On 1 July 2023 important changes to the Polish civil procedure rules entered into force which included also some modifications to freezing injunctions. A freezing injunction (“zabezpieczenie roszczenia”) is an interim court order which prevents a party from disposing of or dealing with its assets. A freezing injunction is therefore an essential tool for those looking to protect assets to ensure those assets are available to satisfy a court verdict which will be obtained later after the trial. Under Polish law, in all civil cases to be examined either by a state court or by arbitration tribunal, each party may demand that the court issues a freezing injunction to secure claims of the applicant (Article 730 of the Civil Procedure Code).
The most significant changes in the area of freezing injunctions which entered into force on 1 July 2023 concern the IP rights cases which covers trademarks, industrial designs, copyrights as well as unfair competition issues.
Changes regarding freezing injunctions in relation the IP rights
Up until recently, there was no deadline for filing a motion to obtain a freezing injunction. According to the new rules, in cases regarding IP rights (other than purely financial claims related to IP matters) the applicant has only 6 month for filing the motion. The period of 6 months runs from the moment the applicant became aware of IP rights infringements.
Moreover, in matters regarding IP rights, the court may grant injunction only after hearing the other side. This is one of the most significant changes. Up until recently, the judges used to grant freezing injunctions
ex parte, so without the presence of the defendant. This allowed for the strategy based on the element of surprise because the defendant used to learn about the injunction being issued only after his bank account has been seized.
Changes regarding the appeals
Other changes which entered into force on 1 July 2013 refer mainly to appeals. Up until recently, the appeals of the decision of the lower court were decided by the other judges of this court. According to the new rules, all appeals will be decided by the court of the second instance.
No changes have been introduced to the grounds of granting a freezing injunction.
How to obtain a freezing injuction?
The court has a wide discretion to grant a freezing injunction, and will do so only when it considers that it is necessary. The following conditions must be satisfied:
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- the applicant must demonstrate to the court that he has a good arguable case - although the applicant does not need to show that the case will definitely succeed, he needs to show that his claim is justified and highly probable and
- there must be a real risk of the disposal or use of the assets.
When making its decision the court will analyse the evidence and the arguments raised by the applicant (the potential defendant is not aware about the application, so he will not be able to make any statement at this stage). The court will take all relevant factors into account and will weigh the damage caused to the subject of the injunction against the benefit to be gained by the applicant.
The application for the freezing injunction must be supported by documents and other evidence showing a real risk that assets will be dissipated if the order is not given. Typically, the applicant should present evidence showing that financial situation of the defendant is deteriorating. It could be financial statements showing losses or at least a drop in revenues on a year-to-year basis. The evidence must be accurate and provide all relevant documentation and information.
As the potential defendant is not aware about the application, the applicant must disclose all relevant material to the court including material which may be unfavourable to him. This includes matters raised by the other party in correspondence and any relevant defenses. The duty of full and frank disclosure is ongoing. Any incorrect information or omission which is subsequently discovered must be corrected immediately, even subsequent to the granting of freezing injunction.
Failing to comply with the obligation of full and frank disclosure may result in the court setting aside the freezing injunction.
Advantages of obtaining the freezing injunction
Obtaining the freezing injunction puts the applicant in a very favourable position. The tactical advantages for the applicant are as follows:
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- it preserves assets for enforcement purposes;
- it assists in asset tracing claims by forcing the party subject to the injunction to disclose the details of its assets;
- it is a forecast of the future judgement which may lead to faster settlement of an underlying claim; and
- the injunction process may lead to a resolution of the underlying dispute without the need for a trial, saving time and costs.
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