Placing a performance in court deposit by the public procurer is not always permissible

Lawyers of the Law Firm successfully represented the Client in court proceedings for the deposit of a benefit in court.

The Client, as a construction contractor, carried out a public contract in favor of the ordering party, which remained a municipality.

The ordering party, in connection with letters addressed to it by the Client’s subcontractor, in which the subcontractor claimed that it had not received remuneration from the Client, decided that there were grounds for depositing the entire remuneration due to the Client for the work performed into court deposit.

In the facts of the case, the Client terminated the contract with the subcontractor, who stopped performing the contract. The subcontractor did not demand payment of remuneration from the Client, did not participate in the inventory of the works it had completed by the date of withdrawal, and did not receive correspondence from the Client. The Client charged the subcontractor a contractual penalty and deducted the penalty from the remuneration due to the subcontractor.

In its application, the Ordering Party indicated that there was a dispute between possible creditors, so it is not known whether the disputed amount should be paid to the Client or make a direct payment of remuneration to the subcontractor. According to the Ordering Party’s position, in connection with the subcontractor’s claim of non-payment of part of the remuneration, and in connection with the content of Article 647 (1) § 2 and 5 of the Civil Code, both the Client and the municipality, as an investor, may be jointly and severally liable to pay the amount of remuneration in question. In such a situation, in accordance with the content of Article 467 (3) of the Civil Code, in the opinion of the Client, it was reasonable to deposit the appropriate amount in court.

The court of first instance granted the request and allowed the amount of remuneration to be deposited in court.

The Law Firm’s lawyers filed an appeal against the decision of the Court of First Instance, in which they alleged, among other things:

• misinterpretation of the provisions of the Civil Code regarding the deposit of the consideration in court, since the subcontractor had no claim against the ordering party and the Client, so there was no dispute as to who was the creditor – the Client or the subcontractor;
• Violation of the provisions of the Public Procurement Law, by wrongly assuming that there was a case in which the Client, as a contractor, evades payment of the subcontractor’s due remuneration, and there is a dispute between the Client and the subcontractor, because of which the ordering party does not know to which entity the payment is due.

Thanks to a successful legal argument in the appeal, the Court of Second Instance overturned the appealed order and dismissed the request for deposit of the benefit, which determined the Client’s right to receive the payment due to it.