Declaration of set-off vs. effective allegation of set-off during trial

The lack of clarity in this regard stems mainly from a fairly common mistake, namely the conflation of the concepts of a set-off declaration and a set-off defence.

A declaration of set-off versus a plea of set-off

The declaration of set-off referred to in Article 499 of the Civil Code is a substantive legal act which, where the conditions set out in Article 498(1) of the Civil Code are met, results in the corresponding cancellation of mutual claims, whereas a set-off defence is a procedural act consisting of a request to dismiss the claim in whole or in part, on the grounds that the claim covered by the statement of claim has been extinguished as a result of set-off. A declaration of set-off therefore constitutes the substantive legal basis for a set-off defence.

In view of the above, in order to effectively raise a defence of set-off during the proceedings, it is necessary to precede this step by making a declaration of set-off. And whilst the submission of such a set-off declaration in response to the statement of claim (or other procedural document) should be regarded as intuitive and effective where the parties are acting without legal representatives, where at least one of the parties has appointed a legal representative, this is, as a rule, ineffective. This is because, where the parties or a party have appointed legal representatives, the pleadings are served upon those representatives, which by its very nature prevents the effective submission of a set-off statement to the other party.

As the Supreme Court stated in the grounds for its judgment of 7 March 2013 in case no. II CSK 476/12, since a set-off declaration can only take effect upon reaching the addressee (Article 61 of the Civil Code), a set-off declaration contained in a response to a statement of claim and served only on the claimant’s representative, who is not authorised to accept it, cannot be regarded as effective.

Raising a set-off defence

Therefore, where the parties to the proceedings have appointed representatives, the raising of a set-off defence must be preceded by the submission of a set-off declaration, which shall be submitted by the party (either directly or through a representative holding an express power of attorney to make substantive legal declarations) directly to the other party. Only then is the set-off declaration effectively filed, which enables the relevant procedural plea to be raised during the proceedings.

If you are interested in the subject of set-off declarations, set-off pleas or other legal matters, please make use of the services of HWW Hewelt Wojnowski Lindner i Wspólnicy.

*The content of this article reflects solely the author’s views. The author accepts no liability for the factual content herein or for the manner in which the information contained therein is used.