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Can a thing in dispute be disposed of during trial?

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​​​​​​​​​​​​​​​dr Anastazja Niedzielska-Pitera and dr Kamil Wielgus

15 October 2024


Pursuant to the Polish Code of Civil Procedure (CCP), initiation of court proceedings has certain legal effects. 

Disposal of things in disp​ute


According to Article 192(3) CCP, once the defendant has been served with a statement of claim, the disposal of an (individualised) thing or right which is in dispute between the parties does not affect further course of the trial. Sometimes the acquirer of a thing may substitute for the disposing party (litigant) with the consent of the opposing party. At the same time, the disposal of a thing or right (e.g. a claim protected under Paulian action) neither interrupts nor formally impedes the proceedings. A thing may be disposed of at both first and second instance proceedings, as well as during cassation proceedings. This means that, from the perspective of substantive law, the party disposing of a thing is no longer its owner but remains a party to the lawsuit without losing its legal standing. There are exceptions to this rule in case law, for example, where the right of possession is protected and, debatably, in the case of disposal of a thing the sale of which is covered by a preliminary agreement.

However, a ruling issued in a case, e.g. a judgment, is generally binding upon both the original litigants (including the party disposing of the thing) and also upon the party acquiring the thing. This extended application of the judgment is intended to protect the litigation opponent of the party disposing of the thing. Otherwise, for example, the defendant could sell the thing many times to different purchasers and the trial itself could not proceed due to the constant change of the defendant. 

Right in dispu​​​te


In some cases it may be unclear what a right in dispute is. This type of case was heard by the Court of Appeal in Cracow (file no. I ACa 1343/21). 

The lawsuit was for payment of the amount due under a bank loan agreement, with the bank acting as claimant and the borrower as defendant. In the first-instance court, the creditor changed through assignment – a fund (implicitly – an investment fund) became a party to the agreement, substituting for the bank. The borrower considered this unacceptable and appealed against the District Court's judgment. 

The Court of Appeal in Cracow disagreed with the defendant's argument that on the date of the judgment the borrower was no longer a debtor of the bank but of the fund. Pursuant to Article 192(3) CCP, this was irrelevant – the disposed of right in dispute was a claim for payment and not necessarily the funds (specified by type) that was the subject of that claim. The claim was assigned effectively and the debtor was informed about it. This means that the party to the agreement changed and the bank was no longer in a legal relationship with the borrower from the point of view of substantive law (bank loan agreement). At the same time, the new creditor, i.e. the fund, was not obliged to substitute for the assignor, i.e. the bank, in the proceedings. The bank could continue its proceedings against the borrower despite the disposal of its claim to the fund. The fund could join the proceedings, but initially this did not happen as the defendant did not consent and subsequently objected against the fund joining the case as an accessory intervener. If the fund did not join the proceedings, the court's judgment would also be binding upon it as the acquirer of the things or rights in dispute (extended validity of the judgment). Nonetheless, the borrower's objection was subsequently dismissed and the fund was granted the status of an accessory intervener. In the course of the trial, the fund's sta​nding to bring proceedings was combined with the substantive basis for its legal standing, i.e. the claim under the loan agreement. At the same time, the litigation effectively proceeded and it was concluded for the bank, that is an entity which, despite no longer being a party to the loan agreement, maintained its standing as claimant in the litigation.

Su​mmary


The judgment described above fits within the trend of Supreme Court judgments (e.g. file no. V CSK 617/16 or II CSK 306/11) concerning the disposal of things disputed in a lawsuit. According to the case law, the stability of the litigation parties is a key element of the litigation. Although there is an effective legal succession under substantive law, it does not automatically trigger a procedural transformation before court. ​

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