Legal News [September 2021]: Airbnb provides accommodation services, not rentals

The Municipal Court in Prague has decided that short-term rentals made through Airbnb fall within accommodation services, and thus have to be taxed as a business activity. The Supreme Court found that the excessive duration of a legal dispute constitutes a rebuttable presumption of immaterial damage which should be compensated. The Constitutional Court pointed out that courts have to inform e-submission senders of the result of the verification of a recognised electronic signature also in cases where the automatic verification is performed by the courts’ IT systems. Find more information from the area of Czech law in the September edition of Legal News.

The Supreme Court’s Grand Panel decided on damages for the excessive duration of a legal dispute (31 Cdo 1601/2021). It found that the excessive duration of a legal dispute itself constitutes a rebuttable presumption of immaterial damage which should be compensated. Thus, it is not possible to grant satisfaction only in the form of a declaration of a breach of law.

Remarkable decisions in the area of real-estate law

Within land division proceedings, courts do not examine the effectiveness of such an intention. According to the Supreme Court (22 Cdo 1338/2021), courts should only focus on determining whether the division is discouraged by the use of the land or an obvious abuse of rights.

According to the ruling of the Municipal Court in Prague (6 Af 20/2020), Airbnb provides accommodation, not rentals, In the court’s opinion, it constitutes “a business activity as part of accommodation services” as it satisfies accommodation needs, not housing needs. One of its practical impacts is the obligation to tax short-term rentals made through platforms like Airbnb as a business activity (as well as other accommodation services).

From the area of judgements related to unjust enrichment, we have chosen the opinion of the Supreme Court you can read in the judgment 28 Cdo 493/2021. According to Section 2994 of the the Civil Code, the user of somebody else’s property who was not in good faith concerning the authorisation of the person that let them use it unlawfully, has to return unjust enrichment. This is also the case if the property was ceded to him as a community service and not on the basis of a contract.

In one of the series of legal questions on restitution disputes, the Supreme Court tried to argue against the interpretation of the Constitutional Court (28 Cdo 509/2021). The matter was the question of whether the permission of a construction authority was required for the division of the land to be handed over or whether a court’s decision could replace the permission of the construction authority. The Supreme Court advocates the latter statement, which is in contradiction to the finding of the Constitutional Court ref. no. III. ÚS 3804/19.

Other judicial news

We would also like to draw your attention to the recently published finding of the Constitutional Court ref. no. II. ÚS 671/21, in which the Constitutional Court points out the courts’ obligation to inform the sender of an electronic submission of the result of the verification of a recognised electronic signature. This obligation also relates to cases that are automatically verified by the courts’ IT systems. From our perspective, this is the first sign that the Czech Republic realised that (1) electronic signatures can be valid or invalid, (2) this validity can be verified immediately after the receipt of the signature (in a few years, this probably will not be possible anymore) and (3) it would be fair to the sender to confirm such validity or invalidity.

The Supreme Court commented on debt, interest and accessories of a receivable and debt elimination in the judgment ref. no. 29 ICdo 83/2019. The conclusions of the Supreme Court mention that debt, interest and accessories of a receivable that arose before the initiation of insolvency proceeding against the debtor’s property cannot have a different (better) ranking than the receivable (principal) itself in terms of the possibility of satisfying the receivable (principal) and its possible enforcement.

In the judgment (ref. no. 29 Cdo 3204/2019), the Supreme Court dealt with bills of exchange securing an obligation between persons other than the remitter and debtor. The Supreme Court primarily confirmed that the function of a bill of exchange is based on a bill of exchange contract between the parties, noting that security bills do not represent an accessory obligation in relation to another obligation. Therefore, security bills are means of securing obligations, not a security obligation.

Finally, for the sake of completeness – the Supreme Court points out the classic dichotomy of analogous vs. reasonable application of another legal regulation in the last judicial decision we focus on (29 NSČR 125/2019). Specifically, the Supreme Court applies the dichotomy on the appointment of a trustee in an insolvency proceeding where the Code of Civil Procedure is applied analogously, not only reasonably.

The law firm Deloitte Legal engages in thorough analyses of recent court decisions, new case law and legislation. If you are interested in discussing judicial decisions or legal news, do not hesitate to contact us.

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