Justice delayed is justice denied

There is little more frustrating for business than delay and, in the hierarchy of delay for business in Poland, few rank higher than judicial delay. Of course, everybody complains about the sloth of the judicial process but there are some particular problems in Poland, at least for anybody used to a common law system.

First, many acts of basic company administration, from incorporation to simple events such as changing the registered office or membership of the management board (board of directors) are registered in Polish national court registry only after the relevant official (referendarz sądowy, the lowest rung on the judicial ladder) has issued a suitable decision. Before this decision is made an application has to be submitted to the registration court with such supporting documents as are required and a fee. And, as with all bureaucracy, this takes time. Thus, whereas one may change the directors of an English company at nil cost in a couple of minutes by accessing Companies House over the internet, the Polish system requires an application form of several pages, a copy of the resolution appointing or removing the director, a specimen signature of the new director made in front of a notary public and a fee of PLN 650 (approximately £130). If all goes well within two to three weeks the changes will have been registered.

Second, the pace of litigation itself is slow. This is largely because the system is inefficient. One example: instead of estimating the length of time a case requires in court and scheduling several consecutive days to hear it, the court will set the first date for the hearing (which may be a year after the papers are lodged in court) and then set the dates for the second and subsequent days often months later and months apart. Not only does this lead to simple cases taking years but it adds to the inefficiency as everybody has to re-read the papers several times during the process. There is no reason why cases cannot be scheduled in a more rational manner but it is simply not done. One reason may be because many judges in Poland lack experience of the complex commercial issues that are a feature of the modern economy and procrastination is easier than reaching a decision. This is perhaps not surprising given that it is quicker to qualify as a judge in Poland that it is as a lawyer. There are speedier simplified procedures available in certain cases, for example the non-payment of an invoice where the evidence is clear – but the maxim “prevention is better than cure” applies with added force when faced with the prospect of cure before the Polish courts.

There also some particular injustices. One common tactic of litigants is to apply to the court to block the other party’s bank account to secure the sum allegedly owed. Ironically, courts seem quite quick in applying this blockage but rather slower to deal with the application to remove it. Such applications should be dealt with within 14 days but often many months pass before the court does so by which time a business may quite unjustly have been destroyed since operating without a bank account is well nigh impossible. While nobody denies the need to protect the rights of the genuine claimant this particular delay gives a weapon to the unscrupulous. Apart from the genuine injustice inordinate delay causes of itself, there is a wider issue for Poland – the negative impression it creates amongst investors of Poland as a location for new investment.

Is there a solution (short of the ideal of reforming the system)? The first problem may be mitigated by planning changes in advance and group a number a changes under one application. If you know you need to make changes to the board, the address of the registered office or whatever, don’t leave this to the last minute – make all the changes at once, in one application and for one fee. The second problem also be eased by preparation. Make sure that all agreements, however simple, are in writing and keep copies of correspondence, receipts and so forth. The better prepared you are, the simpler the presentation of the case may be, the more quickly the papers may be lodged in court, the less difficult it will appear to the judge and the more likely that an earlier first (and subsequent) hearing date will be scheduled.

This entry was posted in Law. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>