most interesting rulings | In Principle

On 9 December 2021, the Supreme Court of Poland issued a resolution (case no. III CZP 26/21) examining liquidated damages in construction contracts. In construction, liquidated damages are particularly common, generating serious disputes even threatening the completion of projects. In practice, this instrument is mainly used by investors, and the problem usually affects general contractors and subcontractors.

According to the Conversion Act, existing perpetual usufructuaries acquire ownership of real property if conditions set forth in the act are met. What are these conditions, and is perpetual usufruct of land converted into ownership of the land if the building on the land is subsequently designated for residential purposes?

In housing communities, the individual parts of common areas (e.g. parking spots, terraces or gardens) are intended for common use by all owners of premises. Often, to avoid problems with use of such areas, division and use of common areas is established at the stage of acquisition of housing units from the developer. This is known as quoad usum division. Can it be changed if circumstances change?

Under current Polish law, it is illegal to sell OTC drugs from a motor vehicle. This was acknowledged by the Chief Pharmaceutical Inspectorate and confirmed by the Province Administrative Court in Warsaw in its judgment of 23 March 2021 (case no. VI SA/Wa 2691/20).

When filling in the European Single Procurement Document (ESPD) form, contractors must answer the question whether they have committed grave professional misconduct while performing previous contracts. This question is closely correlated with the condition for exclusion under Art. 109(1)(5) of the Public Procurement Law, which specifies that this concerns violations that are serious and self-caused. Therefore, a contractor does not necessarily have to mention any and all delays or complications that occurred during the performance of previous contracts. In this context, an interesting ruling was issued by the National Appeal Chamber on 4 June 2021 (KIO 1087/21) indicating how this question from the ESPD form should be interpreted.

Sometimes typos occur when preparing bid documents, and can be corrected by the contracting authority if the contractor provides the required clarification. But not all mistakes can be cured, especially those concerning the bid price, as they directly affect the contractor’s position in the ranking. An example of such a mistake is when a price is given in figures and then restated differently in words. The National Appeal Chamber explained in its ruling of 1 June 2021 (case no. KIO 1040/21) why such a mistake cannot be corrected.

When preparing contract documents, the contracting authority must decide the amount of the performance bond it will demand. As a rule, this security should amount to 5% of the total bid price or the value of the contracting authority’s liability. But when can this threshold be exceeded, and to what maximum value? This and other questions were answered in the ruling of the National Appeal Chamber of 21 October 2020 (KIO 1381/20).

A two-stage competitive dialogue often extends the procurement procedure to many months. During that time, as a result of various circumstances, changes in the parties to a consortium may occur, often beyond the contractors’ control. In this situation, will the remaining contractors still be entitled to submit a bid, or should they be excluded from the procedure? In its ruling of 22 January 2021 (case no. KIO 3357/20), the National Appeal Chamber held that to avoid negative consequences for contractors, two key conditions must be met.

Does State Forests have the right of first refusal on the sale of a residential unit together with a share in a partly forested property? A surprising decision by the Wołomin District Court.

In the past, Polish courts took the position that a contractor whose bid was not selected due to a violation of the Public Procurement Law must first file an appeal with the National Appeal Chamber (and possibly a complaint with the state court against the chamber’s ruling), and only then could seek redress from the contracting authority. This discouraged contractors from pursuing claims. A recent resolution by the Supreme Court has changed this situation.

When establishing the conditions for participating in a contract award procedure, contracting authorities often face the dilemma of how to reflect the specific subject matter of the procurement without infringing the principle of proportionality. This task is even harder when the procurement involves specialised medical equipment, where improper servicing could put patients’ life or health at risk. Do such circumstances justify limiting the number of bidders seeking a contract? Yes, the National Appeal Chamber held in its ruling of 29 January 2021 (case no. KIO 3489/20).

Trade secrets are a sensitive aspect of public procurement proceedings. They limit the principle of openness of proceedings, but protect sensitive information about the contractor’s business. When granting or denying a request to keep certain information secret, the contracting authority should carefully assess the contractor’s arguments, to prevent abuse of this institution. Despite entry into force of the new Public Procurement Law, this issue is still alive, as evidenced by the recently published ruling of the National Appeal Chamber of 29 March 2021 (case no. KIO 720/21).