Property law: Seeking agreement in international transactions

However, in certain transactions of an international character, i.e. in which there is an element of the transaction which is not Polish, this rule presents problems. For example, what if the sale agreement for a Polish real property was concluded in the US, where there are no Polish notaries and the American notaries cannot provide the exact same form of agreement? Even if they could, the question still remains of which law would apply?

Seek counsel

The answer is quite simple: one should find a Polish consulate in the US and ask them to perform such a deed in his capacity as notary public (subject to the authorization of the Ministry of Justice issued upon application of the Ministry of External Affairs). However, this solution appears impractical and certainly will not be attractive for two American parties wishing to buy and sell property located in Poland, if one has to follow the US example.

We might then conclude that there is simply no option other than to use the services of an American notary. But we would then discover that s/he cannot draw up the notarial deed as it is understood in Poland. Bearing in mind that the sale agreement (regardless of where it is from) will also have to be sent to the Polish land and mortgage register court to register the new owner, the problem still remains as to how to conclude an agreement governed by Polish law and apply the correct form.

The letter of the law

Let us leave the example of the US and imagine a country where real property can be effectively sold by means of a simple written contract. Let us imagine that two foreigners, while being in such a state, have concluded a sale agreement for property located in Poland in an ordinary form and have then sent this agreement to the Polish court to register the new owner.

The Polish registry court, after receiving such an agreement, will first request its sworn Polish translation (if the sworn translator was not Polish, for an apostilled sworn translation). The Court will then apply Polish law in determining the form of the sale agreement and will thus apply the Act on Polish Private International Law (1965). Under the Act, our sale agreement should be governed by Polish law, and for this reason its form should also conform with Polish law. The Polish law provides for an exception which gives the right to apply the form of the state where the agreement was concluded. The Court is then obliged to interpret (with assistance, if necessary, from experts from the Ministry of Justice) what the law of the state in which the sale agreement was concluded says about the form of legal acts transferring title to a real property. One must, however, always remember that the contents of the sale agreement and all its legal consequences would, in our case, be governed by Polish law.

Strict rules

Similarly, the form of the power of attorney required to enter into a sale agreement for real property located in Poland but granted outside of Poland is also controversial. Consequently, the form of the power of attorney, supported by the jurisprudence of the Supreme Court, should be governed by the law which applies to the form of the action to which the power of attorney authorizes - it is enough, however, to apply the form of the law of the state where it is granted.

However, few commentators believe that the form of such power of attorney should be governed by the law applicable to the form of the sale agreement. But then again, the lack of the possibility to enter into a notarial deed, under Polish law, would only require executing the power of attorney in the form analogous to the notarial deed form - in other words, the strictest form allowed under the given jurisdiction.

Jakub Kutzmann is an associate with Linklaters law firm. e-mail: jakub.kutzmann@linklaters.com