Introduction – Government Trade Intervention
It wasn’t too many years ago that Poland’s market structure was comprised as a communist system, and a member of the USSR. Over time, Poland has been able to break away from the communist system and develop into more of a laissez-faire economy. One can clearly see the beginnings of this transformation in the year 1986, when Poland decided to allow foreign investment for the first time. This indicated that Poland was ready to begin this new direction, even though FDI had not yet raised enough to be of any significance.
In 1994, Poland signed an agreement with the European Free Trade Association that allowed them to enhance development of world trade by removing international trade barriers against other European countries. But Poland’s biggest step towards a more capitalistic market came in 2004 when they joined the European Union. By entering the EU, Poland was obligated to make changes to their foreign trade policy. These reforms reduced government intervention by easing restrictions on their financial markets, easing competition laws, and increasing laws on intellectual property rights. In turn, these changes have helped Poland move from a rigid communists system into an easier system for increased foreign investment and expansion, and as a result, Poland has moved up in the ease of business rankings from 55th in 2013 to a current placement of 32nd. Impressive advancements such as these make for attractive foreign business expansion.
So as one continues an analysis of Poland and it’s political system, the question: “What laws or legal practices might attract a business to Poland?” may arise. The exploration of this inquiry will find that two key factors in an enterprise expanding to this Central European country were the use of Dispute Resolution and a high level of intellectual property protection.
Dispute Resolution and Property Rights
Dispute resolution generally refers to one of several different processes used to resolve disputes between parties, including negotiation, mediation, arbitration, collaborative law, and litigation. Dispute resolution is the process of resolving a dispute or a conflict by meeting at least some of each party’s requirements and addressing their interests.
When dealing with businesses and legal issues, Poland encourages the use of dispute resolution. Judges in Poland are essentially independent and are governed solely by the Polish Constitution and Polish laws. There are pros and cons to this use of court system.
The advantages are that it takes a lot less time to reach a final resolution, than if the company and disputing party were to go to trial. It also saves both the government and the disputing parties are significant amount of money. The parties can also have their dispute arbitrated or mediated by a person who is an expert in the relevant field. In an ordinary trial involving complicated and technical issues that are not understood by many people outside a relevant industry, a great deal of time has to be spent educating the judge and jury, just so they can make an informed decision. This large time investment often translates into a great deal of money being spent. Both sides might have to call expert witnesses, who may charge very large fees for their time. According to the business education site, Lorman, if an arbitrator has a background in the relevant field, however, far less time needs to be spent on this, and the parties can get to the actual issues of the case much sooner. However, there are some disadvantages as well.
Generally, arbitrators can only resolve disputes that involve money. They cannot issue orders requiring one party to do something, or refrain from doing something (also known as injunctions). The second major factor, that makes Poland attractive to businesses is the emphasis the government put on protection of Intellectual Property. Intellectual Property by definition is a work or invention that is the result of creativity, such as a manuscript or a design, to which one has rights and for which one may apply for a patent, copyright, or trademark. This allows businesses to move to Poland, and not worry about their ideas or business models being manipulated or stolen. Poland has two major laws that protect intellectual property, the Act on Copyrights and Neighboring Rights Act of 1994 and the Industrial Property Law of 2000. Each law protects the creations of innovator and states that an individual or business cannot copy another companies’ business model or ideas.
A Note on Threats and Risks
A restaurant business considering expansion to Poland would be pleased to know that corruption has significantly reduced in recent years through a combination of law enforcement and political will. The Polish Anti Corruption Bureau has been set up, and reports of corruption are now far less common. A public willingness to report corruption has been an aid in the reduction of unethical activities. Bribery is also illegal in Poland, and there are considerably minimal terrorist threats. All of this combined leads to there being low political risk in taking our restaurant industry to Poland.
Despite Poland’s past life—in which it was under the iron heel of the former Soviet Union—she is now a democratic nation, enjoying a republican form of government, similar, after a fashion, to that of the United States’. Unlike the U.S., however, hers is a parliamentary system, replete with a president, who serves as the chief of state, and a prime minister, who serves as the chief of government. Poland has two major political parties: the Civic Platform, and Law and Justice.
Also, akin to most modern-day democracies, Poland’s legislature is bicameral, possessing both an upper house, which Poles call the senat, and a lower house, which Poles refer to as the Sejm. The former is composed of 100 popularly elected members and the latter, 460 members, respectively. Poland does have a judicial branch; however, the judicial system of Poland is oft criticized for being slow to move, especially in the adjudication of corruption cases, which leads many to believe that, despite the anti-corruption laws, its prosecutors are still largely susceptible to political pressures.
Poland, once a stagnant command economy, now boasts a vibrant free market economy, much like the United States! In fact, Poland’s economy is the largest in Central Europe and the sixth largest Europe-wide. Although Poland is a former satellite of the now-defunct Soviet Union, there are still collectivist-like pockets in the country; one notable example of which can be seen in the agricultural sector, which is still highly subsidized and partially owned by the government (and, it is important to note, unproductive and grossly inefficient). Yet another such area can be seen in the banking industry, in which all of the dominant banks are owned by the state.
Conclusion: Use of Legal Contracts
Shortly after the inception of the United Nations Convention on Contracts for the International Sale of Goods, also referred to as CIS, held on April 11th 1980 in Vienna, Austria, Poland signed the agreement in the fall of the following year, one month after the United States got on board. The CISG addresses such things as: interpretation of the parties’ agreement; the role of practices established between the parties, and of international usages; the manner, timing and effectiveness of acceptances of offers; modifications to international sales contracts; place and date for payment, and buyer/seller remedies for branch of contract. In considering the prospect of expanding a restaurant to the country of Poland, one certainly ought to bear in mind the competent legal system, which Poland has worked over the passed three and a half decades to develop. There is a lot to be happy about in Poland in fact. As quoted by the Heritage Foundation, “Over the past five years, Poland’s economic freedom score has advanced by 4.5 points, the largest improvement in the region.” That being said, the legal system and laws that have been put into place by the government of Poland is a supportive infrastructure needed by any industry examining a foreign market, and perhaps particularly the restaurant industry.