Less friction between public and private

The following interview was published on 16 June 2025 on the website of the British Polish Chamber of Commerce. The original version is available at: https://bpcc.org.pl/pl/less-friction-between-public-and-private/

Over the past two decades Poland has experienced a transformational infrastructure boom, with billions of euros of EU funds passing through in public tenders. Contractors from all over the EU and beyond have built roads, railways, ports and airports. There have been many high-profile cases where things went badly wrong, but overall, taking the big-picture view, how would you assess the experience of public-sector infrastructure work in Poland? 

To be fair, ‘badly wrong’ might be even seen as an understatement. And this is valid not only for the dispute stage of the high-profile cases you mention, but for when the projects were prepared by the contracting authority. Those early sins usually lead to more ambiguities during the performance stage, and later – to court disputes. Poland’s accession to the EU in 2004 took place only 15 years after the change of the regime and replacing the ‘planned’ economy with a (more or less) free market economy. It has been a huge pace. Despite Poland having had some experience with pre-accession funds (PHARE for example), we were still new to the challenges of dynamic, competition-based mechanisms of organising and implementing key infrastructure projects.

Proper planning of financing projects and drafting construction work contracts with due consideration of the enormous complexity of infrastructure investments seem to be the key problems in the early years of public sector projects. My observation is that the biggest public-sector employers have gained much experience, and over the years their personnel has incomparably higher expertise now.

Despite that there is still a lot to do to improve the investment experience in Poland, particularly in terms of public procurement and court procedures (some swing of the bias in favour of the State Treasury can still be observed). In the last couple of years there is a growing trend for more amicable solutions of high-level disputes with public-sector employers. I see this as an incentive to get involved in what’s still to be done in Poland on the infrastructure market.

Whilst we have seen major contractors from France, Spain, Germany, Sweden, Portugal and Turkey winning huge infrastructure contracts in Poland, British contractors have somehow been absent. To what extent is this down to the difference in cultures when it comes to public procurement? Does the split between common-law and code-based law jurisdictions tend to rule out companies from English-speaking nations in practice?

I think the former of the two factors plays a bigger role in making British contractors reluctant to approach the Polish market. The divide between common law and civil law traditions also plays a role, but it may be more a matter of broader issues like bureaucracy and local know-how.

As I mentioned above, since the early ‘90s up until now, public procurement has come a long way. At that time, the language barrier might have been an additional obstacle discouraging British contractors from stepping into Poland. Now this is no longer a problem, but maybe some past experiences marked the Polish market as unattractive for those ‘technical’ difficulties – together with the said bureaucracy and previous experiences in the field of public procurement from long ago.

As legal system differences are concerned, I’d say it’s a problem of secondary relevance. Please bear in mind that vast part of the key infrastructure projects financed by the State Treasury are performed under the FIDIC rules, which are widely known and applied in the common law system. Even if we consider the indispensable adaptation to the local legal system of the standard FIDIC contracts, the structuring of the whole investment project is put in frameworks that should be well known to British contractors.

From my observations over the past 15 years when my professional work was focused on the construction market, the best entrances to the Polish market were made by those foreign companies (both EU and non-EU) who have decided to enter local partnerships, which enormously shortened the time needed to acquire the local know-how and knowledge of market’s specificities.

British consulting engineers and architects, however, have been winning work in Poland – why did they succeed, while contractors didn’t?

At first glance, considering the two factors you mentioned above, it looks like a paradox. From my, legal perspective it seems much harder to approach a foreign market with a service requiring deep knowledge of local law, technical and building requirements. In very, very simple terms, asphalt is laid the same way in each country. But designing embankments, bridges and meeting all specific technical requirements in a way that enables obtaining a building permit requires not only knowledge of domestic construction requirements, but also local building certificates of designing engineers.

To that end, I would say the key to easier access of British consulting engineers and architects compared to construction companies could be explained by the much lower entry costs and investments required to organising local structures. From that perspective the high-quality know-how of British consulting is much easier to apply.

Companies’ experience highlights the readiness of the Polish public-sector procuring party to litigate at every opportunity; there’s little real sense of a partnership, just an adversary ready to go to law at the drop of a hat…

Sadly, this is the reality of public-financed construction contracts in Poland. And that is equally valid for foreign and domestic players on the market. On the other hand, it’s hard to deny that the Polish market is still very attractive to many foreign construction companies. My observation is that in the past 20 years there have been several global and European factors that shook the markets – to mention the 2008 financial crisis, the extraordinary global increases of steel and fuel prices in 2016 and 2017, Covid-19 and effect of Russia’s full-scale invasion of Ukraine on the Polish labour market. If you look at the European markets, Poland economy managed to keep its – relatively – stable course.

So, as they say, everything comes with a price and the price to pay on this market – and it must be very clear to any newcomers (and it’s clear to all present construction companies) – is to be extremely careful and diligent when tendering, and when securing long-term delivery and subcontracting agreements by general contractors. There is very little chance to find a swift solution with the contracting authority for any unpredicted changes that will either increase the cost and/or extend the time of performance of infrastructure projects.

Is mediation becoming a more popular remedy? Does Poland’s public sector need to be convinced to forego litigation and adopt mediation as a quicker and cheaper form of dispute resolution, or is it already moving that way? What alternatives exist to going to court?

Definitely! But you are also right – State Treasury contracting authorities need a lot of time and convincing to reach a settlement. Negotiations and mediation can take literally years – I take this both from my personal experience and market information.

At present the best alternative to going to court is holding mediation before the General Counsel of the Republic of Poland’s arbitration court – in Polish, Prokuratoria Generalna Rzeczypospolitej Polskiej or PGRP. The PGRP is a public structure of legal counsel which advises public sector agencies and companies (in some cases its services are obligatory – depending on the amount in dispute). The PGRP not only represents the State Treasury in courts, but also serves it with ongoing service and legal opinions.

The chance to reach an amicable settlement before the PGRP arbitration court is – in real terms – 100 % higher than in ‘ordinary’ mediation. This tendency has been increasing over the past five years at a rapid pace. Many cases that can be solved amicably never reach the court, or are redirected during the court proceedings to GCRP. It is a noticeable trend and I think a new ‘commercial habit’ is being developed in that respect as we speak.

How well is claim management established across the Polish construction sector?

This is a very difficult question. In terms of its presence – obviously it must be, and it was present on each contract I have dealt with in my practice. But the approach to claim management varies drastically depending on the internal structure of the given contractor. And these changes are not necessarily related to the size of the enterprise, but rather the structuring and the concept of handling this part of the project.

Some contractors have a centralised bureau of specialists who deal with claim management with fewer staff on site, while others prefer decentralised structures and have claim managers on site rather than in HQ. As a side note – over the past ten years, most of my clients observe with unhidden dissatisfaction that each claim management team needs also the ongoing support of a lawyer (mostly internal lawyer or even on site).

During the lifetime of a project, it often is the case that construction companies use external advice from consulting engineers and architects. However, full outsourcing of the claim management process is more often used by the employers rather than contractors. To some extent this can be explained by the fact that employers are not ‘professionals’ in the construction business and need professional support to properly manage the construction process.

Polish public procurement has historically focused on the lowest price rather than total cost of ownership or whole-life cost. The culture is adversarial, rather than win-win; there’s little attempt to find new methodologies such as open-book contracting where the pain or the gain is shared between public and private parties. What should Poland’s legislators be doing to improve the way infrastructure is acquired by the state? Or is this an EU-wide issue to be resolved by Regulations and Directives?

Much has already been done in the field of facilitating public procurement procedures both on the national and at the EU level. In Poland a new public procurement law has been passed in 2019. It enables public employers to use non-cost criteria, such as social, environmental or the use of innovative technologies, for assessing tenders. It implemented the directive of the European Parliament and of the Council of 2014. The latter embeds, inter alia, the MEAT principle, shifting from lowest price principle to the Most Economically Advantageous Tender method of evaluation. A further package of public procurement directives is still to come, putting even more accent on life-cycle cost, Green Deal or the total cost of ownership criteria of evaluation of offers.

The problem seems to be in the very strict rules and strict discipline in spending public money, imposed on public employers by the 2004 law on liability for violation of public finance discipline. State Treasury officers tend to take every decision during a construction process first and foremost from the perspective of this law. Only after they feel comfortable that a certain action has been taken without the risk of crossing these strict rules of liability, a decision is made. This explains many of the phenomena discussed above – why public employers lack a business approach, why they prefer to go to court instead of settling disputes (confirmation of the validity of contractor’s claims by a court) and also why public tenders’ main criteria of evaluating offers is the lowest price (less risk of challenging the tender documents). Wherever there is a margin of vagueness or discretion (regardless on which stage of implementing infrastructure projects) contractors must be prepared to provide the fullest possible justification that a certain ‘concession’ made by the public party is well founded and eventually beneficial for public finances.

How would you assess working with Poland’s highway agency, GDDKiA and its rail infrastructure operator, PKP PLK? Are they comparable in terms of the way they work with construction firms? What would you say the key differences are between the two in their approach?

This is a good example. Those are the two biggest public contracting authorities in Poland. Firstly, there are no big differences in the comfort of cooperation with either of them – there is a comparable level of complexity of contracts and bureaucracy that create obstacles in implementing infrastructure projects. GDDKiA tends to use almost exclusively FIDIC-based, heavily rewritten contracts, whereas PKP PLK is using its own templates – to some extent also based on FIDIC but also being a product of the Investment Forum initiative. It is a platform for a dialogue with contractors and engineers at the stage of drafting model contracts for construction works and design. GDDKiA seems to use this dialogue phase in a much narrower scope. Both contracting authorities’ model contracts allocate the bigger part of the contractual risks on the contractors.

Secondly, over the past 20 years in both GDDKiA and PKP PLK – as I mentioned before – the level of expertise of the staff responsible for managing construction contract has increased noticeably. This facilitates cooperation.

If I am to point one key difference between GDDKiA and PKP PLK contract it’s not so much as the approach is concerned, but rather the specifics of PKP PLK’s tender documentation. Unlike GDDKiA which relies upon state/official geodetic documentation, PKP PLK (as a beneficiary of its predecessor PKP operating until 1989) has its own geodetic maps and documentation, which on many occasions deviate from the official, state geodetic documentation. This is an additional challenge for designers in the design phase of railway projects.

Summing up then – should British construction firms – and indeed construction firms from across all Common-law jurisdictions – feel more comfortable about taking the plunge and tendering for infrastructure projects in Poland?

Considering all the above and making comparison between 20 years ago and now, I would say – yes. The market now is more organised and closer to international standards in terms of standard contractual provisions and legal environment. When you take the plunge today, you will definitely fall into much clearer waters compared to the pre-EU Polish market!