Public protests that surrounded the February 2018 death of Slovakia journalist Jan Kuciak and his fiancee have somewhat abated, says Dentons Bratislava Partner Zuzana Simekova, but the controversy and ultimate consequences are still up in the air.
“Things have calmed down somewhat at the moment, and the investigation is ongoing,” she says. “But there has been no information.” At least in the short term, she says, she and her colleagues have not seen any direct impact on business and foreign investment. “Of course the death was a tragic effect that affected Slovakia, and the social pressure is clearly there,” she says. “But it did not have any real impact on business. It was kept separate. Maybe there was some attention to compliance, on transparency, but there has been no obvious effect on any business initiatives People are paying attention, but there has been no real effect on the legislative or regulatory level. And no sign that potential investors are making decisions based on this.”
Still, that doesn’t mean there won’t be any impact in the future. “Things in the market are going well,” Simekova says, “but there is a little bit of a waiting mode as to what’s going to happen. These recent events show that there is a major need for a change in the system of public administration and greater monitoring of the use of public resources, and there have been a number of initiatives announced — and the current President has announced that he won’t run for reelection next year — but what will actually happen and whether they will actually transform the system remains to be seen.” In other words, she says, “right now we are in limbo.”
When asked for her personal opinion about the fall-out of Kuciak’s death, she pauses to think. “I would personally very much hope that this tragic event has opened the eyes and the minds of the people as to what can be changed in the future and how to make those changes,” she says. “There is a great level of frustration — on the one hand we would hope for the changes and the learning, but at the same time we are a bit worried under the current system — and the tragedy itself has clearly shown the depth of the problems. The questions are how much will changing it take, who can do it, where can it start. The question is whether there is sufficient will and ability.”
Still, whether related to Kuciak’s death or not, Simekova says some change is already in the air, including pressure to reform the state administration “on the vertical as well as the horizontal level,” she says, “to ensure compliance and non-discriminatory rule.” Ultimately, she says, “there is a kind of common understanding that this is something that should take place.”
Turning to actual rather than prospective legislative developments, Simekova counts off five recent changes of significance — “three of which are particularly relevant.” The first of the five she mentions is the recent implementation of the GDPR, which she says, like everywhere else, “of course kept all the lawyers in Slovakia very busy.” The second is recent changes to Slovakia’s Commercial Code designed to “address the needs of the business sector,” and which include, among other things, “the implementation of control over certain activities that were potentially problematic causing lot of legal uncertainty and endangering due enforcement of law, including mergers of debt-ridden companies.” She explains: “Now you need the approval of certain financial authorities for such mergers, providing much more of a guarantee that there is some oversight, some guarantees to the creditors that the debts will not disappear.”
Unfortunately, she says, not all changes are positive — or possibly even ethical. “There has been a lot of conversation about debt of hospitals and other entities under the control of the State Ministry of Health,” Simekova says. “They can have massive debts, and this of course also affects the private companies who they owe.” Thus, she reports, “the Slovak government has proposed a restructuring of the situation, to lower the financial debts of hospitals. Discussions with the business community occurred this past spring and may continue, but for the time being no agreement was found. Although the government said they’d try to find a solution, nothing happened until now … apart from the parliament making an amendment on a relatively obscure and minor provision — radiation protection— which included an provision prohibiting the execution of debts on hospitals, meaning those debts are absolutely unenforcable against hospitals for at least a couple of years.” Simekova describes the move as brazen. “It was done indirectly, and essentially hidden so that people wouldn’t notice it.” As a result, she says, her firm has been consulting with many clients seeking to recover from the state’s hospital system. “This is a very difficult situation,” she says, though she declines at this point to predict what specific strategies they intend to pursue in opposition to the law.
Finally, she says, “one last thing that I can mention is never-ending controversy regarding food retailers, and the attempts to amend the law regulating unfair conditions in the food retail sector.” Simekova says, “this mainly relates to the conditions that are agreed upon between suppliers to the food retail chains and the chains themselves. So the regulators are seeing these chains as entities or entrepreneurs that may be imposing unfair conditions on suppliers based on their market power. They want to prevent the chains from abusing their market position in the food sector.” According to her, “it has sparked a lot of issues because you have food sector regulators who are generally responsible, then you have competition authorities stepping in, and so on. We had a law that was not particularly effective, and the government is now considering amending it again and putting it into practice.”
Reflecting on these two last legislative developments, Simekova says, “it seems there is a bit more focus on the regulated sectors than we had before.” So, she says, “the changes that may come in the next few months relate to specific sectors rather than overall business.”
Finally she’s asked whether, all together, she’s optimistic about developments in Slovakia. She laughs. “That’s the one million dollar question — it’s extremely difficult to say.” She pauses, then says, “I think now we have to wait to see. I personally do have some optimism, but we have to wait and see.“
