Law 

Legal News [October 2022]: Constitutional Court assessed whether a contract was for pecuniary interest

The judgment I. ÚS 2337/21 of the Constitutional Court dealt with the interpretation of a loan agreement and the nature of the contractual penalty arrangement in connection with the question of whether it constituted a contract for pecuniary interest or not. In the examined case, the contractual penalty was more akin to interest. The judgment points out that confusing a loan agreement with a credit agreement does not pay off, and not only in the context of contractual penalties and default interest. Read more in our selection of recent judgments.

The Supreme Court addressed a situation where an individual did not represent a party to the administrative proceedings in which an unlawful decision was issued. However, in view of the interference of that decision with the subjective rights of the individual, they were granted the status of a party to the proceedings in subsequent administrative appeal proceedings. In those proceedings, the decision was annulled for reasons of unlawfulness. The question was whether such an individual has active locus standi for compensation for non-material damage caused by an unlawful decision. The Supreme Court answered that question in the affirmative in its judgment in Case No. 30 Cdo 1339/2022.

The (in)validity of the termination of employment for failure to meet the requirements for the performance of the agreed work consisting in the attainment of a certain degree of physical fitness was addressed by the Supreme Court in its judgment in Case No. 21 Cdo 209/2021. According to settled case law, the employee does not meet the requirements for the proper performance of work in terms of Section 52(f) of the Labour Code only if the quality of the required performance is absent for a longer period of time. Thus, if the employee fails to achieve a certain level of physical fitness (fails to pass a physical fitness test) because of a temporary medical disability, it cannot be assumed that the employee does not meet the requirement for the proper performance of their job and thus validly terminate their employment. The Supreme Court inferred that in such cases it is relevant whether the absence of the required physical fitness is of a long-term nature, which is not the case with temporary health problems.

We also draw your attention to the resolution in Case No. 27 Cdo 2805/2021, which deals with the suspension of the right of a shareholder to invoke the invalidity of a resolution of a general meeting in a situation where the shareholder is in default of the obligation to submit physical shares to the holder for the necessary information or for exchange for new registered shares. The limitation/suspension of this right will occur irrespective of whether (or how) the statutory body of the company has been filled (the shareholder claimed that the positions were held illegally), to which the shareholder should have submitted the shares by 30 June 2014 for the necessary information or for exchange for new registered shares and provided the information necessary for registration in the shareholders’ register. This is because ‒ in a proportionate balancing of the appropriateness, necessity, and degree of interference with the shareholder’s rights ‒ the protection of the shareholder is outweighed by the (public) interest in shareholders “shedding the cloak of anonymity”.

From Real Estate Law

The Supreme Court addressed a situation where an individual did not represent a party to the administrative proceedings in which an unlawful decision was issued. However, in view of the interference of that decision with the subjective rights of the individual, they were granted the status of a party to the proceedings in subsequent administrative appeal proceedings. In those proceedings, the decision was annulled for reasons of unlawfulness. The question was whether such an individual has active locus standi for compensation for non-material damage caused by an unlawful decision. The Supreme Court answered that question in the affirmative in its judgment in Case No. 30 Cdo 1339/2022.

The (in)validity of the termination of employment for failure to meet the requirements for the performance of the agreed work consisting in the attainment of a certain degree of physical fitness was addressed by the Supreme Court in its judgment in Case No. 21 Cdo 209/2021. According to settled case law, the employee does not meet the requirements for the proper performance of work in terms of Section 52(f) of the Labour Code only if the quality of the required performance is absent for a longer period of time. Thus, if the employee fails to achieve a certain level of physical fitness (fails to pass a physical fitness test) because of a temporary medical disability, it cannot be assumed that the employee does not meet the requirement for the proper performance of their job and thus validly terminate their employment. The Supreme Court inferred that in such cases it is relevant whether the absence of the required physical fitness is of a long-term nature, which is not the case with temporary health problems.

We also draw your attention to the resolution in Case No. 27 Cdo 2805/2021, which deals with the suspension of the right of a shareholder to invoke the invalidity of a resolution of a general meeting in a situation where the shareholder is in default of the obligation to submit physical shares to the holder for the necessary information or for exchange for new registered shares. The limitation/suspension of this right will occur irrespective of whether (or how) the statutory body of the company has been filled (the shareholder claimed that the positions were held illegally), to which the shareholder should have submitted the shares by 30 June 2014 for the necessary information or for exchange for new registered shares and provided the information necessary for registration in the shareholders’ register. This is because ‒ in a proportionate balancing of the appropriateness, necessity, and degree of interference with the shareholder’s rights ‒ the protection of the shareholder is outweighed by the (public) interest in shareholders “shedding the cloak of anonymity”.

Three Perspectives of Contractual Law

  • The Supreme Court addressed a situation where an individual did not represent a party to the administrative proceedings in which an unlawful decision was issued. However, in view of the interference of that decision with the subjective rights of the individual, they were granted the status of a party to the proceedings in subsequent administrative appeal proceedings. In those proceedings, the decision was annulled for reasons of unlawfulness. The question was whether such an individual has active locus standi for compensation for non-material damage caused by an unlawful decision. The Supreme Court answered that question in the affirmative in its judgment in Case No. 30 Cdo 1339/2022.
  • The (in)validity of the termination of employment for failure to meet the requirements for the performance of the agreed work consisting in the attainment of a certain degree of physical fitness was addressed by the Supreme Court in its judgment in Case No. 21 Cdo 209/2021. According to settled case law, the employee does not meet the requirements for the proper performance of work in terms of Section 52(f) of the Labour Code only if the quality of the required performance is absent for a longer period of time. Thus, if the employee fails to achieve a certain level of physical fitness (fails to pass a physical fitness test) because of a temporary medical disability, it cannot be assumed that the employee does not meet the requirement for the proper performance of their job and thus validly terminate their employment. The Supreme Court inferred that in such cases it is relevant whether the absence of the required physical fitness is of a long-term nature, which is not the case with temporary health problems.
  • We also draw your attention to the resolution in Case No. 27 Cdo 2805/2021, which deals with the suspension of the right of a shareholder to invoke the invalidity of a resolution of a general meeting in a situation where the shareholder is in default of the obligation to submit physical shares to the holder for the necessary information or for exchange for new registered shares. The limitation/suspension of this right will occur irrespective of whether (or how) the statutory body of the company has been filled (the shareholder claimed that the positions were held illegally), to which the shareholder should have submitted the shares by 30 June 2014 for the necessary information or for exchange for new registered shares and provided the information necessary for registration in the shareholders’ register. This is because ‒ in a proportionate balancing of the appropriateness, necessity, and degree of interference with the shareholder’s rights ‒ the protection of the shareholder is outweighed by the (public) interest in shareholders “shedding the cloak of anonymity”.
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