From beginning of 2022, an amendment to the Czech Civil Procedure Code and to the Act on Execution (Enforcement) of Claims shall come into force, bringing biggest changes to enforcement of claims in the Czech Republic in many years. Generally, the changes aim at strengthening the debtor's position. Ongoing enforcements, which did not bring any proceeds for more than 6 years, shall be stayed, unless the creditor pays an appropriate deposit on enforcement costs. In total, the enforcement can be prolonged for up to 12 years. Any collected proceeds shall be used to redeem the principal amount of the claim first, and – only after its full coverage – interest and creditor's costs. This makes an important difference compared to the default rules of the Civil Code. On the other hand, employers will be entitled to a fixed compensation for fulfilment of duties related to administration of attachments of the debtors' earnings. The amount of the compensation should be CZK 50 per month for each employee subject to an attachment.
For the purpose of determining the starting point of the limitation period, the knowledge of damage is given also in the case when the bearer of the right, the limitation of which is adjudged, should and could have known about the decisive circumstances, so concluded the Supreme Court of the Czech Republic. The ruling is contained in the judgment of the Supreme Court of 28 May 2020 (25 Cdo 1510/2019), published in the civil part of the Collection of Court Judgments and Opinions on 29 January 2021 under No 91/2020. Thus, a long-standing case law insisting on actual knowledge of damage has been overcome. The former approach could have led, contrary to the of the purpose of the statute of limitations, to favouring a negligent party (who did not acquaint herself with the decisive circumstances although she could and should have done it).
The Supreme Court of the Czech Republic held that employer's decision to ensure its work needs by independent contractors instead of employees was a legitimate organizational measure which could lead to employee's redundancy and, thus, justify termination of the employment by employer's notice. This legal opinion was expressed in the Judgment of the Supreme Court of 29 January 2020 (21 Cdo 2128/2019), published in the Collection of Court Judgments and Opinions of the Czech Republic under No. 88/2020. The case concerned an employee who was an opera singer, however – basically – there is no reason not to apply the conclusions also in other labor fields (of course on the condition that there is no dependent work pursuant to section 2 of the Act No. 262/2006 Coll., the Labor Code, as amended, which must be performed within employment or other basic labor relationship).
On 30 July 2020, a comprehensive amendment of the Czech Labor Code entered into force, implementing experiences with the Code's application over recent years. Thus, inter alia, a new concept of paid leave is introduced (the leave being calculated per hours), job sharing is enabled, and employees are allowed to take extra leave for organizing summer camps and other like children events, having the right to one-weekly-wage compensation (which will be subsequently reimbursed from the public purse to the employer).
A new Real Estate Agency Act is in force in the Czech Republic since march this year. The Act No. 39/2020 Coll. is the first comprehensive regulation of the realtors' profession on the territory of the Czech Republic; compulsory qualification of real estate agents is provided for. Currently, an amendment to the Act is under legislative consideration. The amendment should, in connection with the ongoing state of emergency (coronavirus), prolong the transitional period, in which the agents should meet the qualification requirements, from six to ten months (i.e. until 3 January 2021).
Czech Republic has new rules for court experts and translators (interpreters) in place. On 20 December 2019, the Court Translators and Interpreters Act has been published in the Czech Collection of Laws (No 354/2019 Coll.), pairing the earlier Experts, Expert Bureaus, and Expert Institutes Act (No 254/2019 Coll.). The statutes are going to replace the existing fragmentary regulations dating back to the 1960s – the professions of court experts and translators are newly organized and new complex rules on their activity and liability are being introduced. Both acts shall come into force on 1 January 2021.
Yesterday, the Czech Government adopted new rules simplifying liquidations of companies and other juridical persons. In the case of businesses, there will be no need to publish double liquidation notice (including a notice for creditors to register their claims) anymore; just a single notice will suffice in the future. For other juridical persons (such as associations), a separate liquidation notice will be entirely abolished and replaced by making the necessary data available in the Public Register (e.g. the Register of Associations). The new regulation should come into force from 1 August 2019.
Taxable persons will more easily qualify for “return" of paid VAT from irrecoverable debt. From April 2019, an amendment to the Czech Act No. 235/2004 Coll., on the Value Added Tax, will come into force which enables to reduce creditors' taxable income by the value of irrecoverable debt in a much more generous way than so far (the current regulations require that the debtor be declared insolvent and subject to liquidation insolvency procedure). From now on, fruitless debt enforcement (execution) will be also one of the options.
Act on Insurance and Reinsurance Distribution will come into force from December 2018. The law, published in the Collection of Laws of the Czech Republic under No. 170/2018, brings a complex new regulation of insurance intermediaries and other entities dealing with distribution of insurance products. As such, it is distinguished by the efforts of increased customer protection and transparency towards the consumer public.
Jan Balarin, a partner in Bedrna & Partners, will present a paper at Carlsbad Legal Days, a traditional legal conference. The XXVI Carlsbad Legal Days will take place from 14 to 16 June 2018. Jan's topic will be “standard of proof and burden of proof in the context of evaluation of evidence in the Czech judicial practice".
Ministry of Agriculture of the Czech Republic issued a new regulation on food supplements. The Regulation, published in the Collection of Laws of the Czech Republic under No. 58/2018, sets – inter alia and as a follow-up to the EU legislation – new complex rules on labeling of food supplements, including claims that cannot be presented in connection with food supplements (such as health claims).
White paper on collective litigation has been approved by the Government of the Czech Republic. Thus, mass enforcement of claims – an instrument long called for by the doctrine as well as practice – will be, in all probability, made part of the Czech civil procedure. In the White Paper, opt-out group proceedings are intended, so a single action will cover claims of all persons affected by the same wrong, without the need to individually register the enforced claims.
International Conference Standard of Proof in Civil Procedure at the Faculty of Law of the Charles University in Prague. The Conference takes place on October 26 and 27, 2017. Standard of Proof, the subject of the Conference, is one of the key problems of civil procedure theory – must the judge be convinced of truthfulness of facts of the case and, if so, to what extent, or can a certain level of probability be sufficient? Bedrna & Partners' Jan Balarin takes part in the Conference with his paper.
A legal opinion was published in the Collection of Court Judgments and Opinions of the Czech Republic which clarifies the mode of transfer of ownership of apartment units created before the new Civil Code entered into force. The opinion follows from the Judgment of the Supreme Court of the Czech Republic, case No. 26 Cdo 3862/2015 (published under No. 21/2017). Contracts on transfer of ownership of apartment units entered into from 1 January 2014 shall be governed by the new Civil Code (Act No. 89/2012 Coll.), whereas the transferred unit shall be specified in the contract in accordance with the (now repealed) Apartment Ownership Act (No. 72/1994 Coll.).
In April this year, the Czech Copyright Act has been significantly amended as regards the collective management of copyright as well as other so far controversial issues. The Amendment (Act No. 102/2017 Coll.) belatedly implements the Directive 2014/26/EU on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market, and thus it brings a much needed element of legal certainty into the current unanchored practice of collective management organizations. In addition, polishing of the concept of “employee's copyright" can be mentioned; a presumption of irrevocability of the employee's consent to assignment of his/her property rights in a copyrighted work to a third party shall apply in the future.
The new Czech Civil Code is being amended for the first time, two years after it entered into force. The most important changes brought by the Amendment (Act No. 460/2016 of 30 December 2016) are as follows: the pre-emptive right of co-owners of immovable property will be restored starting from 1 January 2018; the maximum amount of financial security which landlord may require from tenant of an apartment is reduced from six to three monthly rents; legal entities will no longer be forced to appoint one member of the board to deal with employment matters; a public registry of trust funds is established; courts' powers concerning legal capacity of natural persons is extended so that legal capacity can be restricted for up to five years.
From the start of 2017, regulation of promotional competitions for consumers is to be significantly relaxed in the Czech Republic. The new Act No. 186/2016 Coll., on Games of Chance, does not see marketing competitions (prizes) as lotteries; such competitions shall be judged just as commercial practices according to the Act No. 634/1992 Coll., on Consumer Protection, in the future. Hence, promotional competitions and their terms shall not be unfair (misleading, aggressive), but, for instance, they will not be limited by maximum prize values that may be awarded.
As of October 2016, a new Czech law on public procurement shall take effect. The new regulation (Act No. 134/2016 Coll.) has been enacted in April this year implementing a package of European Union Directives on public procurement from 2014, especially the Directive of the European Parliament and of the Council No. 2014/24/EU. The law is aimed to enable more flexible approach to public contracts, e.g. it brings the possibility to evaluate tenders on the basis of more criteria than just the lowest price and expands the room for amending the existing public-procurement contracts.
The Supreme Court of the Czech Republic took a stand on the character of the obligation of employees to wear a uniform. A Supreme Court's Judgment of 25 June 2015 (21 Cdo 2930/2014) was published in the Collection of Court Judgments and Opinions of the Czech Republic under No. 12/2016 according to which ignoring the obligation to perform work in a uniform (provided by internal rules, superior's instruction or employment contract) does not constitute a breach of employee's duty resulting from legal regulations applicable to the employee's work, but it is a failure to meet requirements for proper performance of work. It is quite a controversial opinion, as it leads, inter alia, to the conclusion that refusal to wear a uniform cannot be a cause to immediate termination of the employment according to § 55 of the Labor Code, irrespective of the seriousness of the case.
New Guidelines for Administration of the Real Estate Cadastre by the Czech Agency for Land Surveying and Cadastre come into force at the beginning of April. The Guidelines, originally published on 10 February 2016, are an administrative instrument implementing various cadastral laws, especially the Cadastral Act No. 256/2013 Coll. and the Cadastral Decree No. 357/2013 Coll. Although the Guidelines are not legally binding in formal sense (due to their internal nature), they significantly shape the procedure before Cadastral Offices. That is why they play a key role in practice. The new Guidelines reflect the recodification of Czech private law (including the real-estate regulations) being in force since 2014 and replace the preceding Guidelines for Administration and Maintenance of the Real Estate Cadastre of 2001.
The Czech Supreme Court held that if – based on an agreement between the creditor and debtor in form of a notarial deed – equity is to be provided to the debtor after execution of the agreement, such arrangement is to be judged as a condition according to § 43 of the Act on Distraint Procedure. The ruling of the Supreme Court (31 Cdo 2184/2013) was published in the Collection of the Court Judgments and Opinions under No. 55/2015. As consequence of the ruling, creditor's performance shall be, within the distraint procedure, documented by a deed issued or verified by a governmental body or notary public. So, if the debtor does not consensually acknowledge the performance, the creditor will have to seek a declaratory judgment first, which can cause substantial delay in enforcement of the claim.
The subject-matter jurisdiction for disputes concerning unit (condominium) owners' contributions to administration of building and utilities payments has been clarified. The Act No. 87/2015 Coll., entering into force on 1 May 2015, provides that district courts (okresní soudy) are competent to deal with the disputes. Thus, it is removed a long-lasting unsatisfactory situation when – because of contradictory case law – associations of unit owners (condominiums) were confused whether to file actions against defaulting unit-owners with district or regional courts. The uncertainty frequently caused prolongations and increases of litigation costs to the prejudice of diligent unit-owners.
The Constitutional Court of the Czech Republic abrogated a provision of the Employment Act which fixed a minimum fine of CZK 250,000 for the offence consisting in enabling illegal working. The abrogation follows from the judgment No. Pl. ÚS 52/13 published in the Collection of Laws on 20 October 2014 under No. 219/2014. The abrogated provision addressed not only illegal employment of foreigners but also working without an employment contract in cases when employment contract should have been made. The rule was regarded as controversial from the beginning as it did not enable to set a milder fine than CZK 250 000, not even in banal cases (such as help of relatives in retail shops). However, meanwhile, the Parliament managed to prepare an amendment to the Employment Act which returns the minimum fine to law, although in a smaller amount (CZK 50,000). The amendment shall enter into force on 1 January 2015.
Yesterday, the proposal for a regulation of the European Parliament and the Council creating a European account preservation order in civil and commercial matters was formally enacted into law in Strasbourg. The Regulation establishes a new instrument enabling creditors to freeze bank accounts of their debtors in other EU member states. Thus, recovery of cross-border debts within the EU will be substantially facilitated.
You are invited to the public meeting on the new real-estate law in the Czech Republic we organize in cooperation with LEXXUS real estate agency. The meeting will take place on January 23, 2014 from 18 pm in Prague, V Celnici 1040/5 (LEXXUS offices). Language of the meeting is Czech (English discussion is possible). Please confirm your attendance by calling: + 420 221 111 999.
Recodification of private law in the Czech Republic, that will come into force at the beginning of the next year, brings not only innovations of substantive law, but also changes to the rules governing court procedure. Some types of proceedings (probate or divorce proceedings) are singled out from the Civil Procedure Code and newly regulated by the Specific Court Proceedings Act (No. 292/2013 Coll.). In addition, B2B litigation will be generally conducted by District Courts and not Regional Courts as up to now. We believe the changes will lead to improvements in performance of the courts.
An amendment to the Commercial Code reshuffles the rules on payment periods and recovery of claims in commercial transactions. In connection with the European Directive 2011/7/EU, Czech Parliament passed an act according to which the price for delivery of goods or provision of services between businesses shall be payable by the debtor within 30 days after receipt of the invoice or delivery of goods (services), whichever occurs later. The law came into force on 1st July 2013. Payment periods longer than 60 days may be arranged only exceptionally, provided that they are not grossly unfair to the supplier (such agreements are excluded at all in relationships with public authorities and undertakings). The statutory interest rate for late payments equals newly to the Repo Rate of the Czech National Bank increased by 8 percentage points. The minimum amount of costs connected with collection of payment, the supplier is entitled to, has been set at CZK 1,200.
The Ministry of Justice plans to recodify the civil procedure rules. On 11 April 2013 the Minister of Justice established the Commission for Recodification of Civil Procedure and emphasized the need to replace the existing Civil Procedure Code, having its roots back in 1963. The Commission will be headed by the Vice Chairman of the Supreme Court, JUDr. Roman Fiala. Thus, after enactment of the new Civil Code, we can expect a far reaching “reconstruction" of the procedural pillar of the civil law.
By a judgment of 16 October 2012 the Czech Constitutional Court annulled the provision of the Civil Procedure Code limiting the period to contest court orders for payment of promissory notes (or negotiable instruments in general) to 3 days. Although the provision exists at least since the 19th century, the Constitutional Court held that now it is too short to present a comprehensive defense. The reason is mainly that promissory notes have been frequently used in consumer credit relationships in recent years and consumers are usually not familiar with negotiable instruments law. The legislator prepares – independently of the judgment – an amendment of the Civil Procedure Code which shall prolong the time to file defense against payment orders to 8 days, however the Constitutional Court indicates it should be reconsidered anyway.
The Czech Supreme Court adopted a position on monitoring of use of Internet in the workplace. The judgment of 16 August 2012 (21 Cdo 1771/2011) makes it clear that covert monitoring of employees' activities on employer's computers does not constitute an infringement of employees' right to privacy, but it is a legitimate means of protection of employer's property interests (§ 316(1) of the Czech Labor Code). The Supreme Court held that "although also employee's Internet traffic data are privacy related information, the substance of tracking by the employer was not to gather information on the employee's privacy but to control whether the employee […] viewed websites unconnected to his work". Thus, subject to a certain condition of adequacy, employer has the right to oversee – even without employee's knowledge – how he or she uses company computers and to draw legal consequences of that, even in the form of termination of employment.
The Parliament of the Czech Republic has enacted the Mediation Act. Mediation is a modern technique of resolution of property and family-law disputes. It enables to achieve a settlement by the help of a qualified mediator. The court may order the parties to take part in mediation. The Mediation Act (202/2012 Coll.) shall come into force on 1 September 2012.
Job applicants are to be regarded as incapable of work if they do not pass entrance medical examination before starting to work. This is provided by the Act No. 373/2011 Coll., on specific medical services, which has come into force on 1 April 2012. The duty shall apply also to short and part-time employment agreements. However, a transition period of one year was set down, during which present rules can be followed.
The President of the Czech Republic signed a package of laws on recodification of private law. The recodification consists of the Civil Code, Companies Act and Act on Private International Law. The signature completed the legislative process which brings the most significant changes in Czech civil and commercial law in the last twenty or even forty years. Contractual relationships, family law, ownership of real estate and apartments, corporate law and many other key legal institutes are regulated anew. The recodification shall come into effect on 1 January 2014.
Czech Supreme Court: Case law requiring prior assessment of property transferred between interconnected persons reversed. The Joint Senate of the Supreme Court adopted a surprising opinion on 8 February 2012 (31 Cdo 3986/2009). Having departed from its previous case law, the Supreme Court held that a valid property transfer between interconnected persons pursuant to § 196a of the Commercial Code (e.g. between a joint stock company and member of its board) is not conditioned by assessment of the value of the property by an appraiser appointed by the court. The conclusion shall apply provided that the property is transferred for market price. The ruling is to be welcomed as improvement of legal certainty.
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