Legal News [May 2021]: The act on the registration of ultimate beneficial owners to become effective from June

We bring you the most important news from Czech law: fundamental court rulings, new case law and legislative acts you should not overlook. What will you learn this time? Already from 1 June, the Act on the Registration of Ultimate Beneficial owners will become effective. The Supreme Court ruled that trade union officials are not automatically protected against dismissal based on the nature of their office. In another verdict, the Supreme Court ruled that if the entitled party has the right of withdrawal from a contract, which is not exercised by the party, it cannot then claim compensation from the opposing party. Read more in May Legal News.

Act on the Registration of Ultimate Beneficial Owners

A regulation was published in the Collection of Laws, which sets out the requisites of the form for the registration of ultimate beneficial owners and related forms. In addition, notarial fees for related actions  are also set. The Act on the Registration of Ultimate Beneficial Owners will be effective from 1 June 2021.  If you want to learn more about all the rules entailed by the new Act, watch free online seminar on our website, where you will also find a clearly arranged brochure to download.

Case Law News

  • The case law has been dealing with the topic of termination of employment of a trade union official for a long time. However, as the rules for termination due to redundancy become less strict , the protection of trade union officials keeps gradually declining. According to the verdict of the Supreme Court No. 21 Cdo 2110/2019, it is entirely up to the decision of the employer, which employee holding a cancelled position is dismissed. The court is not entitled to review this decision (if it is not discriminatory). If a trade union official holds a cancelled position, the employer‘s discretion is in addition limited by the fact that there must be fair grounds for not employing the official any further. In any case, however, the official does not have to be automatically left out from the selection of redundant employees only on the grounds of the official status. 
  • In a very important ruling, the Supreme Court (file No. 25 Cdo 289/2020) awards compensation for health detriment consisting in the value of care provided by a close person that cannot be precisely quantified. Where it reaches beyond ordinary family assistance, it must be determined at the court’s discretion by, for example, an analogy with the price for similar services provided by professional carers.
  • In the verdict file No. 25 Cdo 1825/2020, the Supreme Court describes in detail how changes in the action affect limitation periods, and, in particular, it stipulates that such a change does not involve a change of the quantification of damage, i.e. not even a change of the original requirement of restoration of things to their original condition to a demand for compensation in cash.
  • An interesting case was tackled by the district and regional courts in České Budějovice, when they assessed whether the sale of a car for which a pledge had been established by the Financial Administration was a misdemeanour of obstructing the execution of an official decision. It was only after the intervention of the Supreme Court (file No. 5 Tdo 1262/2020) when it was clarified that this was not such a misdemeanour, because the establishment of a pledge by the tax office is, as with a private pledgee, only a security instrument. An obstruction would only be a violation of the court ruling on the sale of the pledge.

 Contractual Law News

  • We draw your attention to the verdict of the Supreme Court file No.25 Cdo 1267/2020, according to which if the entitled party has the right to withdraw from the contract, which it will not exercise, it cannot demand a compensation from the opposing party for damage that would not have occurred if it had withdrawn from the contract (e.g. refund of the purchase price paid).
  • A very important ruling is the verdict of the Supreme Court file No. 31 Cdo 3679/2020 dealing with the question of the so-called double rent, i.e. first and second rent agreements concluded in relation to the same thing. The Supreme Court considered the finding of absolute invalidity of the second rent agreement as unconstitutional and concluded that the second contract is valid and it is entirely up to the contracting parties whether the situation will be resolved by termination of one of the contracts, their alteration or whether they will bear the consequences of defective performance of one of the contracts. The second concluded rent agreement for the same thing is thus not absolutely invalid due to the initial impossibility of performance.
  • The issue of pre-contractual notification obligations in business relations was dealt with by the Supreme Court in verdict file No. 32 Cdo 2197/2020. The verdict interprets broadly the purpose of Section 1728 (2) of the Civil Code, under which the contracting parties shall communicate to each other all the factual and legal circumstances which they are aware of or must know, in such a manner that each party can be convinced of the possibility of concluding a valid contract.
  • The opposite problem, i.e. the knowledge of one of the contracting parties of the reasons for invalidity, is dealt with by the Supreme Court in verdict file No. 31 Cdo 38/2021. It deduces that in the regime of the old Section 268 of the Commercial Code it was a real awareness of the reasons for invalidity which then leads to the cancellation of the obligation of the other party to pay damages. It is not a mere suspicion, business experience or legal qualification of the relevant act by the injured party. The conclusion may also be relevant for the interpretation of today‘s regulation of invalidity damages (Section 579 (2) of the Civil Code).

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

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