According to the European Court of Justice, Poland is in breach of the freedom of movement of capital for maintaining a 5 per cent cap on foreign investments set up for second-pillar pension funds.
In December 2011, the court determined that the investment cap in Poland's law did in fact restrict the free movement of capital in a manner that "cannot be justified".
The court rejected the Polish government's argument that the investment activities of second-pillar funds were "not economic in nature", and clarified that "occupational pension funds operating in accordance with the principle of capitalisation engage – notwithstanding their social objective and the compulsory affiliation to the second pillar for the retirement scheme to which they belong – in economic activity".
The court added that, apart from restricting Polish funds in their investments, the legal provision had also had a "restrictive effect" in relation to companies established in other EU Member States, in that it constituted an "obstacle to the raising by such companies of capital in Poland".
"It must, accordingly, be held that the Republic of Poland has failed to fulfil its obligations under Article 56 EC", the court concluded.
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