Another litigation success on the construction market

In the course of the proceedings for compensation for alleged defects in the construction design made by one of our Clients, BSJP law firm have obtained – what is regarded as an unusual event in Polish courts – an injunction consisting in blocking the opposing party from using a bank guarantee in the entire course of the proceedings. As a consequence, our lawyers have secured a much stronger negotiating position for the Client in possible future settlement proceedings.

Our Client, as a contractor of the design documentation, was obliged to provide the Ordering Party with a performance bond in the form of a bank guarantee.

In relation to the alleged culpable delay of our Client in the performance of the subject matter of the agreement, the Ordering Party charged them with a contractual penalty for the delay, at the same time threatening that in the event of failure to pay the contractual penalty voluntarily, it will take advantage of the bank guarantee provided as a security. Due to the nature of a bank guarantee and the fact that the bank-the guarantor verifies, for the purpose of the guarantee payment, only the formal requirements of the request, our Client was threatened with unjustified payment from the submitted guarantee.

In view of the real threat of unjustified use of the bank guarantee submitted by the Ordering Party, even before the Ordering Party submitted its request for payment from the guarantee, we filed a motion with the Court requesting that our Client be granted security for its claim for establishing that the Ordering Party – for different reasons – was not authorised to make payment from the bank submitted guarantee.

Despite the fact that the Court of First Instance dismissed our motion, the Court examining the complaint agreed with our argument and prohibited the litigation the other party in an act in law from using the bank guarantee until the proceedings initiated by our Client have ended with final and binding effect.

More importantly, the complaint against the decision to dismiss the motion for injunction was examined by the same Court, but in an expanded panel of judges.

This success was achieved by the following lawyers of BSJP law firm: Piotr Jurczak, Partner and Head of our Katowice-based office, Karolina Pyzio, (Associate, attorney-at-law) and Jakub Gąsior (Associate, attorney-at-law).

In addition, it is worth to emphasise that the litigation practice at BSJP is annually recommended in The Legal 500 EMEA.