A dishonest party may be required to pay a debt through criminal proceedings
The penal sanction of the duty to redress loss or provide satisfaction for injury, which may be imposed on a dishonest debtor by the criminal court, protects the interests of creditors.
Creditors seeking to make up for the negative consequences of illegal asset-stripping by a debtor should bear in mind the penal sanction under current law in Poland consisting of the “duty to redress loss or provide satisfaction for injury,” which may be imposed on the perpetrator of offences against creditors (set forth in Art. 300–302 of the Penal Code).
The practice of the justice system we have observed in criminal cases indicates that judges have taken to heart the intention of the Parliament that in criminal cases the rights of crime victims should be upheld to the fullest and the injury caused by the perpetrators should be compensated for.
Many practical considerations may counsel in favour of applying much more radical legal measures against dishonest debtors in a specific case than the measures provided by the civil law. The creditor will find such measures in criminal law. Among other measures, the criminal law enables exertion against the debtor of various forms of compulsion (including psychological), and provides for a number of evidentiary measures to be pursued outside of Poland with the assistance of foreign law enforcement officials, reducing the time a creditor must wait for a judicial ruling setting aside transactions by the debtor, and generally avoiding the short limitations periods found in civil law. Effective pursuit of criminal measures may result in effective satisfaction of a claim which the debtor has illegally attempted to evade, specifically through the criminal measure of the duty to redress loss.
Therefore, in a criminal case in which the debtor is charged with an offence causing injury to a creditor, the creditor can and should seek an order under Penal Code Art. 46 imposing the sanction of the duty to redress loss. If the creditor fails to file such an application, it risks the loss of a favourable ruling by the criminal court in this respect. Such an application may be filed until the end of the first interrogation of the injured party at the main hearing, but may also be made earlier, in writing or orally for inclusion in the minutes of the testimony of the injured creditor as a witness.
In the criminal judgment, the court does not set a deadline for performance of the duty to redress loss, but the convicted debtor is required to perform the duty without delay. When the sentence imposing this sanction becomes legal final, it constitutes an enforceable writ just like a judgment in a civil proceeding. After issuance of an enforcement clause, it may be enforced by the injured party through an execution proceeding conducted by the bailiff. The limitations periods provided by civil law do not apply to a claim for redress of loss caused by a criminal offence.
Finally, it should be pointed out that the criminal court may make acknowledgement or performance of the duty to redress a loss caused by a criminal offence a condition for suspension of a sentence of imprisonment imposed on a dishonest debtor (Penal Code Art. 72 §2). This may be of great importance in practice. Not many debtors are so determined not to pay their debts that they are willing to sacrifice their personal freedom to this end. If the debtor refuses to carry out the sanction—i.e. is capable of redressing the loss in whole or in part but fails to do so—the court may revoke the suspension of the sentence of imprisonment imposed on the perpetrator.
Janusz Tomczak, Business Crime Practice, Wardyński & Partners
Adam Studziński, Difficult Receivables Recovery Practice, Wardyński & Partners