The Supreme Court consider the cassation appeal of White & Case clients

Claims for determination that there is no right to demand payment under a bank guarantee can be raised against the beneficiary.

On February 23, 2017, the Supreme Court ruled in favor of the cassation appeal submitted by White & Case on behalf of a Polish and Spanish consortium led by Mostostal Warszawa S.A. In this precedent-setting case, the Supreme Court determined who the defendant must be in cases regarding the abuse of a bank guarantee.

The consortium wanted a ruling confirming that the beneficiary had no right to enforce a bank guarantee securing the proper performance of an agreement for upgrading a section of a national road into an express road.

The Supreme Court agreed with the consortium, holding that, contrary to the rulings of some appellate courts, in disputes on the abuse of a bank guarantee the scope of standing is determined by the contents of the requests in a statement of claim. This means that, if the claims are properly worded, a claim for a determination that there is no right to demand payment from a bank guarantee does not have to be raised against the bank that issued the guarantee. It may be sufficient to sue the guarantee beneficiary (in this case, the party that contracted the construction work).

The ruling of the Supreme Court is crucial for other cases concerning bank and insurance guarantees since it resolves a legal issue that until now was unclear to practitioners and led to conflicting case decisions.

The White & Case team representing the consortium included Michał Subocz, the partner in charge of the Disputes Resolution practice, Piotr Bytnerowicz, counsel, and associates Jakub Wołkowicz and Emanuel Wanat.

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