Category: Czech Republic

During the current pandemic crisis, courts in countries around the world have had to suspend their regular operations and have focused only on the most urgent and time-sensitive matters. Yet the first few online courts have been able to maintain regular service. This has led to a massive increase in interest in and awareness of online dispute resolution (ODR) and online courts among judges, arbitrators, mediators, and lawyers in general. The pandemic has highlighted the ability of ODR to keep operating in crises that impact physical operations. Suddenly Zoom and even email are being considered ODR technology because they enable online court proceedings and distant mediations.

Yet ODR and online courts are much more than video-conferencing systems or arbitration over email. The essence of ODR is the application of technology in a form that positively aids resolution, whether through self-negotiation, innovative methods such as reframing aids, blind bidding, nudge technology, crowd sourced determination (jury of peers), or even, in some countries, the creation of robo-judges able to crunch data and assess precedents at a much faster rate than people.

Perhaps the most interesting online courts are those designed to substantially improve access to justice and provide people with a bigger role in determining how their dissatisfactions are resolved. Such new courts are the beginning of a digital transformation of our civil justice as we know it, which, although it may take many years to complete, seems both inevitable and desirable.

In civil cases, ODR allows the ultimate users of the justice system to be put first, which changes the rules of the game regarding the way civil cases are administered. Future online civil courts are going to be based on “mobile justice” –  justice that is accessible via mobile phone and applications. This is a positive feature because it requires significant simplification, re-engineering, and re-inventing of civil court procedures – all of which will make justice more accessible and understandable, while preserving key ethical principles of civil judicial processes.

Successful online courts already exist both within the EU (e.g., in Denmark) and outside it (e.g., in Singapore and Canada). Interestingly, many standard ODR processes are treated similarly by online courts and private ODR platforms, despite their differences. For example, online courts have introduced direct negotiation or assisted negotiation as part of their platforms, just as they have been designed by private ODR providers.

Future online courts will, step-by-step, implement end-to-end processes and be data driven, meaning that the use of AI tools and models will increase. One of the authors of this article, Zbynek Loebl, has argued in his recent book, Designing Online Court; The Future of Justice Is Open to All, that in order for online civil courts to develop, the introduction of open ODR processes, schemes, and standards will be critical. Zbynek came to this conclusion after analyzing examples of the current online courts as well as private ODR platforms and the issues that they are now facing.

New technology including ODR and AI can bring a lot of improvements into our lives. But there are also serious dangers and risks that can turn into opposite outcomes – innovations could result in more discrimination, tougher central control of the judiciary systems, and further the mistrust people have about the functioning of the court system. As there are many examples in recent history confirming this danger, it is crucial that designers of online civil courts set up efficient safeguards from the very beginning. It will be critical for the designers to focus on the application of key ethical principles – not just the general principles of fair justice, but also ethical principles of AI, ODR, and software development. We are happy that in our country, the Czech Republic, our firm, PRK Partners, is actively involved in the preparatory process aimed at designing and developing the first online civil courts.

By Michal Matejka, Partner and Zbynek Loebl, Of Counsel, PRK Partners

This Article was originally published in Issue 7.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Kocian Solc Balastik and Germany’s Heuking Kuhn Luer Wojtek have advised China-based Inner Mongolia Mengtai on the acquisition of the Czech part of the Apt group.

KSB describes the Apt group as “one of the European leaders in the aluminum industry,” and reports that “it is engaged in manufacturing, processing, and marketing aluminum profiles and products for the construction, transportation, automotive, and other industries.” The group has manufacturing facilities in Germany, the Netherlands, and the Czech Republic.

The Mengtai Group is a private company in the Inner Mongolia region of China that engages in coal mining and electricity generation and operates in the aluminum industry.

Kocian Solc Balastik’s team included Managing Partner Dagmar Dubecka and Senior Associates Sasha Stepanova, Jana Guricova, Viktor Zelinka, and Dana Jackova.

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

The Supreme Court of the Czech Republic recently issued an interesting decision concerning the employment of a managing director and an accident at work. It should be noted that this decision does not relate to a long-term problem with the concurrence of functions, i.e. the (im)possibility of performing the function of a managing director in an employment relationship, but reflects a situation where the managing director performs non-parallel work, i.e. work outside the function of a statutory body.

In the case in question, the plaintiff was a limited liability company, the sole shareholder of which was also its managing director. As a representative of the company, this director entered into an employment contract with himself as an employee for the work of assembly foreman. The managing director (as an employee) suffered an accident during the performance of his work. As an employer, the company claimed the damages incurred from the insurance company (here especially compensation for loss of earnings and pain), due to the employer’s statutory insurance for the damage caused to employees by an accident at work within the meaning of Decree No. 125/1993 Coll. However, the insurance company refused to compensate the damage, pointing out that no employment relationship had been established between the company and the managing director.

The ensuing dispute reached the Supreme Court, which dealt mainly with two issues: i) whether the employment contract is valid and an employment relationship has been established between the company and the managing director as an injured party, and ii) whether the employer’s statutory insurance scheme applies to the relationship between the company and the injured party for damages in the event of an accident at work.

Regarding the validity of the employment contract:

Following the existing case law, the Supreme Court confirmed that an employment contract entered into by the same person on both sides, even if acting in different positions, i.e. once as an employee and once as a managing director(employer’s representative), is invalid due to an insurmountable conflict of interest.

Situations where the managing director enters into an employment contract with himself are common in practice. This is typical for start-ups and smaller companies, in which the shareholder performs the function of a managing director while at the same time personally working for the company (e.g. personally provides services to the company’s customers).

The conclusion of the Supreme Court on the invalidity of such contracts raises considerable problems, as it de facto forbids the legal employment of a managing director in one-person companies.

From the author’s perspective this conclusion is not justified for the following reasons.

• It is highly questionable whether there is any conflict of interest at all. If the managing director is at the same time a shareholder in the company and employs himself, his interests as an owner cannot be harmed in any way, because the salary paid is provided from his equity (albeit through a company owned by him).

• In addition, the conclusion of an employment contract is a true legal reflection of the work performed for the company.

• From the viewpoint of impacts on the sphere of levies (state revenues), the wage arrangement is equivalent to the remuneration of a managing director and even less advantageous than the payment of these funds in the form of a pay out of share in the profit. Thus it cannot even be argued that the law is circumvented or that the interests of the state are damaged.

Given the above, the position of the Supreme Court appears formalistic and causes considerable problems in practice. This situation is completely unsolvable for smaller companies, which have only one executive who is directly involved in the provision of the company’s services. It also raises other questions, such as whether the executive should have a work permit in the case of a person who is not otherwise allowed to work in the Czech Republic without one. The fate of statutory insurance, especially pension insurance, is also unclear, i.e. whether the social security administration will raise this argument many years down the line and will dispute the right to old-age pension.

In the author’s opinion, this problem should be resolved in the future in accordance with Section 54 of Act No. 90/2012 Coll., on Business Corporations (Business Corporations Act). These provisions address the issue of conflicts of interest, including a situation where the managing director enters into a contract with a company that he represents. Therefore, if the managing director follows these provisions, the contract should be valid and the negative consequences outlined above should be prevented.

Regarding employment without a valid employment contract:

The Supreme Court has concluded that if an executive performs work for a company based on an invalid employment contract, a so-called actual employment relationship arises between him and the company. If, in these circumstances, personal injury occurs within the scope of work, it is an accident at work within the meaning of the Labour Code and the company is liable to the executive for the damage incurred and is obliged to compensate him to the extent and under the conditions of the Labour Code.

Under normal circumstances, this damage would be compensated from the employer’s compulsory insurance for damage caused by an accident at work. However, in the case of an actual employment relationship, the Supreme Court concluded that such damage is not covered by the insurance in question and the insurance company is thus not obliged to compensate it to the employee. This conclusion is based on the fact that in Decree No. 125/1993 Coll., the establishment of the “first employment relationship” is stated as a condition for the creation of the insurance.

The Supreme Court’s conclusion is overly formalistic and difficult to defend in practice. First, the decree provides that the creation of insurance depends on the existence of an employment relationship. If a person, as an employee, performs work for the employer even without a valid employment contract, it is undoubtedly a relationship that has the essence of labour law. The Supreme Court itself states that the actual employment relationship must be settled in the same way as the employment relationship and grants the employee, for example, the right to compensation of wages, holiday, etc. It is therefore not entirely clear from the decision why such an employee should be excluded from the statutory insurance. The issue of the validity of the employment contract and the so-called actual employment relationship is not reflected in the decree at all, i.e. the decree does not mention it as a reason for refusing performance, it is not a legal exclusion from insurance, and the refusal of insurance was inferred purely by the Supreme Court, without justification and reflection of practical implications.

In addition, the decision does not in any way reflect that the employee has special legal protection and that the invalidity of a legal act cannot be to the detriment of the employee unless it is caused solely by him/her. The exclusion of an employee from the statutory insurance due to the invalidity of an employment contract (here, moreover, for invalidity inferred only in a judicial manner and not, for example, for the absence of an essential element of the employment contract) is undoubtedly to the detriment of the employee. If we add that the employer paid premiums for the employee for the duration of the employment, the conclusion of the Supreme Court seems inexplicable.

Therefore, the Supreme Court’s conclusion does not seem to be correct. Failure to provide statutory insurance leads to a significant deterioration in the employee’s position. Insurance companies will now examine the validity of employment contracts and tend to refuse compensations due to their defects. This creates a real risk that the employee will not receive compensation for an accident at work. Especially in the case of serious accidents at work with permanent consequences, the costs associated with treatment and compensation for earnings can be enormous and the employer may not be willing or able to meet such obligations. Nor can it be ruled out that the employer will dispute his liability and the employee will thus have to assert his claims in court. On the one hand this will delay the satisfaction of his/her claims by several years and, on the other, give rise to considerable costs and uncertainty about the outcome of the dispute.

However, the risk also arises on the side of the employer, who despite paying the statutory premiums duly and in good faith, may be obliged to pay for the entire damage itself, which may be financially devastating especially for smaller companies.

The following conclusions, therefore, derive from that decision:

1. It is problematic if the employment contract is entered into by the same person on both sides. In the opinion of the Supreme Court such a contract entered into before 31 December 2013 is invalid. A contract entered into after this date should be valid if concluded according to Section 54 et seq. of the Business Corporations Act.

2. If the employee performs work for the employer without a valid employment contract, he/she performs it in a so-called actual employment relationship.

3. If an employee suffers an accident while performing work within an actual employment relationship, it will be considered an occupational injury and the employee is entitled to compensation from the employer in accordance with the Labour Code.

4. As the employment contract was invalid and the employee works in “actual employment”, the employer is not entitled to compensation of work injury costs from the insurance company (within the framework of the statutory liability insurance), regardless of whether it paid insurance premiums for the injured employee.

Recommendation:

If the statutory body wishes to enter into an employment contract with a company represented by him, he should proceed in accordance with Section 54 et seq. of the Business Corporations Act. Given that the validity of such an employment contract may be disputed, it is recommended in all cases to arrange commercial accident insurance, which would be paid by the company and which would cover at least part of the damage to the statutory body in the event of an accident. For other employees, careful preparation and checking of employment contracts can only be recommended, so that their invalidity does not have fatal consequences for both employees and employers in the event of an accident at work.

By Helena Hangler, Attorney at Law, Schoenherr

Eversheds Sutherland has advised Expandia on the sale of the Hamburk Business Center office complex in Pilsen, in the Czech Republic.

According to Eversheds Sutherland, the Hamburg Business Center “is a state-of-the-art office complex, which was not approved until the second half of 2019 and which offers more than 7,000 square meters for rent. In addition to modern facilities, the location in the city center contributes to its attractiveness.”

Eversheds Sutherland’s team consisted of Principal Associate Dominika Vesela, Senior Associate Rudolf Kristian, and Associate Paulina Machacova.

Editors Note: After this article was published, CEE Legal Matters learned that HKDW Legal had advised the buyers, BHS Real Estate Fund SICAV, on the deal. The firm’s team was led by Partner Pavel Wenzl and included Senior Lawyers Veronika Gorska, Zuzana Slovakova, and Ondrej Spacil, and Junior Lawyers Anna Kautska and Barbora Gabalova.

Bird & Bird has advised KB SmartSolutions on its strategic entry into Upvest.

Bird & Bird describes Upvest as “a Czech FinTech start-up, a provider of an investment crowdfunding, connecting investors and developers for the purpose of external financing of a broad range of real estate development projects.” Bird & Bird describes KB SmartSolutions as “a subsidiary wholly owned by Komercni banks, [a] member of the Societe Generale Group.”

The Bird & Bird team consisted of Partner Ivan Sagal and Associates Lubomir Brecka and Martina Kopcova.

Bird & Bird did not reply to our inquiry on the matter.

The BDO network of independent tax, audit, accounting, and other professional services firms has launched a law firm in the Czech Republic, with offices in Prague and Brno.

The opening of the legal practice in the Czech Republic follows the July 1, 2020 merger of BDO Slovakia with Slovakian law firm Nexus. The Prague office will be headed by Partner Jiri Smatlak, and the Brno office will be led by Partner Lukas Regec.

BDO has been serving clients in the Czech Republic since 1991. According to a firm press release, the new legal arm in the country will focus mainly on “Corporate law for medium-sized companies,” along with representing clients in court proceedings and in insolvency and restructuring matters.

 

Smatlak joins BDO after a year as the head of the eponymous Smatlak Legal firm. Previously he spent a year as a solo practitioner, eight and a half years with Dvorak Hager & Partners (now the Prague office of Eversheds Sutherland), and two and a half years with PRK Partners.

Regec worked with Smatlak Legal for the past year, after spending the previous three as a solo practitioner in Brno.

Trond-Morten Lindberg, BDO International CEO for EMEA, commented on the new offering in the Czech Republic. “We were all very excited about this new service offering. I appreciate the way our Czech partners keep investing in our clients’ needs, aiming to provide them the best possible service. It’s also great news for our international clients operating in the Czech Republic as they now get instant access to a well-established and skilled legal team. I would like to wish the entire team a lot of success in their new partnership.”

Allen & Overy has advised Czech Gas Networks Investments on its successful issuance and placement of EUR 600 million and CZK 6.75 billion notes with investors on international capital markets. Clifford Chance reportedly advised joint book-runners Citigroup Global Markets Europe AG, Societe Generale, UniCredit Bank AG, Ceska Sporitelna, a.s., Ceskoslovenska Obchodni Banka, a. s., and Komercni Banka, a.s., as well as trustee Citicorp Trustee Company Limited and the London branch of Citibank, which acted as the paying agent, transfer agent, and the agent bank.

According to Allen & Overy, “the notes, which are rated BBB+ by both S&P and Fitch, have been listed on the Global Exchange Market of the Irish Stock Exchange plc trading as Euronext Dublin. CGNI, which is owned by a consortium of long-term infrastructure investors, holds 100% of the share capital of Czech Grid Holding a.s., which in turn fully controls two core Czech businesses, operated by its subsidiaries: GasNet s.r.o. (which is the main distributor of natural gas in the Czech Republic) and GridServices s.r.o. The net proceeds from the notes have been used to partially refinance credit facilities used by CGNI to finance its acquisition of Czech Grid Holding a.s.”

Allen & Overy’s Prague-based team included Partner Petr Vybiral, Associate Jana Chwaszcz, and Junior Lawyer Denisa Jonasova. Its team in London included Partner Tim Conduit and Counsel Jan Skuhravy, and its team in Luxembourg included Partner Paul Peporte and Associate Ruslana Hrischeva.

Kocian Solc Balastik has advised Skoda Transportation Group on the acquisition of Ostrava-based Ekova Electric.

Ekova Electric specializes in the manufacture, upgrading, and maintenance of tramways, trolleybuses, and electric buses.”

KSB’s team consisted of Partner Petr Kasik and Senior Associate Jakub Porod.

Editor’s Note: After this article was published, CEE Legal Matters learned that GT Legal and Grant Thornton advised Dopravni Podnik Ostrava on this deal. GTLegal’s team was led by Senior Attorney at Law Jiri Macat and included Partner Lukas Zahradka. Grant Thornton’s team consisted of Managing Partner David Pirner, Director of M&A Jan Kodada, and Senior Consultant Michal Malina.

The exchange of personal data between the European Union and the United States have suffered a further setback as the EU Court of Justice ruled against the Commission’s Privacy Shield Decision in the Schrems II case. The consequences could be far-reaching, and impact data flows not only to the United States. While the Court upheld the Commission’s decision regarding Standard Contractual Clauses (SCCs), any data flow to a third country must respect the GDPR principles and protect the fundamental freedoms of European citizens. The Court made clear that any jurisdiction, into which personal data are transferred, must offer an essentially equivalent level of personal data protection assessed considering both contractual clauses agreed between transferring parties and the relevant aspects of third country’s legal system. Consequently, not only big companies, such as Facebook, Microsoft, or Google, but also small and medium-sized businesses, must evaluate all data transfers to non-EU countries and assess the potential risks for the data in question.

The Privacy Shield, ruled invalid by the Court in Schrems II case, was a legal framework established in 2016 by the Commission Decision 2016/1250. In essence, the Privacy Shield has been based on the so-called “adequacy decision” under Art. 45 of the GDPR, establishing the United States as a country offering an adequate level of protection. Subsequently, personal data could flow easily between the EU and those companies in the US that were certified under this program. The certification required the companies to specify their identity and contact information, data processing activities, to designate an organization corporate officer and to accept commitments to dispute resolution and cooperation with EU data protection authorities.

The Data Protection Authorities (DPAs) could not take measures contrary to the adequacy decisions with the exception of reviewing individual complaints, such as in the case of Max Schrems, assessed by the Court.

The Commission’s decision regarding Standard Contractual Clauses, on the other hand, specifies contractual clauses, which, when included in a contract, enable the parties to transfer personal data to any country outside EU (as long as they are processed by the parties to the contract). While the SCCs Decision does take into consideration the legislation in any such non-EU country, the Court did not invalidate it but emphasized that the assessment of local legislation is the task of the parties to the contract in which the clauses are included.

By their very nature, such clauses can bind only the parties to the agreement. Therefore, parties themselves must determine the existence of appropriate safeguards of the adequate level of protection pursuant to Art 46 of the GDPR based on the contractual clauses and the relevant aspects of the third country’s legal system. Moreover, implementing the SCCs does not prevent DPAs from taking measures to suspend or end transfers of data to a specific third country. On the contrary, DPAs have a duty to act to suspend or prohibit such transfers of personal data if, in its view and in the light of all the circumstances of that transfer, those clauses are not or cannot be complied with in that third country and the protection of the data transferred that is required by EU law cannot be ensured by other means.

Assessment of Adequacy

European personal data protection laws allow for transfers of personal data outside of member states’ territory on the condition of the adequate level of protection of personal data. The protection level must be confirmed either by the Commission’s assessment of the adequate level of protection (in a form of adequacy decision) or the controller’s or processor’s self-assessment of the appropriate safeguards.

Until recently, these two approaches have been viewed as distinct and separate. In case the transfer was based on a contract between the data exporter (in the EU) and data importer (outside EU), namely the contractual terms were assessed. The Court confirmed that this is still necessary, but added that overall legal environment of the jurisdiction where data are transferred to needs also to be assessed. And the assessment of the particular jurisdiction should take into account the criteria listed in Art 45 (2) of the GDPR, i.e. the criteria for adequacy decision. These two regimes are therefore getting much closer to each other than before.

From this perspective, the protection of personal data in the United States itself has been found inadequate as the US legislation (according to the assessment of the Court) allows for interferences to fundamental rights of European citizens without any means for judicial protection against such intrusions. Court explicitly referred to NSA’s surveillance programs such as PRISM and UPSTREAM that take primacy over European data protection rules.

In our opinion the approach of the Court ignores the gap between the data protection law and practice. While on the EU-level the GDPR was enacted, not all member states fulfill their duties under the regulation and the Charter of Fundamental Rights of the European Union. In some member states, the data protection rules lack enforcement. In other, the competencies of intelligence agencies are broad and with little oversight and redress. Some member states might even struggle with the rule of law itself.

One example among many is the law in the Czech Republic that imposes an obligation on telecommunication providers and ISP to store all operating and location data for 6 months and provide the law enforcement bodies and intelligence agencies on their request with data requested. That law is still in force even though the European Data Retention Directive has been repealed and despite that CJEU stated in the case C-203/15 of Tele2 Sverige that general and indiscriminate retention of all traffic and location data of all subscribers and registered users relating to all means of electronic communication violates Charter of Fundamental Rights of the European Union.

Considering that, it may seem unfair or possibly even discriminatory, to judge third countries by a legal standard not applied in the member states.

Data Transfers and Organizations

As the Privacy Shield framework is no longer available as a transfer basis, companies must resort to other legal grounds such as the SCCs. Nonetheless, the SCCs are subjected to the same criteria of adequacy, which must be assessed by the parties to the transfer. Thus, in the wake of the ruling, not only data transfers to the United States but also to other countries could prove problematic, as it clearly established the criteria of assessment and the DPAs’ duty to act.

The DPAs themselves, however, seem reluctant to enforce their duty under the ruling hastily except for the German DPAs. DPAs held a weekly meeting on Friday following the ruling and issued statement essentially promising further guidance in following days or weeks. Only the German DPAs publicly voiced their critical opinions on the ruling with Berlin DPA going as far as to explicitly recommended companies to transfer personal data stored in the United States back to Europe and issue a warning of possible sanctions.

Insofar, big corporations rely on the SCCs as the legal ground for data transfers, despite the ruling. Microsoft reassured its customers of the continuation of its services and data transfers between the EU and the United States. Similarly, Facebook continues its reliance on SCCs. Likewise, Google continues to refer to SCCs as a tool for data transfers for its G Suite or Google Cloud Platform.

The activity of DPAs will be decisive in the upcoming weeks and months. In the meantime, companies should map the situation and identify processes that rely on data transfers outside the EU (e.g., due to use cloud services). Next, the companies should check to what particular countries the data flow and what are the legal grounds for such transfer. In reliance on SCCs, companies must now assess whether the legislation of destination countries provides for adequate level of data protection, which at least for the United States seems currently doubtful at best.

By Michal Nulicek, Partner, and Filip Benes, Junior Lawyer, Rowan Legal

The state of emergency is over, government measures are slowly easing up and we are entering the unknown as regards further developments in the spread of the SARS-CoV-2 virus (but let’s leave that to the experts). The time is now here to calculate the current and future damage. The measures taken by the government have had an enormous impact on the economy as a whole, as well as on practically every legal and natural person individually: freedom of movement has been restricted, shops and restaurants have been ordered to shut, a ban has been placed on the provision of services and the borders have been closed (all subject to only a few minor exceptions primarily aimed at ensuring basic needs and supplies are satisfied). Furthermore, the government has adopted a number of measures to provide relief to persons affected by the coronavirus pandemic and by the government’s restrictive measures.

As we recently pointed out in the article „ Je nárok na náhradu škody vůči státu ještě aktuální“, at the very beginning of the measure-adoption process, it was discussed that according to Czech law, measures with such an impact cannot be adopted without appropriate compensation. In respect of international investors, the issue of potential damage inflicted upon investors overlaps with the law of foreign investment protection. Foreign investments are protected by investment-protection treaties (usually on a bilateral basis, i.e. BITs, or even multilaterally in the case of for example the Energy Charter Treaty).

The Czech Republic is bound by 77 bilateral investment treaties (including “intra-EU BITs”). Each of these bilateral treaties includes its own provisions on the protection of investments, including criteria setting out definitions of international investors and investments. Among the most common standards found in such treaties are, for example, the Fair and Equitable Treatment standard, the prohibition of arbitrary measures, the protection of legitimate expectations, and the prohibition of expropriation etc.

A potential breach may occur on two levels:

• the measure itself breaches the investment-protection treaty (e.g. the measure is arbitrary or discriminatory in respect of both restrictive measures and measures aimed at mitigating the impact of the situation surrounding SARS-CoV-2);
• the application of the measure is discriminatory.

Measures adopted by a state are often subject to the proportionality test conducted by tribunals. As stated by the tribunal in the case of Electrabel vs Hungary, the measures must be suitable to achieve a legitimate policy objective, necessary for that objective, and not excessive considering the relative weight of each interest involved.

With regard to the prohibition of discriminatory application of adopted measures, the case of Saluka vs Czech Republic should be noted. The arbitral tribunal held that any differential treatment of a foreign investor must not be based on unreasonable distinctions and demands towards the foreign investor, and must not be motivated by a preference for other investments over the foreign-owned investment.

Against the rights of investors established via investment-protection treaties stands the right of the Czech Republic as a sovereign state to regulate its internal affairs. According to the arbitral tribunal in the case of Unglaube v Costa Rica, where the action or decision taken relates to the state’s responsibility for the protection of public health and safety, such measures are accorded a considerable measure of deference in recognition of the right of domestic authorities to regulate matters within their borders.

Also, the question arises whether the given circumstances may give rise to a legal defence against claims that the state conduct was unlawful, e.g. force majeure or distress.

The assessment as to whether an investment-protection treaty has been breached and whether the Czech Republic is liable for any damage incurred will therefore need to be done on an individual basis and may differ from case to case. The outcome of such assessment will depend on the wording of the specific investment protection treaty, on the assessment of the respective measure, including the circumstances of its adoption, and of course, on its impact on the particular investor.

By Milos Olik, Partner, and Margarita Karesova Kucharcuk, Associate, Rowan Legal