New tools for the recovery of arrears
Starting this year, the tax authorities are not limited by local jurisdiction when recovering tax arrears. At the same time, from 1 July 2025, the customs administration can use a new power in the event of an u…
Legal News [March 2025]: The Supreme Court addresses the validity of withdrawal from non-compete clauses
Last month, the Supreme Court addressed several important issues in its rulings, ranging from equal treatment of judges to the statute of limitations on easements, and the abuse of rights in the withdrawal from non-compete clauses. It confirmed that the principle of equal treatment applies to judges as well, but the reassignment of a judge to another section to balance workload is not discrimination. It also opened the question of whether preparatory works can be considered the execution of an easement and sent the decisions of lower courts back for reassessment. Furthermore, it criticized the procedure of a company that withdrew from a non-compete clause at the last moment without considering whether this circumvented the obligation to pay compensation. In the last of the monitored rulings, it confirmed that if an owner abandons a property because they have no way to use it, this is not an abuse of rights—the responsibility for its administration then lies with the state.
- In its decision ref. no. 21 Cdo 3084/2024, the Supreme Court addressed whether the principle of equal treatment for employees, which employers are obligated to ensure under § 16 par. 1 of the Labour Code, also applies to judges. The plaintiff, a judge at the Regional Court in Ústí nad Labem, disagreed with her reassignment to the administrative section and saw the defendant’s (Regional Court Ústí nad Labem) action as unequal treatment. The Supreme Court concluded that the principle of equal treatment under § 16 par. 1 of the Labour Code applies to the working conditions of judges. Furthermore, it upheld the decision of the appellate court, which found that the defendant’s action, reassigning the plaintiff from the civil section to the administrative judiciary section where she was to handle cases corresponding to this specialization, did not violate the principle of equal treatment. This change aimed at reducing or eliminating the workload disparity between civil judges and administrative judges, who were burdened with more cases than civil judges, thereby seeking to equalize the working conditions of judges in both sections. Given these circumstances, the reassignment of the plaintiff cannot be considered an unjust disadvantage compared to other civil judges regarding the opportunity to achieve functional or other advancement, irrespective of the fact that this opportunity is also available in the administrative judiciary section. Therefore, the Supreme Court dismissed the plaintiff’s appeal.
- In its decision ref. no. 22 Cdo 1476/2024, the Supreme Court dealt with the characterization of the execution of an easement—a utility easement—by activities that are in the nature of preparatory works. The District Court in Mladá Boleslav ruled that the easement for the placement of communication and utilities on the plaintiff’s land was statute-barred because it had not been used for ten years. The appellate court in Prague confirmed the ruling and emphasized that preparatory works (e.g., signing a memorandum with the municipality or approving a study by the city council) are not actual execution of the easement. The courts consistently ruled that the plaintiff was entitled to claim the statute of limitations. The Supreme Court concluded that categorically excluding preparatory works as the execution of the easement is incorrect and could cause additional unintended consequences. It would be paradoxical if the holder of the easement, who engages in preparatory works on the servient land, was protected in the execution of such rights against the servient land owner but it did not count as the substantial execution of the easement preventing the statute of limitations. Practical situations may arise where the execution of preparatory works does not correspond to the nature of the easement or its content. If the execution of activities has no substantive, temporal, or locational connection with the easement, the servient property owner may resist such actions. Evaluating these cases often involves considering individual circumstances of the specific case according to the type of easement, and the courts’ conclusions must reflect these peculiarities. Because the lower courts excluded preparatory works as potential execution of the substantial content of the easement without further evaluation, the Supreme Court returned the case to the first-instance court.
- In its decision ref. no. 27 Cdo 1236/2024, the Supreme Court addressed the issue of withdrawing from a non-compete clause agreed between a joint-stock company and a member of its elected body. The plaintiff, former chairman of the board of directors of the defendant, sought payment for non-compete clause compensation, but the courts at both levels dismissed the claim, reasoning that withdrawal from the clause was valid and effective. The appellate court confirmed that the defendant had the right to withdraw from the non-compete clause even on the last day of the plaintiff’s term and found its action consistent with good morals. The Supreme Court criticized the lower courts’ decisions for merely stating that the withdrawal was agreed upon and the defendant executed it within the stipulated period. This finding is not significant in considering whether the defendant abused its right to withdraw from the non-compete clause. The existence of the right is a prerequisite for its abuse. In other words, the fact that the defendant could withdraw from the clause even on the last day of the plaintiff’s term does not indicate whether it abused the right to withdraw. The Supreme Court concluded that the appellate court did not assess whether the defendant’s action was an apparent abuse aimed at avoiding payment of non-compete compensation, which ultimately harmed the plaintiff by significantly reducing his chances of finding a new position in the banking sector. The Supreme Court, therefore, overturned the decision and returned the case to the first-instance court.
- In its decision ref. no. 22 Cdo 3489/2024, the Supreme Court assessed whether the abandonment of a property by the defendant constituted an abuse of rights. The plaintiff argued that the abandonment of the property, which subsequently fell to the state, aimed to bypass § 12 par. 2 of Act No. 219/2000 Coll., on gratuitous transfer of property to the state, requiring the consent of the Ministry of Finance. The defendant argued that they had no adequate use for the property and so abandoned it. The appellate court confirmed that abandoning property does not constitute an abuse of rights unless accompanied by specific and extraordinary circumstances. The Supreme Court stated that the future development and value of the property are unpredictable and the fact that the abandonment may lead to state rights and obligations is insufficient to claim abuse of rights. The court supported the view that the owner has the right to manage their property, including its abandonment if it has no adequate use. The court found that abandonment cannot be considered abuse unless accompanied by exceptional circumstances indicating harmful or unfair action. Possible difficulties associated with the abandoned property, such as technical or legal defects, were not confirmed by the court as grounds for dismissal on the basis of abuse of rights. The Supreme Court concluded that abandonment of property, especially of religious nature, is not automatically abuse if the owner has no meaningful use for it. The state’s obligation to manage such property remains and associated difficulties do not justify an abuse of rights claim.
