Legal Eye: A legal Christmas list for Poland

Dear Santa,

Despite all of the press about certain naughty deeds in Poland, your Legal Eye columnists solemnly swear that we fall into the "nice" category. If you have any doubt, ask our spouses about our good behavior this past year, as based on the length of our respective personal wish lists.

Never ones to shirk from our civic duty, though, we ask that you look kindly on Poland's legal environment. During the past year you delivered several early Christmas presents to Polish consumers, employees and business alike. We appreciate these little goodies and hope you will be able to deliver a few more in the coming year.

However, Santa, there has been continued foot-dragging on necessary reforms and some less-than-merry developments. As you are able to circle the globe in 24 hours using old-fashioned technology and you are able to show that running a tight ship does not mean disregarding social issues, maybe you could give the government a few pointers.

Consumer gifts

Consumer borrowers were given an early Christmas present on February 20, 2006. Amendments to the Civil Code limited the amount of interest and up-front fees a lender may charge a consumer on loans of less than zł.80,000. Now a lender may not charge more than five percent of a loan's value as an up-front fee to a consumer. The rate of interest may not exceed four times the rate assessed by the National Bank of Poland, which at the time the new law took affect stood at 5.75 percent, meaning that the maximum rate of interest was capped at 23 percent. Looking to next Christmas, perhaps the loan amount could be increased?

On a related topic, we would like the Sejm to finalize its work on personal bankruptcy, which to date does not exist in Poland. The current bill, which doesn't seem to be gaining much headway, would permit a natural person to file for bankruptcy protection and to make arrangements with creditors concerning outstanding debts. Where consumer lending flourishes, you also need to deal with the inevitable situation that someone will not be able to pay. Santa, perhaps you could make the government understand this?

Employee bonuses

No, we're not talking about year-end or holiday bonuses, but a new right for employees. As of May 25, 2006, the Act on Work Councils requires that each business employing at least 100 employees creates a work council. Employers need to consult with the councils on all matters regarding the level, organization and structure of employment. Starting from 2008, smaller businesses will also need to create work councils for their employees.

Santa, we would appreciate it if responsible ordinances and interpretations were adopted to help everyone figure out what all this means on a practical, operational level. 

Taxpayer presents

We know that the tax man is an official to be reckoned with everywhere. But we also know that no mortal is infallible. In a landmark ruling on April 26, 2006, the Supreme Court reiterated and expanded the liability of the State Treasury to taxpayers injured by the actions of public agencies. The issue of damage or loss sustained by business entities resulting from improper decisions of tax officials has caused controversy for years. These decisions are subject to immediate enforcement, even before the taxpayer may file an appeal. If the decision is improper, taxpayers may now not only seek redress for damages, but also for lost profits.

Santa, perhaps next year you could see to it that the current regulations are further amended to afford each taxpayer the right to appeal prior to enforcement?

Another potentially positive development needs your help. Legislation is pending to eliminate the need to stick Treasury stamps on applications and attachments submitted to a public authority. Beyond the ick factor involved in licking all of those stamps, the abolition of this requirement would facilitate the use of the internet to file administrative applications electronically. Santa, we hate waiting in lines. Could you please give the government a little nudge to enact this legislation?

Investor gratuities

We are excited that Poland remains keen on special economic zones. To give credit where it's due, the government deserves praise for allowing more flexibility for including land in a special economic zone. Of course, we wish that maximum tax breaks had not been reduced for some regions as of next year, but we can't complain about economic development.

While Poland offers a great investment incentive in the special economic zones, all is not rosy for investors. The procedures for setting up a company in Poland are antiquated. Santa, the government keeps delaying the creation of a "one-stop shop" for registration of a business in Poland.

Also, we're really not sure what to make of the new Central Anti-corruption Bureau. Used improperly, its wide-ranging authority over private business could have a chilling effect on investors. Could you please put in the stockings of appropriate politicians a little inspiration and motivation to do more to encourage investment in Poland?

Santa, thank you very much for reading our list and checking it twice. We appreciate the early Christmas presents and hope you will find more in your bag for next year.

Paul Fogo is a senior attorney with Miller, Canfield, W. Babicki & Partners.

Judith Gliniecki is the Managing Partner of Rymar and Partners