POLAND: Verdict of the Constitution Tribunal dated July 17, 2007 (case number P 16/06)

1. 1. The judiciary question arose in the following case: Plaintiff (Agent) claimed goodwill indemnification from an insurance company (Principal) on the basis of an agency contract concluded on August 20, 1997 and terminated on May 9, 2002 by mutual consent. The agency contract was concluded before the provisions on goodwill indemnification came into force and terminated several months after the one year period referred to in Art. 2 sec. 3 of the Amending Law elapsed. Defendant argued that Art. 7643 of the Polish Civil Code (setting out conditions of claiming goodwill indemnification) in connection with Art. 2 sec. 2 and 3 of the Amending Law is inconsistent with the Constitution of Poland. Therefore District Court, having considerable doubts thereto, asked the Tribunal the judicial question. The Court argued that the rule ordering application of the new provisions, in particular of the provision on goodwill indemnification, unknown previously, to the contracts concluded before the Amending Law came into force, violates the rule lex retro non agit. The questioning Court stated that application of the new provisions to the contracts concluded on the basis of different, previously binding provisions violates the rule of freedom of contract, as the new provisions ‘enter’ into the relationships formed on the basis of different rules.
   2. The representatives of the Polish Parliament and General Prosecutor, as well as Helsinki Foundation, acting in the proceeding as amicus curiae, were of the opinion that the provisions of the Amending Law in question are in full compliance with the Constitution of Poland. According to the Parliament, the Amending Law contains appropriate vacatio legis which allows the parties to an agency contract to create their relationship under the new rules, in particular – in accordance with the provisions concerning goodwill indemnification. According to General Prosecutor any of the provisions of the Amending Law is acting retrospectively.
   3. The Tribunal stated that Art. 2 sec. 2 of the Amending Law creates a general rule of applying the previous provisions to the contracts concluded before the Amending Act came into force. However, Art. 2 sec. 3 of the Amending Law provides an exception, concerning the agency contracts concluded between professionals, to which the new provisions of the Polish Civil Code (in particular: provisions on goodwill indemnification) will apply one year after they have come into force. The implementation of the Directive 86/653 made it necessary to amend the Polish Civil Code as far as provisions on agency contracts are concerned. The European provisions protect the agent as a weaker party to the contract; this rule also constitutes a reason for the introduction of the provisions on goodwill indemnification.
   4. The Tribunal held that the institution of indemnification with not established sum thereof, but with established rules of its calculation, was not new to Polish civil law. Therefore, the possibility of claiming goodwill indemnification should not raise any doubts. It is the court’s role to calculate the amount of goodwill indemnification according to the general rules of the Polish Civil Code. The verdict of the Polish Supreme Court dated November 8. 2005 was mentioned.
   5. The Amending Law provides for the rule of further application of the previous law as far as the contracts concluded under this law are concerned. This is a rule coherent with the so called ‘first rule’ of the intertemporary law. The possibility of obtaining the goodwill indemnification by an agent appears – in contracts concluded earlier – after December 9, 2001 r. i.e. after 1 year has passed from the new provisions implementing the Directive 86/653 coming into force. In this respect there is an exceptional regulation, coherent with the so called ‘second rule’ of the intertemporary law i.e. new law’s direct application. The provision providing goodwill indemnification came in force December 9. 2000 and at that moment it was binding and applied to each agency contract concluded after December 9, 2000, even to those terminated before December 9. 2001. Pursuant to Art. 2 sec. 3 of the Amending Law the contracts concluded before December 9. 2000 have been subordinated to goodwill indemnification on December 9. 2001. Since that date conclusion of agency contracts has entailed an obligation to pay goodwill indemnification; the date of agency contract’s conclusion has not been important anymore. The agency contracts concluded in the period of time between December 9, 2000 and December 9, 2001 were governed by the new provisions, so the goodwill indemnification obligation existed.
   6. The Tribunal stated that the rule of payment of goodwill indemnification is in compliance with the rule of freedom of conducting economic activity. A goodwill indemnification is provided by the law implemented in accordance with an important public interest. According to the Tribunal the adjustment of the Polish law to the European law in connection with Poland’s accession to the EU and protection of the weaker party to an agency contract both constitute an important public interest justifying the implementation of the new law to the agency contracts concluded before December 9. 2000 after 1 year the new provision came into force, i.e. on December 9. 2001. The Tribunal emphasized the fact that the friendly interpretation of the EU provisions’ of the new law is appropriate.

Olga Sztejnert, IDI country expert for Poland.