A short but very important amendment to the Polish Code of Administrative Proceedings was passed and signed into law last month. It limits the time in which an administrative decision with very significant defects such as one issued with a gross violation of the law, can be sought to be annulled. This is especially important to people seeking the recovery of property nationalized by the communist authorities and to real estate investors, but its significance is much broader. The new provisions will enter into force on the 16th of September this year.
Current regulations on challenging administrative decisions
As a rule, any administrative decision may be appealed to a higher authority within 14 days of its delivery or announcement. However, if such decision is grossly flawed, it can be annulled even after the time limit for an appeal has expired. The grounds for annulment of a final administrative decision are:
1) violation of the regulations authorizing the administrative authority to issue a decision on
a particular matter;
2) issuance of a decision without a legal basis or in gross violation of the law;
3) issuance of a decision on a matter already resolved by a final decision;
4) ruling on the rights or obligations of a party that is not a participant in the proceedings
in which the decision is issued;
5) permanent unenforceability of the decision;
6) content of the decision that would cause its execution to lead to the commission of a criminal offence;
7) content causing the decision to be invalid by operation of law.
The possibility of annulment of a final decision at any time obviously creates uncertainty as to the future legal situation resulting from such a decision. This carries an additional risk for future legal transactions. To address that issue, the current regulations provide that a decision cannot be annulled due to the defects listed in points 1, 3, 4 and 7 above, if at least 10 years have elapsed from the date of service or announcement of such decision, or if the decision has already caused irreversible legal consequences. In these cases, the administrative authorities may not declare the annulment of the decision but – if the above defects indeed exist – should issue another decision confirming that the original decision did violate the law but cannot be annulled. Such confirmation allows a party harmed by a decision which cannot be annulled to claim compensation for damages caused by it.
It follows from the above that, when types of defects listed in points 2, 5 and 6 are concerned, a decision may be annulled at any time, regardless of how far in the past it was issued. Most importantly, this applies to perhaps the most common ground for annulment, i.e. the issuance of a decision in gross violation of the law. Several years ago, the Constitutional Tribunal held that this situation is inconsistent with the Polish Constitution, as it creates too much uncertainty to meet the standards of the rule of law.
The Polish Parliament recently decided to implement the directives derived from the Constitutional Tribunal’s verdict. The Parliament enacted that the 10 year period after which an administrative decision can no longer be annulled shall apply to all grounds for annulment, most importantly to decisions issued in gross violation of the law. This is especially important with regards to cases in which decisions nationalizing private property were issued by the communist authorities with clear disregard for the law then in force. After the new regulations enter into force, it will no longer be possible to annul these decisions.
The Polish legislator has introduced one more significant change. According to the currently enacted regulations, after the lapse of 30 years from the delivery or announcement of the decision, it will not be possible to initiate proceedings regarding defects that would constitute grounds for annulment. Therefore, it will no longer be possible to obtain confirmation that the original decision violated the law, such confirmation being a condition for obtaining compensation for damages incurred in connection with the issuance of an unlawful decision. Thus, this amendment essentially prevents the parties affected by the defective decisions issued more than 30 years ago from obtaining compensation.
The transitional provisions provide that pending annulment proceedings initiated more than 30 years after a decision subject to annulment was issued or announced shall be discontinued by operation of law.
The new law raises many controversies and doubts. In particular, the compatibility of the new regulations with the Polish Constitution has been questioned. The Constitutional Tribunal will most likely take a stand on this issue. Nevertheless, it will be a matter of at least several months.
On the one hand, the new regulations will negatively affect the interests of persons harmed by unlawful decisions of the administrative authorities. This is particularly true of people who, despite many years having passed since the fall of communism, have not received their property back nor been compensated for the nationalization of their property. On the other hand, it may be expected that the new regulations will bring more certainty and stability to legal situations created by or resulting from unlawful practices of the state. This will be of particular interest to the real estate market and investors, as many transactions in this market have taken place under the shadow of risks associated with the recovery of property by its previous owners.