Failure to Pay an Invoice and Fraud in Poland

In business activities, it is common for one party to not fulfill its obligations, such as failing to pay an invoice or not delivering a service after the other party has paid a proforma invoice. This raises the question of whether a claim of fraud can be made against a dishonest Polish contractor who does not comply with the terms of the contract.

Fraud is defined under Polish law in Article 286 of the Penal Code. According to this provision, “Whoever, with the intent to gain financial benefit, leads another person to dispose of their or someone else’s property in an unfavorable manner by misleading them, exploiting their mistake, or exploiting their inability to properly understand the actions being undertaken, is subject to imprisonment for 6 months to 8 years. The same penalty applies to anyone who demands financial benefits in exchange for returning unlawfully taken property. In minor cases, the perpetrator may be fined, subject to restricted liberty, or imprisoned for up to 2 years.”

The protected legal interest under Article 286 regarding fraud is property. Failure to pay an invoice can constitute fraud if the victim was misled, resulting in an unfavorable disposal of their assets.

Doctrine commonly accepts that this provision also protects the integrity of financial transactions and freedom from fraudulent schemes regarding the disposal of property.

It is important to note the ruling of the Court of Appeal in Wrocław on March 9, 2016 (Case No. II AKa 41/16), which states that “Entering into a reciprocal agreement, where one party receives consideration but from the outset has no intention or possibility of fulfilling the reciprocal obligation within the agreed timeframe or intends to delay it indefinitely, constitutes fraudulent behavior penalized by Article 286 § 1 of the Penal Code.”

The Court of Appeal in Katowice also expressed a relevant view in its ruling on April 20, 2000 (Case No. II AKa 71/00), stating that “while it can be agreed that a party in a bilateral transaction is not obligated to disclose their company’s financial situation, this will not constitute fraud under Article 286 § 1 of the Penal Code only if, by adhering to standard business practices which the other party has a right to rely on, the entity can realistically fulfill its contractual obligations at the time of their inception without consciously causing financial harm to the creditor. Otherwise, concealing the actual financial state of the company creates a false impression of its ability to repay the debt within the agreed timeframe.”

In a similar vein, the Court of Appeal in Katowice, in its ruling on March 17, 2016 (Case No. II AKa 39/16), stated that knowingly failing to meet a payment deadline constitutes fraud under Article 286 § 1 of the Penal Code, as the victim, had they known the true intent of the debtor (i.e., the failure to pay for goods or services), would not have entered into the transaction, as it was solely unfavorable for them.
To assign blame for the crime under Article 286 § 1 of the Penal Code, it is necessary to prove that from the very beginning, the perpetrator intended to cause the victim to dispose of their property unfavorably (see: the ruling of the Court of Appeal in Gdańsk on August 24, 2016, Case No. II AKa 195/16). When determining the intent of a defendant accused of fraud, who denies committing the offense, it is essential to consider the circumstances from which conclusions regarding the feasibility of fulfilling the promises (obligations) made by the defendant to the party disposing of their property can be drawn, particularly their financial capabilities (especially a lack of funds), the scale of obligations, and prolonged difficulties in meeting current liabilities (see: the ruling of the Court of Appeal in Gdańsk on February 22, 2018, Case No. II AKa 22/18, LEX No. 2504707).

If a Polish contractor does not pay an invoice and avoids contact, the following actions are recommended:

1. Email Reminder
   The first step in resolving the situation amicably is to send a reminder to the contractor about the overdue payment, preferably by email or SMS. This provides evidence, in case no agreement is reached, that can later be presented to the court. Therefore, phone calls alone are not recommended. In the email, it is worth setting a new, final payment deadline and outlining potential consequences, such as the accrual of interest or compensation for delays in commercial transactions.
   If the contractor from Poland remains silent despite the email reminder, it may be worth involving a Polish attorney in the matter.
2. Legal Proceedings
   If law firm-level debt collection does not yield results, consider taking the case to court. It is worth noting that Poland has an electronic court that quickly resolves such matters, and handling cases before the electronic court also reduces legal costs.
   At this stage, assistance from a Polish attorney would include preparing a professional lawsuit in the court with jurisdiction over the contractor’s registered office or the place where the contract was performed.
   In clear-cut cases, it is possible to request the issuance of a payment order in summary or writ proceedings, a fast-track procedure that allows the court to order the debtor to pay without a full trial.
3. Bailiff Enforcement
   After obtaining a judgment or payment order from a Polish court, if the contractor still fails to pay, the case can be referred to a court bailiff. The bailiff will seize the debtor’s assets, such as bank accounts, movable property, or real estate, to enforce the debt, including the overdue invoice and court and attorney fees.
4. Filing a Criminal Complaint for Suspected Fraud in Poland
   If there are grounds to suspect that the contractor from Poland is deliberately avoiding payment and acting with fraudulent intent (e.g., entering into a contract without intending to fulfill it, regularly avoiding payments, or misleading about their financial situation), you can file a complaint for suspected fraud (Article 286 of the Penal Code). The complaint is filed with the prosecutor’s office or the police. If a criminal investigation is initiated, it may put pressure on the debtor to pay the debt.
5. Considering Mediation or Settlement in Poland
   In some cases, when maintaining business relations is important, it may be worth considering mediation in Poland. A settlement could be reached, such as splitting the payment into installments. However, it is essential to remember that the essence of a settlement is that both parties give up some of their rights. This may mean receiving less money overall, but it could be advantageous if you learn that the Polish contractor is insolvent and on the verge of bankruptcy.
6. Monitoring Polish Contractors Before Entering into Cooperation
   In the future, it is advisable to check contractors through business reports (including announcements published in the Court and Economic Monitor) or the National Debt Register, which can help avoid issues with a contractor’s solvency in Poland. Other valuable sources of information before entering into a partnership with a Polish company include the government list of entities registered for VAT, non-registered entities, and those removed and reinstated on the VAT register (the so-called White List of Taxpayers), as well as changes in the structure of a Polish business visible in company registers and economic records.
7. Quick Action and Hiring a Lawyer
   Time is crucial in cases involving unpaid invoices or undelivered services. The sooner legal action is taken, the greater the chances of recovering the debt, especially if the debtor is deliberately avoiding payment or in financial difficulty. Hiring a Polish lawyer specializing in pursuing claims against dishonest Polish companies ensures professional handling of the case and appropriate legal steps (payment demands, court actions, asset monitoring). A Polish lawyer can also speed up proceedings, avoid formal errors, and effectively negotiate with the debtor, significantly increasing the chances of quickly satisfying claims. In cases handled by SOS Legal Law Firm, a full report on the Polish contractor is prepared.

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