Inter absentes Contracts – Evolution in Polish Conflict-of-Laws Rules

https://doi.org/10.63189/FTJR4221

Cross-border contractual activity involving parties situated in different jurisdictions at the time of contract formation has become commonplace. Owing to advances in information technology, contemporary e-commerce is largely predicated upon such transactions. Nonetheless, certain spheres of economic and social activity, as well as particular categories of goods, remain excluded from the possibility of inter absentes contracting. States frequently restrict this modality with respect to goods or services intrinsically linked to their territory or legal system. Polish conflict-of-laws legislation – specifically, the Private International Law Act of 2011^[1] – expressly regulates the form of inter absentes juridical acts in order to pursue this objective. The rule is relatively straightforward, but merits brief exposition in comparison with prior legislative frameworks. It is also necessary to consider whether the current regulation adequately addresses the challenges posed by an increasingly digital and globalized commercial environment.

The present Polish Private International Law Act constitutes the third codification of conflict-of-laws rules in Polish legal history. The first act^[2] entered into force in 1926 and remained applicable until 1965. The second act^[3] governed from 1965 until it was superseded on 16 May 2011 by the current legislation.

The interwar statute addressed inter absentes transactions through the prism of the place where the juridical act was deemed to have been executed. Both substantive and formal legal consequences were assessed under the legal order determined by this connecting factor.^[4] It should be emphasized, however, that during the lifetime of the 1926 Act (i.e., until the entry into force of the 1965 Act), such transactions were extremely rare – limited in practice to commercial contracts for goods concluded in writing through the exchange of documents by postal correspondence. Moreover, prior to World War II, cross-border trade followed traditional patterns, while in the post-war period international trade in goods was essentially monopolized by the socialist state. This environment was hardly conducive to the broader application of the aforementioned concept.^[5]

The 1965 Act was enacted entirely under communist conditions, when international travel was effectively prohibited by the totalitarian state and trade in goods and services remained almost exclusively under state control.

Following the political transformation of 1989, however, the 1965 Act began to operate in an entirely new legal and economic reality. Paradoxically, its provisions proved to be relatively liberal and well suited to the economic freedoms characteristic of countries undergoing systemic transformation. The Act itself contained no explicit reference to inter absentes transactions (likely due to the limited practical significance of this category under the 1926 Act). Nevertheless, the concept appeared in judicial practice, as discussed below. On the one hand, this omission could be interpreted as tacit recognition of the admissibility of such transactions. Given the Act’s liberal approach to the form of dispositive and obligatory acts concerning real property, it was possible to infer substantial formal freedom with respect to inter absentes acts, irrespective of the type or subject matter of the contract.

Yet, while the broad interpretive stance adopted under the 1965 Act opened the Polish legal order to foreign-form acts – including even those effecting transfers of real property ownership – inter absentes acts presented a specific challenge. The Supreme Court, in a liberal line of jurisprudence initiated by rulings in 1998^[6] and 2004,^[7] confirmed the full applicability of Article 12 of the 1965 Private International Law Act to matters of form, including dispositive acts concerning real property.^[8] Under Article 12, a juridical act performed abroad was deemed formally valid if it complied either with the law governing the transaction (lex causae) or with the law of the place where the act was performed (lex loci actus). The Act established no exceptions to this principle. Consequently, in light of the cited case law,^[9] acts transferring ownership of real property located in Poland, executed for instance before a United States notary public, were formally effective in Poland, notwithstanding the notarial deed requirement imposed by Polish domestic law.

With regard to inter absentes acts specifically, the application of the 1965 Act initially appeared permissive. In a 1979 decision,^[10] the Supreme Court, despite the absence of express statutory regulation, recognized the presumption of their formal and legal validity.^[11] In Polish notarial practice of the 1990s, such arrangements became relatively common. A typical case involved a foreign notary public (e.g., in the United States) certifying the signature on an offer to donate real estate situated in Poland, which was subsequently accepted by the donee before a Polish civil-law notary in the form of a notarial deed. This practice persisted until it began to be curtailed by judicial rulings issued from 2008 onward (discussed below).

The Supreme Court’s 2003 ruling, which effectively opened the Polish legal order to foreign acts transferring ownership of real property situated in Poland, was met with considerable criticism in Polish public opinion. As early as 2005,^[12] the Civil Law Codification Commission at the Ministry of Justice commenced work on a new Private International Law Act. The climate of the public debate also contributed to a shift in the Supreme Court’s jurisprudential orientation. Nevertheless, given the unequivocal wording of Article 12 of the 1965 Act, it remained difficult to alter the judicial line regarding transfers of ownership of real estate located in Poland until the statute itself was amended. By contrast, inter absentes transactions – unregulated in the 1965 Act – quickly became subject to restrictive reinterpretation in case law.

In 2008, the Supreme Court issued a decision (I CSK 153/08^[13]) that struck at the core of Article 12 of the 1965 Act, effectively precluding reliance on it to validate the formal effectiveness of a foreign transaction where the parties were situated in different jurisdictions at the moment of contract formation. The ruling was particularly severe: the Court went far beyond the factual circumstances of the case, foreclosing the effectiveness of a wide range of such acts. In reality, the factual matrix of I CSK 153/08 did not significantly differ from those underpinning the earlier liberal jurisprudence of the 1970s onward. The fact that the case concerned real property itself did not warrant such a radical departure from established precedent. The source of this change should thus be seen more generally in the judiciary’s retreat from the liberal interpretation of Article 12 of the 1965 Act, in anticipation of legislative reform already in preparation at that time.

The facts of I CSK 153/08 were as follows: the donor executed a declaration – an offer to donate Polish real estate – without complying with the notarial deed form required under Article 890 § 1 of the Civil Code. While abroad, in the Kingdom of Sweden, he made this declaration in writing in accordance with Swedish law, specifically § 29 of the Land Code (SFS 1970 No. 994). The donee accepted the offer in Poland but likewise failed to comply with the Polish notarial deed requirement, merely signing the Swedish form confirming the donor’s declaration. The Supreme Court held that the transaction’s performance across different jurisdictions rendered the application of Article 12 of the 1965 Act by the lower courts erroneously. The Court reasoned:

In the case law concerning the interpretation of Article 12 of the 1965 Act […] the principle of the supplementary effect of the rule providing for the jurisdiction of the lex loci actus does not raise any doubts. However, the literature has pointed out that this mechanism is not suitable for contracts concluded inter absentes, where the parties to the contract – as in the present case – were located in different countries at the time of its conclusion. In such cases, it is difficult to determine the place of conclusion of the contract. Locating the contract in one and the same territory would require recourse to national law (domestic or foreign), which would be an artificial solution, lacking the qualities that a conflict-of-laws rule should possess.

However, the alleged incompatibility between Article 12 of the 1965 Act and the specific nature of inter absentestransactions (i.e., the so-called “artificiality” of the choice of connecting factor identified by the Court) should not have constituted the basis for the Supreme Court’s decision in the case at hand. The proper basis for judicial assessment ought to have been the donee’s acceptance of the donation in a form that disregarded the requirements applicable under the law of the place where the donee’s declaration of intent was made. Regardless of the determination of the legal character of the offer, the most coherent conclusion would have been, in principle, to regard it as sufficient that each declaration separately comply with the formal requirements of the law of the place where it was made (the so-called theory of separation of statutes – Spaltungstheorie).^[14] Adopting this solution would not only have enabled the Court to avoid reliance on the alleged artificiality of the choice of applicable law, but also to avert the demonstrably negative effects of the judgment on subsequent jurisprudence in wholly different factual circumstances concerning inter absentes acts. Unfortunately, the Supreme Court failed to adopt this interpretation.

Irrespective of its reasoning, the 2008 ruling effectively eliminated from Polish practice, in the years 2008–2011, inter absentes transactions concerning real estate executed by parties situated in different jurisdictions. In May 2011, a new Private International Law Act entered into force, introducing more restrictive provisions on the form of juridical acts. With respect to inter absentes transactions involving transfers of real property ownership, it effectively codified the consequences of the 2008 ruling. Although the 2011 Act expressly introduced a provision concerning the form of inter absentes transactions (Article 25(1)(3), which provides: “If the contract is being concluded between persons who, at the time of declaring their intentions to be bound, are present in different countries, it shall be sufficient to comply with the form prescribed by the law of either of these countries”), paragraph 2 of that Article carves out significant exceptions. It excludes from this liberal rule transactions relating to real property and legal acts whose subject matter is the establishment, merger, division, transformation, or dissolution of a legal person or an organizational unit without legal personality.^[15] In these cases, only the form required by the lex causae applies. Consequently, the formal validity of cross-border inter absentes acts is definitively excluded if all component parts of the act fail to meet the formal requirements of the law governing the transaction itself. In practical terms, this means that dispositions of real property located in Poland cannot be effected pursuant to foreign law where the form does not conform to the Polish notarial deed requirement. This applies both to the dispositive acts as a whole and to their constituent “parts” in the case of inter absentes transactions.

In summary, it should be emphasized that the 2011 amendment is generally regarded as a positive development from the perspective of legal certainty and transactional security. The replacement of Article 12 of the 1965 Act with Article 25 of the 2011 Act effectively terminated practices of financial abuse involving money laundering through the acquisition of Polish real estate abroad, as well as the unlawful or criminal appropriation of immovable property with unsettled ownership status. The inconvenience to private parties arising from the formal inadmissibility of inter absentestransactions concerning real estate is minimal. It should be recalled that the 2011 Act did not alter the regime governing powers of attorney. Such instruments remain valid if executed in accordance with the law of the place of their execution (ex lege loci actus). In practice, for example, instead of executing an offer to transfer ownership of real estate, a donor or seller in the United States will now issue a power of attorney authorizing such a transaction. The authorized act is then carried out entirely within the Polish legal system. At the same time – and contrary to the implications of the Supreme Court’s 2008 ruling – the provisions of Article 25 of the 2011 Act impose no formal barrier to other inter absentestransactions, provided they do not involve dispositions of real property or the legal existence of legal persons. In this respect, the rules set forth in Article 25(1)(3) of the 2011 Act are distinctly liberal, facilitating cross-border legal transactions and ensuring the formal effectiveness of such acts, which increasingly constitute a routine element of contemporary social and economic activity.

^[1] Act of 4 February 2011 on Private International Law, consolidated text: Journal of Laws (the official source of law for promulgation of Polish laws) 2023, item 503.

^[2] Act of 2 August 1926 on the Law Applicable to Private International Relations (Private International Law), Journal of Laws 1926, No. 101, item 581. It should also be noted that in the interwar period (and later, until the 1950s), five, and subsequently four, civil law systems coexisted in Poland as a legacy of the partitions of 1772–1918: in Galicia and Cieszyn Silesia the Austrian system applied; in Spisz and Orava, the Hungarian system (replaced during the interwar period by the Austrian system); in Upper Silesia and Greater Poland, the German system; in the central territories, the French system (in fact a Franco-Russian variant, originating in the Napoleonic era); and in the eastern territories, the Russian system. Unification was gradual – some areas of civil law were harmonized during the interwar period, with the communist regime completing the process in the 1950s. It was also necessary to adopt a conflict-of-laws act for internal legal orders, namely the Act on the Law Applicable to Internal Private Relations (Inter-district Private Law), Journal of Laws 1926, No. 101, item 580.

^[3] Act of 12 November 1965 on Private International Law, Journal of Laws 1965, No. 46, item 290.

^[4] The Polish conflict-of-laws rules adopted at the inter-district and international levels in the interwar period did not contain specific provisions on the form of inter absentes transactions but regulated the applicable law in such cases: “a contract between absent parties shall be deemed to have been concluded at the place where the offeror received the acceptance of the offer” (Article 9(1)(3) of the 1926 Private International Law Act; Article 11(1)(3) of the Inter-district Law). In the absence of other provisions, these rules could be extended to form, in conjunction with the general provisions on form (Articles 5–6, sentence 3 of the 1926 Private International Law Act; Articles 7–8(3) of the Inter-district Law). In practice, the effect of this interpretation was straightforward: dispositive and obligatory acts concerning real estate were subject to the lex causaeas to form, even if concluded inter absentes. The interpretation of interwar regulations regarding other juridical acts was not restrictive; the omission of explicit rules did not generate case law eliminating the formal effectiveness of such acts (Przybyłowski, 1935, p. 134).

^[5] It is noteworthy that during the entire validity of the 1926 conflict-of-laws act there appears to have been no judicial decision in which a Polish court directly applied the provisions concerning inter absentes acts.

^[6] Supreme Court (Poland), judgment of 20 January 1998, I CKN 345/97, OSNC 1998, No. 9, item 137.

^[7] Supreme Court (Poland), judgment of 8 January 2004, I CK 39/03, OSNC 2005, No. 2, item 33.

^[8] Under the 1926 Act, acts disposing of or obligating the transfer of ownership of real estate located in Poland were formally ineffective if not performed in Poland. Similarly, the 2011 Act (discussed below) excluded the possibility of applying the lex loci actus to transactions concerning real estate. Paradoxically, the regulatory regimes of the free-market periods (the interwar era and post-2011) were, and remain, considerably more restrictive than the liberal framework introduced at the height of communism in 1965. This paradox is explicable: a totalitarian regime that restricts citizens’ foreign contacts has little need to reinforce such restrictions through private international law, whereas political liberalization and the intensification of cross-border transactions necessitate protective mechanisms for socially sensitive areas such as real estate.

^[9] The concept of mandatory provisions applicable to the form of real estate transactions did not gain traction in Polish jurisprudence. Some scholars argued for this solution (Mataczyński, 2005, passim; Mataczyński, 2007, pp. 31–38), consistent with the exclusive jurisdiction of Polish courts in real estate matters. However, the prevailing case law disregarded this interpretation.

^[10] Supreme Court (Poland), decision of 21 May 1979, I CR 98/79.

^[11] The operative passage of the 1979 ruling stated: “For unilateral contracts, due to their content (a unilateral obligation to perform), the applicable law is that of the obligor, and in the case of a donation, the applicable law is that of the donor. The essence of a donation agreement is the donor’s commitment to provide a gratuitous service at their own expense, not the recipient’s acceptance of that service. Therefore, according to this law (the law of the essential service), the determination is made as to in which country the donation agreement was concluded.” It is difficult to assume that these conclusions would not also apply to the law governing form.

^[12] In public opinion, transactions executed abroad that circumvented the Polish civil-law notary were often (correctly) associated with tax fraud, money laundering, or the unlawful acquisition of real estate that ought to have reverted to the State Treasury.

^[13] Supreme Court (Poland), decision of 17 October 2008, I CSK 153/08; see also Czubik, 2010, pp. 107–115.

^[14] See Górecki, 2007, pp. 203–214.

^[15] Article 25(1)–(2) of the 2011 Private International Law Act provides: “1. The form of a legal transaction shall be governed by the law applicable to that transaction. However, it shall suffice to comply with the form prescribed by the law of the country in which the transaction is performed. If the contract is concluded by persons who are in different countries at the time of making their declarations of intent, it is sufficient to comply with the form prescribed for that act by the law of one of those countries. 2. The second and third sentences of paragraph 1 shall not apply to regulations concerning real estate and to legal acts whose subject matter is the creation, merger, division, transformation, or dissolution of a legal person or an organizational unit without legal personality.”

References

Czubik, P. (2010) “Glosa do orzeczenia Sądu Najwyższego z 17 października 2008 r. (I CSK 153/08) dotyczącego skuteczności co do formy umowy darowizny dokonanej inter absentes, w przypadku gdy strony umowy przebywają na obszarze różnych jurysdykcji państwowych,” Gentes et Nationes, 1, pp. 107–115.

Górecki, J. (2007) Forma umów obligacyjnych i rzeczowych w prawie prywatnym międzynarodowym. Katowice: Wydawnictwo Uniwersytetu Śląskiego.

Mataczyński, M. (2005) Przepisy wymuszające swoje zastosowanie w prawie prywatnym międzynarodowym. Kraków: Kantor Wydawniczy Zakamycze.

Mataczyński, M. (2007) “Wpływ polskich przepisów wymuszających swoje zastosowanie na formę umowy przenoszącej własność nieruchomości położonych na terytorium Polski” in Klejment, Z. (ed.) Zagwarantowanie bezpieczeństwa obrotu nieruchomościami oraz ochrona wpływów budżetowych poprzez ustanowienie wyłączności polskiego notariusza. Kraków: Krajowa Rada Notarialna.

Przybyłowski, K. (1935) Prawo prywatne międzynarodowe – część ogólna. Lviv: Księgarnia Gubrynowicza i Syna.