Conciliation proceedings will no longer interrupt the course of limitation
As of the end of June 2022, the provisions relevant to the effects of using conciliation or mediation proceedings as pre-trial dispute settlement instruments will change in Poland. The change will significantly affect those entrepreneurs and other entities conducting economic activity in Poland who would like to first try to settle a dispute amicably while at the same time not losing, due to limitation of claims, the possibility of pursuing their claims in judicial proceedings, in case the amicable settlement of the dispute fails.
The fundamental change in this respect introduced by the Act as of 2 December 2021 amending, among others, the provisions of the Polish Civil Code and the Polish Code of Civil Procedure includes the regulations covering the rules of suspending and interrupting the course of limitation period.
In compliance with the abovementioned new regulation, the course of limitation period for pursuing claims does not commence, and where it commenced is suspended:
- for claims covered by the settlement agreement – for the duration of the mediation proceedings,
- for claims covered by the motion for a summons to a conciliation session – for the duration of the conciliation proceedings.
The provision currently being in force in Poland (Article 123 (1) and (3) of the Polish Civil Code) stipulate that the course of limitation period is interrupted by any act before a court of law or other authority appointed to try cases or to enforce claims of a given kind or before an arbitration court, which activity is undertaken directly in order to assert or establish or satisfy or secure a claim, as well as by initiating mediation. This means that until the abovementioned change comes into force, filing a motion to court of law for initiating conciliation proceedings (whose goal is solely to conclude a settlement agreement without the necessity of taking all evidence) does interrupt the course of limitation period and once the conciliation proceedings end, the course of limitation commences to run afresh. Therefore, in the absence of conclusion of the settlement agreement, the creditor has additional time to decide whether to pursue the claims in judicial proceedings or not, without running the risk of the claim becoming time-barred.
The described change is important insofar as after it comes into force on 30 June 2022, a request for commencing conciliation proceedings before the court of law and mediation will not interrupt the course of limitation period of claims, but only cause its suspension for the duration of conciliation or mediation proceedings. Once conciliation proceedings end, the limitation period for claims will continue to run. In practice this means that in the absence of concluding the settlement agreement during the conciliation proceedings or within mediation, the creditor will have significantly less time for bringing an action before the court of law to avoid the risk of the claims becoming time-barred. In connection therewith, entrepreneurs who would like to take an advantage of the current regulation in Poland allowing the interruption of the course of limitation by filing the first request with the court of law for conducting the conciliation proceedings and therefore prolong the possibility of pursuing their claims in judicial proceedings in the case of the absence of the conclusion of the settlement agreement, they should consider doing so before 30 June 2022.