Class Action in Poland - milestone or useless procedural tool?
Opublikowano 23 stycznia 2012 r. na Business Law Blog
The class action regulation in Poland, known as the “Ustawa o dochodzeniu roszczeń w postępowaniu grupowym” (“Act on Group Proceedings”), based substantially on the Swedish Act of 2002, came into force on July 2010.
This article summarizes the first impressions on the regulation and tries to answer whether this bill is a milestone in the Polish legal system or just a useless procedural tool which does not have a bigger social and economic impact. The article concentrates on two significant issues: Limitations of the Act, and Polish Class Action in relation to Polish Substantive Law
Limitations of the Act
The first issue that comes to notice while analyzing the Act is the strict limitations imposed on its application. Under this law you may file a class action only in cases related to consumers’ claims, torts or product liability (excluding cases related to personal goods). Such limitations reduce its influence. For example in Poland it is not possible for a group of entrepreneurs to file a class action against other company based on the fact that it is in breach of contracts that were entered into with all the entrepreneurs but negotiated and executed by them individually. For example, if the producer is selling its product to a large number of small distributors and thereafter starts to breach contracts concluded with each of them individually then they cannot commence a class action against him and have to struggle individually in separate cases (the same scenario would occur in case of a legal conflict between franchisees and a franchisor). They might also try to use other procedural institutions such as a formal joint participation or a joint recognition of cases (art. 72 § 2 p. 2 and art. 219 of the Polish Civil Procedure Code respectively).
The ratio legis behind the above limitations was to exclude the possibility of blackmails through class actions which seems to be common in the United States. However, the first statistics show that the above considerations were exaggerated and in the Polish system the risk of such abuse is not significant. The specificity of the Polish legal system, the stage of economic development, as well as specific mentality of the society, restrain such actions. Thus, restricted limitations imposed by the Act result only in deprivation of individual rights in wide range of cases.
Polish Class Action v. Polish Substantive Law
The second issue related to the analyzed regulation is its incoherence with the substantive law which is tailor-made for individual (not class) cases. The Civil Code was not simultaneously amended to fit class action proceedings what now results in cases of self-contradiction. Currently, on the one hand we can unify our claims for the sake of group proceeding but on the other hand we are unable to do that because of deficiency of the appropriate provisions in the substantive law concerning grounds for seeking damages and rules of their assessment. This problem is especially flagrant in cases in which we have to deal with a lot of casualties (for example a plane crash in the center of the town) with a huge variety of damage levels (e.g. broken rib, loss of limbs, simple sore). Currently, under the Civil Code, it is almost impossible to find a unified rule to assess all the types of damages. On the other hand, the legislator gave us a possibility of creating small 2-person sub-groups within the class action but even this in practice is insufficient to handle the various types and levels of individual damages (it is particularly complicated in cases of future loss of profit which is always a hypothetical type of claim).
There are plenty of other problems with the application of this regulation but the two issues highlighted above are especially worth noticing as they go to the core of the whole idea of a class action (“Who can use it?” and “How to use it efficiently?”).
Summing-up, there are lots of loopholes in the Act on Group Proceedings, both procedural (like limitations in application of the class action) and related to the substantive law (in the scope of the rules on estimating unified damages for larger groups of claimants as well as problems related to loss of future profits). However, the current regulation is useful in cases where we only want to determine the liability of the defendant because in such cases the problem of assessing damages does not occur. A good example of this kind of claim is the pending case against BRE Bank.
Piotr Terlecki is an attorney-at-law / legal counsel (adwokat / radca prawny), managing partner at Terlecki & Partners Law Firm (Terlecki & Wspólnicy Kancelaria Prawna sp.k.), PhD candidate at Warsaw University (Civil Procedure Faculty). Piotr specializes in litigation, contract law, real estate investments and bankruptcy proceedings.