New rules on remuneration for construction work subcontractors

Poland: The amendments form part of a broader reform to facilitate creditors in recovering their claims.

Much of the work on major construction projects involves subcontractors. In practice, a significant proportion of legal disputes concerns payments by the investor to the contractor and its subcontractors.

The new rules aim to eliminate issues and concerns as to investors’ liability for payment.

The amended rules introduce the investor’s implied consent for the contractor to hire a subcontractor. An investor who does not want the subcontractor to perform work for it must object in writing within 30 days.

In contrast to the previous provisions, an investor must file an objection in writing with both the contractor and the subcontractor.

The investor and the contractor may detail the subcontractor’s construction work (specific work or tasks) in the contract. This formulation would amount to an expression of the investor’s consent and would result in its joint and several liability.

Joint and several liability allows a subcontractor to direct all or part of its claim against the investor and contractor either together or separately, so that satisfaction of the subcontractor’s claim by either debtor frees the remaining one.

Subcontractors are now able to notify the investor in writing of the detailed scope of work commissioned to them by the contractor.

Importantly, it is not necessary to present the investor with the contract concluded with the subcontractor (or a draft thereof).

The amendments, which come into force on 1 June 2017, are intended to change the current situation related to non-payment of invoices in the construction industry.

As analysis shows, approx. 10% of invoices in Poland are subject to a delay of at least 90 days, which is the third worst result in EU. As many as 13 out of 61 listed companies operating in the construction industry appear in the register of insolvent debtors. Their unpaid debts amount to a total of approx. PLN 4 billion, which represents 46% of the total debt of all listed companies.

In addition, the average duration of business-related court cases in 2016 was approximately 15 months; in the district courts more than 40% of business cases lasted more than 12 months, with approx. 25% lasting longer than 2 years, and as many as 10% of cases lasting more than 3 years.


Source: Act amending some acts in order to facilitate recovery of claims dated 7 April 2017

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