Who has standing to sue in the case of a consortium, and does completion of contract performance preclude a claim for modification under Art. 357(1) of the Civil Code?
In the judgment of 24 July 2024 (case no. II CSKP 968/22), the Supreme Court of Poland ruled on doubts regarding legal standing to assert a demand for either contract modification or payment under Art. 3571 of the Civil Code in the event of an extraordinary change of circumstances (the rebus sic stantibus clause), on the part of a consortium of entities executing a public contract for a contracting authority. The court also commented on whether a claim under Art. 3571 can be made after the contract has been fully performed. This ruling is very important for contractual practice in Poland.
The Supreme Court recognised that in the case of a consortium, there is necessary material co-participation, and thus all the entities in the consortium must participate in a case under Civil Code Art. 3571. But the court noted that it will not always be possible for all consortium members to appear as claimants in the case. A member may not be interested in litigation, for example when, due to the scope of their duties in the consortium, they have not suffered a loss, or they simply do not want to get embroiled in lengthy, costly litigation with the contracting authority. In such a situation, the remaining consortium members have no legally effective instrument to induce the other consortium member to join litigation on the claimant’s side, as no one can be forced to be a claimant.
Bearing in mind the practical considerations and the need to preserve the right to a fair trial, the Supreme Court held that in such a situation, a consortium member who refuses to appear as a claimant can be joined as a defendant in the case, so that all consortium members are parties to the proceeding. This is a laudable position, as it eliminates the possibility that one consortium member’s unwillingness to appear in the case could prevent the other members from pursuing their rights in court. In this regard, the Supreme Court met the expectations of procurement practice.
The court also reached the important conclusion that completion of contract performance does not exclude a claim under Civil Code Art. 3571 if the contractor shows that the fee received from the contracting authority does not extinguish the contractor’s claims, and the contractor has brought an action for an increase in its fee. The Supreme Court noted that to hold otherwise would lead to a situation in which the speed with which the courts hear the case would determine the validity of the claim under Art. 3571. If the courts did not have time to examine the case before the performance of the contract was complete, the contractor’s claim under Art. 3571 would lapse. This would be incompatible with the right to a fair trial, especially since cases under Art. 3571 are usually complex and can last for years, and contractors under agreements of a relatively brief duration could not have their case resolved before performance of the contract was completed.
The Supreme Court has not yet issued a written statement of the legal grounds for this judgment, and this article is based on the oral statement of the grounds for the ruling delivered by the Supreme Court.
Agata Jóźwiak, attorney-at-law, Dispute Resolution & Arbitration practice, Wardyński & Partners
