Global Law Experts Roundtable Interview on Commercial and Contract Law

my name is Jenny Brash. I’ve been working for Global Law Experts for the last year. So, I worked for years. Actually, I used to work for Deote. and I did also work as a business analyst in the UK in London for many years in in the banking industry. but then I did a shift to everything kind of health and wellness. So I’ve been involved quite heavily in yoga for the past few years. so this is something that I started doing more as a freelance

but it’s just turned into a more permanent position. And you know over the course of this last year I’ve had some very interesting discussions with lawyers. So I’m really enjoying this new corporate role. All right. All right. Do you want to give us your introduction there? VCH.

>> Hello, my name is Vek Da. I’m a partner of today legal a warso based law firm. I’m from Poland. So, we are specialized in primarily in dispute resolution. We solve disputes in the litigation form and away from courts. But apart from this contentious part of our job, what we do is we prevent disputes as well.

So, we do a little bit into this non non-contentious part as well of legal services. We help investors set up their businesses and operate their businesses safely in Poland. And of course, we help operational business with contractual legal analysis, contractual legal drafting. So I am very happy to join our today’s meeting. Happy to share some insights about the commercial contractual issues which take place in Poland these days.

>> Hello everyone. Good to meet you all. my name is Dennis Utatina. I practice law in Uganda. the law firm that I work with is called Dentons. We provide quite literally everything. So we I have several other partners that each have a specific specialization.

My particular specialization is corporate and commercial advisory. So, business setup, contracting, labor law, immigration, whatever business needs all the way from setup, up to winding up and whatever comes in the middle, I handle that. I do a bit of, private equity finance as well. I do that bit. Yeah, I’m really glad to be here.

>> So, we’re going to get going with the question. The first question I’m going to pose is just looking at the commercial and contractual environment. What key commercial and contractual issues are currently influencing business activity in your jurisdiction?

Would you like to start voic? >> So it seems that always the legal issues follow the macroeconomic factors. So some some objective outside factors. So what we have encountered during the recent years in Poland there has been there has been a list of factors which has influenced the commercial and contractual environment. The first factor was of course the cover and then we had the war in Ukraine which is nearby. So we saw clear influence of these factors on our contractual and commercial practice every day. First of

all, how the contractual environment has shaped during the recent years is that we have tried to take care of volatility of pricing to avoid the pricing pressure which comes from inflation. This started with 2021 when COVID hits and we had the PPI inflation rate of 8% yearbyear and the following year we had 22% inflation rate PPI in 2022. That’s why what we what we do in contracts after this difficult experience for for the for the business we introduce some indexation clauses into the contracts avoid fixed fee

clauses. we introduce some review elements to take care of these unexpected and rapid changes of of costs of production and of course within the supply chains. The second factor that that I can see clearly is the in increasing influence of compliance regulations which mostly come from the EU regulatory system and they are implemented into the Polish legal environment either directly or through some transposition of legal regulations.

So this is not not anymore solely a background. This becomes a core of contracts to be compliant with all the rules that you need to follow. I mean audit rights, AML controls. After the war in Ukraine started, we had a huge inflow of capital from both Ukraine and Belarus. And for example, we have some strict regulations regarding the inflow of Belarusian capital into the Polish economy. So you need to take care of it in all the contractual and commercial obligations that you do. And thirdly, I

would say that the business is more and more aware of how difficult it is to carry out dispute resolution, especially litigation dispute resolution in Poland these days. So in the contracts you can see some clauses which concern this part and this sphere. By this I mean some strict regulation of evidence, how to how to collect evidence, how to discipline both parties as far as the evidence goes. some regulations which concern faster decision making in the contracts embedded already and some early resolution pathways. For example,

when you take a look at the at the new regulations which have been introduced in the Polish system and they concern construction contracts primarily you have the obligatory mediation that you need to start each potential dispute resolution with. So if you if you have this perspective of mediation of course you don’t want to make mediation purely a theotrical experience you want to collect the evidence to look for some benefits from the mediation to look for some le leverages to take advantage so this is something we have become more

aware of during recent years and I can see it clearly in the regulation of contracts that we draft these days. Thank you so much. Very interesting insights there. Dennis, would you like to share your perspective in your jurisdiction >> from a a commercial perspective, negotiations perspective?

in Uganda, the government and I think just like with many jurisdictions is the biggest spender. So it’s the biggest client for most customers and their spending habits always affect the spending habits of the public. So what we’re seeing the government move more into is usually what then the market moves into in terms of contracting and how you contract. we’re seeing government introduce a lot of installment payments. they require pre-inancing of contracts and then they will pay in installments and not in one lump sum. So when it comes to

negotiating commercial terms, we are encouraging clients and we’re seeing most of them come with installment payments. We’re seeing less and less lumpsum payments for whatever purchase it is or whatever contracting it is because that’s how the money is flowing within the the economy. Then from a legal perspective end we last year had an introduction stringent requirement more stringent and more regulation on competition.

So those are aspects that we have to look out for when we’re contracting when we are advising clients product services. We have to ensure that we’re compliant and we are not getting no one is running after the client for any particular transaction.

So we try to stay maybe break down the contracts and stay below the threshold for having to report to the anti-competition authority because then approvals take anywhere up to 45 days. So we try to contract and structure our contracts in ways where we either have we either stay away from the reporting requirement for the anti-competition authority or if we can’t make sure that all the terms are compliant in line with that law because the fines are quite heavy and they can lead to businesses being lost making

for quite some time. So those two really stand out in in in Uganda and we are always on the lookout particularly to advise clients to keep that line. >> Thank you so much Dennis. All right, so we’re going to move on to question number two and this is more looking at risk areas in commercial relationships.

So, which aspects of commercial or contractual arrangements tend to create the greatest risk if not carefully structured or managed? we’ll start with you, Vochek. >> So, yeah, when you do business in Poland, you need to be aware of a couple of risks to navigate and just eliminate those in your in your business activity.

The first problem that I can see in many contracts is an I would say underregulation of the liability so to say area of the parties to the contract. I mean parties usually spend weeks negotiation the price of the services or the products to be sold and delivered but they don’t pay that much attention to to the liability regulation. I mean liability caps, identities, remedy structure. these regulations from time to time stay vague. They cause some doubts about who is responsible for which part and how

the risks are distributed along the bodies. So this is the first element I would like to single out. the second one would be the the procedure of termination of the contract. and by this I mean both the premises of contract termination and the legal effects of contract termination because dependent on the type of a contract that you have in Poland you may terminate the contract either with so to say forwardlooking effect the so-called exnoke effect or the backwardlooking effect the so-called exon effect so you

need to be fully aware how it works in Poland to know whether where the parties are located if the contract is effectively terminated. the second thing I would say are contractual penalties which are used quite often in Poland to simplify the the recovery part if something goes wrong. But the problem is that in the Polish legal system you may you may you need to decide whether the premise of contractual penalty is for example delay or culpable delay. Whereas in the Polish language, we don’t have a

term culpable in this context which would clearly single out these two situations. So you need to be very precise because in the legal wording in Polish both delay and culpable delay are used are called with words which seem synonymous but in the legal system they work in a pretty different way. and the fourth element I would I would like to to shortly discuss are the dispute resolution closes as such but I would rather say that the whole structure how the dispute if it arises is to be solved

by this I mean the choice of the applicable law but also the forum so which court is has the authority to take the case and analyze the case and thirdly interim relief possibilities is not to wait for the final ruling but to protect the rights of a party who has entitled to an interimm relief. and at the end of the day there is the enforcement part after each litigation or dispute resolution case.

So you should also take this into account to decide where the potential dispute resolution case would be heard and where it would be enforced. just to give you an example of of some risks that may take place, there are some contracts which have clauses which come from other jurisdictions. So not fully compliant with the Polish system, just accepted on a general ground so to say. And when you want to enforce these clauses, it appears that they do not work in Poland as they would

for example in Great Britain or the US. So you need to stay if you do business in Poland, you need to be aware of the Polish regulatory system and stay compliant to have all the contractual clauses efficient and enforcable here before the Polish courts.

>> Thank you so much. Over to you, Dennis. >> We have something quite similar when it comes to dispute resolution. while the the the the legal landscape and the law allows for contracts that are concluded in Uganda but can be regulated by say Polish law or English law. we do have certain incidences where you could agree to be regulated by say British law.

For instance, you have party A for contract is British, party B is Ugandan. The parties agreed to be have a contract regulated by British law. meaning that the the the contract is regulated by British law and dispute resolution is still placed under the British courts or arbitration. And then you have a party, one of the parties, maybe the Ugandan, raise a dispute that is specifically provided for by Ugandan law. or a third party that is a beneficiary to the dispute if they were to raise a claim,

they might be able to raise it under Ugandan law in Ugandan courts because they were not parties to a contract where the two of you agreed to be bound by British law and have the matter had in a British court. So that can throw off the freedom of contract that is usually seen as a seen as a pivotal point for contracting. So that’s a real risk. And this is something that came up just recently about two weeks ago. a matter was brought up in court and the

judge one of the parties objected and said no the contract is regulated by Brit by British law and it’s under the resolution of British courts. But the judge went ahead to hear the matter because it was raised by a third party.

Now as a contracting parties, we choose British law because we feel it’s safe. it’s straightforward. we’ll get judgment quickly. Then you find that you pulled now into Ugandan courts possibly do not have an office in Uganda made a supply in Uganda out of British jurisdiction. So that is a risk that we have seen creep up recently. the dispute resolution. One of the real real other challenges is that our our dispute resolution mechanism is a bit slow. we could have I could if I

could give you an estimate on how long a dispute a commercial dispute would take to get resolved. I would give it maybe a minimum of about 24 months to get resolution. that’s a business tied up in court before you get any form of resolution. So you find people choosing to go down the route of arbitration or dispute resolution in other jurisdiction. But now we have this new risk that a court in Uganda could decide to bring the contract back in Uganda and tie you up in court for 12 months that

you’d prefer to have something resolved in six months, three months under arbiteration. So that’s a real risk. And like I said, this just came out last week. We are just now starting to draft closes that we think we could start including in agreements that addresses this. right now most of the agreements we have in place don’t address this risk because it’s just come up. But we’re trying now to make sure that all the contracts going forward have a close that addresses this because it’s a real risk right now in in

contractor and commercial relations. >> Thank you so much, Dennis. All right, guys. I’m going to I’m going to push on with question number three. So, we’re going to move on to round three, which is all about crossborder considerations.

So what challenges do businesses most commonly face when entering cross-border commercial or contractual relationships in your jurisdiction? Starting with you Jack. >> the first issue I’d like to discuss is something that I have already signaled before. I mean the issue of the forum of a potential dispute and the enforcement which will follow most probably. So the place of assets to take advantage of when you enforce the ruling. I mean it may happen that there is a mismatch between one and the other.

I mean there is a court of one jurisdiction whose ruling is going to be enforced by some bay leaf or enforcement authorities in another country because this is the place where the assets of the detor are located and this may cause some trouble. might have already come across some cases in which it did because if both these authorities I mean the court and the enforcement bodies are located within for example the EU framework which is quite I would say it is complex but each legal system

national legal system resembles the other. it works. But if one of these authorities is located outside EU, it may take some time to make the ruling enforceable in the other jurisdiction, it may add some additional friction. It may cost some time and make the enforcement difficult at least or give the detor some time for example to hide his assets their assets away which can be a true and real problem which may influence the final efficiency of the enforcement proceedings. The second element is the evidence collection. I

mean in crossborder cases it may be even more difficult to to define the and and take grasp of the documents which may be decisive for the case the key witnesses there are some technical issues even with the witnesses I mean the language of the witnesses you may need some certified translators for the testimonies that the witnesses provide to the court and of course the quality of the translation may be a factor also So when it comes to you know grasping the specificity or for example technical

issues that the witnesses need to convey need to make an input of into the proceedings and finally there is the problem with arbitration because arbitration and mediation they become more and more popular in Poland during the recent years. Some of this is obligatory as I mentioned before comes from the regulation. But the problem is that when you want to enforce the arbitration ruling, the arbitration procedure needs to be so say coherent and adjusted to the o I would say overall Polish dispute resolution regulation. It may be that the

arbiteration ruling is not enforcable because it has not met some formal criteria for enforcability. So I have two extreme cases to to show how problematic it may be. One of the cases is is is a case of a self-established arbitration court private arbitration court in Poland. So there was a there was a wise businessman how we call them who established his own private arbitration court and of course all the rulings were issued in his favor but then it appeared that they were not enforcable which is a good point here in

this in this context. But another another example is an arbitration ruling which was technically okay formally okay but you could not enforce it efficiently because you couldn’t find you couldn’t find the assets of the dtor. It took so much time to enforce the the ruling that the dtor just took his assets away. So you need to take close a close look at the dispute resolution regulations without the contract to make the potential dispute resolution as smooth as possible and as efficient as possible.

>> Thank you so much Vek. Over to you Dennis. >> We seem to be having the same line of of answers for us as well. We have noticed that one of the most negotiated clauses in a cross-border transaction agreement contract is the choice of dispute resolution.

So where you have two parties from different nationalities or three from different nationalities you’ll find that each of the parties has a preference. So one wants Mauritius, the other Singapore, another UCCC Chamber of Commerce in Paris and each has justifiable reason for wanting a different means of dispute resolution. The Ugandan wants to have the dispute resolved in Ugandan courts because that means they won’t have to travel and spend money. you know, you see, you’re already in the middle of a dispute and you’re spending

money to resolve the dispute. so they want to have Ugandan courts resolving the the the the dispute. We have to then now come in as advisers and listen to all parties and then advise justifiably. Majority of the time we have found that the best thing to do is get a neutral venue. So if one of the parties in Paris another is from Uganda, we say all right let’s do Maicius center of arbitration. There are some internationally recognized arbitration tribunals. So we use those most of

the time and it has worked. the second challenge usually comes in post contracting. So you have the relationship going already and as you know the law is very very mobile. It’s always changing. So we we do we’ve have had situations before where a court has come out and pronounced itself on an interpretation of a of of a of a of a section of a law of of a regulation that retrospectively affects several several transactions. existing transactions. And now the parties are always asking us, what do we do now? How do we make it

regular? How do we make sure that our contracts are still impossible? Because we didn’t know that that could possibly happen. One of the things that we make sure we don’t let go of is the the close on severance. We always ensure that we have a closing superability that if any clause or any provision or any act or any obligation in a contract is found in the future by a quote to be uninforceable or illegal to not affect the whole contract. So that saves the contract. We just pull out the one

clause and know that it’s not necessarily undoing the whole contract. So for us those are the two things that we have seen to be quite challenging in this cross-border transactions. >> Thank you Dennis. All right we’re going to move on to question or round four shall we say and that is managing contractual issues. So when issues arise in commercial or contractual relationship what approaches are most effective in addressing them in a practical and commercially sensible way? Start with you Voic. So I I’m a true believer first of all in some

reality check to make sure how the things stand to be as objective as analytic as you can to provide your client with a very fair feedback how the process potential dispute resolution process will unfold what risks are ahead of them and what leverages you can use to their benefit. There are some lawyers who take a look at a case and when they hear a question from the client, what are the probabilities of winning or losing a case? Then the lawyer answers no idea whatsoever because courts are

unpredictable. I do not believe it. I believe of course in some human aspect in court rulings. But first of all, I truly believe in analysis and objective assessment of where we are with the kids. So what we do first is we take a look at the potential evidence. we analyze the best and worst case scenarios and we assign some probabilities. We know more or less which challenges what changes we will face along the way. The second element which is not to be honest so much

disputed is the or discussed is the making the decision makers act as soon as pract practicable. there is a case on my desk these days which is a construction dispute where it took some time for the decision maker to press the button and start the case. it may cost when it comes to the efficiency of the case because the Polish detors unfortunately have this tendency to hide their assets away. If you don’t ask if you don’t act as as soon as possible

if you don’t apply some entering measures to grasp the assets it may be problematic later at the later stage of the proceedings. and there is also this this discussion about the escalation tools about negotiation, mediation, arbitration, ADR solutions.

as I said before, they may be theatrical if you are not prepared and just do what is ordered by the law that you need to mediate. But I have another experience much better experience. there is an authority in Poland which is called the general council to the republic of Poland. So this is like a legal assistance to the state of Poland and some stateowned companies who are usually the ordering party in some huge procurement public procurement processes. So if there is a dispute with

these parties you can go to this special mediation court next to the general council to the republic of Poland. I have a mediation case out there which is very beneficial to both parties. and the it is it is an interesting experience because we have entered into these pro proceedings very well prepared. We have done our homework. We have worked with the management board of the client. and although from the formal viewpoint we have not reached a formal agreement within the mediation process. still the contract which is

ongoing at the same time it has been much easier to perform by both parties because each party knows the legal arguments of the legal council and they want to avoid some further disputes regarding this contract. So getting prepared, being efficient, being fast and doing what makes the most sense is the pathway of the highest efficiency when it comes to coping with problems in Poland.

>> Thank you so much. All right, on to you Dennis. Well, with contracts and commercial arrangements, I think the biggest and commonest primary issue is default on obligation or meeting obligations. whether it’s payment, performance, delivery, quality of work. we we see that a lot and we we when we are drafting these documents and advising clients whichever side we are on we are always asking questions. Is this deliverable? Is this doable? Don’t commit on something that cannot be done.

We had a dispute about five years ago where the client was asked to perform some works road construction. They undertook the the contract then halfway the contract they came back to the the the the hiring party and said the road you asked us to construct is impossible to construct. It’s it’s not doable. so then the hiring party says but when we asked you you said you would do it. they said well we carried out our DD and we told we could do it but no

one in the world can perform this contract. It’s not that we’ve breached it’s just an impossible to perform contract. So we were acting for the hiring party and we had to go out source another service provider who could demonstrate that this contract is in fact not impossible to achieve. It’s just that it will be achieved at a loss for the construction company. That’s why they went down the road that it’s impossible but it was actually possible.

So first things first, as we are negotiating, as we are contracting, we place ourselves in the business of our client and make sure that we are taking on obligations that we can meet. If we are acting for the hiring party, we ask for things like a performance bond, which is enforcable quickly in case there’s a there’s a breach instead of running after the defaulting party.

if there’s a dispute and the contract is a specialized contract of a nature that the judicial officer in a normal court would have to be trained for a few months to be able to adjudicate a matter say a construction contract. we always opt for arbitration because arbitration would move faster. the complexities of construction law will be understood by an experienced and specialized construction arbitrator better than a judge who handles criminal matters and and commercial commercial matters and bail matters. So the finer there are

very very fine lines when it comes to construction arbitration and a matter could be decided on something very technical. So we we we try to make sure that where a contract is specialized arbitration has to be the choice and specialized arbitration. We also make sure that where a dispute arises where if an issue arises the quickest way to address it is does it make business sense? So right you want to go to court what are you going to get out of court? You’re going to get a

declaration and then what? You’re going to spend 2 months and get a declaration and then what? How does this add to your business? Is it financial? How much money are you going to spend traveling back and forth from Paris every two months and end up getting a judgment for say a million dollars, but you spend $800,000 on adjudicating this judgment?

So why don’t you consent now? Why don’t you take a haircut now? go back to your business and make money instead of arbitrating just in terms of principle just for the sake of it just to prove a point. So we try all sorts of avenues to make sure that whatever issue arises it’s handled and resolved in the most expedient and businessfriendly way.

>> Thank you so much. I like the way you express that getting a haircut. So, we’re going to move on to our final round, gentlemen. So, just looking at practical guidance for businesses. what advice would you give businesses seeking to structure robust commercial contracts or manage risk when operating or investing in your market?

So, we’ll start with you, go check. >> so our recommendation is a two-fold approach. So, when you draft a contract, think of both performance and default of the contract. By performance I mean take take a look at the notice mechanisms along the way as you perform the contract how the documentation flows in two ways to be able to make some so to say evidence how it went introduce some discipline to the parties some deadlines within the contract to make it as smooth as possible and if the

contract is not performed or is not perform according to the standards. Then think of the dispute part of the story and take a full 360 approach. I mean, think about the governing law, about the forum, court forum or arbitration, mediation mechanisms, but also about the language of of a potential litigation case that will apply interim reliefs. And last but not least, enforcement of the ruling.

Not make it impossible to enforce at the end of the day once you have spent this amount of money that Dennis has has mentioned only to have the ruling you know to post on your wall behind your back. So this is the worst case scenario probably. and of course as I mentioned you need to be aware of these compliance details not to be you know caught in between during the during the dispute resolution case for example that you have forgotten about I

don’t know GDPR or AML requirements which make which m which could make it impossible you know to to keep the case up. So as as a summary of of what I mentioned before, be aware of the risks and think in in advance. we do dispute resolution, but we truly prefer to avoid disputes, to think beforehand.

You may be well prepared to, you know, to move smoothly and navigate smoothly through all the commercial issues and not meet your business partner in a Polish court at the end of the day. Thank you so much. Over to you Dennis.

>> So the first thing we would encourage is take legal counsel. Do not enter into the market and undertake contracting or relations on your own. We do unfortunately have several cases where people are reaching out and saying I came into Uganda 3 years ago. I did this. I did that. I did the other. Now I’m not getting paid. can you please help and we say all right can we look at your documentation and there is none and even where the documentation is shared

has a lot of gaps there’s so many things that are not taken care of so to avoid such things such things can be avoided very easily and you have a straightforward case a straightforward matter that anyone that looks at it would say please pay this gentleman will please perform your obligations because you contracted to do So and you contracted very well. So seek legal counsel. Secondly, I would advise that engage in a good robust due diligence process. Conduct due diligence on the people you’re working with, the

potentials, the clients, the market, the country. you don’t necessarily have to visit the country. If you have good representatives, good counsel, you can carry out good conduct good good and thorough due diligence on anything. these days there’s a lot of stuff online, but it’s usually not enough. So if you collect information online again, send it to the people on ground, send it to local council to double check it and confirm that what you’re relying on is actually the truth and it’s not going to cause you to lose

money or your investment. So due diligence is very important. the person that you’re dealing with, do they have capacity to bind that company that you’re signing with or is it are you dealing with the the head of finance who has no authority to contract and then at the point of dispute resolution, you’re thrown out on a on a on a preliminary objection before you even go anywhere and and and your hands are tied. So due diligence is very important.

legal, financial and all of that. it might be tempting to skip on it and go quickly into the business end of of the work, but we thorough thoroughly encourage all our clients to carry out due diligence. if you find that it’s not workable, then it’s not then you leave it. But you’re better off finding out early before you invest any form of of funds.

>> Thank you so much to both of you. Is there anything either of you would like to add as like your final thought or your final contribution? wanted to thank you Dennis so much for your insightful you know input into our discussion and the the interesting thought on my side is that despite the distance the geographical and regulatory distance between Uganda and Poland I can see that we face similar I would say challenges in our commercial and contractual so to say business activities legal advice and stuff. So it

seems that the that the business flows all around the world and and becomes exposed to similar risks. I would I would I mean I I would agree with every single word that you’ve said all the recommendations that you do regarding the DD before investments is exactly how you do it in Poland as well. so this is this is interesting. We in Europe believe that there is a huge discrepancy between our continental legal systems and you know the UK legal systems but it seems that the world has become much

smaller than we ever thought and we can discuss similar problems in Uganda as as in Poland. So this is very interesting for me. Thank you so much. Yes, I I absolutely feel the same way because every time Jenny asked a question, I would look at my list and everything I have, you already think. So, I’m just saying it in in different expressing it differently. But yeah, I find it very interesting as well that you have exactly the same recommendation to clients coming into Poland that I

have to clients coming into Uganda. So, yeah, it’s it’s good to know that we’re looking out for the same things. it means they’re the right things. >> Yeah. Thank you for being part of our first round table, but it’s been an absolute pleasure chatting or chatting to both of you and I really appreciate yeah all your insights and all your input today. So I look forward to otherwise enjoy the rest of your day and yeah I look forward to chatting again in the future.

>> Yeah, absolutely. Thank you so much. >> Thank you. Bye.