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State Liability for Damage Caused by COVID-19 Restrictions under Polish Law

Published online by Cambridge University Press:  10 December 2021

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Summary

The COVID-19 crisis has marked nearly all spheres of our lives. To combat the spread of the virus, the Republic of Poland decided to impose severe restrictions as to the rights and freedoms of citizens and entities without applying the formal extraordinary measures as provided by the Constitution. Businesses have been significantly affected, but it is highly disputable whether they will be compensated by the State. Two compensation regimes are potentially applicable: the one provided for in the Polish Civil Code and the other regulated in the Extraordinary Measures Compensation Law. In both cases, the conditions for the compensation are ambiguous. Therefore, the aim of this contribution is to determine the main factual and regulatory issues which might inhibit compensation of COVID-19-related damage.

THE POLISH STATE ON THE VERGE OF THE PANDEMIC: MANAGING IMMINENT LOSSES

On 4 March 2020, the Polish minister of health informed that the first case of coronavirus in Poland had been diagnosed. Between then and 20 April 2020 several restrictions on conducting business activities as well as social life were imposed.

Restrictions with regard to the functioning of enterprises (e.g. shops, restaurants, hotels, gyms, hairdressers and cosmetics), as well as people’s mobility (e.g. border closure affecting tourist traffic) during the epidemic, caused and are still causing various types of damage. Companies’ revenues are reduced while the fixed costs (e.g. rent, employee remuneration, public law liabilities) remain unchanged. As a result, the latter tend either not to be paid, or to be paid with funds from sources atypical for the entrepreneur at hand (e.g. loan or credit). In addition, new expenditures, linked directly with the epidemic, emerge (for instance, purchase of disinfectants or costs of maintenance of unused machinery).

The government has declined to declare a state of natural disaster as provided in Article 228.1 of the Constitution. It was argued that the introduction of a state of natural disaster, would have catastrophic consequences for the State Treasury, because, following the Extraordinary Measures Compensation Law (hereinafter EMCL), the actual loss suffered as a result of limiting civil rights during this state is to be compensated. Also, the state of natural disaster forces the rescheduling of elections (Art 228.7 of the Constitution), whereas the presidential election was planned on 10 May 2020. Instead, the extraconstitutional “state of epidemic” was declared, and a series of special laws (so-called Anti-crisis Shields) and ordinances were adopted.

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Publisher: Intersentia
Print publication year: 2021

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