Conflict between Marriott and Lim affect business partners, Global accommodation, Criminal investigation Poland, Polish case
Conflict between Marriott and Lim – Polish government investigation
22 + 14 February 2024
Poland
The Polish government has opened an investigation against the American Marriott on the suspicion that it defrauded the Lim company. A look at international law.
Background
The conflict between Marriott and the Lim Company arose in respect of issues during the first COVID lockdown. It has resulted in an ongoing criminal investigation against Marriott.
This conflict then raised further concerns regarding financial irregularities and criminal investigations in terms of money laundering, breach of contract, breach of information and theft of funds.
The matter also came to the attention of the Polish authorities and government, in addition to the corporate hospitality sector and the financial sector generally.
Matters of a Legal Nature
The hotel owner, the Lim Center requested that the operator, Marriott, agree to close the Marriott Warsaw during the first lockdown of COVID. They suggested that remaining open during the pandemic, even with a limited capacity, would be extremely costly to their business.
Marriott Hotel denied the request and kept on operating during the pandemic. The expenses regarding employees, utilities, and taxes were required to be covered by the Lim Company. This represented substantial sums of money.
Lim Center subsequently filed complaints, alleging of breach of contract and financial irregularities. The legal conflict led to a series of criminal investigations in terms of money laundering, breach of contract, and theft of funds.
Further allegations set out that Marriott prevented Lim from obtaining income for ancillary and associated services. The possibility of renting of the building façade as advertising space was stymied by Marriott and has exacerbated the conflict between the two parties.
Recourse
It is not untypical for corporate and business disagreements arise.
Most, if not all, business relationships are subject to legal substantiation and parties to such legal matters become signatories to the agreements that are deemed necessary and appropriate.
A particular business, such as operating hotel and hospitality facilities, will have their recognized established legal formats. Specific agreements will be drawn up and in place to formalize matters.
The intention of such documents is to protect the parties to any agreement and provide a format to resolve any disagreements that might arise.
There are any number of Lawyers and Legal practices who act on behalf of clients to establish the legal documentation that a certain situation might require.
In the same respect, Lawyers and legal practices will issue claims and proceedings, on behalf of clients, who find themselves in conflict with partners, franchisees or the like.
International Law
A company such as Marriott International, by the very nature of its business, will require extensive input, advice and guidance from their legal advisors and consultants.
Private international law is concerned with transactions between private parties and the process necessary, should a dispute arise.
A legal agreement, based on international law, most likely covers any transaction between parties and will be subject to treaties, conventions or supervisory legal institutions.
The European Court is a typical example of the latter, and would be directly relevant to the disagreement between Marriott and Lim.
The contract should cover the jurisdiction, or country, where mediation or arbitration will take place, or a court case if needed.
An international business lawyer will be instructed to negotiate any initial contract or legal agreements and to assist in resolving disputes.
International law will cover all matters of jurisdiction and the law applicable to any existing contracts.
Similarly International law governs contracts of sale, competition law, free movement of goods, workers, the freedom of capital and establishment and the freedom to provide services.
International Law will also be the framework dictating entry modes for agents, representatives, distributors, licensing and franchising.
Amongst the most common entry modes are licensing and franchising.
Under international law, these are the basic principles which will apply to the disagreement between Marriott and Lim.
Ramifications
The disagreement, regarding a hotel property in Poland, is governed by international law, however, the European Court will be the presiding body over any dispute or disagreement between parties.
Legal representatives for Marriott and the Lim Company will have to make their submissions based on European legal precedent, and in accordance with international law as established by the European Court.
There might be an opportunity for legal matters to be addressed in a United States Court, but this matter is yet to be confirmed.
The fact that the criminal investigation has come to the attention of Polish authorities suggest that the European Court is a more likely destination.
Both Marriott International and the Lim Company will most likely have to defend their actions, claims and requests for damages in the European Court in Luxembourg.
This is a difficult position for both parties, but for Marriott International, who have a substantial worldwide reputation to protect, the stakes for Marriott would appear to be somewhat higher than those for the Lim Company.
Comments on this How will the conflict between Marriott and Lim affect business article are welcome.
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