Interim measures in Polish court proceedings – application, costs, timeframe and requirements

Security for a monetary claim – what forms of security are available?

An application for interim relief must specify the form of security requested by the party. As a rule, the appropriate form will differ depending on whether the party seeks security for a monetary claim or security for a non-monetary claim. It should also be remembered that the court is required to balance the interests of both parties. This means that the purpose of the security must be effectively achieved, while at the same time the other party should not be burdened beyond what is necessary.

The most common forms of security for a monetary claim include:

• attachment of remuneration for work, receivables from a bank account, or another receivable or proprietary right,
• attachment of movable property,
• establishment of a compulsory mortgage over the respondent’s real estate,
• a prohibition on disposing of or encumbering real estate for which no land and mortgage register has been established, or where the register has been lost or destroyed.

Practical example 1 (monetary claim):

“I request that the Court grant security for the claimant’s claim against the defendant up to the amount of PLN 100,000 (in words: one hundred thousand zlotys) in the following manner:

• by attaching all receivables due to the defendant from the Tax Office,
• by attaching the defendant’s receivables from bank accounts maintained by (…)”

Practical example 2 (monetary claim):

“I request that the Court secure the claim by establishing a compulsory mortgage over four properties – plots of land with a total estimated value of PLN 190,000, including, among others, an undeveloped plot of land no. 1/1 forming part of the spouses’ statutory matrimonial property, located in Olsztyn, for which the District Court in Olsztyn, 5th Land and Mortgage Register Division, maintains land and mortgage register no. WA2M/0000000/2.”

It is crucial to select the form of security precisely in light of the facts of the case and to specify the amount of security accurately. This should increase the likelihood of the court granting the application. The court cannot substitute the applicant in determining the form and scope of the requested security, nor can it grant security beyond the limits of the application. Pursuant to Article 738 of the Polish Code of Civil Procedure, the court considers an application for interim relief within the limits of the application.

Security for a non-monetary claim – what forms of security are available?

Because the category of potential cases involving non-monetary claims is very broad, the law provides for an open-ended catalogue of forms of interim relief. The form of security must be defined precisely and individually in each case so that it protects the applicant’s interests and reflects the circumstances of the particular dispute. The most common forms of security for non-monetary claims include:

• staying the implementation of a shareholders’ resolution,
• depriving a shareholder of the right to conduct the company’s affairs,
• prohibiting publication of specified content infringing the entitled person’s personal rights,
• prohibiting the manufacture and distribution of a product,
• prohibiting retransmission of material by a cable network operator,
• regulating the rights and obligations of the parties or participants for the duration of the proceedings,
• ordering an appropriate warning to be entered in the land and mortgage register or another relevant register,
• staying enforcement proceedings or other proceedings aimed at enforcing a decision,
• staying the implementation of a housing community resolution.

Practical example 1 (non-monetary claim):

“I request that the Court grant interim relief in respect of the claim seeking a declaration of invalidity of the resolution adopted by the shareholders of ABC sp. z o.o. on 24 January 2023 by staying the registration proceedings concerning the entry of changes based on that resolution until these proceedings are finally concluded.”

Practical example 2 (non-monetary claim):

“I request that the Court grant interim relief by prohibiting the disposal of the defendant’s ownership rights in the real estate covered by these proceedings, namely residential unit no. 1 located at 51A Ogrodowa Street in Warsaw, for which the District Court for Warsaw-Mokotow in Warsaw, 7th Land and Mortgage Register Division, maintains land and mortgage register no. WA2M/0000000/1.”

Practical example 3 (non-monetary claim):

“I request that the claim be secured by prohibiting the defendants (…) from taking photographs of the claimant (…) on the claimant’s property located in (…) without the claimant’s consent.”

Practical example 4 (non-monetary claim):

“I request that the Court grant interim relief by staying the implementation of Resolution No. 1/2022 of the owners of units in the property located at 51A Ogrodowa Street in Warsaw, dated 2 January 2023, concerning the appointment of Jan Kowalski as a member of the housing community’s management board, until the proceedings are finally concluded.”

When can an application for interim relief be filed?

Under the applicable provisions, an application for interim relief may be filed before proceedings are commenced, together with the statement of claim (i.e. in the first pleading initiating the proceedings), or during pending court proceedings. In practice, however, the application is most often filed together with the statement of claim.

Filing an application for interim relief before bringing the claim may be particularly important where there is a risk that the defendant will dispose of assets. The entitled party does not then have to wait until the complete statement of claim has been prepared and filed. The application should, however, briefly describe the subject matter of the future proceedings, specify the requested form of security, and substantiate the claim and the legal interest in obtaining interim relief on a prima facie basis. If the court grants such an application, it sets a deadline for filing the statement of claim, which may not exceed two weeks.

Application for interim relief – who may apply for security?

The law provides that interim relief may be sought in any civil case falling within the jurisdiction of a court or an arbitral tribunal. Accordingly, interim relief is available in matters arising under civil law, commercial law, employment law, family law and social security law. One of the conditions for granting an application for interim relief is determining whether the matter constitutes a civil case under the substantive-law or formal-law criterion.

The person primarily entitled to file an application for interim relief is the claimant, and in most cases it is the claimant who makes the application. In exceptional cases, the defendant may also be entitled to apply. An applicant and a participant in non-contentious proceedings may likewise seek interim relief, for example in matters concerning company affairs, acquisition of ownership by adverse possession, dissolution of co-ownership, establishment of a transmission easement, entries in the land and mortgage register, or entries in the National Court Register, among others.

An application for interim relief may also be filed by an ancillary intervener, a public prosecutor, a non-governmental organisation, or another authority entitled to initiate or participate in proceedings, although such cases occur much less frequently.

Application for interim relief – what is the court fee?

One of the major advantages of applying for interim relief is the relatively low cost. Where an application for interim relief is filed together with the statement of claim, which is the most common situation, no separate court fee is payable for the application. If, however, the application is filed during pending proceedings, most commonly after the statement of claim has already been filed, the court fee is only PLN 100 (Article 69 of the Polish Act of 28 July 2005 on Court Costs in Civil Cases).

Interim relief – how long does the court have to consider the application?

Pursuant to Article 737 of the Polish Code of Civil Procedure, an application for interim relief should be considered without delay, no later than within one week of its receipt by the court, unless a special provision provides otherwise. If the law requires the application to be considered at a hearing, the hearing should be scheduled so that it can take place within one month of the application being received.

This time limit is, however, instructional in nature. In other words, it directs the court to take the procedural step within a specified period, but exceeding that period does not produce adverse procedural consequences. The court should therefore consider an application for interim relief within seven days, but if it fails to do so, this does not itself produce legal consequences. In our firm’s experience, courts generally consider such applications within the statutory period or only slightly later.

As a rule, an application for interim relief is considered at a closed session, without the participation of the respondent, i.e. the person against whom the application is filed. Only after the interim relief has been granted is the respondent informed by service of a copy of the order granting relief. From that point, the respondent may take procedural steps in the interim relief proceedings, in particular by filing an interlocutory appeal. In our firm’s experience, such appeals are usually considered within several to a dozen or so weeks of being filed.

Interim relief – prima facie substantiation of the claim

First of all, for an application for interim relief to be successful, the applicant must substantiate the claim on a prima facie basis.

What does this mean in practice?

The applicant should present circumstances indicating that the claimant’s claim is plausible and not manifestly unfounded, and therefore that there is a strong possibility that the court will ultimately uphold it. At the interim relief stage, the claimant is not required to prove the claim in full, but must present evidence and assertions sufficient to substantiate it on a prima facie basis. Case law indicates that a claim is credible where there are reasonable grounds to assume that it exists and is due. The requirement to substantiate the claim therefore also requires prima facie substantiation of the facts from which the claim arises. It is not permissible to conclude that a claim is credible only to a certain percentage and grant security in that proportion (see judgment of the Court of Appeal in Warsaw of 7 August 1997, case no. ACz 735/97, Pr. Gosp. 1998, No. 6, p. 52).

Prima facie substantiation should therefore be based on circumstances and evidence which, assessed in accordance with common experience and a rational evaluation of the facts presented, justify the conclusion that the claim pursued is highly probable.

• Practical example: in one of the cases handled by our firm, the Court held that the claimant had sufficiently substantiated the claim on a prima facie basis by relying on a provision of a development agreement providing for contractual penalties and a demand for payment sent to the defendant. The Court granted security for the claim in full.
  
  
• Practical example: in another case handled by our firm, the Court found that the claimant had substantiated the disposal of three separate units by relying on entries in the land and mortgage registers, which supported the allegation that the defendant was disposing of assets. The Court granted security for the claim in full.

Interim relief – requirement to demonstrate a legal interest

Another condition that must be met by a party seeking interim relief is the existence of a legal interest in obtaining it. As a rule, demonstrating a legal interest requires showing that, without interim relief, enforcement of the future judgment would be impossible or significantly more difficult.

In practice, in the case of monetary claims, this largely means showing a concern that the respondent’s solvency is at risk, in particular where the respondent does not have sufficient assets to secure the claim.

In practice, in order to increase the chances of an application for interim relief being granted, the evidence may include information showing that the defendant is disposing of assets, information about indebtedness, debt repayment agreements, or other financial information. Where the claimant is represented by a professional legal representative, it is in practice that representative’s responsibility to formulate the application properly, select an appropriate form of security and present material enabling the court to find both the claim and the legal interest in granting interim relief sufficiently substantiated.

Case law indicates that circumstances seriously jeopardising the achievement of the purpose of proceedings include the debtor’s poor financial condition, reflected in ceasing to pay liabilities, disposing of assets, limiting the scope of business activity, taking out loans or credit facilities secured against assets, and a deterioration in the ability to repay them (order of the Court of Appeal in Rzeszow, 3rd Labour and Social Security Division, of 27 December 2012, case no. III APz 12/12).

Legal commentary also indicates that, in the case of monetary claims, concern as to the enforceability of a future judgment may arise primarily from the fact that the respondent’s solvency is at risk, particularly where the respondent does not have sufficient assets (Code of Civil Procedure. Commentary on Selected Provisions of the 2019 Amendment, ed. A. Jakubecki, Warsaw 2019).

In many cases involving commercial companies, one option is to refer to the company’s financial statements, which may contain information indicating a risk to solvency, for example:

• no long-term or short-term provisions for costs and liabilities,
• low net profit,
• significant indebtedness,
• liabilities arising from the issue of debt securities,
• loan liabilities to related entities,
• cessation of business activity or the absence of further investments by the company.

Practical example: in one of the cases handled by our firm, the Court held that the mere failure to file financial statements with the National Court Register was sufficient to substantiate the claimant’s legal interest on a prima facie basis. The Court granted security for the claim in full.

What happens in practice after the court grants interim relief?

Once the court issues an order granting interim relief, it is important to have it implemented in practice as quickly as possible. The mere issuance of the order does not automatically result in the attachment of the debtor’s assets. Where the security is to be enforced through enforcement measures, the court issues an enforcement clause ex officio, after which the entitled party may submit the order to the competent court bailiff.

Where the most common form of security is used, namely attachment of receivables held in bank accounts, this means filing an application with the competent court bailiff to enforce the interim relief. The bailiff then sends the bank maintaining the debtor’s account a notice of attachment up to the amount specified in the court order.

The attachment becomes effective when the bank is served with the notice prohibiting withdrawals and, as a rule, also covers funds credited to the account after the attachment has been made. The debtor is not informed in advance that interim relief has been granted. If the order was issued at a closed session and is enforceable through an enforcement authority, the court generally serves it only on the entitled party, while the debtor receives it from the enforcement authority only when enforcement of the interim relief begins. This is of significant practical importance because it limits the possibility of the debtor transferring funds out of the bank account in advance.

Where a bank account is attached as interim relief, the funds are not yet paid to the claimant. As a rule, the amount obtained from the attached account is transferred to a deposit account and remains there until the case is resolved further. The main purpose of interim relief is to preserve assets against which effective enforcement may later be carried out, rather than to satisfy the claimant’s claim at this stage. In practice, the funds remain on the deposit account until the court proceedings are finally concluded.

Where the claimant is represented by a professional legal representative, that representative should, immediately after receiving an enforceable order, file the appropriate application with the court bailiff and take the steps necessary to ensure that the interim relief is actually implemented.

From a practical perspective, speed is particularly important because the debtor’s asset position may change between the time information about its financial situation is obtained and the actual attachment of its bank accounts.

Verdict Partners commentary

In our view, whenever there are grounds to suspect that a debtor is in financial difficulty or may attempt to frustrate satisfaction of a claim, it is worth considering an application for interim relief. In practice, such an application is usually filed together with the statement of claim, although it may also be filed at a later stage of the proceedings. A major advantage of this legal mechanism is that funds can effectively be ‘frozen’ for the duration of the proceedings, beyond the respondent’s control. In many cases handled by our firm, security for a monetary claim has proved to be an extremely effective tool supporting the recovery of funds for our clients.