The Actio Pauliana and Gratuitous Transfers: Creditor Protection Against Fraudulent Donations
I. INTRODUCTION
Among the various mechanisms available to creditors seeking protection against debtor malfeasance, the actio Pauliana—or Paulian action—occupies a position of singular importance in civil law jurisdictions. This ancient remedy, with origins traceable to Roman law’s conception of fraus creditorum, enables creditors to challenge transactions executed by debtors with the intent or effect of frustrating legitimate claims. While the Paulian action encompasses a broad range of potentially voidable transactions, empirical observation of judicial practice reveals that gratuitous transfers—and donations in particular—constitute the overwhelming majority of successfully challenged conveyances.
This predominance is neither coincidental nor difficult to explain. When a debtor seeks to shield assets from creditor recourse, the path of least resistance invariably involves transferring property to trusted individuals without consideration. The recipient is typically a family member or close associate who, by virtue of the relationship, will permit the debtor continued beneficial use of the transferred assets. From the creditor’s perspective, such transactions present a particularly egregious form of fraud: assets vanish from the debtor’s estate in a formal sense while remaining functionally available to the debtor, rendering enforcement proceedings futile.
The Polish Civil Code, in Articles 527 through 534, provides a comprehensive framework for addressing such fraudulent conveyances. Notably, the statutory scheme establishes significantly relaxed evidentiary requirements when the challenged transaction involves a gratuitous transfer, reflecting a legislative judgment that donees occupy a categorically different position than purchasers for value. This Article examines the doctrinal foundations and practical implications of the Paulian action as applied to donations, with particular attention to the statutory presumptions that render donees exceptionally vulnerable to creditor challenge.
II. THE STATUTORY FRAMEWORK: ESSENTIAL ELEMENTS OF THE PAULIAN ACTION
A. General Prerequisites Under Article 527
The Paulian action, as codified in Article 527(1) of the Polish Civil Code, requires the creditor to establish several conjunctive elements. First, the creditor must demonstrate the existence of a valid, enforceable monetary claim against the debtor. Second, the debtor must have executed a juridical act—here, a donation—with a third party. Third, this transaction must have resulted in prejudice to the creditor, defined under Article 527(2) as the debtor’s insolvency or the aggravation of a preexisting insolvent condition. Fourth, the third party must have obtained a pecuniary benefit from the transaction. Fifth, the debtor must have acted with awareness that the transaction would prejudice creditors. Finally, under ordinary circumstances, the third party must have known, or with the exercise of due diligence could have discovered, that the debtor acted with such awareness.
These requirements, taken together, impose a substantial evidentiary burden on the challenging creditor. However, the legislature has introduced significant modifications to this framework when the transaction under scrutiny involves a gratuitous transfer—modifications that fundamentally alter the litigation landscape.
B. The Gratuitous Transfer Exception: Article 528
Article 528 of the Civil Code introduces what may fairly be characterized as a revolutionary departure from the ordinary evidentiary requirements. The provision states, in pertinent part, that where a benefit has been obtained gratuitously, the creditor may seek avoidance of the transaction “even if the third party neither knew nor, with the exercise of due diligence, could have discovered” that the debtor acted with awareness of creditor prejudice.
The implications of this statutory language are profound. In practical effect, Article 528 eliminates the scienter requirement entirely with respect to donees. A daughter who receives real property from her father, acting in complete good faith and with no knowledge whatsoever of her father’s outstanding obligations, nonetheless cannot invoke her innocence as a defense to the Paulian action. If the creditor establishes the remaining statutory elements—most critically, that the donation rendered the donor insolvent or exacerbated his insolvency—the donee’s subjective state of mind becomes juridically irrelevant.
The ratio legis underlying this seemingly harsh rule reflects a utilitarian calculus: the donee, having parted with nothing of value, suffers no genuine economic loss when compelled to surrender what was freely given. The legislature has determined, in essence, that as between an innocent donee who loses a windfall and an innocent creditor who loses a legitimate claim, the equities favor the creditor. This represents a considered policy judgment that prioritizes the integrity of credit relationships over the security of gratuitous acquisitions.
III. THE COMPOUNDING EFFECT: PRESUMPTIONS REGARDING CLOSELY RELATED PARTIES
A. The Statutory Presumption Under Article 527(3)
The donee’s vulnerability under the Paulian action is further amplified when, as is typically the case with intra-family donations, the recipient qualifies as a person “in close relationship” with the debtor. Article 527(3) establishes a rebuttable presumption that such persons possessed knowledge of the debtor’s fraudulent intent: “If a person in close relationship with the debtor obtained a pecuniary benefit as a result of a juridical act performed by the debtor to the prejudice of creditors, it is presumed that such person knew that the debtor acted with awareness of prejudicing creditors.”
The concept of “close relationship” (bliski stosunek) extends beyond consanguinity and affinity to encompass any relationship characterized by sufficient intimacy to suggest that the third party would likely possess knowledge of the debtor’s financial circumstances. Polish courts have interpreted this category broadly to include spouses, children, parents, siblings, cohabitants, close friends, trusted employees, and business associates with whom the debtor maintains relationships of particular confidence.
B. Cumulative Operation of Protective Mechanisms
In the paradigmatic case of a donation to a family member, the creditor benefits from the simultaneous operation of two distinct protective mechanisms. Article 528 renders the donee’s good faith irrelevant as a matter of law, while Article 527(3) presumes the donee’s bad faith as a matter of evidence. Although these provisions address different aspects of the scienter inquiry—the former eliminating it entirely for gratuitous transfers, the latter shifting the burden of proof for transactions with related parties—their cumulative effect creates an exceptionally favorable litigation posture for the creditor.
It bears emphasis that even were Article 528 inapplicable, the presumption under Article 527(3) would independently disadvantage the donee. The practical consequence is that family members who receive donations from financially distressed relatives face what might be described as a “double displacement” of the ordinary evidentiary framework: they can invoke neither actual innocence nor the creditor’s failure to prove their knowledge.
IV. THE LIMITED RELEVANCE OF THE DONEE’S GOOD FAITH
Given the statutory modifications discussed above, one might reasonably inquire whether the donee’s good faith retains any juridical significance whatsoever in the context of a Paulian challenge. The answer, while nuanced, is largely negative with respect to the action itself.
A donee acting in unimpeachable good faith—one who genuinely and reasonably believed the donor to be solvent—cannot deploy this innocence as a shield against the creditor’s claim. Once the creditor establishes the donor’s insolvency and the causal relationship between the donation and that insolvency, the subjective purity of the donee’s intentions becomes immaterial to the disposition of the Paulian action.
The donee’s good faith may, however, assume relevance in collateral proceedings. A donee who surrenders property pursuant to a successful Paulian action may possess claims against the donor sounding in unjust enrichment or breach of implied warranty. Similarly, questions of good faith may bear upon the measure of damages in subsequent litigation between the parties to the avoided transaction. These considerations, while potentially significant, fall outside the scope of the Paulian proceeding itself and offer the donee no protection against the creditor’s immediate claim.
V. ILLUSTRATIVE APPLICATIONS
The doctrinal principles elaborated above find concrete expression in recurring factual patterns that populate the dockets of Polish courts.
The Pre-Insolvency Marital Transfer. Consider an entrepreneur who, anticipating the financial collapse of his business enterprise, conveys the family residence to his spouse by deed of gift. Upon the subsequent bankruptcy of the enterprise, creditors find themselves without recourse to meaningful assets. Any creditor who commences a Paulian action within the five-year limitations period prescribed by Article 534 and demonstrates that the donation rendered or aggravated the donor’s insolvency will likely prevail, notwithstanding the spouse’s complete ignorance of the business’s financial difficulties.
The Anticipatory Intergenerational Transfer. A parent, apprehending potential maintenance claims from children of a prior marriage, donates residential property to children of a current union. Should the children from the first marriage assert Paulian claims, the donee children will find themselves in an extraordinarily disadvantageous procedural position. Article 528 negates any defense based on their ignorance of the donor’s obligations, while Article 527(3) presumes their knowledge of the donor’s fraudulent purpose.
The Corporate Asset Strip. A shareholder in a failing enterprise, prior to liquidation, transfers valuable equipment to a relative under the guise of assisting with a new business venture. Creditors of the enterprise may reach this equipment through Paulian proceedings, provided they satisfy the statutory requirements concerning the shareholder’s personal liability and insolvency.
VI. DEFENSIVE STRATEGIES AVAILABLE TO THE DONEE
The foregoing analysis might suggest that donees are entirely without remedy when confronted with Paulian challenges. This conclusion, while substantially accurate with respect to good-faith defenses, overstates the donee’s predicament. Effective advocacy on behalf of a donee must redirect attention from the unavailing scienter inquiry to other elements of the creditor’s prima facie case.
A. Challenging the Insolvency Requirement
The most promising avenue of defense lies in contesting the creditor’s assertion that the donor became or remained insolvent. Article 527(2) conditions the Paulian remedy upon proof that the challenged transaction caused or aggravated the debtor’s insolvency. If the donee can demonstrate that the donor retained sufficient assets to satisfy the creditor’s claim—that is, that the donation did not in fact prejudice the creditor within the meaning of the statute—the action must fail regardless of the gratuitous character of the transfer.
B. Attacking the Underlying Claim
The donee may also challenge the existence, validity, or enforceability of the creditor’s underlying claim. A creditor asserting a time-barred obligation, a disputed debt, or a claim that has been satisfied or discharged cannot maintain a Paulian action. While the Paulian proceeding does not adjudicate the merits of the underlying obligation with preclusive effect, the creditor must nonetheless establish the claim’s existence as a predicate to relief.
C. The Statute of Limitations Defense
Article 534 imposes an absolute five-year limitations period, measured from the date of the challenged transaction, within which Paulian claims must be asserted. This provision establishes a period of repose that, once elapsed, extinguishes the creditor’s remedy entirely. The five-year period is characterized as a termin zawity—a preclusive term that the court must apply ex officio and that admits of no tolling or equitable extension.
D. The Alternative Authorization Under Article 533
Finally, Article 533 affords the donee a mechanism for discharging liability without surrendering the donated property. Under this provision, the third party may satisfy the creditor’s claim by either (i) paying the creditor directly, or (ii) identifying sufficient assets of the debtor from which the creditor may obtain satisfaction. This “alternative authorization” (upoważnienie przemienne) permits the donee to preserve the donated property by assuming, in effect, the debtor’s obligation to the extent of the property’s value.
While this remedy imposes a financial burden on the donee, it may represent a rational economic choice where the donated property’s value substantially exceeds the creditor’s claim. The donee who pays a modest debt to retain valuable real estate achieves a result preferable to surrendering the property to execution.
VII. CONCLUSION
The intersection of the Paulian action and gratuitous transfers reveals a legislative policy that deliberately subordinates the interests of donees to those of creditors. This prioritization manifests in two complementary doctrinal mechanisms: Article 528’s elimination of the good-faith defense for recipients of gratuitous benefits, and Article 527(3)’s presumption of knowledge for recipients who stand in close relationship with the debtor.
For donees—particularly family members who receive gifts from financially troubled relatives—these provisions create a litigation environment of exceptional adversity. The conventional defense that one acted without knowledge of the debtor’s circumstances, ordinarily available to purchasers for value, simply does not obtain. Effective defense must instead engage the creditor on alternative terrain: the adequacy of the debtor’s remaining assets, the validity of the underlying claim, the timeliness of the action, or the availability of statutory alternatives to property surrender.
The policy justification for this asymmetric treatment rests on the distinction between those who give value and those who do not. The purchaser for value has parted with consideration and thus has a legitimate expectation in the security of the transaction. The donee, by contrast, has sacrificed nothing and accordingly possesses a weaker claim to protection when the transaction prejudices those with prior claims against the donor’s estate. Whether this utilitarian calculus adequately accounts for the equities in every case—particularly where donees have relied to their detriment on the stability of long-completed gifts—remains a question worthy of continued scholarly attention.
Statutory Authority: Articles 527–534, Act of April 23, 1964—Civil Code (consolidated text: Journal of Laws 2024, item 1061, as amended).
