Set-off defence after amendments to the Code of Civil Procedure

A set-off statement is a declaration of a dual nature, namely a procedural allegation (having procedural effects) and a declaration of intent (having substantive legal effects). The declaration of set-off is most often made outside of the trial (it has substantive legal effects) and a plea is made during the trial, which has purely procedural effects.

Time to raise a set-off

The possibility to raise a charge of set-off is limited in time. In this respect, the July amendment did not introduce any changes.

At present, the defendant is entitled to raise the allegation of set-off at the latest when entering into a dispute on the merits, i.e. in practice in the first pleading. An exception to this is if the claim is not yet due at the time of entering into the dispute, in which case a set-off allegation involving such a claim is only possible within 2 weeks of the date on which the claim became due.

Grounds for a set-off – amendments

The grounds for a set-off may be a claim of the defendant from the same legal relationship as the claim asserted by the claimant, unless the claim is:

1) undisputed,

2) confirmed by a final court decision, an arbitration court decision, a settlement concluded before a court or an arbitration court, a settlement concluded before a mediator and approved by the court,

3) confirmed by a document confirming its acknowledgement by the claimant, as well as a claim for the reimbursement of the fulfilled service due from one of the joint debtors to the remaining co-debtors.

Essentially, points 2 and 3 indicated above were added by the July amendment of the CCP, and the current amended wording of Article 2031 of the CCP has been in force since 1 July 2023.

As a result of the amendment, the subject-matter scope of the provision has been expanded, and thus another claim has been added, which may be covered by a charge of set-off, regardless of the issue of disputes or establishing or substantiating the claim with an appropriate document. The claim in question is a claim for the repayment of a performance owed by one of the joint debtors to the other co-debtors. The issue of return (recourse) claims between joint and several debtors is of fundamental importance here.

The requirement for the set-off of a claim substantiated by a document not coming exclusively from the defendant was also removed and replaced by a claim that is substantiated by a document confirming its acknowledgement by the plaintiff.

Furthermore, the scope of claims subject to deduction has been extended, even if they do not fall within the basic catalogue, i.e. when it is neither a claim from the same legal relationship as the claim claimed by the plaintiff, nor a claim for the return of a fulfilled service owed by one of the joint debtors to the other co-debtors. Claims covered by certain titles may be submitted for offsetting: a final court decision, an arbitration court decision, a settlement concluded before a court or an arbitration court, as well as a settlement concluded before a mediator and approved by the court.

Summary

 As a result of the recent changes, it is apparent that the legislator is seeking to limit the possibility to raise a procedural allegation of set-off, which has far-reaching consequences and a practical dimension that is not necessarily positive for the defendant in litigation.

Due to the procedural limitations (as to the grounds of the allegation of set-off and the time limit for raising the allegation), it may happen that a party will not be able to raise the allegation of set-off and its only option will be to bring a separate lawsuit in relation to this claim. This may be particularly relevant in commercial litigation, where the filing of a counterclaim is not permitted and the allegation of set-off is often one of the defences brought against the claim.

Any information regarding the issue described above can be explained by our litigation lawyers.