Today, the firm received the justification for the (not yet final) judgment of September 11, 2019, of the District Court for the Capital City of Warsaw, in which the Court confirmed that the beneficial owner who placed orders with a Polish lawyer (cooperating with a Cypriot lawyer) regarding the servicing of a company registered in the Republic of Cyprus is liable for those orders. On this basis, the Court awarded the claim in full, together with interest and costs of legal representation.
The outcome of this case was by no means obvious for the firm (and as we know, there are no obvious cases), and it will certainly attract the attention of many lawyers left with unpaid invoices for orders relating to companies in Cyprus (or other countries) that were widely used in Poland at the time, particularly in investment activities. The reality of business practice in Poland is unfortunately such that when the period when these companies had wide application ended, investors or entrepreneurs somehow lost interest and willingness to continue servicing them and liquidating them in accordance with local regulations. This lack of interest unfortunately also extended to numerous invoices issued by lawyers for the ongoing servicing of such companies, which many firms undoubtedly know well from their own experience.
In the above case, the fundamental dilemma, correctly resolved by the court, concerned who is liable for claims arising from legal and corporate services whose subject was a company based in Cyprus: the company itself, or the person who ordered its establishment and who placed the orders (the beneficial owner). The court resolved these doubts and found that the parties, i.e., the Polish lawyer and the defendant (the beneficial owner of the company), were bound by a legal relationship classified as a contract for the provision of services, to which the provisions on mandate apply accordingly (Art. 750 of the Civil Code).
I think this may be interesting news for many lawyers left with unpaid invoices for servicing companies based abroad, but also for beneficial owners of such companies who, in the heat of doing more business, “missed” settling these orders and properly closing, i.e., liquidating the company.
Paweł Osiński
Attorney
Expert in corporate law and international corporate law