State Treasury liability for legal injury during the pandemic | In Principle

Declaration of a state of epidemiological threat and then a state of epidemic, and other legal acts, entails not only introduction of commands and prohibitions in everyday and professional life but also various types of restrictions on business operations. Doctors may be directed to work in hospitals for infectious diseases. Businesses are saddled with new restrictions causing them to generate significant losses. Can damages be sought from the State Treasury due to these restrictions?

Source of injury during a pandemic

The existing regulations in Poland provide for liability of state authorities for “legal injury,” i.e. lawful actions by bodies of state or local authority causing material (majątkowe) injury. This liability is exceptional in nature and in each case requires demonstration of a specific legal basis for the claim ensuring redress of injury in the specific situation.

In light of the existing pandemic, the original source of injury may be found in the imposition of numerous restrictions, under such acts as:

• Regulation of the Minister of Health of 13 March 2020 Declaring a State of Epidemiological Threat in the Territory of the Republic of Poland
• Regulation of the Council of Minister of 31 March 2020 Establishing Certain Restrictions, Commands and Prohibitions in Connection with the State of Epidemic
• The Anti-Crisis Act, as successively amended (Act on Special Solutions for Preventing, Countering and Combating COVID-19, Other Infectious Diseases, and Crisis Caused by Them of 2 March 2020).

This group of restrictions includes various bans and limitations on conducting economic activity (restrictions on the operation of shopping malls, closing of restaurants, salons and the like), directing doctors to work at hospitals for infectious diseases, or requiring certain expenditures by service firms (e.g. purchase of disinfectants).

Examples and types of injury during the pandemic

Despite the ongoing pandemic, the duty to redress injury under civil law has not changed its form, and covers redress of injury in two forms: actual injury (damnum emergens) and lost benefits (lucrum cessans).

Injury due to lost benefits is always hypothetical and generally occurs alongside actual loss. Finding such an injury requires a high likelihood of obtaining certain benefits, bordering on certainty, if it were not for the event causing the injury. In other words, a claim for lost benefits may be upheld only when the claimant provides to a degree bordering on certainty that if the event giving rise to a duty to pay damages had not occurred, it would have obtained the benefit (Supreme Court of Poland judgment of 22 March 2019, case no. IV CNP 43/17).

Thus shutting down of a certain service sector might potentially provide grounds for demanding redress of injury in the form of lost benefits (for example the lost profit on sale of clothing, or cancellation of an event at a restaurant that was planned two months earlier and originally was to occur the day after closing of restaurants).

In turn, an example of actual injury due to the restrictions would be the duty to provide customers with disposable gloves as a condition for admitting them to stores or service locations. Providing customers such gloves would constitute an expense that should fall within actual injury. Moreover, there are and undoubtedly will be more serious losses, connected for example with broken supply chains for goods essential for production (particularly for foods), but also cleaning products, clothing and so on. The mere statutory closing of many entities in the service industry entails real losses, e.g. due to the need to release employees or pay rent for occupied space. Costs such as disposal of spoiled products or storing of goods delivered under previous orders which now can no longer be sold would also count as actual injury.

Even if the source of the injury can be determined, and the existence and amount of the injury, currently it is difficult to identify clearly the actual (and not merely theoretical) legal basis for the Treasury’s liability in damages for injuries arising during the pandemic.

Currently, Treasury liability may be based solely on the general provisions of the Civil Code, i.e. Art. 417–417². A finding of liability on these legal grounds means that the Treasury would be liability for actual injury as well as lost benefits. Nonetheless, it should immediately be pointed out that Civil Code Art. 417 §§ 1 and 2 and Art. 417¹ §§ 2 and 3 should not be applicable because the statutory conditions for their application are not fulfilled, including the absence of the appropriate predicate, for example an oversight decision on unlawfulness.

What if the regulations are held to infringe the Constitution or an international treaty?

Art. 417¹ §1 would provide the basis for liability of the State Treasury if in the future the Constitutional Tribunal held that the Anti-Crisis Act or other normative act restricting the conduct of certain types of economic activity (e.g. hotels or salons) is unconstitutional. And there are many grounds for arguing this.

First, major commands and prohibitions (including shutting down of numerous sectors of the economy) were introduced based on executive regulations, even though Art. 31 of the Constitution expressly provides that this may occur solely on the basis of a statute. At the same time, under Art. 10(5) of the Anti-Crisis Act, a public treatment facility may seek redress of injury suffered as a result of imposition on it of duties or tasks connected with combating COVID-19. However, the Prime Minister may issue instructions connected with combating COVID-19 to legal persons or business entities which are not public treatment facilities. For such private entities, the act does not provide a route for asserting claims for damages. This appears to present a potential basis for finding this act to be unconstitutional because it violates principles of equal treatment.

However, until a finding of unconstitutionality is made by the Constitutional Tribunal, these regulations enjoy a presumption of constitutionality, but this does not exclude the practice of diffuse constitutional review by the regular courts, under certain states of facts. But in this respect some commentators take the view that a court hearing a case seeking redress of injury arising out of a normative act is not authorised to determine on its own that the act is unlawful (see A. Olejniczak in A. Kidyba (ed.), Kodeks cywilny (Civil Code) (2010), 3:373).

It should also be pointed out that some of the cases recognise the possibility of treating a judgment of the European Court of Human Rights as a predicate ruling under Civil Code Art. 417¹ §1 (Supreme Court judgment of 28 November 2008, case no. V CSK 271/08). Thus pursuing an individual complaint against Poland could open the way to obtaining damages for some of the injuries suffered as a result of restrictions imposed during the pandemic.

What about normative inaction?

Some hope for seeking damages from the Treasury in the current situation is offered by Civil Code Art. 417¹ §4, although this solution is debatable. This provision involves “normative inaction,” i.e. a situation where the legislature’s silence is covered by the regime of damages. Nonetheless, in this respect certain statutory conditions must be met, including an affirmative duty to issue a normative act.

First, the source of the injury is introduction of restrictions, and not failure to introduce a constitutional state of extraordinary measures, such as a state of natural disaster. It has been recognised by the Supreme Court of Poland that injury also means a detriment to legally protected goods, in which case it is an injury not just to deprive the owner of rights it holds, but also to deprive it of the possibility of exercising its entitlements (judgment of 8 July 2016, case no. I CSK 575/15). Because the right to damages for unlawful action of a public authority is a constitutional right, it could potentially constitute grounds for the source of injury. But as of now these are only theoretical considerations.

Second, although some commentators have argued recently that the government should some time ago have introduced one of the constitutional states of extraordinary measures (and at the moment we are in a quasi-extraordinary state), neither Art. 228 of the Constitution nor the Natural Disasters Act provides for such an obligation. The normative acts only give public authorities this possibility.

Third, in a potential trial for damages it would be essential to prove an adequate causal connection between the injury suffered and the failure to introduce a constitutional state of extraordinary measures. This could be particularly difficult because, as already mentioned, the injury is also occurring as a result of actions by the authorities based on other legal acts.

Can the principle of equity be applied?

It appears that under Civil Code Art. 417², redress of personal injury caused by exercise of public authority may be sought from the State Treasury when the person performing the task cannot be accused of acting unlawfully but it would be unjust for the consequences of the injury to be borne solely by the injured party. But this legal basis is founded on the principle of equity, which always requires a detailed analysis of the specific instance.

It may be assumed that such instances could include for example a situation where a doctor is sent to work in a hospital for infectious diseases to combat the coronavirus, where the doctor is then infected with COVID-19. A similar approach might be taken to a situation where, for example, a member of an examination committee or election worker is infected because sanitary procedures were not followed. Nonetheless, in such instances, it must be demonstrated with high probability that the infection occurred at that specific time and place. This is somewhat analogous to so-called hospital injuries.

However, not every infection will lead to liability in damages, as there must be personal injury, e.g. in the form of severe illness. Such injury would exist, for example, if infection led to serious health complications, such as damage to the heart muscle.

Summary

This discussion shows that under the current state of the law, hypothetically the State Treasury might be held liable in damages for injuries arising during the pandemic, without introduction of a constitutional state of extraordinary measures—whether the injuries were suffered by businesses or by individuals (for example persons exposed to an excessive risk of infection with the virus). Nonetheless, a finding of such liability will always require a careful analysis of the specific facts. It also seems that this unprecedented state of affairs calls for application of exceptional and generally complicated legal constructions.

This status would clearly change if one of the constitutional states of extraordinary measures were introduced. Introduction of such a state would mean, under the Extraordinary Damages Act (Act on Compensation for Material Losses Resulting from Limitation of the Freedoms and Rights of Persons and Citizens During a State of Extraordinary Measures of 22 November 2002) that anyone who suffered a material loss as a result of limitations on their human and civic rights during the state of extraordinary measures (i.e. “legal injuries”) would be entitled to pursue a claim for damages. However, this specific liability in damages covers only actual injury, i.e. excluding lost benefits.

We analyse in more detail the liability under the Extraordinary Damages Act in the article “Would a state of extraordinary measures change the issue of damages for businesses?”

Given the lack of legislative support on rules for redress of existing injuries, a great deal of responsibility will fall on the courts, which under the existing regulations will have to develop solutions for enforcing constitutional rights. This will take courage on the judges’ part, as on one hand they will have to decide disputes involving the State Treasury, which are generally difficult and complex, and the other hand they may have to issue judgments applying diffuse constitutional review.

Krzysztof Wiktor, attorney-at-law, Mateusz Kosiorowski, Government Claims practice, Wardyński & Partners