Category: Czech Republic

  • Kocian Solc Balastik Advises Plzenske Mestske Dopravni Podniky on Award of Contract to Rebuild Plzen Tram Depot

    Kocian Solc Balastik has advised Plzenske Mestske Dopravni Podniky – the Pilsen Public Transport Corporation – on awarding a public contract to renovate the Slovany tram depot in the Czech city of Plzen.

    According to KSB, “the nearly CZK 1.7 billion investment aims to refurbish and redevelop the depot to meet the city public transport operator’s current needs.” The reconstruction of the depot, which was originally built in 1943 (for trams that weight significantly less than today’s vehicles), is expected to begin shortly and be completed by the end of 2022.

    Kocian Solc Balastik’s team included Partners Sylvie Sobolova and Vaclav Rovensky and Advocate Martina Parusova Zímova.

    Kocian Solc Balastik did not reply to our inquiry on the matter.

  • KSB Advises Eligo on Acquisition of Euroserum’s Czech Branch

    Kocian Solc Balastik has advised Eligo on its acquisition of the Czech branch of Euroserum.

    Financial details of the transaction were not disclosed.

    According to KSB, “Eligo is a food company specialized in the production of dried dairy products. Euroserum is a French manufacturer of dried whey, and a subsidiary of Sodiaal.”

    KSB did not respond to an inquiry about the deal.

  • Stepan Klecek Strengthens BDO Legal’s Team in Prague

    Stepan Klecek, the founder of Klecek Associates, has become a Partner at BDO Legal in Prague.

    BDO has recently expanded its network of legal advisory offices with the establishment of a new one in the Czech Republic (as reported by CEE Legal Matters on August 5, 2020).

    According to BDO Legal, “Klecek’s main areas of focus are commercial law, M&A, real estate, and financing, and he has been involved in the areas for more than 13 years.”

    Klecek spent eight years at PRK Partners and four at Rentsch Legal before setting up his own firm in 2018. He obtained his first Master’s degree at the Faculty of Law of Charles University, and the second one at the University of Economics in Prague.

  • The Minimum Threshold of Property Damage in the Criminal Code Is Not Unconstitutional. The Possible Increase of the Limit Is a Legislative Matter

    The District Court of Liberec as plaintiff called into question the constitutionality of Section 138 Par. 1 of the Criminal Code that determines the property damage threshold after which criminal liability arises. The Court concluded that the regulation contradicts Art. 40 Par. 6 of the Charter, which stipulates that the criminality of a fact must be determined and the punishment must be decided according to the law that is in force at the time when the crime was committed. More recent laws should be applied when it is beneficial to the offender.

    The plaintiff particularly appealed to the fact that the threshold of damage is primarily criticized for unreasonably amounting to CZK 5,000 and for not having been changed since 2002. Thus the threshold has been set without regard to inflation, the rise of living standards and price levels in the Czech Republic. In order to illustrate how the economic situation has changed, the Court referred to average salaries in comparison to the regulation. In 1992, the minimum threshold for property damage was equivalent to 43% of average salary, while in 2018 it amounted to “only” 15,7%. This means that a crime, for instance the theft of the same amount of CZK 5,000 in cash, will not affect the victim in 2018 in the same way as it did in previous years. The plaintiff perceived the unconstitutionality primarily in the conflict between the legislation and the prohibition of retroactivity, for in its view, this Criminal Code regulation has stealthily become more severe. The plaintiff compared this to a situation in which a regulation is passed that reduces the threshold of criminal liability, but the principle of using a more favorable legal provision does not remain the same.

    The Constitutional Court agreed with the plaintiff that the legal regulation had stagnated and confirmed that the development of the abovementioned economic factors had contributed to the significant spread of criminal sanctions. However, the Constitutional Court at the same time highlighted its previous cases and noted that it did not have the right to judge how wide the thresholds of criminalization of certain types of proceedings should be, and that it could not assume the role of the legislature in this case. This conclusion was later also applied to the issue of setting the limit of damages.

    The Constitutional Court also expressed disagreement with the comparison that the abovementioned changes of an economic nature have the same effect as a regulation being passed that reduces the threshold of criminal liability, while not preserving the rule of using a more favorable legal provision: “With respect to the prohibition of retroactivity expressed in Art. 40 Par. 6 of the Charter (and in Section 2 Par. 1 of the Penal Code), it is the state at the time when the crime has been committed that is decisive. After all, that is also applicable to the assessment of the damage caused by the crime, for according to the Section 137 of the Penal Code, the assessment of the damage must be based on the price for which the thing that is the object of the charge is usually sold at the time and place of the crime. The change in value of a certain object that happens after the commission of the crime does not have any influence on the evaluation of the criminal liability of the offender, and that is applicable even to cases when this would be profitable for the offender (e.g. as a result of significant reduction in the price of a certain thing after the crime has been committed). A change of this sort (that happened between the moment when a particular regulation came into force and the moment when the crime was committed) then may appear even less significant as regards the possible violation of the prohibition of retroactivity as per Art. 40 Par. 6 of the Charter.” (Point 36 of the decision.)

    In the conclusion of the decision, the Constitutional Court then expressed the opinion that criminal liability becoming more severe due to conservation of the legislation together with economic development is not in contradiction with the provisions of the Charter. Nevertheless, the Court firstly added that the problems pointed out by the plaintiff can legitimately be perceived as a significant problem of the contemporary criminal politics of the government, and secondly it highlighted the legislative initiative of a group of deputies, which among other aims also focuses on the elevation of the threshold of property damages.

    The Constitutional Court thus did not use the opportunity to modify current legislation and to abolish the regulations that determine the threshold of property damages. What is then left is to wait for the outcome of the legislative process and hearing of parliamentary report N. 466/0, which proposes to enact price thresholds for the incurrence of criminal liability for insignificant damage at CZK 10,000 and at the same time to double all other price thresholds. On 20.01.2020 though Jan Hrnčíř put forward another amendment to the parliamentary report that, on the contrary, proposes that the threshold for insignificant damage should remain at CZK 5,000 and that all other damage thresholds should be doubled. The final proposal of the regulation that would assess the threshold of property damage remains unclear at the present moment.

    By Lukas Duffek, Partner, Petr Zabransky, Senior Associate, and Linda Coufalova, Junior Lawyer, Rowan Legal

  • DLA Piper Advises Inven Capital on Investment in Swedish Software Company Eliq AB

    DLA Piper’s multi-office team has advised Inven Capital on an unspecified investment in Sweden’s Eliq AB.

    According to DLA Piper, “Inven Capital is a venture capital fund backed by the CEZ Group that invests in clean technology and new energy sectors. The fund focuses on innovative and fast-growing European and Israeli companies and startups.” Eliq AB provides software for monitoring electricity consumption and demand patterns.

    DLA Piper’s team in the Czech Republic was led by Partner Miroslav Dubovsky. The firm’s team in Sweden was led by Partner Petter Kjollerstrom and Associate Ronny Hussein.

  • One Step Closer to Class Actions

    A European Parliament press release from the 22nd of June about agreement on the revised text of the directive on representative actions has raised hopes for the swift finalization of legislation on class actions (“representative actions” in European jargon) on an EU level. The directive, which is part of the new concept of consumer protection – the so-called New Deal for Consumers – was introduced more than two years ago, but due to the strong response to the first motion and the fact that bringing about European class actions is overall a tricky process, it is only this year that some significant progress has finally been made.

    This is also an important step for the Czech Republic. The Chamber of Deputies is discussing the Czech bill regarding class proceedings, which aims to transpose the European regulation into the Czech milieu. The concept of class actions has long been criticized by many, both in the Czech Republic and the European Union. Current progress on the EU level could however lend support to Czech advocates of the bill.  

    The rocky road to agreement

    The main concept of class actions is definitely good – to resolve situations where a consumer would otherwise refrain from a claim rather than bring an action to court for a small claim. However, when all the consumers involved join together, the claim may amount to such a sum that it might put the existence of some businesses in danger. The mere threat of a class action thus has a strong effect, and the related media pressure on businesses could be too extreme. Even though the case may end successfully for the defendant, the effects of negative media attention might be almost impossible to reverse or compensate. Class action suits may thus easily become a means of purposefully harming businesses. This is no idle threat, vexatious Czech insolvency petitions have already shown what problems might be brought about by badly structured legal instruments.

    The directive aims to create a balanced model of class actions for consumers from all member states. That is a revolutionary idea in itself, and when passing the draft of the directive, it showed that the risks of class actions need to be taken into consideration, and that merely protecting consumers is not enough. The recently concluded draft directive should be a compromise between these two perspectives: according to the co-author of the draft Geoffroy Didier, the representatives of the EU attempted to find a balance between the legitimate protection of consumers’ interests and, at the same time, the need for legal assurance for businesses.

    Revising the draft directive

    The responsibility for filing a class action on behalf of a group of consumers under the directive rests with the “qualified subject”. Each member state will have to appoint at least one entity that, as a qualified subject, will be authorized to negotiate on behalf of consumers on the issue of cross-border class actions. The member state will impose conditions for a consumer organization to qualify, and it should be expected that the ability to bring class actions will remain in the hands of trustworthy consumer organizations only.

    To add weight to the responsibility for bringing the action, the directive implements a new rule that the costs of the proceedings must be covered by the losing party. Such a model in the case of a final demand is not foreign to Czech legislation, however, and given that the costs sought by the court are usually low, this change will not serve as a significant deterrent in our circumstances.

    The biggest amendment to the regulation will most probably be the certification of actions: that is, a preliminary proceeding in which it will be determined whether a class action is admissible before the action itself is initiated. If the action does not prove admissible at the certification stage, the action will not reach the proceedings stage itself in which a decision on the merits of the case is discussed.

    It will be left to member states to decide how those certification stages will function. It also needs to be said that during the preparation of the Czech class actions bill, the certification stage was subject to extensive criticism, particularly because it is claimed that if the certification has to be discussed before the courts, it might overload the judicial system. The ministry has also not yet clearly answered the question whether it is possible to distinguish if the action is vexatious or groundless at the certification stage at all. We presume that this stage will leave room for many variations and believe that leaving the regulation of the certification proceedings in the hands of member states goes against the idea of a directive that aims to unify the conditions for consumers to access class actions.

    Even after the revision of the draft directive, it is still valid that on the EU level, class actions should be applied to cases involving the violation of consumer rights in the sphere of data protection, financial services, in actions concerning the tourism and power industry, telecommunications, environment, health or the rights of people travelling by plane or train. If the European Parliament and the Council of the European Union pass the directive as a single entity, member states will then have two years to transpose the directive and six more months to apply the rules.

    By Michal Nulicek, Partner, and Jaroslav Heyduk, Of Counsel, Rowan Legal

  • Dentons Advises CPI Property Group on New Hybrid Issue and Tender Offer

    Dentons has advised CPI Property Group on a successful tender offer and the issue of EUR 525 million 4.875% undated subordinated notes callable in November 2026. 

    The notes — which Dentons refers to as “the New Hybrids” — were issued under CPIPG’s EUR 8 billion Euro Medium Term Note (EMTN) Programme and received significant investor interest, with nearly EUR 1 billion of demand. Proceeds from the New Hybrids are primarily intended for extending CPIPG’s refinancing profile and further reducing gross debt.

    On September 8, 2020, CPIPG announced tender offers targeting its EUR 550 million 4.375% undated subordinated notes callable in 2023 (the “2023 Hybrids”) and EUR 347 million 1.45% senior notes due 2022 (the “2022 Notes”).

    On September 17, 2020, EUR3 28 million of the 2023 Hybrids and EUR 12 million of the 2022 Notes were accepted in the tender offer. In total during 2020, CPIPG has repaid more than EUR 1.2 billion of senior unsecured bonds, Schuldschein, and hybrid bonds in advance of the scheduled maturity or call dates.

    Dentons acted as English law and Luxembourg law counsel to CPIPG. The firm’s London-based team was led by Partner Nick Hayday and included Associates Moeen Qayum and Niharika Khimji, while Luxembourg-based Counsel Olivier Lesage and Partner Stephane Hadet provided Luxembourg law advice.

  • Kinstellar and White & Case Advise on Acquisition of Central Kladno Shopping Center in the Czech Republic

    Kinstellar’s Prague office has advised Czech investment group Portiva and Micronix on its CZK 2 billion acquisition of the Central Kladno shopping center in Kladno, a town about 30 kilometers west of Prague, from Crestyl. White & Case advised Crestyl on the deal.

    According to Kinstellar, “with some 27,000 square meters of space, the Central Kladno shopping center has major tenants that include the Albert supermarket chain, C&A and H&M clothing retailers, [and] the Sportisimo sporting goods chain.”

    Crestyl is a real estate developer from the Czech Republic. The company is currently actively developing more than fifteen locations throughout the Czech Republic with a total investment value in excess of EUR 1.2 billion.

    Kinstellar’s team consisted of Partner Jan Juroska, Counsel Martina Brezinova, Senior Associate Adam Nemec, and Junior Associates Anna Veselska and Sabina Skoumalova, and Alice Radvanovska.

    White & Case’s team consisted of Partners Petr Panek and Vaclav Kubr, Local Partner Karel Petrzela, and Associates Marianna Galusova and Lucie Zanaskova.

  • Baker McKenzie, JSK, and Urban & Hejduk Advise on Acquisition of GoPay by Worldline

    Baker McKenzie’s Prague office has advised Worldline SA/NV on its acquisition of a 53% of stake in Gopay. JSK and Urban & Hejduk advised the seller on the deal.

    Financial details were not disclosed.

    According to Baker McKenzie, “Gopay currently employs 45 employees and manages online payments for around 10,000 e-shops in the Czech Republic, with a presence in Slovakia, Poland, and Hungary.”

    Worldline SA/NV is a European payment and transactional services provider. According to Baker McKenzie, “its core offerings include pan-European and domestic commercial acquiring for physical or online businesses and secured payment transaction processing for banks and financial institutions. With 2019 revenue of EUR 2.4 billion, Worldline SA/NV is present in 30+ countries and employs approximately 12,000 people worldwide.”

    Baker McKenzie’s team was led by Partner Libor Basl, assisted by Associates Dusan Hlavaty, Slavomir Slavik, and Jan Kolar.

    JSK’s team included Partner Tomas Dolezil, Senior Associate Helena Hailichova, and Junior Lawyers Tomas Benes and Sebastian Speta.

    Urban & Hejduk’s team consisted of Partners Katerina Mala and Jan Urban.

  • KSB Helps the Walteran Company Obtain License from Czech National Bank

    Kocian Solc Balastik has helped the Walteran Company obtain a license from the Czech National Bank to operate an investment company.

    The company was granted the license on September 1, 2020. According to KSB, “the investment company will focus on managing an NWD SICAV multi-asset fund.”

    KSB’s team was led by Partner Vlastimil Pihera.