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XI Edycja Konferencji SIDiR

As a partner, we would like to invite you to the 11th edition of the Conference organized by Association of Consulting Engineers and Surveyors (SIDIR) and the Arbitration Court of Construction at SIDiR: “Good practices in the preparation of public procurement contracts for construction works and intellectual services – selected aspects”.

Ahead of us are 2 days of valuable and interesting lectures, panel discussions, knowledge sharing, exchange of experience and opinions – as usual at the highest professional level.

đŸ”¶ When❓ 27-28 September 2023
đŸ”¶ Where❓ Hotel Bellotto in Warsaw
đŸ”¶ Registration and detailed information đŸ‘‰https://konferencja.sidir.pl/


The number of places is limited, the order of application is decisive.

Among the Speakers:

Jacek Bendykowski Marcin Bisikiewicz Marek Borkowski Tomasz Darowski Tomasz Domaradzki Ćukasz Gembiƛ Izabela GubaƂa Andrzej Grabiec mariusz haƂadyj Maciej Jamka Jaroslaw Jerzykowski Tomasz Latawiec Piotr Mazuro Tamara MaƂasiewicz Rafal Morek Anna Oleksiewicz Piotr Pazdan Kamil Pociecha Andrzej RogiƄski Marek Rytlewski Tomasz SkoczyƄski MichaƂ Skorupski Piotr Skrzypczak Piotr Stenko Agnieszka Suchecka Patrycja Treder Elzbieta Viroux JarosƂaw Wielopolski Artur WoĆșnicki

Conference Partners:

BIKTL Latawiec Konsulting sp. z o.o. CMS Cameron McKenna DWF (Poland) Domanski Zakrzewski Palinka (DZP) Jerzykowski i WspĂłlnicy spóƂka komandytowa Kancelaria Radcy Prawnego Piotr Skrzypczak Mazurkiewicz CieszyƄski Mazuro i WspĂłlnicy Adwokaci i Radcowie Prawni Sp.k. Misiewicz, Mosek & Partners Counsellors at Law skars.pl SkoczyƄski KolaƄczyk Rudnicka Kancelaria Prawna SKA Viroux & Partners ZBM S.A.

#SIDiR  #FIDIC  #consultantengineer  #constructioncontracts #constructionlaw #investmentprocess #construction #publicprocurement #constructionworks #intellectualservices

Viroux & Partners has been ranked by The Legal 500 in two categories

We are thrilled to announce that Viroux & Partners has been ranked by The Legal 500 in two categories, being recognized for the second year in a row for “steadily developing [our] capabilities, focusing particularly on corporate disputes and contractual issues across an array of sectors, including energy, infrastructure, real estate and healthcare.”

Dispute Resolution â†’ Band 5

Commercial, Corporate and M&A → Firm-To-Watch

We couldn’t have achieved this without our clients’ trust and support, and we’re incredibly honored by the feedback and testimonials they have given us. Clients praised us for “treating every case, whether it’s a big arbitration with a sector leader or a smaller case, with the same level of proficiency and efficiency.” Thank you for entrusting us with your legal needs and for recognizing the high level of service we provide.
To our team of lawyers and staff, thank you for your tireless efforts and unwavering commitment to excellence. Your expertise and dedication are the driving force behind this recognition, and we’re proud to work with such an outstanding group of professionals.

SIDIR conference

On November 16-17, 2022, another SIDIR conference will take place, the subject of which will be “Implementation of construction contracts in times of extraordinary changes in relations, including those caused by the action of Force Majeure”. Our Managing Partner ElĆŒbieta Viroux will be a speaker again, and Viroux & Partners also joined the conference as a partner. We invite everybody to join the conference!

https://konferencja.sidir.pl/

The Legal 500 as a Firm to Watch

We are pleased to share that we have been recognized by The Legal 500 as a Firm to Watch in the area of Dispute Resolution, Poland. We want to share in this celebration with our clients, who entrusted us to advise them, and that spoke so warmly of us when acting as references.

Having been recognized so soon after the formation of our firm is a great honor, and speaks to the type of work we are able to carry out for companies, entrepreneurs, and individuals in Poland and internationally.

And lastly, we want to thank the team members at Viroux & Partners for their exceptional work.

We had honour to participate in a panel discussion organised by SIDIR

foto: sidir.pl

We had the honour to participate in a panel discussion organised by SIDIR entitled “Mediation from the perspective of mediation participants. Costs, duration, preparation of positions and opinions, the role of the mediator”.

Our conversation reinforced my conviction that, whether in the private or public sector, mediation is an avenue that can and should be used to resolve disputes. Key words that, in our opinion, bring us closer to a settlement are: active mediator, goodwill of the parties and awareness of the risks of litigation.

Foto. sidir.pl

Does a Polish court confirmation that surrender of a foreign citizen is legally permissible always have to result in extradition?

A surrender of a foreign citizen by Poland is possible only in strictly defined cases. Moreover, in order for a citizen to be extradited, the so-called negative premises, i.e., excluding legal admissibility of the extradition, must not occur.

Negative premises for extradition are established in Article 604 of the Code of Criminal Procedure, which provides that surrender is inadmissible if:

  1. the person to whom the application relates is a Polish citizen or has the right of asylum in the Republic of Poland;
  2. the act does not contain the qualities of a prohibited act or the act does not constitute an offense or the perpetrator has not committed an offense or is not liable to punishment;
  3. the statute of limitations has passed;
  4. criminal proceedings concerning the same act committed by the same person have been finally terminated;
  5. it would be contrary to Polish law;
  6. there is a justified fear that in the country demanding surrender the person surrendered may be sentenced or executed under the death penalty;
  7. there is a justified fear that in a state demanding surrender, the freedom and rights of the person surrendered may be violated;
  8. concerns a person who is being prosecuted for the commission of a non-violent politically motivated crime.

Moreover, detailed provisions of a legal assistance agreement concluded between Poland and another country may specify additional negative premises.

Extradition takes place on the basis of an agreement between Poland and another country. Only the existence of an international agreement on mutual legal assistance entitles the foreign country to request Poland to surrender its citizen who is currently staying in Poland. Lack of such an agreement between Poland and a foreign state makes it impossible to surrender a citizen at the request of such a state.

Firstly, if the requested person is a suspect, the application of the foreign state is sent to the locally competent prosecutor’s office. Upon the order of the prosecutor’s office, the foreign citizen is usually brought to the prosecutor’s office to be charged and questioned. Then, the application of the foreign state is sent to the locally competent Regional Court, which decides whether the transfer of the person is legally admissible or not. The court may then also decide to remand the person in custody. If the transfer is found to be legally permissible and the decision becomes final, the application of the foreign state is sent to the Minister of Justice, who gives or withholds his consent to the transfer of the citizen. Only if the Minister of Justice consents to the transfer, the foreign national may be transferred.

It should be noted that the District Court’s finding that the surrender of a foreign citizen is legally permissible does not automatically result in the Minister of Justice’s consent to the surrender.

In one of our cases, we were appointed at the stage after the Court of Appeal issued a decision, upholding the District Court’s decision, stating the legal admissibility of the surrender of the Belarusian citizen. As it turned out, this citizen was prosecuted in Belarus as a result of refusing to provide Belarusian law enforcement agencies with information about persons cooperating with a candidate for the office of President of Belarus, posting in social media slogans and posts condemning the actions of the government of Belarus and organizing various anti-government rallies. As a result of his refusal to cooperate with the Belarusian law enforcement agencies, the citizen was warned that criminal proceedings would be initiated against him for alleged actions from several years ago. Due to the fear of being charged in retaliation for his refusal to cooperate and the fear of unfair trial, the citizen decided to leave for Poland. After several months, he was apprehended here and was charged with crimes committed between 2014 and 2018, as well as being placed under temporary arrest.

While awaiting the decision of the Ministry of Justice, we applied to the Office for Foreigners to grant the aforementioned citizen refugee status, in connection with his flight from Belarus for fear of being persecuted for political reasons. In the course of the proceedings, evidence was provided to confirm the reason for the Belarusian citizen’s departure to Poland. Ultimately, the Office for Foreigners granted him refugee status. As a result of the above-mentioned circumstance, despite the legally valid decision stating the admissibility of the Belarusian citizen’s surrender, the Minister of Justice issued a decision refusing to consent to the surrender of the aforementioned citizen, citing the negative reason for granting the refugee status. Based on the decision of the Office for Foreigners, the District Court revoked the detention of the aforementioned citizen.

According to our experience, there are more and more applications from Belarus for the surrender of their citizens.

As the above example shows, a decision declaring extradition admissible does not always mean that a citizen will be actually extradited. Meanwhile, the proceedings, which may seem to be conducted in a “schematic” way, may eventually turn out to be for the person concerned a complete reversal of his initial procedural situation. In criminal cases, it is particularly important because often such cases have major implications on a person’s life.

Lifetime servitude of habitation – a way to secure real estate in difficult times

A servitude of habitation is a right that encumbers a third party’s property and allows that property to be used by a designated individual for a lifetime. For example, parents who transfer ownership of an apartment or house to their children may reserve the right to use specific rooms or floors. If this legal solution is applied, the said tenants (in this case: parents) gain certainty that regardless of the circumstances, they will be able to continue to live in the property and use the facilities and common rooms, e.g. garage or laundry room.

The legal institution in question is of personal nature, thus it is vested in a person individually specified by name. It is also non-transferable and expires at the latest upon the death of the person entitled. The establishment of a servitude consists of a declaration made by the owner of a real estate, by virtue of which he surrenders part of the rights to his property. The document should be drawn up in the form of a notarial deed and indicate not only the premises to which the easement will apply but also the manner and scope of its use by the servant. However, if one wants to take advantage of the benefits of the discussed institution, it should be taken into account that the servitude needs to be entered in the real estate register as a right in rem. The discussed solution is usually included in life-tenancy or donation contracts, but in recent years more and more often it occurs on its own.

The object on which the right can be established for the benefit of a third party is developed land, real estate (when the building is a separate object of property), or residential premises. The servitude may concern the whole property or a specified part of it. For example, we can designate a selected room or an entire single-family house. When establishing a servitude, the parties may agree that after the death of the beneficiary the easement will be granted to his/her children, parents, and spouse. The duration of this right may then be significantly extended.

It should be emphasized that any real estate encumbered with a servitude may be bought or sold without the consent of the servant. However, the right itself cannot be sold in any way, which means that it is not subject to execution either. In practice, this means that the buyer is obliged to respect the rights of the person with the right of servitude. The establishment of the said right on the real estate effectively discourages potentially interested persons from purchasing it and significantly lowers its value.

Nowadays, real estate is the most important asset of many people, therefore, if there are any financial problems, it is a priority to secure that real estate against possible execution. An alternative to a standard sale or donation agreement, which does not deprive the owner of his/her right to the real estate, is in this case the above described lifetime servitude.

The indicated legal institution in a simple way protects debtors from their creditors by discouraging potentially interested persons from purchasing real estate with an “additional tenant”. Usually, bailiff auctions conducted in such cases end up ineffective, because the potential buyer is aware that he or she will have to respect the rights of the person with the right of servitude.

Author

Oskar Kozikowski

The new act – it is easier for the customer to withdraw from the contract with the developer

Changes in the field of developer law will come into force in July 2022. The adopted changes in the so-called “developer act” increase the scope of protection for buyers of apartments with regard to removing defects in premises. The amendment strengthens the position of buyers of premises, providing tools for pursuing claims against developers. Read more about it here (in Polish)

Covid regulations in construction contracts

Successive lockdowns and broken supply chains began a domino effect. Investors and procurers halted work out of their own caution or in fulfillment of top-down guidelines, then the attendance of workers and subcontractors on-site periodically declined due to quarantines. Work performance and thus billing slipped, disrupting payment flows. Construction material prices have skyrocketed. Material orders are now based on prepayments, while the delivery itself has become significantly longer.

Recently, the trend of smaller suppliers and subcontractors breaking their contracts has become evident, as it has become more profitable to pay contractual penalties and perform services or deliveries at current prices rather than the prices agreed on 6 months ago.

As a result, participants in the construction processes have reached a point where they are unable to determine what the cost and completion date of the contract will be.

The first issue important for contractors will be the extension of time for completion of construction tasks. The second element of getting the contract “on track” will be obtaining additional remuneration compensating for higher costs of contract execution and costs of construction downtime during the lockdown, if there was a work stoppage.

Claim for extension of time for completion of a task under public and private contract regime

The redefinition of the completion date is of fundamental importance for all participants in the construction process. It is, of course, the issue of contractual penalties charged for the delay. In the case of time slippage, caused by reasons related to Covid -19, the causes of delays should be divided into two categories: the closure of construction by the decision of the ordering party (investor) and other circumstances, such as reduced availability of workers, lack of materials, disease, and quarantine. The above division is consistent with the catalog created by the legislator, where COVID – 19 circumstances are divided into: (i) those with the potential to affect the due performance of the contract and (ii) those circumstances affecting the performance of the contract.

In the case of public procurement, the relevant tools are directly provided by the “Covid Special Act” of March 2, 2020, on specific solutions related to the prevention, counteraction and eradication of COVID-19, other infectious diseases and crisis situations caused by them.

The provision of Article 15r. od the above-mentioned Act stipulates that the ordering party, upon determining that the circumstances related to the occurrence of COVID-19, referred to in paragraph 1, affect the due performance of the contract referred to in paragraph 1, in consultation with the contractor, shall amend the contract, in particular by changing the date of performance of the contract or a part thereof. Since the legislator used the phrase “amend the agreement”, the ordering party has no room for maneuver and must conclude an annex to the agreement, provided that the impact of COVID -19 on the performance of the contract is demonstrated by appropriate documents. The contractor’s refusal to conclude the relevant annex should entail an appropriate claim for a declaration of intent to the court. Circumstances evidently affecting the performance of the contract are those relating to the closure of the construction site, quarantine of workers.

With regard to the circumstances related to COVID – 19 and which may affect the performance of the public procurement contract, the public ordering party may decide to conclude an annex changing the term of performance of the contract. In this respect, the legislator left the decision to conclude an annex to the ordering party, depending on its assessment of the impact of COVID – 19 on the performance of the contract. At the same time, the conclusion of an annex extending the contract performance deadline and the related waiver of claiming contractual penalties were explicitly excluded by the legislator from liability for violation of public finance discipline by the ordering parties.

In the case of private contracts, extending the time for task completion will come down to negotiations and an agreement between parties.

Refusal to sign an annex extending the time for completion of a task does not leave contractors defenseless – both those performing public tasks and private investments. It is standard practice that contractual penalties are calculated for so-called “delay”, i.e. culpable delay. Meanwhile, it seems that any circumstances relating more or less directly to Covid-19 and affecting the overall situation in the market should be qualified by the courts as circumstances beyond the control of the contractor and thus exclude liability for delay.

Financial claims of contractors and increase of the lump sum in the public and private contract regime

Irrespective of the postponement of the deadline for completion of the task, the issue of restoring the profitability of the contract seems to be more important, particularly in the case of contracts where remuneration was determined in the form of a lump sum. And this is the prevailing market practice.  Prices of construction materials and labor costs cause that the execution of contracts brings measurable losses. In addition, the prolonged time of the task execution entails costs related to the maintenance of the contract security, construction backup facilities, and insurance.

In the case of public procurement, the “Covid Special Act” is not precise. The provisions state that the contracting authority shall amend the contract “in particular by” “changing the method of settling the contractor’s remuneration”. Each time the phrase “in particular by” appears in the statute, it means an exemplary list and an open catalog of available actions. In turn, a change in the “method of settling the contractor’s remuneration” may itself mean a switch in respect of particular works from a lump-sum system to a cost-based system. Such an understanding of the legislator’s intentions is supported by the further part of the provision, according to which the limitation of the contracting authority’s discretion is that “the increase in remuneration caused by each subsequent change will not exceed 50% of the value of the original agreement”. In practice, this should mean nothing more than giving the ordering party the right to increase the amount of the contractor’s remuneration. While an extension of the contract’s execution undoubtedly affects the costs of its execution in the form of insurance, CAR policy, and security costs, the ordering party, in accordance with the act, enters into an annex to the contract. The link between changes in the prices of materials and services and the occurrence of the Covid – 19 outbreak is less obvious, which qualifies these costs as likely to affect contract performance. Under the cited Act, this means that the ordering party has discretionary authority.

Nevertheless, the contracting authority’s decision is not a determinant of the contractors’ strategy: it is still open to claim either an annex increasing remuneration under the “special Covid Law” or invoking the rebus sic stantibus clause, i.e., an extraordinary change in relations.

For private contracts, the change in remuneration is again a matter of negotiating the terms of the contract. With respect to private entrants, contractors have a litigation tool in the form of a motion to secure a claim for increased remuneration. If the court finds the contractor’s claim for an increase in remuneration credible, it may provisionally – by way of security – order, for example, the seizure of the investor’s bank accounts or real estate belonging to him. This does not yet mean final success in the form of increasing the contract value, but it definitely translates into the contractor’s negotiating position.

Author: Aleksandra Terc

Compensation for theft of funds from a bank account

Bank liability for theft of funds from a bank account. 

Nowadays it is necessary to own a personal bank account in order to function properly on a daily basis. A bank account is a multifunctional tool to manage finances and its main task is to safely store cash in a non-cash form. Using a bank account, we can also confirm our identity in electronic administration systems or sign a document with a trusted signature. The increase in the popularity of personal accounts, as well as the constantly advancing digitization significantly facilitate our everyday life. 

The development of e-banking not only brings a number of benefits but numerous risks as well. There is a growing number of cyber-attacks leading to, among other things, file destruction, blocking access to devices, data phishing, and theft of funds from accounts. According to the information provided by the Financial Ombudsman, in 2020 there were almost 1200 requests for intervention in a dispute concerning an unauthorized bank transaction, which is almost twice as many as in the previous year.

In case of anunauthorized bank transaction, it is important to remember that, as a customer of a financial institution, we have certain legal tools at our disposal to enable the recovery of lost funds. Based on the provisions of the Banking Law of 29 August 1997 (“Prawo bankowe” Dz.U. z 2020 r. poz. 1896) (hereinafter also referred to as the “Banking Law”) and the Payment Services Act of 19 August 2011 (“Ustawa o usƂugach pƂatniczych” Dz.U. z 2020 r. poz. 794) (hereinafter also referred to as the “Payment Services Act”), the bank is obliged to exercise due diligence to secure the funds held in it. It is obliged to take risk mitigation measures and introduce control mechanisms to manage operational and security breach risks in the provision of payment services. 

In addition, banks are also required to take measures to prevent money laundering, the financing of terrorism, and the prevention of crimes using banking instruments. For this purpose, financial institutions have been entrusted with a wide range of powers and instruments, ranging from the ability to verify and identify their beneficiaries, through the implementation of control and security systems, up to the ability to exercise authority. If the safeguards provided by law are not sufficient and an unauthorized transaction occurs, the bank account user will have a claim against the bank for immediate reimbursement of the amount of funds transferred.

It should be noted that if the transaction was made via e-banking, the bank is obliged to restore the account to the state from before the transfer. The liability of the financial institution is waived only if the unauthorized transaction was caused by the customer intentionally or by a willful or grossly negligent breach of duty. The amount transferred from the account must be returned immediately, but no later than by the end of the working day following the day on which the unauthorized transaction was identified or the day on which the relevant notification was received. 

In view of the above, we cannot forget that the bank account user is obliged to use the payment instrument in accordance with the framework contract and to immediately notify the financial institution of any loss, theft, misappropriation, or unauthorized use of or access to the payment instrument discovered by him. The user should also immediately notify the bank of any unauthorized, non-executed or improperly executed payment transactions discovered.

Attention should be drawn to the current judicial practice. The Regional Court in Warsaw in its judgment of 19 December 2016. (case number I C 229/15) indicates that: “The risk of making a withdrawal from a bank account into the hands of an unauthorized person and making a monetary settlement on the basis of an instruction issued by an unauthorized person is borne by the bank, also in a situation where the account agreement is covered by internet banking.” However, according to the thesis of the Judgment of the Court of Appeal in Warsaw of 19 July 2018 (ref. I ACa 348/17) it should be noted that: “A payment transaction is considered authorized only if the payer has consented to its execution, whereby a payment order cannot be revoked from the moment it is received by the bank. The burden of proving that a payment transaction was authorized by the user or that it was executed correctly lies with the provider, i.e., the bank. (…)” Additionally, following the Judgment of the Court of Appeal in Warsaw of 24 May 2018 (ref: VI ACa 217/17) I point out that: “If transactions have been carried out without the payer’s consent and in circumstances for which the payer is not responsible, and the payer has subsequently reported the occurrence of unauthorized transactions, it is the provider’s responsibility to refund the unauthorized amounts.”

Author: Oskar Kozikowski

Pursuant to the COVID-19 Counter-Proliferation Act

Pursuant to the COVID-19 Counter-Proliferation Act (hereinafter referred to as the “Special Act”), during the period of the state of epidemic emergency, the time limits in judicial and administrative proceedings shall not commence, and those commenced shall be suspended for that period. 

The following time limits shall be suspended:

  • Time limits, when meeting a deadline depends on a legal protection before a court or authority;
  • Time limits for a party to perform actions forming its rights and obligations;
  • Limitation periods;
  • Time limits when not meeting the deadline causes expiration or modification of material rights, claims, and receivables, as well as falling into delay;
  • Deadlines, the non-observance of which entails negative consequences for a party;
  • Deadlines for entities or organizational units subject to registration in the competent register to perform actions that result in the obligation to report to that register, as well as deadlines for entities to perform their obligations under the provisions on their regime.

Examples of such deadlines are those established in the Code of Administrative Procedure or the Law on Proceedings before Administrative Courts:

  1. Applicable to the party of the proceedings:
    1. 7- day time limit for filing a complaint;
    1. 14- day time limit for filing a complaint;
    1. 30- day time limit for filing a complaint to the administrative court;
  2. Imposed on public administration bodies for consideration of cases:
    1. For cases that require an administrative investigation – one month from the date of initiation of proceedings; 
    1. In the case of particularly complicated cases requiring an investigation – no later than two months from the date of the initiation of proceedings;
    1. In the case of appeal proceedings – one month from the date of receipt of the appeal;

Non-consideration of cases due to suspension of time limits.

As a result of the suspension of the application of the provisions establishing time-limits, which the parties and authorities are obliged to meet, the parties have lost the ability to assert their rights on account of inaction or procrastination and their right to have cases heard without undue delay

These regulations may halt any action in proceedings conducted by administrative authorities and administrative courts. Letters, motions, complaints, etc. filed by parties or participants in proceedings during the state of emergency or epidemic will not be examined and public administration bodies will not suffer any negative consequences.  

Quicker resolution depends on the will of the office

The provisions of the Special Act provide that actions performed in the period of suspension of commencement or suspension of time limits are effective.

A party or participants to the proceedings are obliged to perform actions specified in the request if failure to take such actions could result in danger to life or health, serious damage to the public interest, or threat of irreparable material damage, this also applies to public administration bodies who have been requested to take a stand on a matter which is a subject of the proceedings.

Accordingly, ex officio decisions may be issued:

  • Decisions granting in full the request of a party or participant in the proceedings,
  • Certificates stating that there are no grounds for filing an objection.

Examples of decisions fully accepting the request of a party or participant to the proceedings are:

  • Decision on the permission to use;
  • Decision on the transfer of the construction permit;

A party is entitled to file an appeal against an administrative decision. The decision shall not be enforced before the lapse of the time limit for lodging an appeal. However, if it is in accordance with the demand of all parties, it is enforceable before the expiration of this deadline.

Thus, there are no impediments to cases that are in accordance with the demand of the parties to be resolved.

How to legally operate on the virtual currency market?

Trading virtual currencies and their use as a means of payment is becoming more and more common. Virtual currencies turned out to be a much faster means of payment than fiat currencies. As a result, the service sector has begun supporting payments via virtual currencies, and the exchange of these currencies is developing intensively. National laws have not kept up with the classification and regulation of this sector, leaving entrepreneurs without answers and guidelines on how to operate legally and safely. Aleksandra Terc has some answers for us, which you can read here (in Polish

Building materials prices up. How to create a “plus” contract?

Is it possible to come out “on the plus” in the implementation of a construction contract? The question is becoming more and more relevant from month to month: the prices of materials are ever increasing. Prices and flat-rate remuneration in public procurement, which have been growing continuously for 1.5 years, are becoming a serious problem for many contractors. We invite you to read this article by Aleksandra Terc, where you can find some practical guidelines and hints (in Polish)

The new development plan may cost a lot of municipalities

There is an ongoing boom in the housing market and other investments. It particularly important to ensure the possibility of implementing investments on property you own. This means specifying the premise of your future investments in a local spatial development plan. Without such a plan, it becomes necessary to monitor the operation of the municipality, because local spatial development plans can change to keep up with the pace of development. Jakub Mazur authored an article on the claims that property owners are entitled to in the event of a change in the purpose of a building plot in the local spatial development plan, which you can read here (in Polish)

Fraud

While evading payment for an invoice when the service has been rendered may constitute the subject of a civil dispute (default) and give rise to a claim for payment, it may also constitute a criminal offense commonly referred to as fraud.

Pursuant to Article 286(1) of the Penal Code, whoever, in order to gain a material profit, leads another person to a disadvantageous disposal of his own or another person’s property by deceiving that person or by exploiting a mistake or an inability to grasp the intended action, shall be subject to the penalty of deprivation of liberty for a term of between 6 months and 8 years.

Failure to pay an invoice, therefore, constitutes an offense when the following conditions are simultaneously met:

  1. The perpetrator, i.e., in the above case it will be e.g., the recipient of the service, the buyer, etc., must act with the aim of achieving a pecuniary benefit. This means that this goal must already exist in the perpetrator’s mind at the time of the cooperation or conclusion of the contract. Someone who wants to deceive a business partner intends to enrich themselves at someone else’s expense from the very beginning. What is important – the material benefit may also accrue to an entity other than the perpetrator, i.e., he/she may gain benefit for someone else, e.g., for the company on behalf of which they act or for another entity. A financial benefit has many forms. It may be: obtaining a service for which the perpetrator had not planned to pay from the beginning, or a thing or in any other that leads to enrichment of some entity.
  2. The offender must bring another person to a disadvantageous disposition of their own or another person’s property. Undoubtedly, e.g., sending a concert ticket to someone hoping for a payment, which is not made, constitutes an unfavorable disposal of property. In this case, the wronged party voluntarily makes a disposal in such a way, that he decides to send a given product, and thus transfers its ownership to another person. Another example of disposal of property is the provision of a service for which the victim hopes to receive payment. In such a case the victim allocates certain funds, time, pays employees and finally issues an invoice hoping to be paid. If it was not for the lack of awareness of the real intentions of the perpetrator, the service would not have been performed.
  3. The perpetrator shall mislead the person making the disposal of property, or exploits the error or inability to comprehend the action. This means that the person making the property disposal, if not for being misled, would not perform a specific action. As an example, we can mention a situation, where an offender using a counterfeited identity card comes to a bank and on the basis of the counterfeited identity document asks the cashier to withdraw cash from the account of a person whose data is contained in the document. The cashier, remaining unaware that the presented identity card is a forgery and the person claiming to be the account holder is in fact not, acts in accordance with the perpetrator’s instructions and gives him the demanded money. If the cashier was aware that the presented document is not genuine – he would not withdraw the money.

Not every failure to pay an invoice will therefore constitute a criminal offense. The only difference between the crime of fraud and simple non-payment, which falls under the jurisdiction of the civil courts, is whether, at the time of entering into the agreement, on the basis of which the invoice is later issued, the perpetrator fulfilled all the elements of the offense under Article 286 § 1 of the Criminal Code. What is important – in criminal proceedings the culpability of the perpetrator must be proven, i.e., it must be proved that already at the moment of concluding the agreement the perpetrator had no intention to pay. Moreover, the perpetrator must undertake a specific activity and cannot remain passive.

Another successful arbitration

I want to share not only the success of @Viroux & Partners, but arbitration as an institution.

I have been a believer in arbitration since my days as a young law student. This is where I first had the opportunity to learn about the advantages of arbitration such as quick resolution and professionalism. Throughout my years of practice as an attorney and arbitrator, these assumptions continue to be fulfilled. The key, however, is to choose the right arbitration panel, know the procedure, understand the business which the dispute relates to and the substantive law at stake. 

Last Friday (16 July 2021) we received an arbitration award in one of the cases pending before the Court of Arbitration at the Polish Chamber of Commerce. The case was heard over a 7-month period. It was a dispute between a Polish company and a German company over the performance of an agreement. The proceedings were conducted extremely efficiently, with great commitment by the arbitrators, and the justification clearly indicates that the case was thoroughly examined. My assessment is driven not by the fact that the award is favourable to our client, but because it is another example that arbitration is a viable alternative to the common courts.

Below you will find what I consider the top three advantages of arbitration:

  1. Time and cost savings – a judgment within 7 months, even if nominally it may cost more, in business terms means incomparably more than a judgment in 4 – 5 years. The pace and cost of examining a case before the Arbitration Court is reduced by the single instance character of the proceedings and the qualifications of the arbitral tribunal, allowing for an examination of a dispute without the necessity of appointing experts. 
    1. Confidentiality of the proceedings – the principle of secrecy applies before the Arbitration Court. Information about the pending proceedings and its parties is confidential, as is the proceeding itself.
    1. Influence on the procedure – in arbitration proceedings, the parties have a direct impact on the arbitration panel and the procedure itself by participating in the development of the calendar of proceedings.

When entering into arbitration clause, the choice of the court, language and place of proceedings depends on the will of the parties. It is said to be the court of “Gentlemen” and, being a woman, I fully share this idea in its good traditional sense.

If you are interested in an “arbitration” – please do not hesitate to contact me.

Taking this opportunity, I would like to thank to the arbitral tribunal for the proceedings, and thanks to our team for the joint success and commitment.

* * *

Je veux partager non seulement le succĂšs de @Viroux & Partners, mais l’arbitrage en tant qu’institution.

Je crois Ă  l’arbitrage depuis mes annĂ©es de jeune Ă©tudiante en droit. C’est lĂ  que j’ai eu pour la premiĂšre fois l’occasion de dĂ©couvrir les avantages de l’arbitrage tels que la rapiditĂ© de rĂ©solution et le professionnalisme. Tout au long de mes annĂ©es de pratique en tant qu’avocat et arbitre, ces hypothĂšses continuent d’ĂȘtre remplies. La clĂ©, cependant, est de choisir le bon groupe spĂ©cial d’arbitrage, de connaĂźtre la procĂ©dure, de comprendre l’entreprise sur laquelle porte le litige et le droit matĂ©riel en cause.

Vendredi dernier (16 juillet 2021), nous avons reçu une sentence arbitrale dans l’une des affaires pendantes devant la Cour d’arbitrage de la Chambre de commerce polonaise. L’affaire a Ă©tĂ© entendue sur une pĂ©riode de 7 mois. Il s’agissait d’un diffĂ©rend entre une sociĂ©tĂ© polonaise et une sociĂ©tĂ© allemande au sujet de l’exĂ©cution d’un contrat. La procĂ©dure s’est dĂ©roulĂ©e de maniĂšre extrĂȘmement efficace, avec un grand engagement des arbitres, et la justification indique clairement que l’affaire a fait l’objet d’un examen approfondi. Mon Ă©valuation n’est pas motivĂ©e par le fait que la sentence est favorable Ă  notre client, mais parce que c’est un autre exemple que l’arbitrage est une alternative viable aux tribunaux ordinaires.

Vous trouverez ci-dessous ce que je considĂšre comme les trois principaux avantages de l’arbitrage :

1. Économies de temps et de coĂ»ts – un jugement dans les 7 mois, mĂȘme si nominalement cela peut coĂ»ter plus cher, en termes commerciaux signifie incomparablement plus qu’un jugement dans 4 Ă  5 ans. Le rythme et le coĂ»t de l’examen d’une affaire devant la Cour d’arbitrage sont rĂ©duits par le caractĂšre d’instance unique de la procĂ©dure et les qualifications du tribunal arbitral, permettant l’examen d’un litige sans qu’il soit nĂ©cessaire de dĂ©signer des experts.

2. ConfidentialitĂ© de la procĂ©dure – le principe du secret s’applique devant la Cour d’arbitrage. Les informations sur la procĂ©dure en cours et ses parties sont confidentielles, tout comme la procĂ©dure elle-mĂȘme.

3. Influence sur la procĂ©dure – dans les procĂ©dures d’arbitrage, les parties ont un impact direct sur le groupe spĂ©cial d’arbitrage et la procĂ©dure elle-mĂȘme en participant Ă  l’Ă©laboration du calendrier des procĂ©dures.

Lors de la conclusion d’une clause compromissoire, le choix du tribunal, de la langue et du lieu de la procĂ©dure dĂ©pend de la volontĂ© des parties. On dit que c’est la cour des « Gentlemen » et, Ă©tant une femme, je partage pleinement cette idĂ©e dans son bon sens traditionnel.

Si vous ĂȘtes intĂ©ressĂ© par un “arbitrage”, n’hĂ©sitez pas Ă  me contacter.

Profitant de cette occasion, je tiens Ă  remercier le tribunal arbitral pour la procĂ©dure, et merci Ă  notre Ă©quipe pour le succĂšs et l’engagement communs.

Reduction in working hours due to the COVID-19 epidemic

The Act on special solutions related to preventing, preventing and combating COVID-19, other infectious diseases and crisis situations caused by them (Journal of Laws of 2020, item 374 as amended (hereinafter referred to as “Tarcza”)), passed on 31 March 2020, introduces a number of legal solutions – in many areas of social life. Most of them are aimed at supporting Polish entrepreneurs to cope with the difficult situation caused by numerous sanitary restrictions during a pandemic. 

As a consequence of the reduction of working hours, the employee’s remuneration may not be lower than the minimum wage for work including working hours.

The adopted regulation is not particularly extensive. Nevertheless, it may raise questions of interpretation. First of all, they arise as to whether the possibility of reducing working hours applies to all employees – regardless of their working hours.

Looking at the provisions of Tarcza, the position should be taken that the special entitlement contained in Article 15g(8) will be applied only to those employees who are employed more than 0.5 full-time. In other words, employees who are employed on 0.5 or less hours cannot be covered by the 20% reduction. In their case, in order to reduce working hours, there would be a need to apply individual notice of termination of the employee’s working and pay conditions by submitting an appropriate notice of change.

The impossibility of covering all employees with a 20% reduction in working time will result from the literal wording of the Tarcza regulations. Since it is possible to reduce an employee’s working time to a maximum of 0.5 hours, as evidenced by the provision “no more than 0.5 hours”, under no circumstances can an employee, who already has such a working time, “go down” below this level. This would go beyond the Tarcza’s ban, which expressly prohibits working hours from falling below 0.5 hours. This conclusion is certainly not altered by the final part of Article 15g(8) of the Tarcza which states that working time must be taken into account. It concerns the issue of remuneration for work due to the employee and not the proportional reduction of time itself. Therefore, it can be said that when adopting the Tarcza, it was decided to include in its provisions only those employees who are a more significant financial burden for the employer. 

A separate issue remains the matter of remuneration for the work of an employee due to him/her as a result of a 20% reduction in the working time in accordance with the Tarcza Provisions.

In simple terms, it can be said that as a result of a 20% reduction in working time, an employee will retain the right to a 20% lesser salary – according to the new working time. If an employee was paid the minimum salary when full-time, as a result of the Tarcza, he or she will now have 80% of his or her working time – the same as his or her previous salary. In other words, he should receive 80% of the minimum salary for work. This is because the legislator has indicated that “the salary cannot be lower than the minimum wage for work (…), including the working hours”. Taking into account the working time indicates this. An employee receives from the employer a minimum amount of time, as it results from the regulations, taking into account that he has to devote 20% less time to work, for which he must be entitled to 20% less remuneration.

Changes in PIT and CIT regulations

On 31 March 2020 the amendments to the Act of 2 March 2020 on special solutions related to preventing, preventing and combating COVID-19 came into force. Below we present the most important changes in the PIT (Personal Income Tax) and CIT (Corporation Income Tax) regulations.

Settlement of tax losses in PIT and CIT

The amendments to the Actintroduces a mechanism, previously unknown in the Polish legal system, allowing for the deduction of a loss incurred in 2020 from income obtained in 2019 in the area of CIT and PIT. However, the deduction will be possible only up to PLN 5 million of the loss and will apply, as a rule, only to those taxpayers who will obtain in 2020 revenues at least 50% lower than those obtained in 2019.

Extension of the deadline for filing the annual PIT and CIT returns

The deadline for filing the annual PIT (PIT-36 i PIT-36L) and CIT-8 returns and for paying the tax due was postponed to 31 May 2020. This means that submission of the return for 2019 after 30 April 2020 will not have negative consequences, assuming that the proper return is submitted by the end of May this year.

Postponement of PIT payment deadline

The amendments provide for the possibility of postponing the date of payment by payers of personal income tax on salaries paid in March and April 2020 until 1 June 2020.

Abandonment of the simplified form of advance payment

Mail entrepreneurs who decided to pay PIT and CIT advances in a simplified form will be able to resign from simplified advances for the period March-December 2020 and calculate monthly advances on current income on general terms.

Amendments to the Code of Commercial Companies

The amended law on counteracting the spread of COVID-19 (hereinafter referred to as “Special Act”) makes changes to the Polish Commercial Companies Code. The amended provisions concern, among others, remote functioning of companies.

Remote meetings of Management and Supervisory Boards

The amendment to the Commercial Companies Code has directly introduced the basis for holding meetings of the management and supervisory boards of companies by means of direct remote communication (Internet) and adopting resolutions in writing, remotely or in writing through another member of the body.

The provisions that prevent the written or remote adoption of decisions concerning the election of the chairman and vice-chairman of the supervisory board, the appointment and dismissal of members of the management board and the suspension of these persons from their duties have also been repealed.

Voting in writing through another member of the Management Board shall consist in a written communication by a member of the Management Board absent from the meeting on the basis of the agenda provided for in the notice entitling another member of the Management Board to cast a vote on his behalf. Therefore, voting in this manner on resolutions not included in the agenda indicated in the invitation is not allowed.

Meetings of shareholders in capital companies

Meetings of shareholders may also be held by means of electronic communication.

In order to hold a meeting in which shareholders will be able to participate by electronic means of communication, it must be convened in advance at a specific time and place. The possibility of remote participation in the meeting shall be announced by the chairman in the invitation. It is up to the convener to allow the possibility of a remote meeting.

The notices convening the shareholders’ meeting should contain information about the possibility of participating in the meeting by electronic means of communication, as well as information about the manner of using such solutions and the manner in which the shareholder will be able to exercise his voting right and to lodge a possible objection to the resolutions covered by the meeting.

The notices convening the shareholders’ meeting should contain information about the possibility of participating in the meeting by electronic means of communication, as well as information about the manner of using such solutions and the manner in which the shareholder will be able to exercise his voting right and to lodge a possible objection to the resolutions covered by the meeting.

Suspension of administrative deadlines due to the COVID-19 epidemic

Under the terms of the Law on Counteracting the spread of COVID-19 (hereinafter referred to as “Special Act”’), during the period in which an epidemic emergency or state of  epidemic is in force, the time limits for administrative court proceedings and administrative proceedings do not start and are suspended for that period.

Suspended are:

  • Time limits on which legal protection in court or authority is dependent;
  • Time limits for a party to perform actions shaping its rights and obligations;
  • The statute of limitations;
  • Time limits, the failure to comply with which results in the expiry or modification of rights in rem and claims and receivables, as well as falling into delay;
  • Final dates, the failure to comply with which is subject to adverse consequences for the party;
  • The entities or organizational units subject to registration in the relevant register to perform activities which give rise to the obligation to report to that register, as well as time limits for the entities to perform their obligations under the regulations on their system.

Examples of such terms are those set out in the Code of Administrative Procedure or in the Law on Proceedings before Administrative Courts:

Applicable party to the proceedings:

  • 7-day period for submitting a complaint
  • 14 day period for submitting an appeal
  • 30-day period for submitting a complaint to the administrative court

The time limits applicable to public administration bodies for the consideration of cases:

  • In the case of cases requiring investigation, one month from the date of initiation of the procedure
  • In the case of particularly complex cases requiring an investigation, no later than two months from the date of initiation of the procedure
  • In case of appeal proceedings – one month from the date of receipt of the appeal

Failure to deal with cases involving the suspension of deadlines

In connection with the suspension of the application of the provisions governing the time limits to be observed by the parties and offices, we may encounter significant difficulties in obtaining a court decision or administrative decision. At the same time, the parties have lost the opportunity to assert their rights for inaction or protraction and the right to hear the case without undue delay.

These regulations may suspend any action in proceedings conducted by administrative offices and courts. Letters, motions, complaints, etc. submitted by the parties or participants to the proceedings during an emergency or epidemic may remain unrecognized and public administration bodies will not suffer negative consequences as a result. 

A quicker resolution depending on the will of the authority

The Special Act provides that the activities performed during the period of suspension of the commencement or suspension of the running of deadlines are effective. This means that courts and offices may continue their work in practice.

A party or participants to the proceedings are obliged to perform actions specified in the demand if failure to perform the action could cause a threat to life or health, serious damage to the public interest or threaten irreparable material damage, this also applies to public administration bodies, which have been asked to take a stand on the subject matter of the proceedings. A party may also voluntarily comply with an obligation imposed, even if the time limit for compliance does not run.

Consequently, ex-officio may be issued:

  • Decisions wholly in response to a request from a party or participant in proceedings,
  • Certificates of no grounds for objection.

An example of a decision that fully complies with a party’s or participant’s request is the following:

  • Decision on authorisation of use
  • Decision to transfer the building permit

A party may appeal against an administrative decision. The decision shall not be enforced before the expiry of the time limit for appeal. However, if it complies with the request of all parties, it shall be enforceable before the expiry of that period. It may also be considered to obtain a declaration from all parties/parties to the proceedings waiving the right to appeal the decision (action).

Thus, there are no obstacles to the parties’ requests being dealt with.

Facilitations in the field of social security in connection with the COVID-19 epidemic

The COVID-19 epidemic has put many companies in a very difficult situation. The loss of income and reduced demand for products and services has negatively affected the financial situation of businesses. In addition, the loss of financial liquidity makes it impossible to pay current social security contributions.

ZUS has declared assistance and prepared facilitations for companies operating in a difficult situation.

Payment in instalments and deferral of ZUS payments

If, due to the coronavirus epidemic, an entrepreneur has encountered problems with:

  1. payment of current contributions to ZUS, or
  2. same problems have arisen in a person running a business, who has concluded an agreement with ZUS to spread the debt to ZUS into instalments or an agreement to postpone the payment of contributions,

he may benefit from simplified forms of aid:

  • deferral of the date of payment of ZUS contributions by 3 months (for the period from February to April 2020),
  • extension of the deadline for repayment in instalments by 3 months (in cases where the deadline for payment was set between March and May 2020).

To receive the relief for entrepreneurs, you must fill in the application form available on the ZUS website (link)

The application should be sent using the PUE ZUS portal, submitted in a box available in ZUS offices or sent by post.

The application must indicate how the COVID-19 outbreak has affected the financial situation of the undertaking and that this situation makes it impossible to pay the fees on time.

ZUS emphasises that submitting an application does not ensure that the relief is granted.

If the application is successful, a contract will be sent to the e-mail address indicated by the applicant or by post (if no e-mail address is indicated in the application). The received document should be signed and then sent back to the sender as a scan.

Within 14 days counting from the end of the epidemic, paper originals of documents should be sent to ZUS. If this requirement is not met ZUS will consider that the agreement has not been concluded and the granted relief will be withdrawn. This will result in the calculation of interest on receivables covered by the agreement.

If the entrepreneur’s financial situation does not improve within 3 months, he will be able to request renegotiation of the contract.

Relief from social security contributions

Employers with less than 10 employees are entitled to be exempted from social security contributions for 3 months (March, April, May 2020) if:

  • as of 29 February 2020, less than 10 people were registered for social security, and
  • they will apply to the Social Insurance Institution by 30 June 2020 at the latest.

There is also a possibility of exemption from payment of social security contributions by persons conducting business activity, whose economic situation deteriorated due to the COVID-19 epidemic and in the first month of submitting the application the income from conducting business activity is less than 3 times the forecasted average gross monthly remuneration in the national economy in 2020, which is 15,681 PLN.

In addition, employers are exempted from paying the pro-long-up fee in the event of submitting, in the course of an epidemic emergency, an epidemic or for 30 days after their cancellation, an application to postpone the payment of contributions or spread the payment of contributions in instalments for the period from 1 January 2020.

Solutions of the “Anti-Crisis Shield” dedicated to employers

The amendment to the COVID-19 epidemic counteracting law, commonly referred to as the “Anti-Crisis Shield”, introduces many solutions important for employers. They mainly concern the possibility of obtaining subsidies for salaries, as well as the introduction of flexible working hours (after meeting a number of detailed conditions).

Salary compensation of employees

Benefits provided for by the amended law on special arrangements for preventing, preventing and combating COVID-19 of 2 March 2020. (‘Special Act‘) are not dependent on the number of employees.

The employer can receive a subsidy in the amount:

  • 50 % of the minimum wage for a full-time job, plus the amount of social security contributions payable by the employer on this benefit in the event of a reduction in the salary of an employee who is affected by economic downtime.
  • Maximum 40% of the average monthly salary in the case of a 20% reduction in the employee’s working hours (however, not less than 0.5 full-time).

No funding is available for those earning more than three times the average monthly salary.

For micro, small and medium-sized businesses, i.e. with no more than 249 employees and an annual net turnover of no more than EUR 50 million), benefits are also provided to subsidise employees’ salaries, depending on the recorded decline in economic turnover. Thus:

  • A decrease in turnover by at least 30% entitles to co-financing in the amount of maximum 50% of the minimum remuneration increased by the amount of social insurance contributions due from the employer;
  • A decrease in turnover by at least 50% entitles to co-financing in the amount of maximum 70% of the minimum remuneration increased by the amount of social insurance contributions due from the employer;
  • A decrease in turnover by at least 80% entitles to co-financing in the amount of maximum 90% of the minimum remuneration increased by the amount of social insurance contributions due from the employer.

This subsidy is possible for a maximum of 3 months. It also covers persons employed under a civil law contract (contract of mandate or other service contract).

The conditions for obtaining a subsidy vary, depending on whether it is applied for by means of economic downtime or a reduction in working hours or for a subsidy not related to these factors.

In case of stoppage or reduction of working time it is required that the employer enters into an agreement with trade unions or employee representatives (if there are no unions).

Other requirements include not being in debt for payment of taxes and social security contributions until the end of the third quarter of 2019 and maintaining the employment of subsidized employees for twice the subsidized period.

Flexible working hours for employees

The Special Act allows the employer to:

  • Apply less favorable terms and conditions of employment for employees than those resulting from employment contracts;
  • Reduce the mandatory rest periods for workers to a daily minimum of 8 hours and a weekly minimum of 32 hours (with an equivalent rest period of 8 weeks);
  • Introduce an equivalent system of working time and extending the daily working time to 12 hours, within a reference period of a maximum of 12 months.

The conditions for implementing the above solutions are:

  • Decrease in economic turnover due to COVID-19;
  • Not being in debt for payment of taxes and social security contributions until the end of the third quarter of 2019;
  • Conclusion of an agreement with trade unions or employee representatives (if there are no trade unions).

Preventive and initial staff screening

During an emergency or epidemic, the employers:

  • are not obliged to refer employees to periodic examinations. Suspended duties must be carried out within 60 days of cancellation of an emergency or epidemic;
  • Are obliged to send employees to preliminary and follow-up examinations before they are allowed to work. If the examination cannot be carried out by the labour doctor, another doctor may carry out the examination. An examination by another doctor is valid for 30 days after the cancellation of an epidemic or emergency.

Medical judgements that expired after 7 March 2020 shall remain valid, but no longer than 60 days from the date of cancellation of an emergency or epidemic condition.

Legalization of foreigners’ stay

Foreigners who would be obliged to submit an application for legalisation of their stay during an epidemic or emergency situation will benefit from the following facilitations:

  • Extension of the period of stay and the period of validity of the visa until the 30th day following the cancellation of an epidemic or emergency situation, and
  • Extension of the period of validity of the residence permit until the 30th day following the cancellation of an epidemic or emergency.

New restrictions on moving in public space

On 24 March, the Minister of Health issued a ordinance amending the ordinance on declaring the state of the epidemic in Poland.

Therefore, from 25 March to 11 April 2020, it is forbidden to travel, except for the purpose of:

  • performing professional activities or tasks and carrying out business activity – therefore, it is allowed to travel and return from work, and in connection with the performance of work, e.g. as a sales representative, courier or for business travel purposes;
  • carrying out an agricultural activity or work on an agricultural holding;
  • the purchase of goods and services connected with the performance of work, business or agricultural activity;
  • supplying essential basic necessities of everyday life such as food shopping, household purchases and visits to a doctor or psychologist;
  • supplying essential basic necessities of everyday life such as food shopping, household purchases and visits to a doctor or psychologist;
  • helping to counter the effects of coronavirus, including through volunteering;
  • participating in religious activities or rituals.

The regulation defines the acceptable way of moving:

  • Two people can simultaneously move along on foot at a distance of not less than 1.5 m from each other;
  • When using public transport, each public transport vehicle may carry a maximum number of people of not more than half the seats in the vehicle. This restriction does not apply to transport organised by employers for their employees (e.g. buses exclusively designed to transport employees to work).

The Ordinance does not specify the permissible way of travelling by private means of transport (e.g. passenger cars – their restrictions do not apply).

These restrictions do not apply to the relatives.

COVID-19 vs Taxes

The COVID-19 virus control period is a difficult for everyone, including businesses. The Ministry of Finance is implementing solutions in the field of tax law that will help entrepreneurs survive the difficult period of the epidemic.

First of all, it is necessary to mention the possibility of filing an application for a tax relief or remission of tax arrears for entrepreneurs who, due to the epidemic, will have problems with timely payment of tax dues. According to the information available on the Ministry’s website, applications submitted by entrepreneurs pursuant to Article 67a and subsequent articles of the Tax Ordinance Act will be considered first. 

Additionally, the Ministry of Finance is planning to introduce facilities, such as:

  • possibility to deduct losses incurred in 2020 from the tax due for 2019,
  • earlier VAT refunds,
  • facilitating VAT settlements by delaying the entry into force of the new Uniform control file (JPK) from 1 April to 1 July,
  • the abolition of the prolongation fee,
  • postponing the obligation to register in the Central Register of Real Beneficiaries to 1 July,
  • extension of the deadline for the remitters to make advance payments for tax on salaries collected for March and April.

The Ministry has not yet given details of the solutions prepared in connection with the current pandemic. We will keep you up to date with all the news.

Do I have to pay rent if my property is closed due to coronavirus?

The state of the coronavirus pandemic, the epidemic threat declared by the Polish government and the related restrictions in social and economic life are fundamental for many entrepreneurs.

Below we are looking for an answer to the question whether in this situation entrepreneurs whose premises have been closed or excluded from economic use are absolutely obliged to pay the rent, especially if the activity conducted in the leased premises was the only source of their income and it is not possible to conduct business in any other way.

There are no clear answers in the general rules and, as always in emergency situations, each case should be examined on an individual basis.

However, we have some general principles that need to be taken into account:

  • Failure to pay the rent means the tenant’s breach of the agreement. Liability for non-performance of the agreement is based on several principles. Mostly on the basis of fault.
  • This liability is excluded if the non-fulfilment of the contract results from circumstances for which the entrepreneur is not responsible and such a state is a state of force majeure;
  • Force majeure may also prevent the landlord from performing the agreement – i.e. they will not be able to provide access to premises with specific economic parameters understood as a set of factual and functional circumstances (e.g. premises intended for the purpose of running a publicly accessible restaurant) – especially if this specific purpose was indicated in the lease agreement and the landlord was fully aware of the activity conducted by the tenant and its conditions;
  • If the landlord cannot rent the premises that match the purpose and social and economic purpose of the tenancy agreement, the landlord does not provide a service for which they could expect a counter-performance (equivalent), or there is a defect in the leased property that cannot be remedied (at least periodically).

Force majeure excludes liability for non-performance of contract

A pandemic, an epidemic emergency and the associated restrictions on social and economic life should be assessed as force majeure, i.e. external events, independent of the parties to the agreement, which cannot be opposed.

Events considered as force majeure always require individual assessment. It should be examined whether they affect the performance of a specific contract. Indeed, the mere existence of a state of epidemic risk and the associated restrictions will not exclude liability for non-performance of the contract when in fact none of these events affect the contract in question.

By concluding the contract, the tenant assumes the risk of business activity, but that risk is not absolute and unlimited, but concerns ‘normal’, typical situations. It is not possible to equate a situation where the lack of income is the result of customers not being interested in the property (business risk) with the closure of the property being ordered by the authorities due to a pandemic (force majeure). 

Where, due to government constraints, it is objectively impossible to operate, e.g. in the form of a catering establishment due to an order to close such establishments, it would, under certain conditions, make it possible to effectively evade responsibility for not paying the rent during the period of mandatory closure. Prohibitions, which have their origin in the decision of the public authorities, exclude the generation of income from the activity which serves to cover the rent for the premises. To ignore this would lead to the economic risk resulting from the existence of a pandemic being passed on to the tenant’s shoulders only, which would also be contrary to fundamental principles of contract law. 

In conclusion, force majeure exempts from liability for non-performance. However, each case requires an individual assessment, as it will not always be possible to waive all obligations.

The difficulty is that the current situation has not yet occurred on such a large scale and there is no jurisprudence to support its position.

Uncertainty of the legal and factual situation will lead to the search for amicable solutions and, in extreme situations, to seek a court decision. In the latter situation, given the urgency of taking a certain decision, we may also apply for precautionary measures, i.e. court order that would temporarily regulate the rights and obligations of the parties.