Among the many legislative changes that have taken place this year, the changes introduced by the legislator in civil procedure deserve particular attention, as they will undoubtedly impact the real estate market. In today's article, we will focus on the regulations related to the introduction of the new separate consumer procedure.
Pursuant to Article 1 item 65 of the Act of 9 March 2023 amending the Code of Civil Procedure and certain other acts (the " Amendment " or " CPC "), a new separate procedure was introduced to the Code of Civil Procedure as of 1 July 2023 – i.e., proceedings involving consumers . As indicated by the drafter in the justification for the Amendment, the introduction of a new separate procedure is an expression of a response to the expectations of the consumer community regarding increased protection of their rights. Therefore, the new provisions are of significant importance from the perspective of development investments and the inherent developer-consumer relationships.
Defining the framework of this separate procedure is also important due to its mandatory nature, as the court cannot hear the case without following its provisions .
When will separate proceedings involving consumers apply?
The new regulations apply to both consumer claims against businesses and business claims against consumers, provided the consumer is a party to the proceedings . An exception will be made when the proceedings involve a consumer but are initiated by an entity acting in the public interest, such as a consumer ombudsman or a prosecutor. In such a situation, court proceedings will be conducted according to general principles.
Importantly, the legislator requires the application of a separate procedure regardless of the fact that the entrepreneur has ceased to conduct business activity .
It should also be emphasized that, under the new Article 458(14) § 4 of the Code of Civil Procedure, consumers may sue businesses by filing a lawsuit with the court having jurisdiction over their place of residence . Previously, consumers filing a lawsuit had to rely on the defendant's registered office or place of residence, which often required more effort. However, the change in the court's jurisdiction does not apply to situations in which the regulations provide for exclusive jurisdiction. In such cases, the lawsuit is filed with the court having jurisdiction according to the relevant rules of the Code of Civil Procedure.
Evidential preclusion
The procedural restrictions imposed on entrepreneurs under Article 458(15) of the Code of Civil Procedure are worth noting. An entrepreneur – regardless of whether he is the plaintiff or the defendant – should cite all allegations and evidence in the first procedural document .
The court will ignore late statements and evidence unless the entrepreneur substantiates that their submission was not possible or the need to submit specific statements and evidence arose at a later stage of the proceedings.
If the court accepts such a plausible explanation, the entrepreneur will be obligated to supplement the evidence within two weeks of the date on which the evidence or claim became possible or necessary. Similar restrictions do not apply to consumers – meaning they may submit evidence to support their claims until the conclusion of the proceedings.
A new development in the division of costs of proceedings
A significant change from the existing regulations is the ability to actually penalize businesses for failing to participate in an attempt to resolve a dispute voluntarily, or for insufficient involvement in such an attempt, which led to an unnecessary lawsuit being filed or an incorrect definition of the subject matter of the case – even if the business is the winning party . The sanction for such actions may be to charge the business with the costs of the proceedings, up to twice their amount , in situations where:
- the entrepreneur, before filing a lawsuit, abandoned a voluntary attempt to resolve the dispute (e.g. did not respond to a complaint submitted by the consumer),
- the entrepreneur avoided participating in an amicable attempt to resolve the dispute or participated in it in bad faith , thereby contributing to the unnecessary filing of a lawsuit or the incorrect definition of the subject matter of the case.
The decision to charge the entrepreneur with such costs (even if the entrepreneur wins the case) remains at the discretion of the court, regardless of whether the consumer requests it.
In the context of real estate development projects, the above changes deserve special attention. In practice, delays in the transfer of ownership or delivery of real estate are common, and buyers' related claims for contractual penalties or compensation are often filed. Complaints from buyers filed under their warranty for physical defects in the property are also common. In these situations, increased caution should be exercised and consumer complaints should be responded to diligently to avoid the risk of the court finding in a potential lawsuit that the developer, as an entrepreneur—and therefore the stronger party—failed to attempt voluntary dispute resolution or participated in it in bad faith (for example, by dismissing a consumer complaint blindly, without having its merits examined by appropriate experts), thus contributing to an unnecessary lawsuit.
In summary , from July 1, 2023, all cases involving a consumer and a business will have to be heard in the separate proceedings described today. Given these changes, businesses should not only thoroughly consider all consumer complaints but also, at the very outset of any proceedings, submit to the court all evidence supporting their claims.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of October 17, 2023
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