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Oil & Gas Laws and Regulations in Poland

Oil & Gas Laws and Regulations in Poland

Oil & Gas Comparative Guide: 2022
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Contributed by CMS.

1. SUMMARY 

Following the shale gas rush in the early 2010s and the subsequent withdrawal of all the major players and of a number of independent players (a result of disappointing results of development efforts and a deteriorated legislative environment), Poland has experienced stabilization in the upstream sector over the last few years. A major part of hydrocarbon exploration (or combined exploration and production licenses) is held by the Polish state-controlled champions PGNiG and Orlen, and the inflow of new players has been limited over the last few years. The existing licenses are located predominantly in the south-eastern and north-western parts of the country, both of which have the longest continuous history of hydrocarbon discoveries, most of which are gas discoveries. The Government offers a relatively small number of exploration areas in annual bidding rounds, and the interest among potential bidders is limited.

Another important trend has been the consistent development of gas facilities enabling imports from directions alternative to Russian sources, involving the construction and extension of the first Polish LNG terminal in Swinoujscie, and of the Baltic Pipe, a submarine connector from Poland to Denmark (with onshore connections to the grid) and then to Norwegian fields (to be commissioned in 2022/23). This trend is to continue, as the Government has announced its plans to install an FSRU near Gdansk. These construction projects are facilitated by tailored legislation, aiming at faster and easier permitting and access rights procedures.

With regard to legislation, there is a clear trend over the last few years towards gradual relaxation of certain stringent licensing rules in the upstream, which were originally enacted in 2014/15. Another visible development is the facilitation and financial support addressed to biogas and to electricity generated therefrom. While at present biogas is typically burnt to produce electricity and heat on the location of the biogas plant, some significant market players, such as Orlen and PGNiG, have announced plans to produce significant quantities of grid-quality biogas and inject it into the national grid within the next few years. 

2. OVERVIEW OF THE COUNTRY’S OIL & GAS SECTOR 

2.1. Legal framework – a brief outline of your jurisdiction’s oil & gas sector

Poland does not have a set of legislative acts related specifically to hydrocarbons. Upstream activity and the construction of underground storage facilities are regulated primarily by the Geological and Mining Law dated June 9, 2011, (as amended), while transportation, surface storage, and trading of hydrocarbons are covered by the Energy Law of April 10, 1997, (as amended). In addition to that, each of the activities related to hydrocarbons is subject to numerous laws and regulations regarding HSE, employment, immigration, surface rights, taxes, social security, corporate governance, etc.

Hydrocarbon production licensing is based on the royalty system; however, any exploration and/or production concession is composed of two elements: (i) the license, which is a permit issued pursuant to an administrative procedure; and (ii) the mining usufruct agreement, which is a contract between the operator and the Polish state (represented by the licensing authority), as the owner of mineral deposits and other parts of the subsurface. Both instruments are, in practice, executed concurrently. The existence of mining usufruct is dependent on the validity and existence of the license. 

Upstream licensing, including licensing of underground storage of gas and liquids, is entrusted to the Minister in charge of environmental matters. There is legislation in the pipeline to shift this responsibility to the Chief Geologist of Poland, reporting directly to the Prime Minister (currently, the Chief Geologist reports to the Minister of the Climate and Environment).

Licensing of gas transmission, distribution, import and trading, production, import and trading in liquid fuels (including LPG), storage of gas and liquid fuels (other than with respect to the aspects governed by the Geological and Mining Law), production, trading, and regasification of LNG, are handled by the energy regulator called the President of the Energy Regulatory Authority. 

Gas traders are obliged to sell, through a gas exchange (currently, there is only one licensed gas exchange in Poland), at least 55% of the annual quantity of gas that each of them enters into the Polish gas system (both produced domestically, imported or originating from LNG regasification). In practice, due to the market share threshold, this requirement is only applicable to the PGNiG group.

Gas importers and traders are required to keep reserves corresponding to their sales over a 30-day period. This requirement is perceived as a major obstacle to the development of the gas market in Poland.

The production of fuels and gas, as well as gas trading, distribution, and storage, are heavily dominated by state-controlled champions: PKN Orlen, Grupa Lotos (which are expected to merge in 2022), and PGNiG (which also has plans to merge with PKN Orlen). 

2.2. Domestic oil & gas production and imports/exports 

Poland consumes about 20bcm (billion cubic meters) of natural gas annually, of which approximately 4bcm (expressed in high-methane equivalent) is produced domestically. Gas imports arrive primarily (about 60%) from Russia under the Yamal pipeline long-term contract (to expire by the end of 2022 and unlikely to be extended or replaced) and via smaller pipeline connections between Poland and Germany, the Czech Republic, and Ukraine. Less than the equivalent of 4 billion cubic meters is imported as LNG, from Qatar, the USA, and other countries. This picture may change significantly following the completion of the Baltic Pipe connector to Denmark, capable of transporting 10 billion cubic meters a year, at the turn of 2022/23, and the increase of the LNG terminal’s capacity to 8 billion cubic meters a year, scheduled for completion in 2023.

More than 70% of the natural gas produced in Poland represents so-called nitrified (low-methane) gas, which is in part de-nitrified in two cryogenic plants operated by PGNiG, in part blended with imported high-methane gas, and in part transported by a separate gas grid located in western Poland and sold to local end-users, including cogeneration and heat plants, as well as households.  

Out of approximately 27 million tonnes of crude oil a year processed in Poland, less than 4% is produced domestically – the balance being imported from Russia (about 70%), Saudi Arabia, Nigeria, and other countries. Imports arrive in Poland via the Druzhba pipeline and by sea terminals.

Gas storage facilities, with a total capacity of about 3 billion cubic meters (only 15% of annual gas consumption), are operated by PGNiG and are considered insufficient, especially in view of the forecasted 50% or higher growth of gas consumption over the next 10 years.

2.3. Foreign investment and participation 

There are no restrictions on foreign participation in the exploration and production of hydrocarbons. However, a holder of an exploration and/or production license must be pre-qualified based on national security considerations. The pre-qualification process is conducted by the licensing authority in cooperation with the Internal Security Agency (Agencja Bezpieczenstwa Wewnetrznego) and the Intelligence Agency (Agencja Wywiadu), and it involves submitting documentation and information regarding the corporate status and structure, including direct and top-tier shareholders, directors and managers, as well as a key business and financing relations. The review is aimed at determining whether the proposed license holder is controlled (in a broad sense) by parties originating from outside the EU, EFTA, or NATO countries (third countries). If such a corporate control is identified, this does not necessarily preclude pre-qualification, but the authority must be convinced that such control does not pose any threat to national security. 

Companies that have passed the pre-qualification phase are entered into a public register. Pre-qualification is valid for five years; however, a pre-qualified party is obliged to notify the authority of any change of the key data that was contained in the original submission for pre-qualification, and the authority may require the pre-qualification process to be repeated, as a result of such change.  

The only exception to the generally free access of foreign investors to the Polish oil and gas sector is gas transmission (transportation by a high-pressure system). The national operator of the transmission system must be a company wholly owned by the Polish state.  

2.4. Protection of investment 

Poland belongs to the European Union and is subject to the relevant European regulations regarding freedom of business and protection of investment. Poland is a party to the Energy Charter Treaty of 1994. In addition, Poland has entered into numerous bilateral investment treaties (BIT) governing the promotion and protection of foreign investment. Recently, these treaties have been invoked in a few disputes, resolved by arbitration, between the Government and foreign investors. 

Undoubtedly, the existence of those international treaties affects both legislation and regulatory practice. Any new legislation that is proposed is subject to a compulsory review for conformity with EU regulations. As a rule, the state administration avoids decisions and measures that may be regarded as discriminatory against foreign investors or as affecting their earned rights.     

3. EXPLORATION OF OIL & GAS 

3.1. Granting of oil & gas exploration rights 

Exploration rights (concessions) are granted in the form of licenses for the exploration and production of oil and gas deposits, for periods no shorter than 10 years and no longer than 30 years, where the exploration phase should be no longer than five years (however, both the exploration and production periods are extendable, subject to certain conditions). As mentioned in Section 2.1., the license is always combined with a mining usufruct agreement, which is in practice a standard and non-negotiable document. The substance of a mining usufruct is effectively limited to: (i) the establishment of mining usufruct as a title (similar to a lease) to the mineral deposits and the underground space, as required to access the deposits; and (ii) a specification of the mining usufruct fees.

Hydrocarbon licenses are issued pursuant to two alternative procedures: (i) an open tender initiated by the licensing authority; or (ii) a competitive procedure initiated at the company’s request, called “open door.” In the first case, the licensing authority publishes on its web site, by June 30, a list and a map of the areas that it intends to put up to tender in the following calendar year, and then announces the dates and other detailed rules of the tender, in the EU Official Journal with respect to one or more of such areas. There is no minimum number of offers required for proceeding with the tender.

In the “open door” procedure, the interested party files an application for a specified area (other than an area already listed among the areas intended to be subject to tender), following which the licensing authority publishes a notice of receipt of the application, in the EU Official Journal, and invites the submission of competing applications with a specified period, no shorter than 90 days. If there are competing applications, the authority conducts its review and assessment and grants the license to the highest scoring applicant. If no competing applications are filed, the authority proceeds with the first application.

In the case of both procedures, competing offers are evaluated based on the following objective and non-discriminatory criteria: (i) experience in hydrocarbon exploration or production, with a good track record of safe and environmentally responsible conduct; (ii) technical capability; (iii) financial capability sufficient to complete the declared work program; (iv) the proposed technologies for geological and mining work; (v) the scope and timing of the proposed geological or mining work; (vi) the scope and timing of the proposed sampling (including coring) operations. 

The licensing authority for hydrocarbons is the minister in charge of environmental matters (currently, the Minister of the Climate and Environment). The other authorities involved in the licensing process include: (i) for onshore areas: the mayors of the municipalities located within the concession area; (ii) for offshore areas: the President of the Higher Mining Authority; the Minister of Defence and the minister in charge of fisheries (currently, the Minister of Agriculture). Each of the said authorities is asked for its opinion within the scope of its competencies. The opinion should be issued within 14 days (silence is deemed to be a favorable opinion), which is non-binding on the licensing authority. 

3.2. Foreign exploration 

As mentioned in Section 2.3., foreign investors can obtain rights in relation to minerals, in principle on an equal basis with domestic investors, subject to passing the pre-qualification process. In particular, companies owned by foreign investors may participate in tenders for licenses or in “open door” proceedings. Shares in companies holding licenses can be purchased by a foreign investor, with the condition that if the acquisition is to result in a change of control, a new pre-qualification of the company is required, and the continued possession of the license is contingent on passing the pre-qualification.  

Licenses are transferable upon the holder’s request. The transferee must be a pre-qualified party, though the authority may nevertheless refuse to transfer the license if the transfer were to be contrary to the public interest, in particular with respect to energy security, transparency of energy markets, protection of mineral deposits, or environmental protection.

It is also possible for a license holder (or a prospective holder) to invite a partner or partners acquiring an interest in the license and mining usufruct. Such a transaction is subject to the same approval process as a license transfer, provided that both, or a bigger number of, partners must sign a “cooperation agreement” (a contract similar to a joint operating agreement) described in the Geological and Mining Law. There is no model cooperation agreement to which the parties would be required to adhere to.

3.3. Stages of the exploration process 

Exploration is conducted in such stages and according to such work program as proposed by the license holder and approved by the licensing authority.  In case of successful exploration, the company should prepare geological and investment documentation for the discovery, which is subject to approval by the Minister of Climate and Environment. Such approval allows applying for an investment decision, i.e., for entering into the production phase.

3.4. Obligatory state participation 

No state participation in the form of interest ownership or PSA is required in hydrocarbon exploration or production.

The Polish state benefits financially from foreign participation in the upstream sector in various forms, including:

(i) license fees applicable to the exploration stage (based on the acreage);

(ii) mining usufruct fees that apply as follows: based on the acreage – for exploration, or on the deposits identified – for production;

(iii) royalties (called the “exploitation fees”), based on the quantity of minerals produced;

(iv) special tax on hydrocarbons, based on the value of the minerals produced;

(v) generally applicable taxes, such as CIT, VAT, property tax, etc.;

(vi) generally applicable health and social security contributions charged on the wages and salaries.

All newly obtained geological information is owned by the state and is made available to commercial parties for a fee, based on a contract with the geological authority. However, the party which has paid the cost of obtaining geological information has the right to use such information free of charge, for an unlimited time. Moreover, such a party has an exclusive right, limited in time, to use the information for the purpose of applying for a production license or underground storage license. These rights are transferable to third parties, without governmental consent. 

Old geological information may be owned by the state, or by the company which has paid the cost of the exploratory work (usually by PGNiG or Grupa Lotos), depending on when it was produced. 

3.5. Risks to be considered

The main risks to be considered with respect to hydrocarbon exploration are related to permitting. 

Drilling and other exploration or field development operations require multiple permits and consents, issued by central or local authorities of multiple tiers. The highest risk of delay and of an unfavorable outcome is typically connected with obtaining an environmental conditions decision. Such decisions are required for certain exploratory operations (e.g. for offshore drilling), and for entering into production. The process involves compiling a significant amount of information on the local environmental ramifications (as part of the preparation of the environmental impact assessment – EIA), is lengthy (typically between six and 18 months, depending on whether a full EIA is required), and allows the participation of environmental NGOs and other potential opponents, whose activity may lead to further significant delays. It is also worth mentioning that the licensing authority itself – which is responsible for issuing numerous key permits and decisions, such as the approval of geological work programs, approval of the field development documentation, or amendments to the license – often acts slower than expected by the license holders. 

4. PRODUCTION OF OIL & GAS 

4.1. Granting of oil & gas production rights 

Hydrocarbon production rights may take the following forms: (i) an investment decision, i.e. a decision of the licensing authority authorizing a holder of a combined exploration and production license to pass to the development & production phase; or (ii) a production license.  

Production licenses are normally issued for deposits discovered and documented under an exploration-only license (exploration-only licenses were issued based on applications filed up to September 30, 2014. Such a license may be issued both to a current or former holder of an exploration-only license, or to a party that has acquired the rights to the geological documentation of the deposit, from the State or from a commercial party that holds such rights. 

Both types of hydrocarbon production rights are issued by the Minister of the Climate and Environment, subject to consent from the mayor(s) of the municipality or municipalities on whose territory the proposed production area (called the mining area) is to be located – for onshore licenses. For offshore licenses, opinions are required from the President of the Higher Mining Authority; the Minister of Defence, and the minister in charge of fisheries. Importantly, the issuing of a production license or investment decision requires an environmental conditions decision, issued by the Regional Director of Environmental Protection. As mentioned in Section 3.5., this process involves the risk of delay or rejection.

4.2. Foreign production 

Similarly, as with exploration (see Section 3.2.), foreign investors are treated on an equal basis with domestic investors, with respect to production rights.

A transfer of production rights may take place by way of a transfer of shares in the company holding the license or by a transfer of the license and mining usufruct, as described in Section 3.2., and the same rules as above apply regarding pre-qualification and license transfer.

4.3. Stages of the production process 

Field development and production should follow the detailed plan included in the geological & investment documentation (which specifies, among others, the number and location of wells and pipelines, methods of flow stimulation, waste management, etc.), as proposed by the license holder at the end of the exploration phase and approved by the Minister of the Climate and Environment acting as the geological authority. Production should begin by the date specified in the investment decision (or production license) and can be conducted for as long as the license holder decides to discontinue the production. If production is to continue beyond the originally granted production period, extensions of the license and mining usufruct are granted routinely by the authority; however, it may be required to obtain a new environmental conditions decision, depending on the scope of the original environmental conditions decision.  

The construction of facilities is subject to effectively the same rules and permitting requirements as with any other industrial installation, except that construction permits in relation to any facilities being part of the mining plant are issued by the relevant Regional Mining Authority, rather than by the county authority (starosta). Depending on the local conditions, field development may require dozens of various permits, such as water permits, road use permits, permits for change of use of the land, tree removal permits, etc. These permits are issued by various local authorities, typically without any significant delay or difficulty. 

If the company needs to be hooked up to the gas grid, it should request connection conditions from the applicable grid operator and should enter into a connection agreement based on those conditions. The connection may be rejected if it would be non-viable technically and economically.

4.4. Obligatory state participation 

As mentioned in Section 3.4., there is no mandatory state or state-controlled utility participation in the production. Instead, the state benefits from the production by charging the various fees and taxes listed in Section 3.4.

The company is free to sell produced hydrocarbons to customers of its choice. No special permits for the export of crude oil or gas are required.  

4.5. Risks to be considered

In addition to the permit-related risks described in Section 3.5., two additional risks are characteristic for the production stage – with regard to local planning and surface rights. 

The local planning risk is related to the fact that the exploration or production activity cannot conflict with the relevant local zoning and development plans, which are enacted by the municipal authorities. In practice, this means that in order to obtain a production license (or to pass to the production phase under a combined E&P license), the company may have to convince the local authorities to amend the local plan. This involves a lengthy procedure (often longer than 12 months) with public participation, and the outcome is often uncertain. On the one hand, local authorities can be convinced to support the project in expectation of related economic benefits (for example, the municipality is entitled to receive 60% of the royalties paid on the hydrocarbons produced), while on the other hand, there are usually concerns regarding deterioration of the environment and living conditions.

With respect to the surface rights, while the applicable regulations generally allow the obtaining of forced access to the land required for the operations and construction of certain facilities (primarily pipelines), as a measure of last resort, land ownership is often highly dispersed, which often creates the need to negotiate access rights and to otherwise deal with a large number of landlords, which are sometimes difficult to identify and locate (as land records are not always up to date). Moreover, the forced access instruments available to the company do not always protect against significant delays if the landlord takes advantage of all opportunities to appeal and otherwise obstruct the process.   

5. TERMINATION OF PRODUCTION OF OIL & GAS 

5.1. Abandonment and decommissioning 

In principle, when production is discontinued, all wells must be safely plugged and abandoned, the remaining installations removed, and the land reclaimed. Details of the decommissioning process should be specified by the company in the operation plan (plan ruchu) for decommissioning of the mining plant and approved by the Regional Mining Authority. There are no statutory rules as to whether all structures (e.g. see platform foundations or underground pipelines) must be entirely removed or can be left in a secure condition. 

A company conducting production must establish a decommissioning fund (deposited in a separate bank account and intact until decommissioning) by setting aside funds at least equal to 3% of the depreciation allowances on the assets of the mining plans, as calculated in line with the income tax rules.

5.2. Environmental and HSE consideration 

HSE and environmental matters, including land reclamation, are covered in the operation plan for decommissioning, signed by the mining operations manager (kierownik ruchu), and approved by the Regional Mining Authority. A detailed land reclamation program is subject to approval by the county authority (starosta). Decommissioning may also require a waste management program, approved by the voivodship (provincial) authority (marszalek wojewodztwa).

6. SAFETY OF OIL & GAS EXPLORATION AND PRODUCTION 

6.1. International treaties to which the jurisdiction is a party 

N/a

6.2. Offshore Safety Directive 

Poland implemented Offshore Safety Directive no. 2013/30/EU in 2017. 

7. IMPORT, EXPORT, AND SALES OF OIL & GAS 

7.1. Import and Export of oil & gas

The general rules regarding the export and import of oil and gas are described in Section 8.1. 

Reservation of cross-border transmission capacity is typically conducted according to the open season procedure. 

7.2. Transportation 

Poland has a developed system of an integrated gas network, owned and operated by OGP Gaz-System (a 100% state-owned company appointed as the transmission system operator by the Polish energy regulator), by the Polish Gas Company (directly controlled by PGNiG, and indirectly by the state), responsible for a major part of the gas distribution network, and by operators of local distribution networks. The Yamal pipeline is operated by a separate company, jointly owned by PGNiG and Gazprom.

Operation of gas networks or of direct pipelines (connecting a gas field directly with an end-user) requires a license or a permit from the energy regulator. Pipelines connecting production wells and the field processing plant are typically considered parts of the mining plant; and their construction and operations do not require any separate governmental authorizations, other than the standard building and usage permits.

Gas transportation tariffs should be based on the “justified cost” principle and are subject to approval by the energy regulator. 

Crude oil transportation pipelines, including the Drushba pipeline connecting Adamowo on the Polish/Belarussian border to the PKN Orlen refinery in Plock and the German refinery in Schwedt, as well as the connections between Plock and the sea terminal (and the Grupa Lotos refinery in Gdansk), are owned by PERN, a company 100% owned by the Polish state. Oil transportation tariffs are not regulated.

7.3. Land rights 

Access to land is, in principle, negotiated between the company and the landlords. The company may obtain forced access based on decisions of the county authority with respect to land required for the construction of gas pipelines. This tool is relatively effective and easy to use; if the company can prove that its attempts to obtain negotiated access have failed.

In addition, a holder of a hydrocarbon production license (or of an investment decision) may request a court decision on compulsory purchase of land if the particular plot can be proven to be necessary for its production activity. This tool seems to be rarely used, if at all. 

7.4. Access and integration 

See Section 7.2. 

7.5. Gas transmission and distribution 

See Section 7.2. 

8. TRADING 

8.1. Trading license 

Gas trading licenses are issued either as licenses for domestic trading in gaseous fuels or licenses for trading in natural gas with foreign countries; both types are issued by the energy regulator. An interested party is required to submit standard corporate and financial information and documents, confirmations of sufficient financial resources and qualified personnel, certificates confirming a non-criminal past regarding members of its management and supervisory bodies, as well as regarding its controlling parties, information on its business conducted thus far and a business plan covering the activity for which the license is sought. Preparation of the necessary documentation and the review process typically takes at least three months but can be much longer than that.   

As mentioned earlier, any company trading in imported gas or importing gas for its own needs must keep reserves of gas equal to at least 30-day imports. This requirement is considered an important obstacle to the development of the gas market in Poland. 

No special authorizations are required for trading in crude oil.

8.2. Products

The majority of gas commodity trading in Poland occurs through bilateral commodity trading. The only exchange on which gas products are traded is the Energy Commodity Exchange in Warsaw, where trading occurs daily on two spot markets: the current-day market and the next-day market. 

9. COMPETITION

9.1. Authorities

Polish competition law is based on the EU competition rules. Similar to EU law, it regulates, in particular: control of concentrations, anti-competitive agreements, and behavior, abuse of a dominant position, and imposition of onerous contract terms. 

The President of the Competition and Consumers Protection Office (UOKiK) is the key competition authority in Poland; however, decisions on concentrations have a community dimension (e.g. the recent merger between PKN Orlen and Grupa Lotos) are made by the European Commission. Decisions of the UOKiK are appealable to the Competition and Consumers Protection Court in Warsaw.

9.2. Anti-competitive actions 

Any proposed merger or another type of concentration (including joint ventures) that meets specific criteria regarding annual turnover of the participants and their affiliates (EUR 1 billion of turnover worldwide, or EUR 50 million in Poland), as well as the acquisition of assets generating turnover in Poland in excess of EUR 10 million, is subject to prior notification to, and approval from, the UOKiK, or the European Commission, as mentioned in Section 9.1. Decisions are normally made within a month after filing all required information. However, compiling the necessary information and responding to queries from the competition authority may take much longer than that. Approval of a concentration may include specific conditions, such as divestiture of a part of the business operated by the participants.

Failure to report the concentration where required may trigger severe fines; a recent example is the PLN 30 billion fines imposed on the participants of the Nord Stream joint venture. 

As regards anti-competitive agreements and conduct, the law contains non-exclusive lists of examples of anti-competitive agreements or other types of market conduct. Such examples include price-fixing, market division, unequal treatment, bid-rigging, excessive or dumping pricing, imposing onerous contract terms, tying, boycott, refusal to deal, etc. Agreements or contract clauses that are anti-competitive are invalid and may trigger substantial fines imposed by the UOKiK on the delinquent company (up to 10% of annual turnover) and its managing personnel (up to PLN 2 million).  Examples related to the oil and gas sector include PGNiG being penalized for onerous terms in contracts with its gas customers (such as a prohibition on resale, or unilateral rights of the seller to reduce the contracted volume).

In principle, UOKiK follows the lines adopted by the EU Commission with respect to the assessment of certain conduct as anti-competitive, and regarding group exclusions. UOKiK keeps an updated register of anti-competitive contract terms (as per decisions of the Competition and Consumers Protection Court) which are strictly prohibited in contracts between businesses and consumers.  

10. STABILITY CLAUSE AND DISPUTE RESOLUTION 

10.1. Stability clause 

Polish law does not contain a stability clause in favor of oil and gas companies. No such clauses are used in mining usufruct agreements. 

10.2. Compulsory dispute resolution procedure

There is no dispute resolution procedure specifically designed for the oil and gas sector. Disputes with the licensing, regulatory, or other authorities may be resolved in various ways, depending on the scope and type of the dispute.

Disputes based on contracts (including mining usufruct agreements) or on torts are resolved by common courts unless the parties agree for dispute resolution by arbitration or by other out-of-court methods. State authorities and utilities rarely, if ever, agree to any dispute resolution other than by common courts. As a rule, decisions made by common courts of the first instance are appealable to a court of the second instance. Decisions of the courts of the second instance are final and enforceable; however, they may be referred to the Supreme Court by certain institutions, such as the Ombudsman or the Attorney General, for special review and potentially for cassation.

With respect to administrative decisions (including the licenses and other decisions of the licensing authority), any decision is either appealable to an administrative body of the higher tier, or, if the decision is issued by a minister or by another authority of the highest tier, the party may request a re-examination of the matter by the issuing authority. Decisions issued as a result of an appeal or re-examination may be referred to administrative courts for review. The review is confined to legality issues, i.e. conformity with applicable laws and regulations.  Judgments issued by administrative courts of the first instance may be referred to the Supreme Administrative Court for a final review.  

Certain types of disputes with energy utilities, including disputes regarding access to the gas grid, gas transportation services, or gas storage services, are resolved by the energy regulator. Decisions of the energy regulator are appealable to the Competition and Consumers Protection Court.

10.3. International treaty protection 

Poland is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards but has not signed the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID). As mentioned earlier, disputes against Poland can be initiated based on EU legislation, the Energy Charter Treaty of the relevant Bilateral Investment Treaty, as well as national legislation. 

In general, there is no special difficulty in seeking protection against the State or its organs before Polish courts; however, dispute resolution is generally slow, therefore it may take years to obtain a final judgment. There are examples of companies in the mineral sector (including oil and gas) successfully obtaining awards from administrative courts in disputes with the licensing authority, e.g. a recently reported judgment in favor of a Canadian investor regarding a refusal to grant an exploration license covering copper ores.

Guide Contributors For Poland

Tomasz Minkiewicz

Partner, Head of Oil & Gas

Tomasz.Minkiewicz@cms-cmno.com

+48 22 520 5562

 

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