The Supreme Court dismissed an appeal by Poland’s roads authority against approval of an examinership scheme for SIAC Construction Limited and related companies. The authority argued that provisions excluding payment of penalties, interest and damages, and limiting subrogation claims, unfairly prejudiced it as a creditor. The Court’s decision, announced on 24 February 2014, was explained in a judgment delivered on 8 April.
The dispute arose from a €365 million contract for a 35-kilometre section of the A4 motorway and bridges between Tarnów and Rzeszów. SIAC Construction was part of a consortium awarded the contract by the Polish roads authority, GDDKiA. SIAC’s independent accountant reported that difficulties with the Polish project were a major contributor to the group’s financial problems. SIAC said it had claims against the authority worth about €113 million; the claims were contested and had not been assessed.
The authority said it had paid subcontractors about €20.8 million and claimed a right to recover those sums by subrogation. It also asserted a contractual penalty and interest claim of about €49.5 million. The Supreme Court stressed that neither it nor the High Court had evidence establishing the nature or amount of the authority’s claims. It considered the claims as presented in the authority’s submissions, without deciding their merits.
The scheme provided for unsecured creditors to receive 5% of agreed claims, or 5% of unagreed claims after determination. It excluded payment of interest, penalties and damages, subject to a limited exception, and purported to waive creditors’ subrogation rights against the companies. The authority sought changes to allow its claims to proceed for payment and to recover sums paid to subcontractors. It had intervened late in the High Court process and had not submitted a creditor claim there.
The Court said unfair prejudice must be assessed in the round, including comparison with likely treatment in liquidation and with the treatment of other creditors. As an unsecured creditor, the authority would receive nothing in a liquidation, the Court said. The Court also accepted that the scheme did not prevent the authority from raising claims by way of defence, set-off or counterclaim in the Polish proceedings, to the extent Polish law allowed. It had no information about the relevant Polish law.
Taking account of that preserved ability to raise the claims in Poland, the Court concluded that any disadvantage from exclusion from scheme payments was largely or wholly counterbalanced. It held that the authority had not shown unfair prejudice and dismissed the appeal. The judgment addressed only the two challenged scheme provisions and did not determine the underlying Polish claims.