Polish group proceedings are court proceedings described by specific stages; the legal regime of the proceedings is prescribed by the provisions of the Act and the provisions of the CCP.
Apart from group proceedings, which is a mechanism for the collective pursuit of claims, the provisions of the CCP provide for certain institutions related to the number of entities in court proceedings.
Under the CCP, collective actions by representative bodies, for example, consumer organisations or interest groups, are not possible.
The CCP allows for actions to be brought by non-governmental organisations regarding their chartered objects in specific categories of cases (e.g., environmental protection and consumer protection), but these proceedings involve an individual action for a specific natural person that may be, in addition, submitted only with the written consent of such a person.
The institution of 'co-participation', where multiple entities are present on one side of the litigation (the claimant's or defendant's side), features among typical institutions that tackle the issue of multiple entities, as part of the classic bilateral process. The CCP distinguishes between formal and material co-participation. The first occurs when the subject of the litigation involves claims or liabilities of a single type, based on the same factual and legal basis if, in addition, the jurisdiction of the court is justified for each separate claim or liability as well as for all of them jointly. Material co-participation takes place if the subject of the litigation involves joint rights or obligations of several entities or rights or obligations based on the same factual and legal basis.
In addition, several individual cases can be merged procedurally for joint examination and resolution or for examination only. Such merging is merely technical in nature, the cases still have a stand-alone nature and maintain their separateness.i Types of action available
In accordance with the wording of provisions of the Act (Articles 1 and 2) the following premises (preconditions for the admissibility of group proceedings) should be met:
- homogeneity of claims of the group members;
- identical (the same) or, similar (equal) factual grounds (basis) of claims (common factual grounds for claims sought);
- size of the group (number of members);
- whether the claims can be examined in group proceedings given their object (whether the claims belong to one of the categories of cases – see above); and
- in addition, for pecuniary claims, Article 2.1 of the Act provides for standardisation of the amount of the pecuniary claims of individual group members.
The requirement of homogeneity means that a representative should apply to the court on behalf of each member of the group for legal protection in the same form, for example, for establishment or for payment (sometimes there is a requirement that the claims result from the same type of legal relations). As the Supreme Court explained in its decision of 28 January 2015, Case File No. I CSK 533/14:
[i]n this provision, the legislator used the 'claim' term in the procedural meaning, namely as seeking of adjudication of a performance or establishing the existence of a legal relation or law or the formation of a legal relation or law. The need to pursue a 'single type of claim' in group proceedings, within the meaning of this provision, means that all claimants should seek the adjudication of the performance or the establishment or formation of a legal relation or law.
In the last decision issued on 17 April 2018, case file No. II PK 44/17, the Supreme Court additionally indicated that the premise of homogeneity should be understood functionally. It means that the type of claim and the method of its calculation are two separate things, therefore the duality of the mechanism used to calculate it (common to all participants) does not oppose the homogeneity of the claim.
Next, claims by members of a group sought in group proceedings, should be based on the same (identical) or similar (equal) factual grounds. Fulfilment of this premise usually raises most doubts in practice. It is assumed that the factual ground of a claim is the main set of facts constituting the basis for the disputed legal relationship and a specific claim; however, the scope of the factual grounds of a claim does not include factual circumstances that affect the amount, objective scope or maturity of the claims.
The requirement for the size of the group means that the proceedings should encompass at least 10 claims.
From the viewpoint of interpretation of the provisions that lay down the premises for the admissibility of group proceedings, the first statements of the Supreme Court based on the Act were of particular importance. The following decisions are of note: the judgment issued in the case of a group of closest persons injured as a result of a disaster construction (i.e., decision of the Supreme Court, Civil Chamber, of 28 January 2015, Case File No. I CSK 533/14); judgment of the Supreme Court, Civil Chamber, of 14 May 2015 Case File No. II CSK 768/14 issued in the case involving a group of consumers pursuing the establishment of liability for damages of a bank for the improper performance of the contract (more precisely, provisions on the method in which interest was accrued on the bank loan); and the resolution of the Supreme Court of September 2015 regarding the case of a group of local government units against the State Treasury related to the incorrect implementation of the EU law (fees charged in connection with vehicle records).
In the first of the judgments mentioned above, the Supreme Court stressed the need to take the essence, purpose and functions of group proceedings in the course of interpretation of provisions of the Act into account.
When the Supreme Court issued these rulings, the courts examining Polish class actions began to be more open in their judicature towards group solutions for pursuing claims, while the interpretation of the provisions of the Act became more in favour of certification. Since mid-2015, and in particular in 2016, a number of cases have been positively certified, for example, a series of cases against insurance companies related to unfair contractual clauses (pertaining to insurance of a low down payment for a mortgage loan, the liquidation fee).
The group proceedings have no limitations as to the method of shaping the demand for the statement of claim; a class action may be an action for performance (adjudication). In the case of adjudication, the amount of claims sought by various group members must be standardised. A class action may take the form of an action for establishing the legal relation or the right (Article 189 of the CCP) or an action for establishing liability (Article 2.3 of the Act). It is also possible that the demand for a class action involves the demand for shaping the right or legal relation (only in such cases where filing such an action is permitted).
Currently, after Amendment 1, standardisation of the amount of claims means that group members have to, altogether or in at least groups of two, seek payment from the defendant in the equal amount (previously the Act required that the standardisation took place after the consideration of the 'common circumstances of the case', which gave rise to doubts and resulted in a different approach of the courts to the interpretation of common circumstances). Now, a sufficient criterion for standardisation is the criterion of the amount.Action for establishing liability
An institution unique to group proceedings is the action for establishing liability; the essence of this action was explained by the Supreme Court in the said ruling of 25 January 2015, arguing that:
In these proceedings, the declaratory judgment regarding a large group of persons is aimed solely at establishing defendant's liability for a specific event and does not concern establishing whether damage was incurred by each of the individual group members. This may, but does not have to be, the subject of assessment only in individual trials, as long as, after the statement of claim for establishing liability is accepted, no individual out-of-court settlements are concluded, which is one of the purposes of issuing such a judgment. If individual trials take place, where a judgment issued on the basis of Article 2.3 is a precedent, then, in such proceedings, individual circumstances will be examined, such as the origin of the damage and its amount, causal link, contribution or limitation if any, as long as it applies to individual claims only and not to all group members. The subject of group proceedings for the demand for establishment are only circumstances that are common to all group members and not individual circumstances of individual members to be examined during individual trials at a later date.
As regards the action for establishing liability, the issue of the defendant's liability is separated from the size of such liability.
The legislator essentially 'implemented' the solutions proposed by the Supreme Court to the Act in the form of Amendment 1 to Articles 2.3 and 2.4 of the Act, where it was specified that the purpose was to establish the defendant's liability for a specific event or events. The statement of claim should indicate the pecuniary claim for which such a claim is pursued. When accepting the action, the court establishes circumstances that are common to group members.Limitation
The institution of limitation in the Polish law is an institution of substantive law and not of procedural law. The provisions of substantive law determine the deadline after which, in the event of inaction of the entitled party, specific claims expire (strict time limits) or lose their ability to be enforced (limitation periods). In 2018, the provisions of the Civil Code defining the length of general limitation periods were amended. And so, currently, unless specific provisions provide for different periods, the general period of limitation for all property claims is six years (not 10 years), and for claims for periodic performance and claims related to business activity – three years. The limitation period for claims for compensation under tort liability is specifically regulated. A claim of this sort lapses, in principle, after three years since the date on which the injured party established the damage and the identity of the perpetrator. However, this period may not be longer than 10 years since the date of the event giving rise to the damage.
The period of limitation for compensation for damage resulting from infringement of competition law is longer, amounting to five years, and its course does not begin to run as long as the infringement is still ongoing and is suspended (the limitation period) for the time of duration of proceedings before state or EU authorities concerning the infringement of competition law.
In addition, also in 2018 a change was introduced in the scope of counting the end of the limitation period – according to the newly introduced rule – the limitation period takes place on the last day of the calendar year. This rule does not apply to limitation periods of less than two years.
The Act itself contains no specific regulation on the limitation period for the claims of particular group members. The Act provides that, for a claim of such person, the effects of filing a claim in group proceedings (i.e., primarily an effect of suspension of the limitation period for such claim) shall remain only in the following situations: (1) when a group member files an individual group statement of claims covered by the rejected statement of claims, within 12 months of the decision on the rejection of a group action becoming final; and (2) when a person who joins the group but is not covered by the final court decision on the composition of the group files an individual statement of claims within six months of such decision.
Before 2018 the court was never required to consider the consequences of the lapses of limitation periods ex officio, but only when such defence (objection) is raised by the opposite party. As of 9 July 2018, special rules on the consequences of limitation periods apply to consumers. Thus, in accordance with the new Article 117.2, Section 1 of the CC, after the expiration of the limitation period, no claim against the consumer can be claimed. The statute of limitations on a claim against a consumer therefore deprives the claim of its actionable nature. This means that the court is obliged to take into account the limitation period of the claim against a consumer ex officio. In addition, in certain special circumstances, the court may disregard the statute of limitations for consumer claimsii Commencing proceedings
The entity exclusively mandated to institute group proceedings is the representative, which acts on its own behalf but in the name of all the group members. This function can be performed by a member of the group or a poviat consumer ombudsman. Group members agree that a certain person should act as a representative. From a procedural viewpoint, that person is solely a claimant in the group proceedings. The Act introduces the requirement for the representative to act via a professional legal counsel. Apart from that, the Act does not regulate the internal relations between the representative and group members; in practice, an agreement is usually concluded to regulate such issues.
Current solutions are based on the opt-in model. Group proceedings are open only to persons who express their willingness to join the group clearly. The Act does not require the group or class to be defined or specified. The announcement on the commencement of proceedings (see below) should basically provide what claims can be referred to the proceedings by submitting a declaration on joining the group. Such a declaration can be submitted by every person (as long as such a person is capable of acting in court proceedings) and, of course, provided such a person has a claim that can be covered by group proceedings. The provisions of the Act do not provide for limitations as to nationality or place of domicile of persons joining the group (for example, as regards claims for damages, where the loss was incurred on the territory of Poland, the place of domicile of the group member is irrelevant). The Act does not provide for specific provisions as to jurisdiction; general rules prescribed by EU legislation or relevant provisions of the CCP apply.Costs
The Act does not include any specific regulations pertaining to the financing of group proceedings; in general, the Polish provisions lack regulations on the financing of proceedings by third persons.
The loser pays the costs rule is in force. The group representative is the sole claimant, and he or she is formally required to bear the costs of the proceedings.
The Act does not regulate the rules for the redistribution of the costs related to the group proceedings (including the costs of legal services) or any allocation to common costs and the costs attributable to each individual claim inside the group. These issues are left to be arranged between the group members. In practice, usually all group members participate in the costs related to the commencement and conducting of the group proceedings, but the Act does not provide for such a requirement. Group members may freely agree on internal relations among them. It is usually agreed that each member pays a fixed or lump-sum amount or it is agreed that such costs are incurred by an entity in proportion to the value of the claims pursued by them.
The CCP's provisions define the costs of the proceedings not as the costs actually incurred by a party, but the costs necessary for the reasonable pursuance of rights or reasonable defence. These costs also include fees paid to legal counsel, but may not be more than six times a specific minimum rate. The court decides on the cost of proceedings in the decision concluding the case in the given instance.iii Procedural rules
Group proceedings are divided into stages. Compared to an ordinary individual trial, there are four stages, including two specific stages that precede the substantive examination of the merits of the case that can be distinguished for group proceedings: stage one is the certification stage and stage two involves shaping the composition of the group.
The first stage, namely the certification stage, is when the court examines whether a specific case can be examined as a class action. A statement of claim in group proceedings should contain a motion to examine the case in this procedure with substantiation. Based on these arguments, the court examines whether the premises for admissibility of the group proceedings are met (as discussed above). If the result of the examination is positive, the court issues a decision on examination of the case in group proceedings, and if the result is negative, the court rejects the statement of claim. Previously, the Act required the decision on this subject to be passed after the court hearing (which prolonged this stage). Currently, for statements of claim brought after 1 June 2017, such a decision may be made at a closed session. Before a decision on this subject is made, the court orders that the defendants submit a response to the statement of claim, where the defendants may object to the case being examined in this procedure.
The 'certification' decision may be challenged in the court of appeals. In accordance with Amendment 1, when the decision on the examination of the case in group proceedings becomes final, the admissibility of group proceedings is not subject to re-examination in the further course of the proceedings.
The decision on the dismissal of the complaint on the decision to reject the statement of claim may be appealed against with a cassation complaint in the Supreme Court. In admitting the cassation complaint, the Supreme Court may repeal the appealed decision and issue a ruling on examination of the case in the group proceedings.
The second stage is shaping the group. This stage begins with an announcement on the commencement of the proceedings and ends when the decision of the court on final group members becomes valid. As regards the method of announcement publication, at present, the provisions of the Act let the court choose the method most appropriate for the given case.
The contents of the announcement are proposed by the claimant, and the court orders the announcement to be published. The publication of the announcement on the commencement of group proceedings is to facilitate notification of all those potentially interested in joining the group. In particular, the announcement may be published on the pages of the public information bulletin of the competent court, on websites of the parties or their legal counsel or in the nationwide or local press. The announcement on the commencement of group proceedings can be skipped if the circumstances of the case show that all group members submitted declarations on joining the group.
Declarations on joining the group from new members are referred to the representative. Based on such declarations, the representative prepares a letter with a list of group members and the declarations. The court delivers a list of group members to the defendant and sets the date for filing objections as to the membership of individual persons in the group. The defendant may challenge the membership of a person in the group by arguing that the claim of that person is different from the claims of other members, for example, that it is based on different factual grounds or does not meet other criteria that the court considered during the certification. Then, the court issues (at a closed session or during the court hearing) a decision on the composition of the group, where it lists, by full name or business name, the persons who are members of the group and specifies membership in subgroups if the group members are divided into subgroups. This procedural decision can also be challenged with a complaint.
As regards proving that a person belongs to the group, for cases involving pecuniary claims, the Act requires the claimant (representative) to prove such a membership, in other cases making the fact plausible is sufficient.
Filing a complaint against the decision on the composition of the group does not suspend the substantive examination of the case.
When the decision on the composition of the group becomes final, attempts by members to leave the group becomes ineffective.
The third stage of the proceedings is the examination proceedings as to the merits of the case. In this scope and with regard to the manner of conducting the proceedings to take evidence, the Act introduces no provisions that would be different from those in force for ordinary proceedings. The progress of the proceedings depends on the subject of the case – Polish procedure does not provide for a disclosure institution.
Certain differences are evident at the stage of issuing the judgment. First, the court is obliged to list all the members of the group or subgroup in the judgment (operative part). If the judgment involves pecuniary performance, the court should determine the amount attributable to each member of the group or subgroup separately.
Second, in each case involving a pecuniary claim examined in group proceedings, where the amount of the claim of any of the group members cannot be precisely proven or proving it is particularly difficult, the court may adjudicate, in the judgment, at its own discretion, the amount in favour of that group member that is not greater than the standardised amount of the claim (given the prohibition to make a judgment in excess of the demand). The court may adjudicate based on consideration of all the circumstances of the case and based on the accumulated evidence. To use such an option, the court should hear the parties on the amounts adjudicated in favour of members of the group or subgroup. If the parties present agreeing motions on the amounts attributable to members of the group or subgroup, in accepting the statement of claim, the court shall be bound by such motions, in accordance with Article 20a.2 of the Act, with regard to the amount attributable to members of the group or subgroup.
The fourth stage is the stage of performance of a final and binding judgment. As regards the enforcement of a pecuniary performance, the enforcement can be instituted by any member of the group or subgroup to the extent of the amount adjudicated in their favour, based on the excerpt from the judgment (Article 22 of the Act). As regards cases involving non-pecuniary performance, enforcement of the adjudicated performance is instituted upon the motion of the representative of the group. Six months after the day on which the judgment becomes binding, if the representative of the group does not put forward a motion for instituting the enforcement, the enforcement is instituted upon the motion of any of the group members.
The speed of proceedings was unsatisfactory in the first years; it is evident that, at present, the cases are processed much faster.
An institution unique to group proceedings is the option for the defendant to demand that the claimant pay the deposit to secure the costs of proceedings. The intention of the legislator was to introduce the deposit as an instrument to deter claimants from rashly bringing class actions.
From the moment the Act came into force, the institution of the deposit is optional, which means that if the defendant files a motion, the court may, but does not have to, commit the claimant to deposit a relevant cash amount as the deposit to secure the costs of proceedings. Initially, the Act did not specify the criteria to be followed by the court in reviewing the motion; such criteria were introduced by Amendment 1. Based on the current wording of the Act (Article 8), the court may issue a decision to oblige the claimant to submit a deposit to secure the costs of proceedings if the defendant makes plausible that the action is groundless and that the lack of the deposit would prevent or considerably hinder the execution of the ruling on the costs of proceedings if the action is dismissed. Circumstances that justify imposition of the obligation to submit the deposit can be, among others, the poor financial situation of the representative (a party) and the lack of regulations applicable to the rules of payment of the costs of proceedings within the group. The court decides on the amount of the deposit in its decision, having regard to the likely sum of costs to be incurred by the defendant. The deposit cannot exceed 20 per cent of the value of the object of the dispute. Although the motion for obliging the claimant to submit the deposit should be placed by the defendant at the first procedural action, the court adjudicates on the deposit when the decision on the composition of the group becomes final. Amendment 1 introduced this rule so that the deposit can be incurred equally by the group although formally only the claimant (i.e., the representative is obliged to pay it). If, during the case, it transpires that the deposit is insufficient to secure the costs of proceedings, the defendant may demand an additional security. If the deposit has not been submitted during the time frame set by the court, the court suspends the proceedings, and if the deposit is not paid within the next three months, the court rejects the statement of claim or the appeal.iv Damages and costs
The issues related to damages and their legally permitted amount are governed by substantive law. Polish law incorporates a principle that the damages must not exceed the loss actually suffered by the claimant. Therefore, the damages should correspond to the amount of the loss, and the amount of the damages is determined on a 'differential method' basis. This is based on comparing the assets that would have existed had there been no event causing the loss to the current state of affairs. The principle of compensatio lucri cum damno also applies. It is essential that the court may adjudicate, in favour of each group member, an appropriate amount (not greater than the standardised amount) pursuant to Article 322 of the CCP in conjunction with Article 20a of the Act.
In Polish civil law, the general assumption behind the liability for damages is to reinstate the condition that would have existed had the loss event not occurred (Article 361, Section 2 of the Civil Code). The damages remedy the loss and, as a rule, the amount must not exceed the amount of the loss. This also applies to remedying a non-pecuniary loss; the cash compensation for the claimant for the loss incurred should correspond to the size of the loss.
Polish law does not include the concept of punitive damages.
One of the elements of the costs of proceedings are the costs of court representation – the losing party does not refund the winning party for the costs actually incurred but the costs recognised on a lump-sum basis, being the amount of the specific minimum rate (in the range from one to six times the amount). The Act provides for the option to pay the success fee.v Settlement
The progress of mediation proceedings is governed by provisions of the CCP. The Act stipulates that in group proceedings, the court may refer the parties to mediation at any stage (Article 7). There are no specific rules for conducting mediation proceedings in group proceedings. It should be assumed that the representative will participate in the mediation. In entering the mediation, the representative should consider that it should obtain the consent of at least half of the group members to reach a settlement and for other dispositive actions.
In accordance with Article 19 of the Act, withdrawal of an action, withdrawal or limiting the claim and conclusion of a settlement require the consent of more than half of the group members.
A settlement is subject to control by the court, which may find reaching the settlement inadmissible if circumstances of the case show that this stands in conflict with the law or good manners, aims at circumventing the law or is a gross violation of interests of group members.
To date, only a fraction of class actions have ended with a settlement. At least one of the cases brought against an insurance company and one against a developer ended with a settlement: the former at the preliminary stage of the certification and the latter at the stage of merits.