Interest Expires Quicker - International Law Office

On January 26 2005 the extended seven-member panel of the Supreme Court adopted a resolution relating to the term of prescription applicable to interest (Case III CZP 42/04).

For many years, it was admissible in practice that a right to recover interest expires three years following the due date, irrespective of whether the main receivable is still enforceable. Consequently, in the case of shorter terms of prescription, it was possible to seek payment of interest even if the right to claim for the main payment had expired. Although in this ruling the Supreme Court confirmed that the right to recover interest is barred by statute within three years of the due date, it ruled that such recovery is no longer possible if the main receivable is barred.

This ruling will affect many areas of business. For example, under the Polish Civil Code, in the case of sales by an entrepreneur in the normal course of business, the term of prescription applicable to the entrepreneur's receivables under such sale is two years following the due date.

Polish law does not adhere to the precedent rule, and rulings of the Supreme Court are binding only in the cases in which they are issued. In practice, however, these rulings - especially those adopted by the extended panel of the Supreme Court - are treated by courts and practitioners as a source for interpretation of law. Therefore, it is likely that this Supreme Court ruling will be applied in business practice soon.

For further information on this topic please contact Tomasz Dabrowski at SALANS D Oleszczuk Kancelaria Prawnicza Spk by telephone (+48 22 520 6300) or by fax (+48 22 520 6400) or by email (tdabrowski@salans.com).