Legal News [June 2021]: the Constitutional Court commented on the conditions for withdrawal from the non-competition clause

In its judgment, the Supreme Court emphasised the difference between "professional care" and "due managerial care". The Supreme Court also ruled that in the case of disinheritance, reasons that occurred after the making of the deed of disinheritance are also relevant. According to the Supreme Court, when examining the continuity of the right to be entered in the Land Register with the existing entries, the status of the entry at the time of the application for entry is decisive. What other interesting judgments have we seen in the field of Czech law?

Corporate Law

  • A new judgment of the Constitutional Court (II. ÚS 1889/19) states that it is not necessary to have agreed reasons for withdrawing from a non-competition clause, which was the generally accepted opinion until now. In the judgment, the Constitutional Court states that there cannot be a blanket case-law prohibition on arrangements from which the employer can withdraw without giving any reason or for any reason, as has been the case so far. At the same time, however, it is necessary for the general courts to examine carefully whether the employer has abused this possibility.
  • The Supreme Court issued a judgment in the area of corporate law under 27 Cdo 3451/2020. According to the judgment, a court’s decision on the absence of a resolution of a general meeting is binding for the court deciding on the registration in the Commercial Register. Thus, the latter cannot consider the same matter even as a preliminary one.
  • Authentication of signatures – the nature of the public document 29 Cdo 1310/2019. The Court of Appeal assessed the authenticity of authenticated signatures on promissory notes and came to a conclusion in which, while granting the authentication clauses the nature of a public document, it refuted the authenticity of the authenticated items (signatures). That is because the entries in the authentication book were fundamentally flawed, making it impossible to match the details in the book with the details in the clauses. However, such reasoning did not stand before the Supreme Court. If the authentication clauses indeed have the nature of a public document, then they confirm that they are an order or declaration of the authority that issued the document and, unless the contrary is proved, they also confirm the truth of what is authenticated or confirmed in them.
  • The difference betweenprofessional care” and “due managerial care” was again emphasised by the Supreme Court in its judgment No. 29 ICdo 38/2019. It did so in relation to the right of denial exercised by the insolvency administrator, who uses this standard of care to decide on the denial of a claim. It also concluded that, although the claim is enforceable based on an arbitration award issued on the basis of a completely erroneous assessment of the state of facts, the insolvency administrator is nevertheless not entitled to use these facts as an argument for denying the claim in accordance with Sections 199 and 200 of the Insolvency Act.


Insolvency Decision

The category of insolvency case law newly includes an interesting judgment of the Supreme Court No. 29 NSČR 17/2020, concerning the lodging of overvalued claims in insolvency proceedings. According to the judgment, in such a case, there will be no penalties for overvaluing the claim by more than double, not only when the application is withdrawn but also when a settlement is reached in an incidental dispute concerning the claim.

In another insolvency judgment (No. 29 ICdo 55/2019), the Supreme Court concluded that if an application for an enforceable claim is not accompanied by a decision on the basis of which it is enforceable, it is not a defect in the application.


Civil Code in Practice

In the area of inheritance law, the Supreme Court has ruled in Case No. 24 Cdo 1820/2020, according to which, under the New Civil Code, the relevant grounds for disinheritance are also those that occurred after the deed of disinheritance was made.

The category of unjust enrichment on the basis of a revoked decision includes the Supreme Court’s judgment No. 23 Cdo 3487/2020. According to this judgment, unjustified enrichment always occurs only between the original parties to the proceedings (dispute), regardless of the fact that the obligor provided performance for the benefit of a third party on the basis of an explicitly given instruction from the obligee. That third party is therefore not passively entitled in a dispute over unjust enrichment.


Other Case-Law News

  • When examining the continuity of the right to be entered in the Land Register with the existing entries, the Supreme Court (No. 24 Cdo 279/2020) considers the status of the entry at the time of filing the application for entry to be decisive. This applies even in the case of an erroneous entry that was subsequently corrected. Another judgment from the field of property law is the Supreme Court’s judgment No. 33 Cdo 3583/2020, according to which debts related to the management of the house and land, which are transferred to the transferee upon the transfer of the unit, do not constitute a legal defect attaching to the unit.
  • What also caught our interest was a rather curious case of theft. According to the Supreme Court’s ruling No. 8 Tdo 18/2021, an act is theft even if the owner of the stolen item cannot be identified. In this case, the perpetrator took a Madison bicycle, which he “found” leaning against the wall of a house in the street around midnight. The appellant argued (in vain) that it was an abandoned item in terms of Section 1045 of the Civil Code.
  • Another recommended decision (No. 32 Cdo 3654/2020) concerns the interpretation of the term used in a specific sector. This was specifically in the field of IT trading and the Supreme Court refused the interpretation of the term “release of software” used by the Court of Appeal. According to the Supreme Court, it is essential that the Court of Appeal consider objective aspects when assessing the meaning of a specific term in this market segment. The role of the model trader and the consideration of how they would understand a particular declaration of will also play an important role.
  • In the context of employment law, the Supreme Court held in Case No. 21 Cdo 3382/2020 that if it is so agreed, an agreement becomes effective when both parties sign it, even if the acceptance is not subsequently delivered to the offeror (even if they are an employee).
  • The relatively protracted case law on the issue of reimbursement of the rental of a replacement vehicle by the insurance company under compulsory third-party insurance was expanded by the Supreme Court’s judgment No. 25 Cdo 2015/2019. According to the judgment, such an expense is economical as long as it is not clear whether the damaged vehicle can be repaired. Once it is objectively clear that it can no longer be repaired, the expense is no longer economical. It will then not be reimbursed by the insurance company.

At Deloitte Legal, we carefully analyse recent court decisions, new case law and legislation. If you are interested in discussing any judgement or legal news with us, please do not hesitate to contact us.

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