Permitted contractual penalties for late payments to subcontractors

Publication / 02.02.2021

On June 30, 2020, in the case ref. III CZP 67/19, the Supreme Court adopted a resolution, according to which Article 483 § 1 of the Civil Code does not exclude permissibility of reserving a contractual penalty for non-payment or untimely payment of remuneration due to subcontractors or further subcontractors, as referred to in Article 143d sec. (1)(7)(a) of the Public Procurement Law. This is because the statutory regulation on procurement is about safeguarding the interests of subcontractors. It is therefore permissible to reserve a contractual penalty in favor of the investor (ordering party) for non-payment of wages to subcontractors culpable of the main contractor.