Success in a case to recover a bank guarantee payment

The contractor sued our client (the ordering party) for the return of approx. PLN 9.5 million taken from a bank guarantee for the cost of rectifying defects and faults in the completed facility. The contract, with a value of approximately €72 million, was carried out under the 'design and build' (so-called 'yellow FIDIC') formula. The contractor was responsible for both the design and execution of the works and the rectification of any defects therein.

The court dismissed the contractor's claim in its entirety. In a long and multifaceted trial, we proved that a contractor carrying out works under the 'design and build' formula assumes responsibility not only for the work performed, but also for the material selected to ensure that the investor's objective is achieved. The key issue in the case was on whom the burden of proof rested, i.e. whether the contractor should prove the lack of responsibility for the defects created and, consequently, the lack of necessity to remove them at its expense. The court upheld our argument that the contractor's withdrawal of the request for expert evidence was tantamount to the contractor's failure to demonstrate its lack of responsibility for the defects in the building. The court took the view that the Contractor - represented by professional attorneys - should have filed the request for expert evidence and it is not the role of the court to act ex officio.

The court also took into account our claims that for the possibility to use the bank guarantee, it is not necessary for the investor to specify the amount of its claim for removal of the defect if the amount of this claim is not possible to determine at the time of notification to the contractor. Our client was therefore entitled to make use of the performance bond and have it credited towards the cost of rectifying the defects - even though the amount of the repair costs could not be determined at the time the bond was consummated.

The case was conducted by attorney-at-law Łukasz Matyjas and attorney-at-law Aleksandra Kieliszek, assisted by apl. adw. Piotr Celinski.