Cross Border Legal Issues

If you run a business in Poland, or if you enter into contracts with Polish contractors, recent changes in Polish law regarding the limitation of claims which have entered into force on July 9, 2018, are sure to spark your interest.

The basic limitation period has been shortened from 10 to 6 years. The new (shorter) term applies to pecuniary claims, including claims arising from a final court judgment. Another important change, an institution which was not a part of the Polish legal system until now, is the deferral of the expiration date of claims until the last day of the year (i.e. 31 December of a given year). This means that claims will expire on the last calendar day of the year in which the limitation period elapses, although such regulation applies only to claims with a limitation period of at least 2 years or more.

From an entrepreneur’s point of view, another important change concerns the limitation period in regard to interest. Claims for interest will expire on the last day of the calendar year, i.e. 31 December, regardless of whether the three-year limitation period expires in January or in any other month. In practice, this results in an extension of the limitation period for interest claims.

If the defendant is a consumer, the court will examine ex officio whether the claims are time-barred and, if so, they will be dismissed. However, if the defendant is not a consumer but, for example, an entrepreneur, the defendant will still have to plead the statute of limitation defense in the course of the proceedings in order for it to be taken into account by the court.

The amendment also introduced the obligation to indicate the due date of pursued claims in the complaint. Lack of such information in the complaint will result in the court ordering the claimant to provide it, which will prolong the proceedings. As such, it is worthwhile to keep this new requirement in mind when drafting a complaint.

Amended regulations will also apply to claims that existed before the changes came into force and have not yet expired at that time.

Despite the main purpose of the amendment – which was to shorten the limitation period from 10 to 6 years, it should be noted that in a vast amount of cases these new regulations may be more advantageous to the creditors, since postponing the expiration of claims to the last day of the calendar year will often give the creditors more time to pursue their claims.

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.

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.