I am not a political scientist, nor a political commentator. I don’t wish to debate the appropriateness of the reforms being made to the Constitutional Tribunal and the Supreme Court by the ruling party, Prawo i Sprawiedliwość (“PiS”). That said, it is undeniable these reforms have altered the previously understood status quo.
In essence, PiS has increased the role of Parliament and the Minister of Justice in the oversight and discipline of judges, and lessened the role of the judiciary in its own self-scrutiny. These reforms have resulted in an ongoing tit-for-tat battle between the Court of Justice of the European Union (the “ECJ”), the European Commission, the Polish Supreme Court and PiS.
The European Commission has brought various proceedings against Poland in the ECJ in response to these reforms. As a consequence, the ECJ has issued orders against the Supreme Court. Nonetheless, PiS has continued passing legislation tightening the judicial rules of conduct.
Finally, on 7 October 2021, Poland’s Constitutional Tribunal ruled that some provisions of European Union (“EU”) treaties and EU court rulings clashed with the Constitution of Poland, asserting that EU institutions were acting beyond the scope of their competencies. This has effectively rejected the notion of primacy of EU law in Poland.
Primacy of EU law has been the status quo since the 1960s. Poland is now in a conflict of laws and political battle – and it will take time to resolve.
While investing in a jurisdiction encountering legal instability is not ideal, this is not terminal for litigation finance and Polish practitioners should not feel that they will be met with automatic rejections. Investors might approach cases that address (or have the potential to address) issues of EU law with more trepidation until the conflict of laws is resolved. But more standard and already well-ventilated disputes pose less risk and are more likely to be funded.
Therefore, the specific and likely causes of action need to be carefully considered by anyone bringing a proposal to a litigation funder. How settled and ventilated are the arguments? Are there likely to be any issues of European law which can be raised by either the claimant or defendant?
Along with duration, these questions will be critical to a funder’s decision – so it would be wise to address these points sooner rather than later.
This blog is the second addition to our Investing in Poland series. The first blog, ‘A dream come true, or just a pain?’. Next, we will look at some case studies where litigation funding will apply.