Can court proceedings be faster than arbitration in Poland? Case Study: A Final Judgment Obtained Within 3 Months

Can court proceedings be faster than arbitration in Poland? Case Study: A Final Judgment Obtained Within 3 Months in a Case for Double Earnest Money (Deposit)

Is it possible to conclude a legal dispute within three months? And to have it be final and binding? Our Team proves that it is!

We are pleased to announce that through the efforts of our firm’s Partner, legal counsel Rafał Podbielski, our Client obtained a positive and now final (due to lack of appeal) judgment in an expedited manner - merely 3 months after filing the lawsuit - before the Regional Court in Myślenice regarding a claim for the payment of double earnest money (podwójny zadatek).

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The Case

On behalf of our Client, we filed a claim for the return of double the amount of the deposit. We argued that the counterparty had withdrawn from entering into the final agreement, which they were obligated to do under a previously executed written reservation agreement.

The counterparty’s defense rested on the claim that the reservation agreement was never validly concluded. They argued that the power of attorney required the form of a notarial deed and asserted that they did not consent to the specific terms negotiated by their proxy in the reservation agreement.

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The Court’s Ruling

The Regional Court in Myślenice, awarding our Client the return of double the earnest money (the sum of 20,000 USD), emphasized the following:

• Scope of Authority: The Court noted that the wording of the power of attorney granted a broad scope of authorization (covering "all matters regarding real estate").
• Form of Power of Attorney: The Court upheld our argument that a notarial deed was not required for the proxy to conclude a reservation agreement. A standard written form was sufficient because a reservation agreement does not result in the direct disposal of real estate ownership.
• Principal's Liability: The Court highlighted that the principal is responsible for all actions taken by a proxy acting within their authority. The opponent could not claim that the terms were set against their will, as the power of attorney contained no restrictions regarding the negotiation of reservation agreement terms.

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This position is consistent with Article 95 § 2 of the Polish Civil Code, which stipulates that a legal act performed by a proxy within the limits of their authority produces effects directly for the represented party.

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Key Takeaways

This judgment confirms several critical legal principles:

1. Precision in Documentation: When granting a power of attorney, one must carefully consider its intended purpose. The content must be precisely defined to leave no room for doubt.
2. Trust and Communication: There must be a bond of trust and prior coordination between the principal and the proxy. Otherwise, the principal may face severe financial consequences for the "irresponsible" actions of their representative, as seen in this successfully concluded case.
3. Forum Selection Strategy: In future contracts, it is worth considering a forum selection clause designating a court located outside of Poland’s major metropolitan hubs (like the Regional Court in Myślenice, for this case). This can significantly contribute to a faster resolution of the case.

Author: Rafał Podbielski, Partner, legal counsel.

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Do you need support in a contractual dispute regarding real estate? Contact us. We will advise you on the most effective and efficient solution. 

You can learn more about our specialization in Real Estate Law for Business here.

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