Category: Czech Republic

In the Czech Republic, persons who undergo Covid-19 vaccination have been given the opportunity to claim financial compensation from the state if the vaccination (or, more precisely, the medicinal product containing a vaccine) causes harm. The Czech Parliament adopted Act No. 569/2020 Sb., on the Distribution of Medicinal Products Containing a Vaccine for Covid-19 Vaccination and on Compensation for Harm Caused to Those Vaccinated by These Medicinal Products (“Act No. 569/2020 Sb.”), which allows such compensation. According to the explanatory memorandum, this measure aims to “facilitate compensation of those who get vaccinated if they are harmed by the vaccination, thereby also indirectly promoting interest in Covid-19 vaccination.”

However, the state’s indemnification does not apply to all Covid-19 vaccines, but only to those purchased based on the European Commission decision.

Until now, the state has been obligated to compensate for harm caused by compulsory vaccination, on the basis of the relatively recent Act No. 116/2020 Sb. on Compensation for Harm caused by Compulsory Vaccination (“Act No 116/2020 Sb.”). This act was adopted following, among others, the judgment of the Constitutional Court no. Pl. ÚS 19/14, in which the Constitutional Court assessed the constitutionality of compulsory vaccination: the Constitutional Court did not find it unconstitutional, but noted that if the state introduces sanctions for persons who refuse compulsory vaccination, the state should also adequately address cases where the vaccinated person suffers harm as a result of the vaccination.

Covid-19 vaccination is not compulsory. However, Act No. 569/2020 Sb. sets out that harm caused by Covid-19 vaccination and the scope of the compensation shall be assessed analogically under the rules for compensation for harm caused by compulsory vaccination, namely under Act No. 116/2020 Sb. Covid-19 vaccination is therefore the first non-compulsory vaccination for which it will be possible to claim damages from the state.

An application for compensation for harm caused by the Covid-19 vaccination should be submitted to the Ministry of Health, as is the case for compulsory vaccination. If the injured party is not satisfied with the way the Ministry handles their application, they may seek damages in court. However, an action against the state can be brought only provided that the right to compensation is first exercised at the Ministry, which is a precondition for bringing such an action.

LEGAL PRESUMPTION OF CAUSALITY

To facilitate the legal position of a patient applying for compensation for harm caused by the compulsory vaccination, Act No. 116/2020 Sb. envisages that for some likely consequences caused by the vaccination, the injured person will not have to demonstrate a causal link between the vaccination and the harm caused, as a legal presumption of causality applies in such a case. The likely consequences of a given vaccination are to be determined by an implementing decree.

Its draft was published by the Ministry of Health in March 2020 already; therefore, it does not mention any likely consequences of Covid-19 vaccination. If, even in the final version of the decree, Covid-19 vaccination is not mentioned, the position of those harmed by Covid-19 vaccination will be more difficult as they will not be able to rely on the legal presumption of a causal link. In that case, it would largely be up to the Ministry of Health how it will assess the consequences of the vaccination and how willing it will be to satisfy any patients’ claims.

LIABILITY OF VACCINE MANUFACTURERS

This law naturally does not affect in any manner the potential liability of other parties. Vaccine manufacturers will remain liable for harm caused by defective vaccines under the relevant provisions of the Czech Civil Code, which implement the EU Directive on the approximation of the laws, regulations and administrative provisions of Member States concerning liability for defective products (the so-called Product Liability Directive).

However, it would be necessary in this case for the harm to be caused by a defect in the vaccine. In connection with vaccination, harm often arises because of the body’s response to the vaccine, but this will usually not be considered a defect in the vaccine. In this context, the Commission has undertaken to compensate manufacturers for the damage they would suffer from any civil litigation, which has attracted some controversy and has also been the subject of the European Parliament’s interpellation for the Commission (such as the question for written answer No. P-000192/2021).

Finally, individuals who have suffered harm because of vaccination will also be able to claim compensation from the health service provider who administered the vaccine should the provider breach their obligations in administering the vaccine (e.g. a breach of recognized standards of medical care) or if the provider administers a defective vaccine (for example, a vaccine that has not been stored in accordance with the manufacturer’s instructions, etc.).

By Vaclav Audes, Partner, Frantisek Neuwirth, Senior Associate, and Denisa Fuchsova, 
Junior Associate, Havel & Partners

On January 29, 2020, CEE Legal Matters reported that BBH had advised the Czech-Moravian Development Bank on the launch of its IPO Fund and signing of a cooperation agreement with the Prague Stock Exchange to support new entities wishing to list on its START market. CEEIHM spoke with Martin Potucek, Chief Executive Officer at Czech-Moravian Development Bank, to learn more about the matter.

CEEIHM: First of all, congratulations on the establishment of your IPO fund. Why did the Czech-Moravian Development Bank set this up?

Originally reported by CEE In-House Matters.

Czech corporate law has changed significantly over these past few years. In 2014, the Act on Corporations replaced the Commercial Code that had been in place since 1991. On January 1, 2021, an additional amendment to the Act on Corporations (the “Amendment”) will go into effect.

The most noteworthy changes introduced by the Amendment include the simplification of the incorporation process for limited liability companies, the re-introduction of the monistic (one-tier) management structure of joint stock companies with only one corporate body, and the introduction of new rules governing financial distributions.

Broader Impact of the New Corporate Rules

Many companies have been busy dealing with the impact of COVID-19 and have not had the opportunity to reflect on the regulatory changes brought about by the Amendment. However, these changes not only have the potential to affect transactions and/or restructures which are currently underway, but are also likely to have a continuing impact on the operations of Czech companies going forward. Set out below are some of the more important changes being introduced by the Amendment:

Transactions. The Amendment broadens the spectrum of transactions which require the approval of the general meeting by the seller (and also, in some circumstances, by the buyer).

The purpose of expanding the existing category of transactions is to protect shareholders against the undesired dispossession of company assets by management and requires that any such dispossession be appropriately reflected in the relevant transaction documentation. This change is likely to increase the administrative burden and costs associated with approving and closing certain transactions.

Personal Implications for Directors and Other Persons. If a corporate director contributed to a company´s insolvency by way of breaching his/her obligations, the insolvency court may order the director to return any benefit obtained from the company in the up-to-two years prior to the commencement of insolvency proceedings.

In addition, the Amendment stipulates that if a corporate director is repeatedly or materially breaching his/her duties, the court may disqualify that director from performing that position for up to three years, even if the director does not cause or contribute to the company’s insolvency. This strict rule also applies to other persons who are in a similar position. The application of this new rule may have special relevance in terms of the unpredictable impact caused by the COVID-19 outbreak in cases where a corporate director remains engaged by a company after a change in the company’s shareholders.

Distribution of Profit and Other Equity. In line with their duty of due managerial care, directors are ultimately responsible for taking all necessary and reasonably foreseeable steps to prevent a company’s insolvency, including making an assessment of whether the distribution of the company´s financial sources could lead to financial difficulties. The Amendment has introduced new balancing tests – an insolvency test and an equity test – which should be applied by directors prior to any distribution in order to comply with their duties and preserve the financial stability of the company.

Additionally, the Amendment requires that any shareholder of a limited liability company who received distributions contrary to applicable legal requirements must return such distributions to the company and shall no longer be protected by the defense of good faith (while shareholders of joint stock companies remain protected unless they knew or should have known that the distribution broke the law).

Beyond the changes introduced by the Amendment, it is also noteworthy that in late 2020 the Czech Republic abolished the property acquisition tax, which amounted to 4% of the purchase price and was applicable to all transfers of real estate (asset deals). The effectiveness of the abolishment was made retroactive to December 1, 2019, and buyers who paid the acquisition property tax after that date can demand repayment. The abolishment of the acquisition property tax may make asset deals more attractive, in particular in the real estate and hotel and leisure sectors, where share deals were traditionally more popular.

By Lukas Janicek, Partner, and Magda Ullmann, Senior Associate, CMS

This Article was originally published in Issue 7.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

White & Case has advised CTP B.V. on the latest drawdown of EUR 500 million 0.750% green bonds due 2027 under the Euro Medium Term Note Program, which are admitted to trading on the Global Exchange Market of Euronext Dublin. De Brauw Blackstone Westbroek advised CTP as to Dutch law matter.

The joint lead managers were Citigroup, ING Bank, J.P. Morgan, and UBS.

According to White & Case, the transaction follows the establishment of CTP’s EUR 4 billion Euro Medium Term Note Program, under which the green bonds have been issued, and the successful debut international offering of EUR 650 million 2.125% green bonds due 2025 and issuance of EUR 400 million 0.625% green bonds due 2023 thereunder.

White & Case’s team included Prague-based Local Partner Eva Svobodova, Partner Vaclav Kubr, and Associates Erik Illmann and Jan Vacula and London-based Partners Stuart Matty and James Greene and Associate Nikita Thakrar.

Kocian Solc Balastic has advised Solitea, which develops business, accounting, and personnel systems, on the acquisition of the IT Services division of Czech company AspectWorks. Solo practitioner Marek Hoskovec advised the sellers on the deal. 

KSB describes AspectWorks, which focuses on cloud platforms, as a “leading Czech implementer of the world’s most successful CRM platform from Salesforce.”

KSB’s team included Partner Drahomir Tomasuk and Lawyer Jan Beres.

Schoenherr has advised Raiffeisen Bank International AG and Raiffeisenbank a.s. on the acquisition of Akcenta CZ a.s., a CEE/SEE provider of FX and payment services to European SMEs and high net worth individuals, from Akcenta Group SE and Milan Lacina. Tarpan Legal advised the sellers on the transaction, which remains contingent on regulatory approval.

According to Schoenherr, “the acquisition will allow Raiffeisenbank to provide instant/short time window payment services, including cross-border payment and FX speculative trades. Akcenta CZ a.s. will work closely with Raiffeisenbank’s foreign exchange and payment transaction unit, but will not be fully integrated into Raiffeisenbank.”

Schoenherr’s team was led by Partner Vladimir Cizek and Attorney Michal Jendzelovsky and included Attorneys Rudolf Bicek, Eva Bajakova, Claudia Bock, Viktor Pakosta, Matej Sarapatka, and Marie Gremillot and Associate Jachym Bem.

Havel & Partners has advised D&FG Sumava I s.r.o. on the development and subsequent CZK 220 million sale of three buildings of the Sumavske Strane Project to over 70 individual buyers.

The Sumavske Strane Project, which is located in the heart of the Sumava mountains in the Czech Republic, consists of three buildings, each named after a tree species – Ash, Linden, and Beech. 

Havel & Partners’ team included Partner Marek Losan, Senior Associate Jakub Zamyslicky, and Junior Associate Nikola Leova.

Allen & Overy has advised W.A.G. Payment Solutions on an unspecified investment in the Netherlands-based Last Mile Solutions. Nordbruis Clement reportedly advised the Last Mile Solutions on the deal.

W.A.G. Payment Solutions — also known as “Eurowag” — is a privately held provider of integrated mobility services aimed at facilitating fuel and toll payments, fleet management, and tax refunds, among other services. 

Last Mile Solutions is a provider of EV charging and smart energy management services through its e-Mobility platform. The company has provided over 100 million of kilowatt hours at 31,000 charge points across 22 countries. 

According to Allen & Overy, “through this partnership, both companies will combine efforts to provide industry-leading e-mobility services to their customers throughout Europe.” 

The A&O team included Prague-based Partner Prokop Verner and Senior Associate Jakub Cech and Amsterdam-based Partner Sophie Roozendaal and Associate Linde de Boon.

Allen & Overy has advised W.A.G. Payment Solutions on an unspecified investment in the Netherlands-based Last Mile Solutions. Nordbruis Clement reportedly advised the Last Mile Solutions on the deal.

W.A.G. Payment Solutions — also known as “Eurowag” — is a privately held provider of integrated mobility services aimed at facilitating fuel and toll payments, fleet management, and tax refunds, among other services. 

Last Mile Solutions is a provider of EV charging and smart energy management services through its e-Mobility platform. The company has provided over 100 million of kilowatt hours at 31,000 charge points across 22 countries. 

According to Allen & Overy, “through this partnership, both companies will combine efforts to provide industry-leading e-mobility services to their customers throughout Europe.” 

The A&O team included Prague-based Partner Prokop Verner and Senior Associate Jakub Cech and Amsterdam-based Partner Sophie Roozendaal and Associate Linde de Boon.

Allen & Overy’s Prague office has advised the Ball Corporation on its acquisition of land for the planned EUR 170 million construction of a manufacturing plant in the Borske Terasy industrial park located in Pilsen.

The plant is expected to open in October 2022.

Ball is a US-based packaging manufacturer that was founded in 1880, operates in over 100 locations, and currently employs more than 21,000 people worldwide.

According to Allen & Overy, the plant is designed to manufacture 100% recyclable beverage packaging.

Allen & Overy’s team consisted of Partner Prokop Verner and Associate Martin Bytcanek.

Allen & Overy could not disclose further details about the transaction.