No guarantee, no deal?

The Sejm has taken a vote on the Construction Payment Guarantees Bill, a proposal which is compliant with EU law. If senators also vote in its favour and the President gives it his seal of approval, the law will soon provide construction firms with better protection against dishonest investors

The key principle of the proposal is to grant contractors the right to demand bank guarantees, or in some cases State Treasury guarantees, from investors as proof that the latter are in a position to meet payment deadlines for all completed work. If a contractor does not receive such a document within a certain period, they will have the right to cease construction and suffer no legal consequences.

Success in the Sejm
The resolution, fiercely supported by contractors, is to counteract payment hold ups which are one of the key problems in the business. The proposal was drafted by experts from a number of construction firms, the National Union of Construction Employers and the "Budowlani" trade union, and advocated before Parliament by MP Zbigniew Janowski, whose task was to convince not only MPs and senators but also members of the government. The battle was not a straightforward one however, as there were divergent opinions as to whether such clauses were needed in Polish law. Finally, at the 52nd sitting in July, the bill was put to a vote, and now it's waiting for passage through the senate.

Equal rights
"The current market is an investor's market, where the latter makes virtually all the decisions as to the terms of contracts for construction work, including payment regulations and deadlines. This particularly impedes smaller construction firms which can't afford to select their employers," says Janusz Zaleski of the National Union of Construction Employers. "The proposal aims at creating equal opportunities for all: contractors and investors. Our aim is to encourage partnership and not tension between these two groups."
The intentions behind the proposal seem reasonable, particularly in view of the fact that numerous companies have gone under as a result of payment delays, while others are on the brink of bankruptcy. Even when firms decide to sue, the process is so long drawn-out that once the case is settled, there is often no one from whom compensation can be claimed. Construction payment guarantees could indeed prevent such predicaments. Reality waits to bear this out.