The information contained in this bulletin is presented to the best of our knowledge and belief at the time of going to press. However, specific information related to the topics listed in this bulletin should be consulted before any decisions are made.
Banking, Finance & Insurance:
Daniel Weinhold, Václav Štraser, Ondřej Tejnský
Competition Law / EU Law:
Tomáš Čermák
Dispute Resolution:
Milan Polák, Zbyšek Kordač, Anna Bartůňková, Michaela Koblasová, Michal Švec
ESG – Environment, Social, (corporate) Governance:
Daniel Weinhold, Tereza Hošková
Family Office:
Milan Polák, Zbyšek Kordač, Michaela Koblasová
Insolvency and Restructuring:
Zbyšek Kordač, Jakub Nedoma
IT, Media & Telecommunication:
Martin Lukáš, Jakub Nedoma, Michal Przeczek
Labour Law:
Eva Procházková, Anna Bartůňková, Daša Aradská, Ondřej Tejnský
Mergers and Acquisitions:
Daniel Weinhold, Václav Štraser
Personal Data Protection:
Martin Lukáš, Tereza Hošková, Daša Aradská
Public Procurement & Public Sector:
Martin Lukáš, Tereza Hošková, Monika Švaříčková
Real Estate:
Pav Younis, Václav Štraser
Regulatory and Government Affairs:
Daniel Weinhold
Start-ups, Venture Capital and Cryptocurrency:
Pav Younis, Martin Lukáš, Jakub Nedoma, Michal Švec, Ondřej Tejnský
Legislation news
Amendment to the Insolvency Act
On 23 July 2024, the President of the Republic signed a bill amending Act No. 182/2006 Coll., on Bankruptcy and Methods of its Resolution (the Insolvency Act), as amended (the “Insolvency Act”), and related laws (the “Amendment”).
The amendment implements Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, insolvency and bans and measures to improve the effectiveness of restructuring, insolvency and resolution procedures and amending Directive (EU) 2017/1132 (the Restructuring and Insolvency Directive).
A key element is the unification of the period of debt settlement to three years for all natural persons, while the amendment also introduces the following changes to the debt settlement process:
- the shortening of the repayment period is compensated by the abolition of the flat threshold of 30% satisfaction of creditors’ claims, which is replaced by a rate individually determined by the insolvency court taking into account the debtor’s income potential (i.e. the law will no longer set a fixed minimum amount of unsecured creditors’ claims that the debtor must repay);
- emphasis on the individual circumstances of each insolvency case, the debtor’s conduct during the insolvency proceedings and the debtor’s actual assets and income;
- the period for submitting reports on the status of insolvency proceedings and a summary of the debtor’s income is increased to every 3 months, unless the insolvency court sets a different submission period not exceeding 12 calendar months;
- the debtor will be exempted from the payment of claims included in the arrangement provided that for a period of three years from the approval of the arrangement the debtor has fulfilled all material obligations arising from the arrangement, including the repayment plan with the realization of assets, and the arrangement has not been revoked;
- the grounds for cancellation of approved debt relief are expanded;
- deductions from wages and other income can now also be made in the initial phase of debt settlement and at the same time a central register of deductions from wages is introduced, which is maintained, operated and administered by the Executor’s Chamber of the Czech
Most of the amendment will enter into force on the first day of the first calendar month following its promulgation, i.e. probably on 1 September 2024. Insolvency proceedings commenced before the date of entry into force of the amended regulation will, with minor exceptions, continue to be governed by the Insolvency Act as amended prior to the amendment.
Case Law
On the need for proper and timely notification of defects in the leased property
(Judgment of the Supreme Court Case No. 26 Cdo 2294/2023 of 12 June 2024)
The applicant was the operator of the hotel which she occupied under a lease agreement with the defendant as landlord. The defendant interfered with the applicant’s possession by wrongfully occupying the leased property. After the disturbance of possession had been removed and the applicant had taken possession of the property, she carried out the repairs necessary to make the hotel operational and sought by way of an action to recover from the defendant (the landlord) the amount incurred for those repairs.
The Court of First Instance examined the case under Sections 2894(1) and 2900 of the Civil Code and dismissed the action on the grounds that the applicant had not established and proved that the damage claimed was causally connected to the defendant’s unlawful conduct. The Court of Appeal upheld the majority of the first instance decision and at the same time assessed that part of the defects fell within the regime of Section 2208 of the Civil Code, i.e. the tenant could claim compensation from the landlord for the costs reasonably incurred in remedying the defects only if it had first given the landlord proper and timely notice of them. However, according to the Court of Appeal, this did not happen in the present case.
On the applicant’s appeal, the Supreme Court stated as follows:
“Pursuant to section 2205(b) of the Civil Code, the lessor is also obliged to maintain the property in such a condition that it can serve the use for which it was leased, and there is no doubt that the lessee’s notification obligation contained in section 2208 in conjunction with section 2214 of the Civil Code also serves to ensure that the lessor is informed of defects in the leased property which he is obliged to remedy so that he is able to fulfil his aforementioned statutory obligation. As a rule, it is the lessee who has access to the property and is therefore able to discover the existence of any defects in the leased object.
However, if the landlord discovers the defect himself, whether in connection with a regular inspection of the property (section 2219(1) of the Civil Code) or otherwise, it would be of no significance to penalize the tenant (by making it impossible to exercise the rights listed in section 2208(1) of the Civil Code) for failure to comply with the notification obligation. The same legal opinion has been reached in the commentary literature, which shows that the fact whether the landlord knew or should have known about the defect is also relevant here. The purpose of the notification obligation under the commented provision (§ 2214 CC) is to obtain this information by the lessor so that he can remedy the defects. If he already has this information (e.g. as a result of an inspection pursuant to section 2219 of the Civil Code), it would make no sense to penalize the tenant for failure to comply with the notification obligation.”
The Court of Appeal held that the applicant was not entitled to compensation for the costs incurred for repairs to the leased property, as it had not notified the defendant as the lessor of the need to carry them out within the meaning of Section 2208(1) of the Civil Code. However, the Court of Appeal did not inquire whether the landlord had not in fact otherwise become aware of the need to carry out repairs to the leased property; its legal assessment is therefore incomplete in the light of the above conclusions and, therefore, in the view of the Court of Appeal, incorrect.
Selective refusal by the court to apply part of a legal provision
(Constitutional Court ruling No. II.ÚS 2865/23 of 28 May 2024)
The applicants lodged a constitutional complaint against the decision of the Court of Appeal, which, without proper reasoning, refused to apply Article 12(4) of the Lawyer’s Tariff, on the grounds that one lawyer had represented all four applicants, that the reasoning used was identical and that the award of fees to all four applicants was therefore considered unfair.
The Constitutional Court has adopted the following position:
‘Situations in which the general courts have found that the amount of compensation for costs calculated pursuant to Section 12(4) of the Advocate’s Tariff is disproportionately high with regard to the nature of the case have been dealt with by the Constitutional Court in the past (cf. In doing so, it stated that the general court is obliged to apply the legal regulation to the case as a whole and is not entitled to selectively deny the parties to the proceedings the application of a particular provision – here, § 12(4) of the Advocates’ Tariff (cf. the Constitutional Court’s ruling in Case No. IV ÚS 529/16, including its obiter dicta).
If the Court of Appeal did not consider the application of the above- quoted provision to be appropriate, it could and should have chosen a procedural procedure that could be considered constitutionally compliant from a constitutional point of view. On the one hand, the Court of Appeal indicated the reasons which led it not to apply the provisions of Article 12(4) of the Lawyer’s Tariff (one lawyer represented four complainants, there was a single argumentation which was identical in relation to all the complainants and the Court did not consider the total amount of compensation to be fair) and, on the other hand, in paragraph 21 of the contested order, it expressly excluded the application of Article 150 of the Civil Procedure Code. In such a situation, the question arises on the basis of which legal regulation he decided the case.
If the Court of Appeal considered that, in the light of the principle of fairness, it could moderate the amount of the costs award, it should have done so in the manner provided for by law and should have informed the parties of that possibility and created a procedural space for them to comment on the court’s action. Failure to do so is arbitrary.”
Even when deciding on the costs of the proceedings, the court cannot exclude the application of a non-legislative legal regulation or part thereof (here, Section 12(4) of the Lawyer’s Tariff) without duly justifying why the regulation or part thereof is contrary to the law or even the constitutional order within the meaning of Article 95(1) of the Constitution.