The cable is in the ground. Some sections have been switched into service and are operating on the live network. There has been no final acceptance. At night, thieves arrive and cut out several hundred metres of copper. The question asked in every construction company at that point is: who pays for it.
Common sense suggests: not us, because we have no control over it. The cable is operating for the employer, and we have no physical access to it without a track possession. But the law says otherwise. Until the works are formally taken over, the risk of their loss rests with the contractor — regardless of fault and even where a criminal offence has been committed by a third party. Worse still, the insurance policy you paid for probably ceased to provide cover on the day the cable was switched into service.
Police reports show that thefts of railway infrastructure are a recurring phenomenon: in one case, 18 offences, more than 30 tonnes of copper and losses exceeding PLN 1.1 million; in another — approx. 1,200 m of cable and losses of PLN 220,000 (Police — criminal group dismantled, thefts of railway infrastructure). At two construction sites — several hundred metres of copper cables and several thousand metres of overhead contact lines, with a total value of PLN 450,000 (Police — large-scale copper theft). The theft of copper from a linear construction project in Poland is not force majeure. It is a normal and foreseeable event — which is precisely why infrastructure contracts require this risk to be insured.
In this article, I explain why the answer suggested by common sense is wrong. I show exactly where the boundary for the transfer of risk lies, what “temporary use” really means and what the gap between the contractual risk period and the insurance coverage period looks like — a gap that can last for months in phased contracts. Finally, I set out specific measures: what to negotiate before signing the contract, what to do during performance and what to do in the first 24 hours after a theft.
Key concepts you need to know
Before we go any further, here are several terms that appear in every construction contract and every insurance policy — and confusing them can be costly.
| Concept | What it means | Why it matters |
|---|---|---|
| Remuneration risk | The obligation to deliver the completed facility under Article 647 of the Civil Code — the contractor must reinstate the stolen scope for the same remuneration, regardless of fault | This is not liability for damages. It is the cost of performing the same work twice |
| Taking-Over Certificate | A document confirming that the works have been formally taken over by the employer (FIDIC Sub-Clause 10.1) | Only then does the risk of loss pass to the employer |
| CAR/EAR policy | Contractors’ All Risks (CAR) or Erection All Risks (EAR) insurance | It should provide cover from the signing of the contract until the Taking-Over Certificate — but it often ends sooner |
| Temporary use | A contractual arrangement under which the employer uses part of the works before formally taking them over | It does not transfer risk to the employer or trigger the defects notification period |
| Waiver of subrogation | The insurer’s waiver of its right of recourse against specified entities (Article 828 § 1 of the Civil Code) | Without this provision, an insurer that pays compensation to the main contractor may sue the subcontractor |
Why intuition is misleading — the contractor bears the risk until the works are formally taken over
Remuneration risk, not liability for damages
The contractor is not charged because it was at fault. The obligation to deliver the completed facility under Article 647 of the Civil Code means that if an incorporated component is stolen, you must reinstate it for the same remuneration. Article 652 of the Civil Code confirms that a contractor that has formally taken possession of the construction site is liable for damage on that site until the facility is handed over (I CSK 1907/25 — Supreme Court). In case IV CSK 368/14, the Supreme Court confirmed that a contract may expressly impose an obligation on the contractor to protect completed work until acceptance — and the facts of that case involved the theft of a power cable (IV CSK 368/14 — Supreme Court).
Arguments that do not work
The three most common arguments I hear from contract teams — and why none of them will relieve you of the risk:
| Argument | Why it does not work |
|---|---|
| “Theft is a criminal offence committed by a third party — force majeure” | Theft of copper from a linear construction project is a normal and foreseeable event. Article 471 of the Civil Code presumes the debtor’s liability — it is for the contractor to prove that it exercised due care |
| “The cable is not our property; it belongs to the utility operator” | Title to property and the risk of loss are two different categories. No construction contract links the definition of the works to title to property |
| “We invoiced this scope and the employer paid” | An interim payment does not transfer risk. Nor do completion of the works, notification of readiness for acceptance, commissioning, physical incorporation of the component or transfer of title to the material |
What exactly transfers the risk
The risk transfers only upon the taking over of the works in accordance with the contractual procedure:
- Under the FIDIC model — a final acceptance report plus a Taking-Over Certificate (Sub-Clause 10.1)
- Under the Civil Code model — the acceptance report alone
There is one automatic mechanism worth remembering: if the engineer remains silent after the deadline for issuing the Taking-Over Certificate has expired (typically 28 days from the application), the certificate is deemed to have been issued on the last day of that period. This is one of the few cases in which risk passes without the other party’s consent.
And one more point: if the employer refuses acceptance without justification, this constitutes creditor’s delay (Article 486 § 2 of the Civil Code) and a breach of the duty to cooperate (Article 354 § 2 of the Civil Code). The contractor may argue that the risk passed at the time when acceptance should have taken place.
The temporary-use trap
The FIDIC standard (Sub-Clause 10.2) links the employer’s use of part of the works to taking them over. Polish infrastructure contracts change this. The Model Particular Conditions of Contract amend Sub-Clause 10.2 by introducing the concept of temporary use (Model Particular Conditions — gov.pl).
The National Appeals Chamber confirmed this arrangement in two rulings:
- KIO 1121/16 (21.07.2016): FIDIC Sub-Clause 10.2 permits temporary use and the contractual separation of the associated risks (KIO 1121/16)
- KIO 235/22 (21.02.2022): temporary use of a section does not start the defects notification period
What this means for your company:
| What temporary use does not do | What it does |
|---|---|
| It does not constitute taking over of the works | The employer assumes the costs of ordinary wear and tear and maintenance |
| It does not result in a Taking-Over Certificate | The employer uses the section |
| It does not transfer care of the works | The contractor continues to bear the risk of loss |
| It does not start the defects notification period | The contractor has no access without a possession granted by a third party |
Theft is not ordinary wear and tear. Vandalism is not maintenance. Liability for a component operating on a live network to which you have no access — remains with you.
Contact us — we will help you determine whether your contract contains a temporary-use clause and what risks arise from it.
The insurance gap — where the real problem lies
A dispute over cable theft is an insurance dispute
Since the risk of theft cannot realistically be removed from the contractor before formal taking over, the real dispute is not about contractual liability. It is about the insurance policy.
The proper place to allocate this risk is CAR/EAR insurance taken out for the benefit of another party (Article 808 § 1 of the Civil Code), providing cover from the signing of the contract until the Taking-Over Certificate. The insurance coverage period should last exactly as long as the contractor bears the risk. The alignment of these two periods is no coincidence — it is the purpose of the arrangement.
The most common and most costly mismatch
The main contractor’s CAR policy contains a clause stating: cover does not include damage to property placed into operation, and the insurer’s liability ends on the date the relevant component begins operating.
Materials published by the Polish Financial Supervision Authority confirm that EAR policies generally do not cover buildings and structures during normal operation (Polish Financial Supervision Authority — examination questions).
The result:
| Element | Date |
|---|---|
| Contractual risk continues until | The Taking-Over Certificate |
| Insurance coverage ends upon | Switching into service / commissioning |
| Gap | From several weeks to many months |
During this period, the company is completely uninsured while its full contractual liability continues. Worse still, the flaw in the policy is systemic. The same grounds for refusal will apply to every subsequent theft under the same contract.
Paying for cover that was never provided
The subcontractor pays a premium passed on as a percentage surcharge on the value of the project. On large projects, this can amount to hundreds of thousands of zlotys. If the policy excludes property that has been placed into operation, there is no equivalence of performance: you paid for cover that you did not receive. This is a highly persuasive argument in a dispute.
The clause that turns a defence into a claim
FIDIC Sub-Clause 18.1 provides that if the insuring party fails to obtain or maintain available and required insurance, it must pay the amounts that should have been recoverable under that policy (FIDIC Red Book 2017 — Polish edition, SIDiR). This provides a ready-made measure of loss — eliminating disputes over quantum.
The general basis of liability is Article 471 in conjunction with Article 361 § 2 of the Civil Code — loss includes actual loss and lost profits within the limits of normal causation (Supreme Court, I CSK 389/18). It should be remembered, however, that the measure would not automatically be the full sum insured, but the amount of the benefit that the insurer would actually have paid under a properly arranged policy, less deductibles and exclusions.
A subcontractor does not have to rely on an intermediary
Article 808 § 3 of the Civil Code: the insured party (e.g. a subcontractor) may claim the benefit directly from the insurer, without going through the main contractor (Civil Code — consolidated text, ISAP). This is important when the main contractor does not report the loss or refuses to do so.
On the other hand, the absence of a waiver of subrogation clause in a CAR policy means that an insurer that pays compensation to the main contractor may sue the subcontractor (Article 828 § 1 of the Civil Code). The absence of this provision from a policy that is nominally intended to benefit the subcontractor is just as serious a defect as an exclusion of theft.
What to do — three time horizons
Before signing the contract
| No. | Action | Why |
|---|---|---|
| 1 | Define the risk-transfer event in a single sentence: “upon issuance of the Taking-Over Certificate for the section” — never use a general phrase such as “after acceptance” | There are several types of acceptance; general wording opens up a dispute over which of them transfers the risk |
| 2 | Negotiate the division of the works into sections and reserve the right to request a separate Taking-Over Certificate for each section | This is the most effective tool for shortening the risk period — it works without the other party’s consent |
| 3 | Check whether the contract contains a temporary-use clause; if it does, negotiate that it transfers at least the risk of loss and theft | Without this provision, you are liable for a component to which you have no access |
| 4 | Request a copy of the CAR/EAR policy together with the general terms and conditions and a schedule of additional clauses BEFORE signing the contract and before agreeing to bear the premium | A policy without a schedule of clauses cannot be verified — the exclusions are contained in those very clauses |
| 5 | Compare the policy with the contract requirements point by point: all-risks scope, reinstatement value, coverage period, extensions for theft of incorporated components and sections placed into operation, sublimits and deductibles | Every mismatch creates an uninsured period |
| 6 | Require the policy to include the subcontractor as an insured party and to contain a waiver of subrogation against the contractor and subcontractors | Without this, the insurer may sue the subcontractor after paying compensation |
| 7 | Specify and price a quantifiable security standard in the contract (fencing, lighting, guards, monitoring and frequency of patrols) | A documented standard limits your obligation to specific measures; without one, you face an unlimited allegation that “you failed to provide adequate security” |
| 8 | Negotiate symmetry in the subcontract: if it passes down the contractor’s obligations under the main contract, it must also pass down its rights | If the main contract regime applies, it applies in full — the clause on care of the works cannot be applied while ignoring the clause requiring those works to be insured |
Article 22(1) of the Construction Law imposes an obligation on the construction manager to “adequately” secure the site, but the regulations do not define a minimum — the number of patrols or any requirement for monitoring or physical security (Construction Law — consolidated text, ISAP). Paradoxically, it is in the contractor’s interest for the security standard to be specified in the contract rather than left undefined.
It is also worth remembering Article 433(3) of the Public Procurement Law, which prohibits provisions making the contractor liable for circumstances for which the employer bears sole responsibility. In cases KIO 2644/23 and KIO 314/22, the National Appeals Chamber held that clauses shifting the consequences of the employer’s errors to the contractor were unfair (Public Procurement Office commentary on Article 433 of the Public Procurement Law). However, this protection does not apply to a subcontract, which is not a public procurement contract.
During performance
- Submit applications for Taking-Over Certificates for individual sections as soon as the scope allows, and monitor the deadlines — the engineer’s silence after the deadline means that the certificate has been issued and the risk has transferred
- Maintain systematic photographic records of the progress of the works and the condition of security measures, with date stamps and geolocation — do this continuously, not only after an incident
- Document every request for additional security measures and how it was treated by the other party — classifying the request as a variation proves that the measure concerned was not included in the original scope of obligations
- Address in separate correspondence incidents affecting existing infrastructure (not your works — reinstatement is additional work) and incidents affecting your own works
- Separate temporary repairs from permanent repairs — if you reinstate a cable using a better technology without requesting a variation instruction, you perform the work for free and create an argument against yourself in a future dispute
After an incident — the 24-hour procedure
| Time | Action |
|---|---|
| Immediately | Report the incident to the Police yourself and obtain written confirmation and a case number — never rely on an assurance from the utility operator, user or security service |
| Immediately | Take photographs with date stamps and geolocation |
| Within 24 hours | Prepare an inspection report with the participation of the other party’s representative |
| Within 24 hours | Determine and record the legal status of the section: whether it had been switched into service, was subject to temporary use or had a Taking-Over Certificate — this determines which line of argument you should pursue |
| Within 24 hours | Submit a written DEMAND (not a request) that the loss be reported to the insurer, citing the specific extensions of cover required by the contract |
| Within 7 days | Obtain confirmation that the loss was actually reported, together with the claim number and the loss adjuster’s details |
| Within 7 days | If the insuring party does not report the loss — send a letter reserving the right to claim payment equivalent to the unrecovered insurance compensation + consider making a direct claim against the insurer (Article 808 § 3 of the Civil Code) |
Why is it so important to report the incident to the Police yourself? Insurers refuse to pay theft claims primarily on formal rather than substantive grounds. Relying on an assurance from the user, utility operator or security service that a report has been filed is a mistake that can cost you the entire insurance payout — and such assurances are not always true.
Article 818 § 3 of the Civil Code: failure to comply with the deadline for reporting a loss under the general terms and conditions entitles the insurer to reduce the benefit only if the delay prevented the circumstances or extent of the loss from being established. But failure to report the incident to the Police is a different category of problem — without a Police report, the insurer will refuse the claim without examining its merits.
An analogy for the IT sector — risk of loss of property before acceptance
The problem is not limited to construction. In IT implementation contracts, the risk of losing equipment before acceptance follows the same structure. Article 471 of the Civil Code, as the general basis for contractual liability for loss of property before acceptance, applies to both construction and implementation contracts (Civil Code — consolidated text, ISAP).
Physically placing equipment at the customer’s premises does not automatically transfer liability — just as physically installing a cable in a duct does not. The key is to distinguish between delivery, installation, commissioning and acceptance, and to define clearly when the risk passes.
With lump-sum remuneration (Article 632 § 1 of the Civil Code), the contractor generally cannot demand an increase in remuneration due to higher costs. The exception under § 2 is an unforeseeable change in circumstances that threatens a gross loss, which entitles the contractor to seek an increase in the lump sum or termination of the contract by a court — but theft on a linear construction project does not meet the criterion of unforeseeability (Supreme Court, II CSK 21/12).
Contract and policy audit — before paying for cover, check that you are actually receiving it
An audit of a construction contract or subcontract together with the CAR/EAR policy comes down to one question: does the contractual risk period coincide with the insurance coverage period. If not, you have a gap that you will pay for when the first theft occurs. And every subsequent one.
Three characteristics of linear projects create this gap: dozens of kilometres of work fronts that are impossible to secure physically, material with a high scrap value and phased commissioning long before final acceptance.
Carry out this review before signing the contract and before agreeing to bear the premium — not after the insurer’s first refusal. A flaw in the policy is systemic and will affect every subsequent theft.
If you need support with auditing risk-transfer clauses, comparing the policy against the contract requirements or negotiating division into sections and symmetry of rights in the subcontracting chain — contact us.
Frequently asked questions
The cable is already operating on a live network and we have no physical access to it — why are we still liable if it is stolen?
Temporary use does not constitute taking over of the works. It does not result in a Taking-Over Certificate, transfer care of the works or start the defects notification period. The employer assumes only the costs of ordinary wear and tear and maintenance — and theft is not ordinary wear and tear. The risk of loss passes only when the Taking-Over Certificate is issued.
We invoiced this scope and the employer paid. Does payment not mean that the risk has passed?
No. A partial (interim) payment does not transfer risk. Nor do completion of the works, notification of readiness for acceptance, commissioning, physical incorporation of the component or transfer of title to the material. Risk passes only upon formal taking over of the works — an acceptance report plus a Taking-Over Certificate under the FIDIC model.
As a subcontractor, can we approach the insurer directly, or do we have to wait for the main contractor?
Article 808 § 3 of the Civil Code gives the insured party (e.g. a subcontractor) the right to claim the benefit directly from the insurer, without going through the main contractor. The condition is that the policy must include the subcontractor as an insured party. Check the wording of the policy — if you are named in it, you do not have to wait.
What should we do in the first 24 hours after a theft to avoid losing the insurance payout?
Always report the incident to the Police yourself and obtain written confirmation and a case number (never rely on an assurance from the utility operator or security service), take photographs with date stamps and geolocation, prepare an inspection report with the participation of the other party’s representative, determine the legal status of the section and submit a written demand that the loss be reported to the insurer. Insurers refuse to pay primarily on formal grounds — failure to file your own Police report can cost you the entire insurance payout.
The contract does not require monitoring or guards — does that work in our favour?
Paradoxically — no. Article 22(1) of the Construction Law imposes an obligation to provide “adequate” security, but does not define a minimum. The absence of a documented standard opens the door to an unlimited allegation that “you failed to provide adequate security”. A documented standard limits your obligation to specific measures — and gives you an argument that you did what the contract required.
Will partial acceptance under Article 654 of the Civil Code relieve us of the risk?
Article 654 of the Civil Code gives the contractor the right to request partial acceptance against payment of part of the remuneration, but it is a default provision — the parties may exclude it. Under FIDIC arrangements, partial acceptance or an interim payment alone does not transfer risk. The risk is transferred only by a Taking-Over Certificate for the section — which is why it is worth negotiating the division of the works into sections and consistently applying for Taking-Over Certificates.
