The Supreme Court derived its considerations directly from the nature of the declaration of set-off and the procedural charge of set-off, and from a purposive interpretation of Article 91 of the CCP. If the entitled party did not file a statement of deduction before the initiation of court proceedings, raising a charge of deduction under Article 203¹ of the CCP required, in order to be effective, either the filing of a statement of deduction and the subsequent raising of a charge, or the combination of both actions in a single statement. In the previous line of jurisprudence, it was accepted that if such a statement was to be made on behalf of the entitled party by his/her legal representative, he/she should have a separate power of attorney for the disposition of the claim in addition to the legal power of attorney. Failure to meet the substantive requirement resulted in the ineffectiveness of the procedural plea raised.
However, this was not a strict approach. In its judgment of February 4, 2004, Case No. I CK 181/03, the Supreme Court pointed out that in the case of a party’s representation by an attorney at law, the assumption of intentional action by the principal to win the trial allows one to assume that the scope of the power also included the party’s submission of a specific declaration of intent on its behalf, if this is necessary to defend its rights in the trial. However, this applied only to the attorney of the party making the statement of deduction. In a judgment of October 12, 2007, ref: V CSK 171/07, the Supreme Court indicated that the purposive interpretation presented in the aforementioned judgment of February 4, 2004 does not contradict the view expressed in the judgment of October 20, 2004 only when it concerns actions directed at winning a lawsuit. Thus, it does not include the power to accept a statement of set-off when, from a procedural point of view, this would be disadvantageous to the represented party. A possible declaration of set-off should therefore be addressed directly to the party or the person authorized to receive material legal statements on its behalf.
There is also a second, less popular conception, according to which both the statement of intent and and the demand for dismissal of the claim following a set-off co-create a single action in which the procedural and material elements are combined. Assuming that, according to the July 4, 2019 amendment, raising a claim of set-off is a procedural action in which the material and procedural elements are closely linked, and the material statement is an element of the facts forming the basis of the procedural claim, leads to the conclusion that a power of attorney is sufficient to raise a formative claim (see: A. Torbus [in:] Code of Civil Procedure. Court costs in civil cases. Investigation of claims in group proceedings. Transitional provisions. Commentary to the amendments. Volume I and II, ed. T. Zembrzuski, Warsaw 2020, art. 203(1).)
The Supreme Court decided to remove the doubts arising from the divergent concepts. In fact, on July 2, 2024, it leaned over the legal issue presented by the Court of Appeals in Katowice in a decision of December 15, 2023 (file number: V AGa 278/22). The issue presented was as follows:
For the effectiveness of raising a charge of set-off under Article 203¹ of the Civil Procedure Code and the receipt of such a statement by the plaintiff’s attorney, is a power of attorney for litigation sufficient, or should a separate power of attorney for substantive actions be granted for this purpose?
In a resolution adopted (Ref: III CZP 2/24), the Supreme Court indicated that a power of attorney is sufficient for the effectiveness of raising a charge of deduction under Article 203¹ of the CCP and receipt of such a statement.
The content of the resolution is an obvious departure from the established jurisprudential practice of the Supreme Court and the common courts, and admits the rationale of the hitherto minority view of the close connection of the substantive and procedural elements within the plea of set-off under Article 203¹ of the CCP, and thus also the expansion of the powers of the trial attorney.
The resolution adopted by the Supreme Court has significant practical significance. The filing of a charge of set-off has been facilitated, which will have a not inconsiderable impact on, among other things, franking cases and doubts about the application of the law of retention.
How the Supreme Court justified the extension of the attorney’s powers
What raised the most doubt was extending the power of attorney for litigation to the receipt of a set-off statement as well, because the Supreme Court had until then been restrained in granting such powers. In the justification of the resolution the adjudicating panel rejected the previous teleological interpretation on two grounds. First, it assumes a priori that the two parties to the proceedings are treated unequally. Second, it is hard to find any rationality in granting a given power to the attorney of a defendant raising a set-off defence while at the same time making it impossible to exercise that power because of the scope of the opposing party’s power of attorney. The Supreme Court also noted that the scope of a power of attorney for litigation should not be selectively extended by implication, which follows from the wording of Article 91 of the Code of Civil Procedure and from the form in which a power of attorney is granted under Article 89 § 1 and 2 of that Code.
The Supreme Court therefore derived the attorney’s power not from the presumed will of the principal, but from the very construction of the set-off defence newly introduced into the Code of Civil Procedure, read together with the scope of a power of attorney for litigation (Article 91 points 1 and 4), assessed against the criteria of Article 92. The decisive argument was that under the opposite approach the defence under Article 203¹ of the Code of Civil Procedure could become a dead letter, since the legislature would grant a party a means of defence and at the same time force it to look for the underlying construction in another act.
The Supreme Court also recalled that the procedural defence and the substantive set-off remain separate. A situation is possible in which the defence turns out to be procedurally ineffective even though the set-off statement was made effectively and produced its substantive effects.
Frequently asked questions
Is a procedural power of attorney sufficient to raise a set-off defense in civil proceedings?
Yes, according to the Supreme Court resolution of July 2, 2024, a procedural power of attorney is sufficient for the effectiveness of raising a set-off defense and its receipt by the party’s attorney. It is no longer required to grant a separate power of attorney for performing substantive law acts. This is a significant facilitation in conducting civil cases.
What changes does the new Supreme Court case law introduce regarding procedural attorneys?
The Supreme Court has expanded the powers of procedural attorneys, recognizing that their authorization also covers substantive law acts necessary to raise a set-off defense. The previous practice required a separate power of attorney to dispose of claims, which was considered a condition for the effectiveness of the defense. Currently, procedural and substantive elements are treated as closely related.
What areas of legal practice will be affected by the Supreme Court resolution of July 2024?
The resolution has significant practical importance, facilitating the raising of set-off defenses in many civil cases. This change will have a considerable impact, among others, on Swiss franc cases and on resolving doubts regarding the application of the right of retention. These processes will become simpler to conduct for attorneys representing parties.
Did the previous Supreme Court case law require a separate power of attorney for set-off?
Yes, in the previous line of case law it was accepted that a procedural attorney must be authorized by a separate power of attorney to dispose of claims for the raising of a set-off defense to be effective. Failure to meet this requirement resulted in the ineffectiveness of such procedural defense. The new resolution represents a clear departure from this rigorous approach.
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His practice covers commercial and civil law, with particular emphasis on conducting court litigation. He has many years of experience handling civil, family and commercial law cases, including corporate disputes. He has managed B2B debt-recovery services for companies in the automotive and e-commerce sectors. He developed his experience working at renowned Warsaw law firms.
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