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Debt Recovery – Pursuing Claims Against Counterparties

Debt Recovery – Pursuing Claims Against Counterparties


Debt Recovery – Pursuing Claims Against Counterparties

Many entrepreneurs face the challenge of non-payment from counterparties, whether other businesses or consumers. This issue can significantly hinder the ability to meet one’s own financial obligations and may impede business growth.Many entrepreneurs face the challenge of non-payment from counterparties, whether other businesses or consumers. This issue can significantly hinder the ability to meet one’s own financial obligations and may impede business growth.

This article aims to outline and organize the available debt recovery measures for entrepreneurs dealing with unreliable counterparties—both in B2B (business-to-business) and B2C (business-to-consumer) relationships. It considers the differing legal frameworks, informational obligations, grounds for contractual liability, and the methods for pursuing claims—whether in the pre-litigation, judicial, enforcement, or insolvency stages.

In addition to provisions of the Civil Code, the Act on Counteracting Excessive Delays in Commercial Transactions, the Consumer Rights Act, and the Code of Civil Procedure, this article also takes into account relevant rulings of the Supreme Court and the Court of Justice of the European Union (CJEU), which are key to interpreting the rules governing business and consumer relations.

Specifics of B2B and B2C Relationships

Relations between entrepreneurs are governed by the principle of contractual freedom, allowing parties to flexibly shape their obligations, including payment terms, liability for delays, and procedures for payment reminders. Businesses may:

  • Set shorter payment deadlines (in compliance with the Act on Counteracting Delays),
  • Apply interest rates higher than the statutory rate, provided they do not breach principles of social equity,
  • Include clauses on interest notes and reimbursement of recovery costs,
  • Use retention of title clauses until full payment is made.

Consumer protection is significantly stronger. In dealings with consumers, businesses are subject to:

  • Extensive information duties,
  • Prohibition of abusive clauses,
  • Clear specification of price, payment terms, and method,
  • The principle of interpreting ambiguities in favor of the consumer (see Supreme Court ruling of 5 December 2019, case V CSK 196/18).

Pre-Litigation Stage – Debt Recovery Strategy

Payment Demand

A fundamental tool offering the debtor one final chance to voluntarily fulfill the obligation. It must be precise—containing debtor details, amount owed, legal basis, payment deadline, and a warning of legal action. In B2C cases, written notice with proof of delivery is advisable to avoid disputes over effectiveness.

Interest Charges

According to Art. 481 §§ 1–2 of the Civil Code, the creditor may claim statutory interest from the date of delay. For commercial transactions, statutory interest for commercial delays applies (updated biannually by the Ministry of Finance). It is also recommended to include the flat-rate €40 compensation under Art. 10 of the Act on Counteracting Excessive Delays.

€40 Compensation Invoice

This is a lump-sum reimbursement for debt recovery costs and does not require proof of incurred expenses. Case law (e.g., Court of Appeal in Poznań, case I ACa 1406/20) confirms the creditor's automatic entitlement to this compensation by law.

Judicial Stage – Methods of Pursuing Claims

Electronic Writ-of-Payment Proceedings (EPU)

A convenient and fast tool enabling creditors to obtain a payment order without a hearing. Drawbacks include a high rate of objections, resulting in the case being transferred to the local competent court.

Simplified / Order for Payment / Ordinary Proceedings

  • Simplified: For claims under PLN 20,000 (using a designated form),
  • Order for payment: For claims based on invoices, contracts, promissory notes, payment notes, or receipt acknowledgments,
  • Ordinary: Standard civil lawsuits.

According to Art. 485 § 1 of the Code of Civil Procedure, a payment order in order-for-payment proceedings can be issued based on official documents, promissory notes, or acknowledged invoices.

Evidence

It is crucial to secure evidence: invoices, delivery confirmations, business correspondence, reminders, and repayment schedules. Noting the absence of objections can also serve as debt acknowledgment (Art. 123 § 1 pt. 2 of the Civil Code).

Enforcement Stage and Alternative Security Measures

Court Enforcement Officer (Bailiff)

With a final and enforceable payment order (Art. 776 of the Code of Civil Procedure), enforcement can commence. Enforcement actions may cover bank accounts, movable property, salaries, and other receivables (e.g., rental income).

Security of Claims

Under Art. 730 § 1 of the Code of Civil Procedure, a creditor may request interim relief, especially where there is a risk that the debtor may dissipate assets. Security measures may include account freezes or bans on disposing of assets.

Additional Legal Measures – Bankruptcy, Criminal Fraud, Paulian Action

Filing for Bankruptcy (Art. 21 of the Bankruptcy Law)

In case of insolvency—defined as failure to pay obligations for over three months—a petition can be filed with the commercial court. This may lead to the appointment of a trustee and debt recovery through insolvency proceedings.

Paulian Action (Art. 527 of the Civil Code)

If a debtor transfers assets to third parties to the creditor’s detriment (e.g., donating real estate), the court may declare such transactions ineffective vis-à-vis the creditor. Requirements include intentional harm to the creditor and a benefit received by a third party (see Supreme Court ruling IV CSK 660/14).

Criminal Complaint (Art. 286 § 1 of the Penal Code)

When a debtor intentionally avoids payment by providing false information, entering fictitious contracts, or obtaining goods without the intent to pay, such actions may constitute fraud.

Summary and Practical Recommendations

Written contracts should precisely define deadlines, penalties, and recovery procedures. Use of security instruments (e.g., promissory notes, guarantees, mortgages) is strongly advised. Before contracting, verify the counterparty’s credit rating through databases such as KRD, BIG, or ERIF. Regular monitoring of receivables and early response to delays are essential.

Debt recovery in B2B and B2C relationships requires strategies tailored to the counterparty’s status and applicable legal framework. Entrepreneurs should act promptly and leverage all pre-litigation, judicial, enforcement, and security measures. Preventative measures—such as well-drafted contracts and risk assessment—are key.

Finally, engaging professional legal counsel (e.g., an attorney) can enhance the effectiveness of recovery efforts and help minimize costs. All actions should be properly documented and assessed for future legal implications.