Table of Contents:
1. Legal Issue Referred to the Supreme Court
2. Conditions for Raising a Plea of Set-off Under Article 203¹ of the Code of Civil Procedure (CCP)
3. Position of the First-Instance Court
4. Doubts Raised by the Second-Instance Court
5. Position of the Supreme Court
6. Arguments Supporting the Supreme Court’s Position
A party’s procedural attorney in a civil trial is authorized to effectively raise a plea of set-off and to receive such a declaration based on Article 203¹ CCP under procedural powers of attorney.
Legal Issue Referred to the Supreme Court
On July 2, 2024, the Supreme Court addressed the following legal question:
Does the effectiveness of raising a plea of set-off under Article 203¹ CCP and receiving such a declaration by the plaintiff’s attorney require solely procedural power of attorney, or is a separate authorization for material-legal actions necessary?
The Supreme Court passed the following resolution:
For the plea of set-off under Article 203¹ CCP to be effective, procedural power of attorney is sufficient to both raise the plea and receive such a declaration.
Conditions for Raising a Plea of Set-off Under Article 203¹ CCP
Article 203¹ CCP sets out the conditions under which a party in a civil trial may raise a plea of set-off. The subject of the plea may only be a claim:
- Belonging to the defendant and arising from the same legal relationship as the claim pursued by the plaintiff, unless the defendant’s claim is undisputed, confirmed by a final court decision, an arbitral tribunal decision, a settlement concluded before a court or arbitral tribunal, a court-approved settlement concluded before a mediator, or substantiated by a document acknowledging the claim by the plaintiff;
- For the recovery of performance made by one of the joint and several debtors to other co-debtors.
This plea may be raised exclusively in a procedural filing and no later than upon entering into a dispute on the merits of the case, or within two weeks from the date when the claim presented for set-off became due.
Position of the First-Instance Court
In the proceedings before the First-Instance Court, the attorney representing the defendant raised a plea of set-off under Article 203¹ CCP. The court adopted a commonly accepted position in doctrine and jurisprudence, holding that a procedural attorney cannot effectively invoke a set-off of claims, as it constitutes a material-legal action rather than a procedural law institution.
According to the First-Instance Court, raising a plea of set-off by a procedural attorney required authorization under Article 98 of the Civil Code (CC), rather than merely procedural power of attorney under Article 91 CCP. Similarly, the court found that the plaintiff’s attorney was not authorized to accept a set-off declaration on behalf of their client.
Doubts Raised by the Second-Instance Court
The Second-Instance Court had doubts in the matter and referred the legal question to the Supreme Court for clarification.
Position of the Supreme Court
In addressing the legal question, the Supreme Court noted that Article 203¹ CCP, introduced into the Code of Civil Procedure on November 7, 2019 by the Act of July 4, 2019, established a formalized institution of the plea of set-off. This institution is based on the concept of material-legal set-off. Consequently, this enables the procedural attorney to raise the plea of set-off within the scope of their procedural authorization.
Arguments Supporting the Supreme Court’s Position
The Supreme Court provided the following arguments in favor of its position:
- The procedural attorney’s authority encompasses all procedural actions, including the plea of set-off, which also has material-legal effects.
- Unlike material-legal institutions listed in Article 91(4) CCP (e.g., settlement agreements, waivers of claims, or admission of claims), which directly concern the subject matter of the dispute and negatively affect the legal standing of the parties—thus requiring explicit mention in the provision—the plea of set-off is a form of defense available to the defendant.
- In legal proceedings, both procedural and material or hybrid pleas are raised. Within the scope of the defense, the defendant’s procedural attorney is authorized to raise them, such as filing a motion to dismiss the case (a material-legal position) without requiring additional material-legal authorization (supported by argumentum ad absurdum).
- Regarding the plaintiff’s attorney’s authority to accept a plea of set-off, the Supreme Court similarly applied argumentum ad absurdum, stating that authorization is not required to receive other substantive declarations, such as those concerning the statute of limitations, lack of standing, or dismissal of claims due to performance of the obligation.
