where a debtor becomes insolvent by making the donation.

 

Further disposal of the benefit

What happens if the third party disposes of the benefit gained to the next person? Then the creditor may directly sue the person to whom the disposition was made (i.e. “the fourth person”) if that person knew of circumstances justifying the debtor’s act being declared ineffective or if the disposition was free of charge (Art. 530 CC).

 

Deadline for an actio pauliana claim

What is to be remembered? You may demand for a legal act to be declared ineffective only within five years from the date of the act.

Violation of the right to the company name

Anna Miśtal-Kluś        17 August 2017        Komentarze (0)

The right to the company name is of a crucial importance for entrepreneurs conducting business activity. Therefore it is important to be aware of certain legal measures that can protect you from violation of your rights in Poland.

When is your right to the company name violated? Especially if someone uses the same company name or a similar one and his firm’s activity causes association among clients or potential clients that there are connections between those two activities. In practice it happens that in this way someone uses the other companie’s reputation and makes profit out of this, in particular by causing wrong impression that his activity is a business of a better known and recognized company.

Your company may demand protection on basis of several Polish legal provisions.

Firstly, if your company has got a registered word trademark you can demand protection on basis of the Industrial Property Law and especially demand forbidding of the use of given words as a sign of the other person’s business and abandonment of trademark infringement.

Secondly, if using the company name or the similar name may be recognized as an act of unfair competition then you may demand protection on basis of the Act of unfair competition, and especially demand abandonment of using of the given name.

Thirdly, the protection of the entrepreneur is governed by the Civil Code as well, which provides that an entrepreneur whose right to a business name has been threatened with someone else’s activity may demand that it is abandoned unless it is unlawful. In the event of an infringement, the entrepreneur may also demand the removal of its effects, the submission of statements in appropriate content and form, the general remedy of damage to property or giving out the benefit of the person committing the infringement.

It is advisable not to stay passive if you notice that someone violates your right to the company name and tries to make profit of your companie’s reputation. It is better to undertake legal actions which will help you to stop the violation.

 

Many years of good cooperation and after that a court struggle. This is how some business relations end. At the beginning of the court procedure the law firms of the parties prepare often very complicated standpoints of their clients. Parties file to the court many documents, present their arguments at length. According to the Polish civil procedure law the party should present the necessary proof of its claim at the very beginning of the trial in order to avoid the situation when the court does not recognize its proof stating it has been presented with the delay. Filing a claim requires payment of the court fee which amounts to 5 % of the claim’s amount.

Then during the first court session the court is obliged to ask the parties if there are any chances for the agreement between them. The court may also direct the parties to mediation, however the parties must agree to that. Mediation requires payment of some additional costs by both parties. The parties may choose the mediator together or the court indicates such person. During the mediation parties – with help of the mediator – may speak freely not only about their claims, but also about other factors important to them related to the case, as mediation is not aimed at leading legal discussions. The mediation may be a very helpful way to find the solution, particularly if the core of the misunderstanding is not only the legal problem and the money. Especially if at least one party is not a big company, but a small entrepreneur or a private person, then some other aspects may have a big influence at making decisions. In such a situation the role of the mediator might be very significant, as he may help the parties to see the real problem and help them to make a compromise. Sometimes one court dispute does not mean the end of the business cooperation, then the parties may notice that it is better to find a solution that could be accepted by both of them rather than to lead a long court process not sure about the outcome and its costs.

If parties agree to solve the dispute in the conciliatory way, then they prepare the text of the agreement. The agreement may be concluded in front of the court or in front of the mediator – in the first situation the court returns the claimant the half of the court fee paid by him while filing the claim, in the second one the court returns three-quarters of such court fee. Rules of payment of other costs related to the court process may be governed between the parties by the agreement. Such agreements may be granted an enforcement clause by the Polish court and if the party does not fulfill the agreement voluntarily, then it can be executed by the court bailiff.

And if negotations end with fiasco? Then the court struggle goes on… However, it is possible to conclude an agreement at any time before the judgement is passed.

 

Succession – on basis of the last will – to real property located in Poland

Anna Miśtal-Kluś        21 November 2016        Komentarze (0)

Due to a large group of Poles living abroad, as well as due to mixed marriages concluded by the Poles, which results in the fact that foreigners frequently become heirs of property located on Polish territory, the issue of succession to property left in Poland on the basis of wills made abroad is of utmost social importance. This issue is also relevant in the situation where a citizen of a country other than Poland disposes of assets in the will, which includes property located on Polish territory, which due to the interest of foreigners purchasing real estates in Poland observed in recent years may be a common situation as well.

There are some key issues that have to be always examined in case to state who is an heir in a given case and how to confirm this officialy. It is to be underlined that proper analysis of a situation depends on the date of death of a testator. If a testator died on or after 17 August 2015 we have to apply in Poland as the EU-member state the REGULATION (EU) No. 650/2012 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 4 July 2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession. The aim of this regulation is that the court of one country, applying the law of one country, states who is an heir of the whole property of the deceaed person.

However, if death took place before 17 August 2015 the previous rules have to be applied. In this entry I would like to explain some important issues connected with such inheritance as we will still face such cases certainly for many years in the future.

If the testator left real property in Poland, the heir (or legatee), so as he can freely dispose of it, must in accordance with the Polish Code of Civil Procedure obtain confirmation of inheritance acquisition issued by a Polish court, regardless of any inheritance proceedings conducted in another country. Alternatively – instead conducting court proceedings in Poland – the heir may obtain the deed of succession certification drawn up by the Polish notary (if it is allowed in a certain case). It means that it is possible that an heir confirms the inheritance in one country and obtains the property left by the deceased person in this country upon such confirmation, but he will have to lead the second procedure in Poland in order to confirm his rights to real property left by the deceased person in Poland. The Polish court might apply the foreign law during such proceedings if it is the proper law according to Polish conflict-of-laws rules.

One of the most important questions is if the will drawn up abroad may be effective in relation to property left by the testator in Poland. The answer is positive, provided that conditions for its validity shall be fulfilled. The validity of the will drawn up abroad shall be assessed in Poland according to the national law of the deceased at the time of drafting the will. Accordingly, if we deal e.g. with an Italian citizen, who did not have another citizenship, the validity of a will made in Italy will be assessed in Poland on the basis of Italian law. However, if this will was drawn up in Italy by a Polish citizen (even though he was also a citizen of another state – including an Italian citizen), in Poland it will be subject to Polish law only and, therefore, in order to assess in Poland the validity of the will prepared by a Polish citizen abroad, the provisions of the Polish Civil Code will be applicable. On the other hand, if we deal with the citizen of at least two countries, who is, however, not a Polish citizen, then as far as the national law is concerned, he is subject to the law of the country which he is most closely connected with and this law will be taken into account when assessing in Poland the validity of the will. The above mentioned rules are governed in Poland by The Private International Law which constitutes the Polish conflict-of-laws rules.

It should be noted, however, that for assessing the validity of the will in Poland in terms of its form the Polish legislator refers to the Convention on the conflicts of laws relating to the form of testamentary dispositions, done at The Hague on 5 October 1961. It is very important because the laws of different countries can provide various forms of preparation of wills. In Poland for the most popular can be considered a form of a handwritten testament and the testament in form of a notarial deed. A handwritten form provided in the Polish Civil Code requires that the testator draws up a will in such a way that he will write the whole manuscript, sign it and put a date on it. It should be emphasized that writing a will on the computer, printing it and signing it by the testator does not comply with the written form according to Polish law, while a will drawn up in such form may be valid under the law of another country, if that law allows this form of wills. Therefore, if the will is drawn up in a form that is allowed by the law of one of the countries specified in Art. 1 of the above mentioned Convention, the testament will fulfill in Poland the condition of its validity in terms of form, even though Polish law did not provide for such a form.

 

As indicated above, the validity of a will drawn up by a Polish citizen abroad will be assessed on basis of the provisions of the Polish Civil Code, except from the form of a will. The latter may raise certain problems in practice when the law of another country provides different regulations in the field of inheritance law.

The basic principle of the Polish inheritance law is that an heir inherits a share in inheritance, rather than the specific items that the latter consists of (it is different by legatees, however it will not be further explained in this entry). The testator may in his last will appoint all or some of the heirs to the whole or the part of the inheritance. Thus, if the testator has e.g. appointed to inheritance two of his children in equal shares, it means that each child will inherit a share of one half of the whole estate. The issue of what items he will actually receive from the estate, will be specified in the contract for the distribution of the estate concluded between all the heirs or in the court ruling issued at the request of any of the heirs. Until the estate has not been distributed, all heirs are entitled to a share in all inheritance items in the proportion of their inheritance share. The testator is not therefore capable to effectively determine in his last will, which inheritance items shall be distributed to his heirs.

In practice it happens that the testator, when drawing up a will, does not take into account the abovementioned rules of inheritance. This is often the case when the last will is prepared by someone on his own (i.e. not by the notary) or the last will is prepared abroad (even by the notary). It is to be remembered that the notary in each country may advise only on the content of the last will according to law of the country where he practices. Therefore the last will prepared in the other country, especially in the country which law provides possibility of distribution of certain estate to the heirs in the last will (like e.g. in England) may cause significant practical problems while confirming succession to real property located in Poland. Each case requires a very specific and detailed analysis. Even similar cases – becaue of tiny differences – may lead to different results.