At STX Next, we provide software development outsourcing services to clients from all over the world. The majority of them are not based in Poland. As such, when the time comes to sign a contract, certain legal concerns come up on our clients’ side.
Many of our clients raise questions about using Polish law in their contracts with STX Next. They mostly take issue with Polish copyrights and operating within Polish jurisdiction.
It got me thinking: why is that? Is it as simple as the fear of the unknown?
After all, Polish law is neither more exotic nor more complicated than the law systems of other European countries.
The more I pondered the problem, the more value I found in properly explaining the ins and outs of Polish law and its benefits. So eventually I put pen to paper (or, rather, fingers to keyboard) and produced this very article to dispel any such doubts once and for all.
Read on to learn why signing a contract under Polish law is a good choice for your software development project.
Table of contents
Let’s begin by tackling the issue of Polish copyrights.
It’s more complicated than it may seem, and using Polish law in your contract with regard to copyrights has some indisputable advantages.
The main benefit of using Polish law in your contract with a software house like STX Next (or any Polish company, if you’re from abroad) is precisely that it is entirely Poland-based: the company is Polish, the headquarters are in Poland, and all the employees are either Polish or living in Poland.
It comes as no surprise, then, that on our end the contracts with developers must be based on Polish law.
But why does that matter for the contracts we have with our clients?
The developers are the authors of the work they produce, the code they write. This makes them the primary owners of the copyrights, which you then as a client want to buy (and STX wants to sell).
When we use Polish law in our contracts with the developers, the initial copyright transfer needs to be based on Polish law. Changing the law used in the contracts we have with the clients would make the business transaction between us and the client based on two separate law systems.
Now, whether the cooperation goes smoothly or a dispute arises between STX Next and the client alone would actually make little difference and cause few problems. However, were the conflict to concern copyrights, the courts would have a difficult and complicated case on their hands, necessitating them to settle the case using these two different law systems.
Needless to say, such scenarios—even if unlikely—are best avoided.
On the subject of copyrights, it’s important to draw a distinction between copyright laws in Poland and abroad. Are they really that different?
Not always, but even minor dissimilarities can cause significant problems down the line.
There are two main rules of Polish copyright law:
Rule #1: We can only transfer financial rights, which include the rights to transfer, use, and profit.
Rights beyond those—i.e. personal and moral rights—are non-transferable.
The rule is quite common in many Western law systems, but the difference lies in the way we define moral rights. The definition is wider in some countries and narrower in others.
This creates a huge potential risk for us: if we use a law system other than Polish in our contract with a client, he may end up buying something he cannot buy (because STX Next is unable to buy it from a developer) or not buying something he can buy (because of the wider definition of non-transferable rights in this other law system).
It’s easy to see how massive a problem that would be for you, the client, since it blurs the lines of what you can and cannot purchase from your service provider.
This is also related to the second main rule of Polish copyright law, which states:
Rule #2: The contract has to show exactly which rights we transfer.
Even though we have a singular definition of “copyright” in Polish law, it is made up of personal and financial components.
The financial component covers:
- the right to transfer,
- the right to use,
- the right to profit.
Furthermore, the right to transfer can mean the right to transfer by paper or via the internet. The right to use, on the other hand, can mean the right to use by copying, publishing, etc.
This last group of rights—or, rather, the ways of using these rights—is referred to as the fields of exploitation.
Clearly defining the fields of exploitation in the contract is an absolute must; a general clause such as, “The Author transfers all financial rights to the Work,” will always be null and void, without exception.
Now, just imagine if we used a law system other than Polish in our contract with a client and found such general clauses—or worse yet, fields of exploitation different from the ones in our contract with a developer.
It would be a veritable nightmare of endless questions:
What did you buy?
Did you buy anything?
What can you do with the software you bought?
And the one that takes the cake: what are the odds of the developer making a claim against you because you breached his moral rights? Never mind that you didn’t—couldn’t—actually know what his moral rights were.
This should sufficiently explain the copyrights side of why it is so much easier and simpler for both parties to use Polish law in your contract. The alternative can easily cause a great deal of trouble.
As a final note here, let’s not forget that Polish law is simply easier to understand, being a regular continental law system. You can always ask us about specifics if you have any questions, and we’ll be able to answer them more competently.
The second main concern our clients raise involves Polish jurisdiction.
Rest assured, though: it’s not only beneficial for STX Next, but just as much for you. A win-win if there ever was one.
As we’ve mentioned above, it is our policy to handle copyrights in accordance with Polish law when working with our developers. The developers transfer the copyrights to us, then we transfer the copyrights to you. All is as it should be.
In the unlikely event of there ever being a copyright-based court case between STX Next and one of our clients, it will be easier and faster to settle if we both use the same law system.
The same principle applies to Polish courts, because Polish judges are, unsurprisingly, experts on Polish law.
In case of litigation in a different country, the judge would need to work in two different law systems: the law of his country and the Polish copyright-related regulations.
There isn’t a single judge on Earth who knows two different law systems in equal detail, necessitating the help of a law expert, like a law professor. They would need to be compensated, and that’s really expensive.
What does this mean in practice? That using two law systems in your contract significantly raises the costs of court proceedings—not to mention considerable delays in settling. The delays happen because it usually takes some time for the aforementioned experts to familiarize themselves with the case at length and resolve the matter to the best of their ability.
All of this unpleasantness can be avoided if we simply stick to a single law and court system. But this is only the first of many reasons why Polish jurisdiction is a wise choice.
We distinguish three types of costs involved in legal proceedings in Poland:
a) The basic court fee paid when filing a lawsuit
This sum is quite similar in nearly all countries of the European Union, and makes up 5% of the financial claim. For instance, if the claim is 30,000 PLN, the court fee is 1,500 PLN.
b) The lawyer’s fee
Note: you need to hire a Polish attorney. A lawyer from your country of origin can’t represent you in a Polish court.
This cost isn’t regulated top-down; all attorneys decide their own hourly fees. However, the ballpark figure per hour usually amounts to around 200–400 PLN NET.
c) Additional miscellaneous costs
More often that not, further expenses are necessary for the proceedings to begin, such as translating legal documents or getting opinions of court experts.
I know what you’re probably thinking right now: “I have the exact same types of costs in my country. Where are the cost savings in using Polish courts?”
It’s simple: currency.
Legal proceedings and court costs in Poland are priced in Polish złoty (PLN). 1 PLN is approximately 0.25 EUR.
Now, the amounts of legal costs in Western countries are roughly the same as in Poland, but the currency is different—you’d pay 1,500 EUR and 200–400 EUR NET per hour. This means that using Polish jurisdiction will only cost you about ¼ of what you would have to pay outside Poland.
Even if it means travelling to Poland from abroad—probably only once, but still—you will pay less overall anyway.
Also, Polish law has this nifty rule, stating that if you win the case, the other side will be obligated to reimburse you for the proceedings. There are some limitations, but quite often you will get back all the money you’ve spent. You just have to win.
Another factor to consider is cost predictability of Polish courts.
What does it mean?
Essentially, your Polish attorney will calculate and inform you at the start of the proceedings how much the whole process is going to cost you. Such estimates done by Polish attorneys are usually quite accurate, and the risk of you having to pay extra midway is small.
One question remains, though: why put such emphasis on the Polish attorney?
It’s common practice in any law system that your proxy in court can only be an individual with proper authorization.
In Poland, we have two such professions:
What matters to you, as a foreign client, is that most of them speak English, German, or some other European language. Also, many are acquainted with the law systems of various member states of the European Union.
As such, you should have no problems finding someone willing and able to help you with your case in Poland. An added bonus is that they’re usually more cost-effective than lawyers from abroad.
The bottom line is this: signing a software development outsourcing contract under Polish law is a good choice because it’s simpler and cheaper.
Both you, the client, and the company you wish to do business with will greatly benefit from using Polish law in your contract.
There is one common denominator to all the advantages of this solution: everything becomes easier.
From the get-go, operating under Polish law alone should eliminate many possible obstacles and pitfalls. And should any conflicts or problems arise, resolving them can be done under a single court and law system, facilitating the whole process.
Plus, let’s not forget the most straightforward profit: cost savings. After all, having more money is always better than having less money, am I right?
Thank you for reading my article. If you’ve ever had any doubts or fears about doing business with a Polish company and choosing Polish law for your contract, I hope this has been helpful.
But now that you’re an expert on the legal side of things, maybe you’d like to learn more about other aspects of software development outsourcing contracts? Like, say, how to avoid holes in your contract or the differences between fixed price vs. Time and Materials contracts?
And if you have more questions about using Polish law in your contract, or need help navigating a contract—leave us a comment below, or better yet, reach out to us directly.
We’d love to estimate your project and talk to you at length about software development outsourcing.