Lockdown compensation for companies - will it be paid?

Co-Size-Changing

Many entrepreneurs from various sectors of the economy have suffered enormous losses due to the government's compulsory lockdown. The reduction of these restrictions is expected at the end of the first quarter. The first class action has already been filed against the State Treasury for the losses caused by the business ban. In response to these events, a bill was issued providing for compensation for companies. Read the article and find out if entrepreneurs have a chance of compensation for lockdown.

Is lockdown compensation expected?

Claims for losses incurred from the forced lockdown may take a long time, because Prime Minister Mateusz Morawiecki has filed a motion for unconstitutional provisions regarding the court's power to adjudicate on the constitutionality of an executive act. By approximation, it refers to Art. 417 § 1 of the Civil Code, according to which "for damage caused by an unlawful act or omission in the exercise of public authority is the responsibility of the State Treasury or a local government unit or other legal person exercising this power under the law". According to the Prime Minister, only the Constitutional Tribunal should be able to declare an executive act unconstitutional. This is the first objection to this provision, but may delay any compensation payments pending a ruling on the matter.

Lockdown compensation - what the lawsuits are about

The current ban on the restart of certain industries has been extended until January 31.

The lawsuits are to consider closing companies illegal, thanks to which companies will be able to apply for compensation. After a positive consideration of the lawsuit, entrepreneurs will be able to submit applications for compensation with an indication of the amount of the loss suffered, and it will be their responsibility to prove it.

Compensation for lockdown, state of emergency and court judgments

Despite the possibility of introducing a state of emergency, which could have happened pursuant to Art. 232 of the Constitution, the government did not take this step, so entrepreneurs cannot claim compensation. Judgments of administrative courts clearly state that any restrictions should be introduced by means of a law, not a regulation.

On October 27, 2020, the Provincial Administrative Court (WSA) in Opole in a non-final judgment (II SA / Op 219/20) stated that to "legal regulations concerning limitations of human and citizen's rights and freedoms, all constitutional and legislative rules apply, except for regulations applicable to states of emergency in Chapter XI of the Constitution of the Republic of Poland. Therefore, in order to introduce limitations on human freedoms and rights, extraordinary circumstances justifying specific legal solutions cannot be invoked, and such circumstances cannot justify far-reaching restrictions on civil liberties introduced in the form of regulations ”. “(...) restriction of the freedom of economic activity is permitted only by statute and only for the sake of important public interest”.

An equivalent judgment was issued by the Provincial Administrative Court in Warsaw on November 26, 2020 (VIII SA / Wa 491/20), which states that: "should be issued on the basis of a clear and detailed authorization of the act to the extent specified in the authorization, and it must also be issued within the limits of the authorization granted by the legislator, in order to implement the act. At the same time, a regulation may not be in conflict with the norms of the Constitution, the legislative act on the basis of which it was issued, as well as with all applicable legislative acts that directly regulate the matters being the subject of the regulation. This means that it is forbidden to issue ordinances without statutory authorization, which are not acts implementing the act and which are contrary to the Constitution and applicable statutes. Violation of at least one of these conditions may result in the allegation of non-compliance of the ordinance with the Act.”

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Compensation for lockdown - bill

As a result of recent events and confirmation of the next lockdown, entrepreneurs submitted a bill allowing for the payment of compensation at the level that would be available in the event of recognition by the government of a state of natural disaster or a state of emergency.

The bill specifies:

  1. Anyone who suffered a property loss as a result of restriction of human and civil liberties and rights during the epidemic due to SARS-CoV-2 virus infections is entitled to a compensation claim.

  2. The compensation referred to in paragraph 1. 1, includes compensation for property loss, without the benefits that the aggrieved party could have achieved had the loss not occurred.

  3. The compensation is reduced by the equivalent of the aid provided to the victim under the regulations adopted in connection with the spread of SARS-CoV-2 virus.”.

According to the assumptions, the application for compensation would be directed to the voivode, and the estimated time for the decision would be three months. On the other hand, the maximum time limit for the payment of compensation would be one month.

Lockdown compensation - summary

Judgments of administrative courts do not have to comply with judgments of civil courts, and in matters relating to entrepreneurs, the decisive sentence is the civil court. Currently, there is no clear response from the government to the bill regarding compensation for lockdown for entrepreneurs, which is supported by the opposition.