Execution of reprivatisation claims against the Polish State Treasury
Execution against the State Treasury generally guarantees full satisfaction of a creditor’s claim, even if funds have not been earmarked for this purpose in the state budget.
Previous owners of real estate seized by the state during nationalisation or expropriation, and their heirs, seek to regain their former properties in kind, or if that is not possible, they seek compensation for the loss of their property. To this end, they assert claims against the Polish State Treasury for possession of real estate or payment of compensation. Then, to obtain a writ of enforcement, a specific type of execution proceeding must be conducted against the State Treasury. The procedure contains a number of restrictions and requires the creditor to take a number of additional actions. Execution of reprivatisation claims is no different from execution of other claims against the State Treasury, however.
Execution of both monetary and non-monetary claims against the State Treasury is governed by Art. 1060 of the Civil Procedure Code, and involves two different stages.
During the first stage the creditor itself, without involving execution authorities, relying on its writ of execution, applies directly to the state organisational unit whose activity is connected with the obligation (monetary or non-monetary), i.e. the unit named in the writ of execution, to comply with the writ. The unit is required to perform within two weeks after service of the creditor’s demand.
Although payment should be made promptly by organisational units of the State Treasury, such units (particularly near the end of the budgetary year) typically refuse to perform, citing a lack of funding in the current budget. However, the Public Finance Act dated 27 August 2009 provides mechanisms for the units to perform despite a lack of funds earmarked for this purpose in the budget. Art. 164(1) of the act provides that “unanticipated expenditures that are required to be paid pursuant to writs of execution, judgments or judicial settlements, may be made irrespective of the level of funds planned for such purpose. An amendment to the expenditure plan shall be made accordingly by transferring expenditures from other expenditure classifications or special-purpose reserves.”
If the organisational unit of the State Treasury fails to comply with the creditor’s demand, the second stage ensues, in which the creditor is authorised to take the relevant execution actions via the authorities appointed for this purpose, i.e. the court or judicial bailiff.
In the case of execution of monetary claims, the creditor applies to the court for issuance of an enforcement clause for the writ of execution. Execution of monetary claims against the State Treasury is limited, however, to the bank account of the relevant organisational unit. Thus it is not possible to conduct execution of such claims out of movables or real estate of the State Treasury, which must be indicated by the court when it issues the enforcement clause. This is an exception to the rule that execution may be conducted against any and all assets of a debtor.
The next step is for the creditor to apply to the bailiff to commence execution against the bank account. Generally execution of monetary claims presents no problems. Execution against a bank account is the quickest way to enforce claims, particularly considering that organisational units of the State Treasury are required to hold their funds in a bank account.
The execution proceeding works somewhat differently when an organisational unit of the State Treasury fails to satisfy a non-monetary claim. The creditor does not obtain an enforcement clause for the writ of execution, the further execution proceeding cannot be conducted by the bailiff, and the creditor may only apply to the court to set a deadline for the director of the organisational unit to perform as provided in the writ of execution (e.g. deliver possession of real estate), and if the writ of execution is still not performed, to impose a fine on the director of the unit in an amount of up to PLN 1,000, and subsequently the director may be subject to arrest.
The parliament provided the State Treasury, as a debtor, with a privileged position in execution proceedings. Nonetheless, enforcement of writs of execution against the State Treasury generally proceeds quickly and without major difficulties.
Leszek Zatyka, Reprivatisation practice group, Wardyński & Partners