It is difficult to imagine a complex infrastructure project without the participation of subcontractors. In Poland, where large projects are often contracted to foreign companies, local subcontractors play an important role. This was also the case prior to the EURO 2012 football championships, when subcontractors were heavily engaged in the construction of roads and railways necessary to secure access to the newly built football stadiums. However, the EURO 2012 also resulted in a wave of bankruptcies and liquidations of Polish subcontractors, who suffered due to payment withholding, warranty deposits, contractors’ bankruptcies and lack of financial liquidity along the supply chain.
Whether the lapse of the 28-day notification period under sub-clause 20.1 of the International Federation of Consulting Engineers (FIDIC) Red and Yellow Books renders the contractor’s claim time-barred has been a point of interest for courts in civil law jurisdictions for years. Polish courts have also not shied away from commenting upon the legal nature of sub-clause 20.1. The legal landscape seemed relatively settled in this regard until March 2017, when the Supreme Court took an unequivocally pro-employer perspective on the matter.
By Łukasz Gembiś, K&L Gates, Warsaw
In February 2017, the Ministry of Infrastructure and Construction announced the introduction of the “New standards in road construction” aimed primarily at regulating the balanced division of risks in roads construction contracts. Among many changes that have been made to the new model of public procurement contracts in road construction, special attention should be paid to returning – after many years of absence – arbitration as the preferred method of settling disputes between public investors and general contractors in Poland.
In Poland, for years now we have seen a steady increase in the number of commercial disputes referred to the common courts. According to the information provided in April 2016 by Undersecretary of the Ministry of Infrastructure and Construction, Jerzy Szmit, the value of the claims that contractors brought to the court, or intend to bring, amounted to approximately €2.5 billion, covering 5000 cases (only regarding road construction disputes).
Although the efficiency of the Polish courts has improved in the last few years, the average duration of court proceedings in Poland is still very long. Amicable dispute resolution is one method to deal with the resulting delays (for example by way of conciliation or mediation procedures etc.). However, unfortunately, despite various initiatives to promote such methods by both the Ministry of Justice and the Ministry of Development, government bodies and state budgetary units only occasionally make use of procedures for the amicable settlement of disputes arising under civil law. It appears that the main factor preventing public investors from wider use of such amicable dispute resolution methods is a fear of incurring liability for breach of public finance discipline.