The Polish legal system allows foreign companies to conduct their business activity in Poland both directly (to a limited extent), as well as through a branch (oddział) and representative office (przedstawicielstwo). A branch is considered to be an organisational structure (without its own legal capacity or personality) providing a framework for doing business in the full range for that company, whereas a representative office can only carry out advertising and promotional activities.
THE STATUTORY VAGUENESS
Under Article 87 of the Act on the Freedom of Economic Activity of 2 July 2004 (consolidated text Dz.U. 2013, item 672 as amended – the “Act”), when establishing a branch, it is obligatory to indicate “a person authorised in the branch to represent the foreign company.” This description is naturally too terse to sufficiently clarify the legal status and array of competence of the representative in question. There are several constructions possible in this respect, among them in particular considering the person as a “normal” proxy, a commercial proxy (prokurent), or denying them any capacity in the legal sphere (and, consequently, limiting them only to factual dealings). The entire issue has not been addressed so far directly by the Supreme Court, whereas the answers provided by lower courts, administrative bodies and the doctrine are rather varied and far from exhaustive.
THE RESOLUTION OF THE SUPREME COURT
A significant step forward in this respect was made recently in a resolution of the Supreme Court of 26 February 2014 (III CZP 103/13). Responding to a preliminary question from the court of second instance (containing a request for an interpretative pattern of Article 87 the Act), the Supreme Court stated that the person authorised by virtue of this provision may act directly in civil proceedings on behalf of the foreign company and, consequently, establish a representative ad litem. This statement tracks a clear path for foreign business entities, confirming that individuals delegated to take care of their Polish branches are entitled to defend their interests also through litigation.
FURTHER OBSERVATIONS
The importance of the resolution does not cease, however, at this point. In the grounds of the resolution, the Supreme Court explicitly accentuated the autonomous character of the representative specified in Article 87 of the Act. Its properties – among them particularly the scope of the power of attorney – should be marked out in view of the structure and functions of the regulations, without any prerequisites based upon classical features of types of representation under private law. In other words, as the Court pointed out, the range of power of a representative should allow him or her to carry out the complex matters of the branch independently and as fully as possible. The duties in this respect comprise various elements, both factual and legal in nature (including acting in civil proceedings).
Apart from the requirements of the smooth and effective operation of foreign companies, the Court also emphasised the public dimension of the broad scope of competence of the representative. From the perspective of other market actors, it is of vital importance to identify the person capable of acting within the branch, and delimiting their scope of competence. According to the Court, a particularly favourable person from this point of view is the representative operating under Article 87 of the Act – in part due to the official character of his position, being revealed publicly in the National Court Register. Finally, the Court also addressed a more specific issue arising under Article 87 of the Act – the possibility to establish more than one representative in the meaning of this provision. Accepting this solution, the Court indicated that the minimum condition of commencing business activity in the form of a branch in Poland is indicating one representative; however, the statute does not set out any upper limit. Furthermore, as the law does not specify otherwise, in the opinion of the Court each of the representatives established in parallel is capable of acting on an independent basis in the full scope of competence granted by Article 87.
About the author
