The Court rejected actions of the state outside the Crisis Act regime as unlawful. Companies’ hope for damages increased.

Let us briefly go back to the past and the essence of this decision. After the declaration of a state of emergency on 12 March and until 23 March 2020, the state governance regime was entrusted to the government, which acted based on the “Crisis Act”. Under this Crisis Act, a number of emergency measures were issued, practically shutting down the economy and reducing human rights (especially freedom of movement) in a fundamental and so far unprecedented manner. Everything was done to eliminate the spread of the COVID-19 disease and the pandemic situation. As mentioned, the government proceeded in this manner until 23 March 2020, when it abandoned the Crisis Act regime without further explanation, and emergency measures of the same importance and scope began to be issued by the Ministry of Health under the Public Health Protection Act.

Suspected purposeful conduct by the state in order to avoid liability for  damages. The reason why the lawsuit was filed against the Ministry of Health

However, this seemingly slight change in the competence of central state authorities has a major impact on the business sector. This is especially because while the Crisis Act provides for a very strict regime of the state’s liability for damages caused by emergency measures issued under the Crisis Act, the Public Health Act does not know such or any other mechanism of damages.

This fact, i.e. the suspicion of the state’s purposeful conduct in order to avoid the obligation to compensate for the damage caused by the state’s crisis measures was, inter alia, in the words of the appellant himself, one of the reasons why an action was brought for the annulment of selected emergency measures of the Ministry of Health.

What are the practical consequences for the business community?

The court said that – in sport terms – it was not possible to change the rules during the game. Therefore, if a state of emergency and the crisis situation declared by the state persist, the government must act according to the designated legislation, i.e. the Crisis Act. It is not possible to dismiss this arbitrarily and act with the same intensity under another legislation in order to purposefully avoid the negative effects of the Crisis Act. The court accentuated that it did not question the need for state intervention and restriction on human rights, but the state has to take such measures in a way that the law foresees. That is, according to the Crisis Act.

Thus, for the next period, clear rules will be laid down for the state on what legislation it has to proceed with and under the regime of which act emergency measures should be taken if the emergency situation persists. This decision further helps to dispel legal uncertainty under which legislation damaged entrepreneurs can claim compensation for damage suffered. For until now, the state representatives have rejected any claims. It therefore seems more likely today that these claims exist and may be applied under the Crisis Act or the Act on the state liability for damage caused by an illegal decision or maladministration, which appears to affect the cancelled emergency measures of the Ministry of Health.

Are you considering claiming damages from the state?

What can be recommended to entrepreneurs who are considering claiming damages from the state? Above all, to record the damage or loss of profit incurred and to further carefully document what measures the entrepreneurs have taken to eliminate the impact of the crisis on their business as much as possible (i.e. how they prevented the damage). This may include various documents or other evidence, which will vary in the light of the specifics of each business. However, the claim for damages will not be successful unless the damage is sufficiently demonstrated and justified with regard to the extent of the damage actually incurred, the profits lost and the proof that the entrepreneur had taken appropriate measures to mitigate the impact of the crisis on their business.

Are you at your wits’ end as regards the current situation? Please, contact us, we will assess each case individually, support your application or advise you with its enforcement.