Damages for legislative unlawfulness

If injury is caused by a defective normative act, it may be unclear where to seek damages—from the State Treasury or from local government—particularly in cases where the actions of these defendants may not be regarded as unlawful.

To effectively pursue a claim for damages for an injury caused by a public authority, it must be clearly determined which entity is liable for the loss. In the case “unlawful legislation” it is not always obvious which public entity (the State Treasury or a local governmental unit) should be liable for the loss.

Under the Civil Code, liability of a public authority for an injury caused by defective normative acts is provided for in two instances.

The first is when the injury is caused directly by the normative act. Civil Code Art. 4171 §1 provides that if an injury is caused by issuance of a normative act, redress of the injury may be sought following a finding in the relevant proceeding that the act is contrary to the Constitution, a ratified treaty, or a statute.

The second instance, referred to in Civil Code Art. 4171 §2 (second sentence), is where an act applying the law is issued on the basis of a defective regulation. In that situation, the injury is caused by the normative act indirectly, as one link in the causal chain.

In either of these cases, redress of the injury may be sought only after the proper proceeding has been conducted resulting in a finding of unlawfulness. Determining the unlawfulness of a normative act generally lies within the jurisdiction of the Constitutional Tribunal or the administrative courts. Under Art. 188 of the Polish Constitution, the Constitutional Tribunal rules on the constitutionality of statutes, treaties and regulations issued by central state bodies. Meanwhile, the administrative courts are vested with the authority to examine the consistency with statutes of resolutions of local governmental bodies and local normative acts issued by territorial units of governmental administrative authorities (Constitution Art. 184). It is accepted in the legal literature that a normative act is an act of a general, abstract nature, containing universally binding legal standards.

It follows from Civil Code Art. 4171 §1, in connection with Art. 417, that if injury was caused directly by a regulation of law held to be unconstitutional, or by an act of local law by a territorial unit of a governmental administrative authority, liability for the injury is borne by the State Treasury. If the injury was caused by a defective act of local law issued by a unit of local government, that unit is liable for the damages.

The question is raised in the literature, however, whether the mere entry into force of an unlawful normative act constitutes sufficient grounds for finding a causal connection between the act and the injury suffered. It is argued that it is extremely rare for the entry into force of a normative act to immediately affect the legal status of an entity and cause a detriment to its interests (M. Safjan, “Odpowiedzialność odszkodowawcza z tytułu bezprawia normatywnego” (Liability in damages for normative unlawfulness), RPEiS 2005 no. 1, p. 13).

More commonly, the injury does not flow from the mere issuance of the unlawful normative act but is a consequence of an act applying the defective law (A. Rzetecka-Gil, commentary to Civil Code Art. 4171, Lex). Thus the mere fact of setting aside a normative act as unconstitutional will not suffice to enable effective pursuit of a claim for damages. It must be shown that on the basis of an unlawfully issued normative act specific actions of public authority were taken, aimed at a specific person who thus suffered an injury (Supreme Court order of 30 May 2003, Case III CZP 34/2003, Prok. i Pr. 2004 no. 2 item 30). Thus when pursuing damages, the unlawfulness of both the normative act and the act applying the law, issued on the basis of the unlawful normative act—such as an administrative decision—must be proved.

This double prerequisite is provided for in Civil Code Art. 4171 §2. This provision raises the question of which element in the causal chain (the normative act or the act applying the law) will consequently justify liability in damages.

This is particularly relevant in a situation where one public entity would be liable for injury caused by the defective normative act (the State Treasury) but another public entity would be liable if the injury were held to be caused only by an act applying the defective law (e.g. a local governmental unit issuing a resolution in an individual matter based on an unconstitutional statute).

It is argued in the literature that regardless of whether injury resulted from the mere issuance of an unlawful normative act or was a consequence of an act applying the defective law, the defendant in the trial for damages should be the entity that issued the unconstitutional normative act (A. Rzetecka-Gil, above). It is pointed out that because issuance of an act applying an unconstitutional law does not result from the erroneous or culpable application of regulations by the administrative authority, it cannot be concluded that the administrative authority acted unlawfully (M. Safjan, “Skutki prawne orzeczeń Trybunału Konstytucyjnego” (Legal effects of Constitutional Tribunal rulings), PiP 2003 no. 3, p. 8). “If the legislature issues an unconstitutional statute on the basis of which an administrative authority issues a decision causing injury, the doubt may arise whether the administrative authority acted unlawfully” (P. Dzienis, Odpowiedzialność cywilna władzy publicznej (Civil liability of public authorities), Warsaw 2006, p. 325).

But a different view is presented in the case law. According to the Supreme Court of Poland, the individual acts are the immediate source of injury and damages should not be sought from the legislature. “The Civil Code does not provide for a situation of ‘doubly unlawful’ acts of public authorities—first the issuance of bad statutory regulations and then issuance of a legal act based on those unconstitutional rules. Regulations of law are essentially a set of norms of a general and abstract nature. In relation to specific persons, they are applied by executive acts—in this case a resolution of the city council (commune). It is the local government that should answer for the injuries suffered by the specific plaintiff as a result of issuance of the unconstitutional regulations” (Supreme Court judgment of 15 October 2014, Case V CSK 580/13).

Consequently, it is the local governmental unit, which did not act unlawfully (as it correctly applied a legal norm that had not yet been held to be unconstitutional), that incurs liability in damages, and the State Treasury will be released from such liability even though the normative act is held to be unconstitutional and under Civil Code Art. 4171 §1 in connection with Art. 417 gives rise to liability in damages.

In the case in which the Supreme Court issued its judgment of 15 October 2014, a small local commune had to pay damages on the order of several hundred thousand zlotys because it issued a resolution in the individual case of the mayor based on a regulation later held to be unconstitutional. The State Treasury did not incur liability for the loss due to issuance of a defective regulation, because the Supreme Court held that the immediate cause of the injury was the act of application of the law, issued by the local governmental unit, and that unit is liable in damages. Thus the commune was held liable for correctly applying a legal regulation that was in force at the time.

Dr Magdalena Niziołek, Wardyński & Partners