Contractual penalty reduced by 80%. Success worth over PLN 33 million

Contractual penalty reduced by 80%. Success worth over PLN 33 million

Our Law Firm has successfully concluded a dispute conducted on behalf of a Client – a rail vehicle manufacturer limited liability company with its registered office in Poznań with Poland’s largest rolling stock purchaser for payment of more than PLN 30 million together with statutory interest for delay. Our Client was represented by Przemysław Przerywacz, attorney-at-law, who heads the Litigation & Disputes Department.

On 18 March 2021, the Court of Appeal in Warsaw announced a judgment in this case, which legally resolved the dispute in favour of our Client.

The dispute concerned a claim for remuneration for manufacturing railway wagons by the claimant for the benefit of the respondent, which was countered by the opponent with a plea of set off of receivables on account of a contractual penalty amounting to nearly PLN 30 million.

In the course of the proceedings, the Law Firm presented its position that the contractual penalty provided for a delay in manufacturing the ordered wagons was grossly excessive and demanded that it be reduced. It argued that the contractual penalty amounting to 20% of the contract value in the event of performance of the obligation, regardless of the circumstances, is grossly excessive. The Court of First Instance granted the claim in part by reducing the contractual penalty by 50%.

In his appeal, Przemysław Przerywacz, attorney-at-law, demanded further reduction of the contractual penalty by 80%. The appeal was also filed by the opponent of the lawsuit, who demanded that the right of contractual penalty be taken into account in its full amount.

The dispute was settled by the Court of Appeal in Warsaw in a judgment of 18 March 2021, ref. no.: VII AGa 2196/18. The Court fully shared the legal argumentation presented by the Przemysław Przerywacz and allowed the appeal filed by him in full and dismissed the appeal of the opposing party in full.

Ultimately, the contractual penalty was reduced by 80%. The total value of the claim together with interest, which was legally adjudicated in favour of the Law Firm’s Client, amounts to approximately PLN 33 million.

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