Keeping up with the changes: the 1999 legal scene in review
With all of the anticipation of what will and won't happen on Jan. 1, it is likely that historians will one day characterize 1999 as a bridesmaid of a year, discussed solely in context of the turn of the century. However, for those of us marching boldly into 2000 (armed with flashlights, extra cash and water just in case), we are going to have to live with the developments of this past year. From a legal perspective, we will be feeling the effects of 1999 for some time to come. Some of the major legal events deserve special note.
Befriend a translator and Polish language teacher:
The days when international capitalists could do business in Poland without ever deigning to learn a word of Polish are over. On my list of really big legal events in 1999, the "Law on Polish Language" ranks No. 1.
Of its many provisions, the one nearest and dearest to us lawyers is the requirement that agreements to which one of the parties is Polish and that are to be performed in Poland be in Polish. The government has graciously granted an exception that allows a foreign language version of an agreement with a Polish party to be the governing version as long as a Polish version is also prepared and the parties remember to include a provision stating that the foreign language version prevails.
What does this mean practically? If you don't speak Polish, you should get to be good friends with a Polish teacher and a translator soon as they are likely to be quite busy when the law goes into effect May 8, 2000. An informal inquiry that I have conducted among Polish teachers and translators has thus far only resulted in denials that any lobbying efforts were made by these persons in an attempt to drum up business.
Permits, get your permits:
In addition to looking out for the well-being of Polish teachers and translators, it appears that the government was also concerned that the state treasury had too little to do. Thus, in amending the "Act on Companies with Foreign Participation," it threw in a new permit requirement. From June 15, 1999, a foreign entity must obtain a permit from the treasury minister to purchase shares in a limited-liability company or stock in a joint-stock company if the company uses assets of a state-owned legal person pursuant to an agreement that has a term of more than six months.
What is the effect? Well, we really don't know because the provisions of the law could be interpreted very broadly. If you ask your lawyer, who is one of those risk-averse types that we lawyers tend to be, you'll likely hear that you need to obtain a permit even for transactions that could be considered minor from a business point of view.
Sue, sue, sue:
Poland has ratified the "Convention on Jurisdiction and Enforcement of Court Awards in Civil and Commercial Matters," signed in Lugano, Switzerland, on Sept. 16, 1988 (a.k.a the Lugano Convention). Pursuant to the Lugano Convention, an award issued by a court of a country that is a party to the convention will be recognized by Polish state courts as long as the technical requirements of the convention are met. On Feb. 1, 2000, the convention is scheduled to enter into force with respect to Poland.
"Lots of conventions exist; what does this mean to me?" you ask. Let's say a court in Austria has issued a decision and big monetary award in your favor against a Polish company. The only assets of the Polish company are in Poland. Until now, you had to go through fairly complicated procedures for a Polish court to recognize the award so enforcement proceedings could be conducted to get some money out of the company.
Congratulations, you're now a Polish resident:
The big good news/bad news event of the year was the liberalization of the "Foreign Exchange Law." On the good-news side, Polish foreign exchange policy now meets OECD standards as many of the prior restrictions with respect to foreign trade activities have been abolished. Current operations are, in general, fully liberalized. Long-term capital investments in the form of direct investments and trading in securities have been substantially liberalized although Polish residents still need a permit to invest in, in general, non-OECD countries. Short-term capital operations are still subject to a permit requirement.
On the bad news side, incorporating OECD terms resulted in some vagueness in the "Foreign Exchange Law." As an example, the law makes reference to the terms "resident" and "nonresident" in describing the foreign exchange status of individuals and legal entities. While it's fairly obvious that the location of its seat is the decisive factor in determining whether a legal entity is a resident, it's not so easy with individuals as they are deemed to be residents of Poland if their "permanent address" is in Poland. The Polish Civil Code defines "permanent address" as the place where an individual resides and intends to reside indefinitely. Thus, if you are a foreigner residing in Poland even for a few years, you are not deemed to be a resident of Poland unless the "center of your vital interests" is situated in Poland. Whatever that means.
In the name of your usual "Legal Side" columnist, Lejb Fogelman and all of us at Hunton & Williams Poland, we wish you all the best in this holiday season and the coming New Year.
Judith Y. Gliniecki is a senior associate with Hunton & Williams' Warsaw office.
