The accession of Poland into the European Union on 1st of May 2004 and the introduction of a free movement of people and capital connected with it had a massive impact on legal services in Poland. We as lawyers did everything to be prepared for those changes in advance. [Read more.]

Alternative dispute resolution and court proceedings in Poland

Anna Miśtal-Kluś11 October 2023Komentarze (0)

Our legal office often files lawsuits in Poland on behalf of foreign clients in cases where Polish courts have jurisdiction. Unfortunately, court proceedings in Poland are quite lengthy, the number of lawsuits submitted to the court is increasing every year, so it is always worth considering an alternative way of resolving a dispute. Our trial experience shows that even after many years of trial, concluding a settlement can be beneficial for each party of the proceedings.

In the initial phase of the dispute, when emotions are very tense, it is often difficult for the parties to reach an agreement. However, as the proceedings continue, sometimes it is possible to reach an agreement, especially when the proceedings are prolonged due to the need for another expert opinion to be issued or for one of the parties, or even both parties, to file an appeal against the judgment of the court of the first instance.

What are the direct benefits of concluding a settlement:

• in payment proceedings, the party knows what amount it will receive from its adversary and within what time limit,
• in the settlement, the parties can regulate who will bear the costs of the trial and in what amount (especially court fees, expert fees, remuneration of the proxies),
• in the event of failure to implement the settlement concluded before the court, the creditor may apply to the Court for an enforcement clause to be issued to the judgment and enforce the judgment directly by the bailiff,
• a claim established by a settlement concluded before a court or a settlement concluded before a mediator and approved by the court expires after six years. If the claim established in this way covers periodic benefits, the claim for periodic benefits due in the future becomes time-barred after three years,
• the court refunds the entire claim fee if the proceedings ended with a settlement before the hearing before the court of first instance;
• the court returns half of the claim fee if the proceedings in the first instance ended with a court settlement after the commencement of the hearing,
• the court refunds half of the appeal fee when the case ended with a court settlement before the second-instance court,
• at any stage of the case, the court may refer the parties to mediation – if a settlement is reached before a mediator, the court returns three-quarters of the fee initiating the proceedings.

Would you like to learn more about the court proceedings in Poland don’t hesitate to contact our lawyers.

Inheritance proceedings

Anna Miśtal-Kluś27 May 2022Komentarze (0)

Cross-border inheritance and the form of a will on the example of a will made in England

Cross-border inheritance can raise a number of problems and complex legal questions. One of the important issues is the will and its form.

I will try to discuss the indicated problem on the example of a will drawn up in England upon legal provision that bind in Englad, which is to constitute the basis for a declaration of the acquisition of inheritance by a Polish court (as a real estate located in Poland is a part of inheritance).

The Polish court conducting an inheritance proceedings will apply the conflict of laws rules that are in force in the Polish legal system, i.e. 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 (hereinafer referred to as: the EU Regulation).

The United Kingdom, within the meaning of the EU Regulation, remains a third country (it was a third country even when the UK was a member of the EU, and this is in accordance with point 82 of the Preamble to the EU Regulation).

The EU Regulation and the form of the will

Article 27 section 1 point a) of the The EU Regulation provides:
Formal validity of dispositions of property upon death made in writing
A disposition of property upon death made in writing shall be valid as regards form if its form complies with the law of the State in which the disposion was made or the agreement as to succession concluded.

However point (52) sentence no. 1. of the Preamble to the EU Regulation provides:

This Regulation should regulate the validity as to form of all dispositions of property upon death made in writing by way of rules which are consistent with those of the Hague Convention of 5 October 1961 on the Conflicts of Laws Relating to the Form of Testamentary Dispositions.

And Article 75 section 1. of the EU Regulation provides:

Relationship with existing international conventions
This Regulation shall not affect the application of international conventions to which one or more Member States are party at the time of adoption of this Regulation and which concern matters covered by this Regulation.
In particular, Member States which are Contracting Parties to the Hague Convention of 5 October 1961 on the Conflicts of Laws Relating to the Form of Testamentary Dispositions shall continue to apply the provisions of that Convention instead of Article 27 of this Regulation with regard to the formal validity of wills and joint wills.

Thus, when assessing the validity of a will drawn up in England in terms of form, the Polish court must refer to the provisions of the above-mentioned Convention drawn up at The Hague on 5 October 1961, to which Poland and The United Kingdom are parties.

The Hague Convention

Article 1. of the Hague Convention provides among others in point a) that a testamentary disposition shall be valid as regards form if its form complies with the internal law of the place where the testator made it.

Therefore, the Polish court in the light of the Hague Convention may be required especially to assess the validity of the will in terms of form on the basis of the legislation being in force in England. In practice it may e.g. lead to a situation in which a Polish court will state the will as valid in terms of form according to law of England and Wales, despite the fact that under Polish law it would be invalid due to the requirements of Polish law as to the form.

More entries about cross-border inheritance cases

COVID-19, Polish anti-crisis regulations

Anna Miśtal-Kluś17 April 2020Komentarze (0)

On 31 March 2020 the Polish Sejm (the lower Chamber of the Polish Parliament) passed the act of law called “The Anti-Crisis Shield” and it was published on 31 March 2020 in Legal Journal under position 568, and it entered into force (with some exceptions) on the same day. Below we present some points of this regulation. It is to be pointed out that the Polish Parliament is still working on some further regulations which will help the entrepreneurs to cope with the crisis – the new regulation is expected soon.

1 – State aids

1.1.
The Anti-Crisis Shield assumes full supsension of social security contributions for March, April and May 2020. For 3 months, the state is to take over the payment of these contributions to the Social Insurance Institutuon (ZUS) for employees of so called micro companies, employing no more than 9 people and established before 1 February 2020.
The exemption from social security contributions will also be available to entrepreneurs themself (physical persons running a business activity). The only condition is the entrepreneur’s revenue obtained in February 2020 was not higher than 300 % of the average salary forecast for 2020, i.e. not higher than 15.681,00 PLN (about 3.438,00 EUR).

1.2.
Physical persons running a business activity before 1 February 2020, persons performing an agency contract, contract of mandate or specific-task contract may obtain compensation for a stopover caused by COVID-19.

For example persons running a business activity may obtain a compensation in the amount of 2.080,00 PLN (about 456,00 EUR) if they prove prove that their income from business activity is reduced at least by 15 % in comparison with the previous month and is not higher than 300 % of the average monthly salary from the previous quarter announced by the President of the Central Statistical Office (GUS), i.e. on 1 April 2020 it cannot be higher than 15.595,74 PLN (about 3.420,00 EUR).

1.3.
Parents having children up to 8 years old may take care of their children who normally attend crèche, kindergarten or school which are closed now because of epidemic, and may obtain protective welfare payment during their closure. It concerns both employees and persons running a business activity who decide not to work during that time. For the time being the closure of the above mentioned posts is planned until 26 April 2020 (it has already been prolonged twice).

2 – Finance and banking measures

2.1
Bank credits – the regulation allows banks to modify the financial conditions, inlcuding change of payment deadlines, previously granted to small or medium companies who have found themselves in a special situation as a result of an epidemiological emergency – modification of the conditions will not lead to deterioration of the borrower’s situation.
The regulation introduced new rules to calculate the maximum amount of non-interest costs of consumer credit.

2.2
The deadline for preparing financial statements for 2019 has been moved by three months – to the end of June 2020, and they should be approved by the end of August 2020 (instead of the end of 30 June). In case of entities subject to the supervision of the Polish Financial Supervision Authority, the deadline for preparing the financial statements for 2019 was moved by two months, i.e. until the end of May, and the reports should be approved by the end of July 2020.

3 – Payment delays

The legal provisions connected with Coronavirus-crisis do not provide any general special regulations concerning payments of due debts arising from civil claims. The limitation periods for such claims continue to run.
On the other hand limitation periods for public claims (e.g. taxes) during an epidemic threat or epidemic status do not start to run and commenced shall be suspended for that period.

4 – Tax exemptions

4.1.
The commune council may introduce, by way of a resolution, for part of 2020 exemptions from property tax: land, buildings and structures related to conducting business activities, to indicated groups of entrepreneurs whose financial liquidity has deteriorated due to negative economic consequences due to COVID-19.
Notwithstanding this, the deadline for payment of the income tax from buildings is extended until 20 July 2020, for the months March-May 2020 (instead of 20 April, 20 May and 20 June).

4.2.
Possibility of retroactive settlement of tax losses in personal income tax (PIT) and corporate income tax (CIT) – the loss incurred in 2020 PIT- and CIT- taxpayers will be able to deduct from the income obtained in 2019. It will be possible to deduct from the income from 2019 a loss of up to PLN 5 million (about 1.075.000 EUR) in the first year. The surplus will be deducted in subsequent years.

4.3.
Extension of deadline for payers to submit advance payment for payroll taxes collected in March and April until 1 June 2020 (instead of dates until 20 April and 20 May 2020). The same prolongation concerns persons running business activity and their income tax for March and April.

The deadline for submitting tax returns and paying tax for 2019 for all PIT- and CIT- taxpayers was extented by 31 May 2020, instead of 30 April 2020 (PIT) and 31 March 2020 (CIT).

5 – Employment law measures

The regulation provides microloan from the Labour Fund in the amount of 5.000,00 (about 1.075,00 EUR) for micro-entrepreneurs (employing up to 9 workers) who conducted business activity before 1 March 2020 and who will make an application in order to be granted a loan. The company may be granted such loan for a period for not longer that 12 months with a 6-month grace period, with possibility of redemption and condition that the entrepreneur for a period of 3 months from the date of its granting will not reduce the state of employment in relation to the state of employment as of 29 February 2020.

Microentrepreneurs may obtain a 3-monthly contribution to the remuneration of their employees in case of economic downtime or reduced working hours (specific conditions are governed by the legal act). The total amount of co-financing in case of economic downtime is 1533,09 PLN (about 330 EUR) per employee, which includes 50 % of the minimum wage, i.e. 1300 PLN plus the employer’s social security contributions from this amount. On the other hand, in case of working time reduction, the total maximum amount of co-financing is 2452 PLN (about 530 EUR), which includes 40 % of the average salary plus employer’s social security contributions from this amount. Working hours can be reduced by 20 %, but nor more than 0,5 jobs.

The employer affected by the consequences of the COVID-19 epidemic will be able to reduce the employee’s daily uninterrupted rest time from the current 11 hours to 8 (with a guarantee of providing the employee with equivalent rest within 8 weeks), and the weekly rest period – from 35 to 32 hours. In consultation with trade unions or – when there are no unions – with employee representatives, he will also be able to extend the daily working time to 12 hours and the billing period to a maximum of 12 months.

6 – Any other specific measures

6.1.
Exemption from rent of tenants in shopping malls for the period in which the tenant of the premises did not operate in a commercial facility with a sales area over 2000 sq m. during an epidemic threat or epidemic status.
Until 30 June 2020 the lessor cannot terminate the lease agreement or the amount of rent.

6.2.
Public procurement law
The contracting authority, after determining that the circumstances related to the occurrence of COVID-19 may affect or affect the proper performance of the contract, may, in consultation with the contractor, amend the contract, in particular by:
• changing the date of performing the contract or part thereof, or temporarily suspending the performance of the contract or part thereof,
• a change in the manner of making supplies, services or construction works,
• a change in the scope of the contractor’s service and the corresponding change in the contractor’s remuneration – provided that the increase in remuneration caused by each subsequent change does not exceed 50% of the value of the original contract.

If the public procurement contract contains provisions more favorably shaping the situation of the contractor than it would result from above mentioned regulation, these provisions shall apply to amendments to the contract, with the proviso that the circumstances related to the occurrence of COVID-19, may not constitute an independent basis for exercising the contractual right of withdrawal.

If the public procurement contract contains provisions on contractual penalties or damages for liability for non-performance or improper performance due to designated circumstances, the party of the contract shall present the impact of the circumstances related to COVID-19 on its proper performance and the impact of the circumstances related to COVID -19 on the appropriateness of determining and seeking these penalties or damages, or their amount.

The Contractor and subcontractor, after determining that the circumstances related to the occurrence of COVID-19, may affect or affect the proper performance of the contract between them, which is related to the performance of the public contract or part thereof, agree on an appropriate amendment to this contract, in particular they may change the date of performance of the contract or part thereof, temporarily suspend performance of the contract or part thereof, change the manner of performance of the contract or change the scope of mutual benefits.

6.3.
Justice

During the period of epidemic threat or epidemic status, procedural and judicial time limits among others in:
• court proceedings, including administrative court proceedings,
• enforcement proceedings,
• criminal proceedings,
• criminal tax proceedings,
• administrative proceedings,

do not start, and they are suspended for this period.

No court sittings are to take place during the above mentioned period. However, the regulation provides the catalog of urgent cases which courts are to consider also when the courts have completely ceased to operate. Among them are motions regarding the application of detention on demand or to hear the person in front of the court in the course of the security of evidence or towards whom there is anxiety that it will not be possible to hear such person at the trial.

FORCE MAJEUR (VIS MAIOR) and its influence on contract obligations

Anna Miśtal-Kluś25 March 2020Komentarze (0)

The Coronavirus disease and its vast social and economic effects have caused that we are all looking for extraordinary measures, also in legal matters. As so many lines of business have already been affected by the lockdown induced by the epidemic, most of entrepreneurs already face great problems with payments and having no possibility to perform their contract obligations (e.g. paying rent, producing and selling goods or performing different services). There is a question if it leads to any negative consequences for them – especially to obligation to remedy a damage of the other contract party or to pay a contract penalty.

 

FORCE MAJEUR

The situation we are facing facing with can be described as an example of force majeur („superior force”, meaning an unexpected circumstance or an unavoidable event). It has a specific legal meaning and is often governed by contracts as a special clause. In order to analyse the risks connected with the current unexpected epidemic situation the first thing to do is to read the contracts of your company and check if there are any specific regulations concerning force majeur. Such clauses might free both parties from liability and obligations when an extraordinary event happens (e.g. war, act of terror, riot, strike, fire, epidemic, hurricane, flood, etc.). Such terms might free the parties to fullfill their contract obligations entirely or only during the period of duration of force majeur. However it is possible that the later fulfillment of obligation will be no longer possible after the force majeur recedes, which also might be treated as a result of force majeur. However, the contract may also stipulate that the force majeur does not free the debtor from liability to perform the contract obligation.

If there are no regulations in contracts concerning force majeur or they do not cover a certain type of unexpected circumstance there are also legal provisions which might be applied in such situations. As far as Polish law is concerned there is no legal definition of force majeur, however the influence of the unexpected events on fulfillment of contract obligations is governed by art. 471 of the Polish Civil Code which stipulates:
„A debtor is obliged to remedy any damage arising from non-performance or improper performance of an obligation unless the non-performance or improper performance is due to circumstances for which the debtor is not liable.”
The above mentioned provision exempts the debtor from the liability against the other contract party if he incurred a damage, if the non-performance or improper performance of the contract was not his fault. It would happen also in case of force majeur.

If there is a contract provision concerning the contract penalty, the debtor may also free himself from obligation to pay the contract penalty in case if the non-performance or improper performance of the contract is due to circumstances for which the debtor is not liable (art. 483 in connection with art. 471 of the Civil Code).
As the force majeur is a so called „general clause” there are no stiff rules of how it is to be applied and every situation is to be analysed separately, because a certain unexpected event might affect various types of business differently. Therefore in practice interpretation of contract provisions or of the above mentioned art. 471 and art. 483 of Civil Code might lead to disputes between the parties. E.g. the question might be if a party could prepare itself for the results of epidemic, especially by securing in advance the materials needed for manufacturing of certain goods, particularly if it was earlier known that the epidemic would most certainly spread all other the World during the coming weeks before it became impossible to perform the contract obligations. This example shows another problem to be examined: what is a required due care of the debtor while performing a contract, i.e. if in case of a risk of epidemic he was obliged to undertake ordinary steps or maybe he was obliged to behave in an extraordinary way in order to perform the contract.

Liquidation of the limited liability company in Poland

Anna Miśtal-Kluś02 October 2019Komentarze (0)

Your business is not successful or vice versa, you have achieved all your goals and want to roll up your business in Poland? But you still have a company here? I will explain you what to do in order to liquidate and strike a limited liability company (spółka z ograniczoną odpowiedzialnością) from the register in Poland.

The first thing is to make a plan and try to estimate how much time you need for its realisation. You will need help of an accountant who will prepare all necessary financial documents for the Register Court and the Tax Office. You might need a legal assistance to finish your activities and to fulfil all the legal obligations. Apart from that you will have to bear the costs of necessary official announcements and court fees for entries into the Register Court.

Main liquidation steps according to the Polish Code of Commercial Companies are as follows.

The first part:

• The shareholders must adopt a resolution to dissolve the company.
• A company needs a liquidator. A general rules is that a liquidator is a person being a member of the management board, unless the company deed or the shareholders’ resolution stipulates otherwise.
• The opening of the liquidation should be reported to the registry court.
• Liquidators shall give an announcement about the dissolution of the company and opening of liquidation, summoning creditors to present their receivable debts within three months from the date of the announcement.
• The liquidators shall make the liquidation opening balance sheet. The liquidators shall submit this balance sheet to the meeting of shareholders for approval.

The liquidation:

• The liquidators shall wind up current affairs of the company, collect receivable debts, fulfil obligations and turn the company’s assets into liquid assets. They may undertake a new business only when this should be required for winding up pending affairs. Immovable properties may be transferred by public auction and they shall not be transferred by unrestricted sale otherwise than under a resolution of shareholders and at a price no lower than that passed by the shareholders.
• Sums needed to satisfy or secure those creditors known to the company, who have failed to present their claims or whose receivable debts are not enforceable or are disputed, shall be deposited by the court.
• The distribution among shareholders of the assets remaining after the creditors have been satisfied or secured shall not take place before the elapse of six months from the day of the announcement on the opening of liquidation and summoning creditors.
• Upon approval by the meeting of shareholders of the financial statements as at the day preceding the distribution among the shareholders of assets remaining after creditors have been satisfied or secured (liquidation report) and on completion of the liquidation the liquidators shall publish this report in the company’s seat and file it by the registration court and at the same time apply for removing the company from the register.
• The books and documents of the dissolved company shall be put in the custody of a person indicated in the company deed or resolution of shareholders. In the absence of an indication to that effect, the registration court shall appoint a custodian.

After removal of the company from the register:

• The company should be removed from the statistical register.
• A petition to the Tax Office must be filed in order to remove the company from its register.
• A bank of the company must be informed about the removal of the company from the register in order to liquidate the bank account.
• The social security institution is to be informed about the removal of the company from the register.

If you think, you do not have that much time or money to deal with the liquidation of the company, you might think of selling shares in your company.

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