Conditions to claim damages for limitations caused by state of emergency or emergency measures under Czech law

 

State of emergency in the Czech Republic

 
On March 12, 2020, a 30-day state of emergency for the Czech Republic was announced in the form of a Czech government decision. The reason for this are health threats in connection with the detection of the Coronavirus / SARS CoV-2. The declaration of the state of emergency took place in the Czech Collection of Laws on 12 March 2020 in the form of Resolution of the Czech government to declare a state of emergency for the Czech Republic due to the health risk related to demonstrating the incidence of coronavirus / known as SARS CoV-2 / the Czech Republic for the period from 14.00 hours on 12 March 2020 for 30 days. The rights of the Czech government for the duration of the emergency can be found in the Czech Act No. 240/2000 Coll. on crisis management and changes to certain laws.
 
Breach of obligations imposed on the basis of the Czech Act on Crisis Management may be penalized for natural persons in relation to its seriousness as an administrative offense with a fine of up to CZK 20,000, CZK 50,000, CZK 100,000 and max. CZK 2,000,000 and legal entities and natural persons doing business up to CZK 3,000,000.
 

Emergency measures adopted by the Czech government

 
The Czech government is entitled to adopt various emergency measures based on the state of emergency. What is the current status of emergency measures adopted by the Czech government? For more information please see our article Emergency Measures and State of Emergency in Czech Republic. The emergency measures and impacts of coronavirus disease already raise questions also in connection with the Czech labor law and employment issues. For more information please see our article Labor Law Questions on Coronavirus and Emergency Measures in the Czech Republic.
 

Conditions to claim damages for the limitations caused by the declaration of state of emergency and subsequent ordered emergency measures under the Czech Crisis Management Act

 
It is not yet clear whether the Czech government will accept its responsibilty for the damages and if it will without any questioning accept claims for damages for the limitations caused by the declaration of emergency and subsequent ordered crisis measures. The situation may also develop and a new legislation may be adopted sooner or later. What is the current legal status?
 
The Czech Crisis Management Act contains in Section 35 the regulation of compensation for the restriction of the ownership right, the provision of material means and the performance of work duties and work assistance and in Section 36 the regulation of damages and therefore, there is a legal basis in Czech Republic for such claims.
 
There is only very limited number of individual court decisions in the Czech case law in based on the Czech Crisis Management Act, in particular in connection with the flooding of August 2002. In one of these decisions, the Czech Supreme Court dealt with the jurisdiction of the crisis management body to assert the damage incurred within the six-month period (Decision of the Supreme Court of the Czech Republic file No. 25 Cdo 3798/2007 dated October 22, 2009).
 

Damage caused by a restriction on the right of ownership or right of use, the provision of an in-kind remedy, the performance of a work obligation or work assistance

 
Section 35 of the Czech Crisis Management Act stipulates that “a legal or natural person shall be entitled to monetary compensation for the limitation of the ownership or use right, the provision of a means, the performance of a work obligation or work assistance. The financial compensation is obligated to be paid by the crisis management authority that has decided to restrict the right or impose the obligation. Monetary compensation may also be granted by mutual agreement for the provision of voluntary assistance. The monetary compensation shall be paid within 6 months of the termination or cancellation of the crisis situation giving rise to a claim for monetary compensation under this paragraph. In the event that the exercise of the title to property is restricted, the owner shall be compensated to the extent of the limitation of his property rights under the Czech Civil Code. In the case of work, assistance or voluntary assistance for which it is not possible to determine the amount of compensation by agreement or procedure under the Civil Code, the compensation shall be set at an amount corresponding to the normal wage for the same or similar work. In determining the compensation for the provision of an in-kind asset, the amount of the costs incurred by the obliged person and the usually required compensation for the use of the same or a similar in-kind asset at the time of its provision shall be used. The crisis management authority shall be entitled to demand reimbursement of costs incurred as compensation for the provision of material resources, performance of duties, work assistance or voluntary assistance from the originator of an accident or other event giving rise to a crisis situation and requiring emergency measures. These reimbursements shall compensate for expenditure incurred.
 

Main terms for filing claim for damages caused by a restriction on the right of ownership or right of use, the provision of an in-kind remedy, the performance of a work obligation or work assistance

 
- The form of compensation is monetary;
 
- The claim is filed with the crisis management authority that has decided to limit the right or impose an obligation, i.e. in the present case with the Government of the Czech Republic resp. at the Ministry of the Interior;
 
- The claim must be filed within 6 months of the end or cancellation of the crisis situation giving rise to a claim for monetary compensation.
 
Other conditions:
 
- In case of a restriction with regard to immovable property, its owner shall be compensated to the extent of the limitation of his property rights under the Czech Civil Code;
 
- In case of work, assistance or voluntary assistance for which the amount of compensation cannot be determined by agreement or procedure under the Czech Civil Code, the compensation shall be set at the level of the normal wage for the same or similar work;
 
- In case of the determination of compensation for the provision of an in-kind resource, the amount incurred by the debtor and the usually required compensation for the use of the same or similar in-kind remedy at the time of its provisioning shall be used.
 

Damages caused in causal connection with emergency measures

 
Section 36 of the Czech Crisis Management Act stipulates that “the state is obliged to compensate for damage caused to legal and natural persons in causal connection with emergency measures and exercises (Section 39 (4)) performed pursuant to this Act. Such liability may be exempted only if it is established that the injured party has caused the damage himself. Compensation for material damage incurred in the activities of the authorities carrying out crisis measures or in the imposition of the provision of material resources shall be provided in accordance with the legislation in force at the time of the occurrence of the damage. Compensation for personal injury resulting from the performance of the imposed work obligation, work assistance or voluntary assistance performed in the framework of an organized activity is similarly provided according to the regulations on compensation of work injuries, unless the claim for compensation of this damage arose from the employment relationship. The financial compensation shall be provided by the crisis management authority that ordered the emergency measure or exercise, in or as a result of which damage or injury has occurred. A legal or natural person shall file a claim for damages stating the reasons in writing with the relevant crisis management authority within 6 months from the date on which he / she became aware of the damage, no later than 5 years from the occurrence of the damage, otherwise the right expires. In cases worthy of special consideration, the crisis management authority may grant compensation even after the deadline for submitting the application or without submitting the application, but no later than 5 years after the occurrence of the damage. Compensation shall not be granted to legal and natural persons who caused the occurrence of the loss event. The crisis management authority shall be entitled to demand reimbursement of costs incurred as compensation for damages from the originator of the accident or other event giving rise to a crisis situation and the imposition of emergency measures."
 

Main terms for filing claim for damages caused in causal connection with emergency measures

 
- The injured party must demonstrate a causal link between the damage suffered and the crisis measures;
 
- The state can only be released from its liability if it is established that the injured party has caused the damage himself;
 
- Damage caused to property incurred due to the activities of the authorities implementing crisis measures or in the imposition of the provision of material resources is provided under the Civil Code;
 
- Compensation for personal injury resulting from the performance of the imposed work obligation, work assistance or voluntary assistance carried out in the framework of organized activity shall be provided in accordance with the provisions on compensation for accidents at work;
 
- The claim for monetary compensation will be provided by the crisis management authority that ordered the crisis measure, i.e. in this case the Government of the Czech Republic resp. at the Ministry of the Interior;
 
- The claim for damages must be justified and applied to the relevant crisis management authority (i.e. in this case the Government of the Czech Republic or the Ministry of the Interior not by a court action) within 6 months from the time when it became aware of the damage within 5 years otherwise the right expires. In cases worthy of special consideration, the crisis management authority may grant compensation even after the deadline for submitting the application or even without submitting the application, but no later than 5 years after the occurrence of the damage;
 
- Damages shall not be granted to legal and natural persons who caused the occurrence of the loss event.
 
Section 36 of the Czech Crisis Management Act does not expressly regulate the right to compensation for lost profits or costs incurred as a result of business interruption, business activity or lost earnings of employees. In this respect, relatively fundamental legal discussions and litigation with precedent decisions for the future can be expected in the Czech Republic.
 

Reduction of compensation for reasons deserving special consideration under Czech law

 
Possible provisions of Czech law, which could limit the claim for damages, could be the provision of Section 2953 of the Czech Civil Code on reduction of damages, which states that „For reasons deserving special consideration, a court shall proportionately reduce the compensation of damage. In doing so, the court shall in particular take into account how the damage occurred, the personal and property situation of the individual who caused and is liable for the damage, as well as the circumstances of the victim. Compensation may not be reduced if the damage was caused intentionally. This does not apply if the damage was caused by a person who offered to provide professional performance as a member of a particular vocation or occupation, or by a breach of professional care.“
 

Liability for the violation of the emergency measures under Czech law

 
Since the announcement of emergency measures and at the latest by the declaration of emergency and the adoption of other emergency measures (see our article Emergency Measures and State of Emergency in Czech Republic), a number of new obligations have arisen for citizens and therefore also for employers and employees. Their violation may result not only in criminal penalties in case of possible committing of the crime of spreading a contagious disease according to Section 152 of the Czech Criminal Code or the crime of spreading a contagious disease due to negligence according to Section 153 of the Czech Criminal Code, but also imposing a fine according to the Czech Crisis Management Act or civil liability under the Czech Civil Code.
 
The general liability for damages contains the Section 2910 of the Czech Civil Code, which stipulates, that "A person who causes damages at fault for breaching a statutory duty, thereby interfering with an absolute right of the victim, shall provide compensation to the victim for the harm caused. A person who causes damages also becomes obliged to provide compensation if he interferes with another right of the victim by a culpable breach of a statutory duty enacted to protect such a right."
 
A number of obligations have already been imposed by the Government Resolutions on the adoption of crisis measures. For example, a person,
 
- who have returned from their stay in the areas of risk areas and immediately upon their return, by telephone or other remote access, have not notified their registering provider of general practitioner medicine or general practitioner for children and adolescents, or
 
- who would not promptly notify, by telephone or other remote access, to their general practitioner of health care provider any symptoms of influenza, or, if they do not have a registrant, to any general practitioner,
 
could be liable for damage caused to third parties with respect to these obligations imposed by the Government Resolution No. 209 of 13 March 2020 on the adoption of a crisis measure due to health threat in connection with proving the occurrence of coronavirus (referred to as SARS CoV-2) within the territory of the Czech Republic.
 
For example, liability could prosecute an employee who infects other employees at work and / or third parties and, as a result, the employer's operation is discontinud and employees lose their earnings.
 
The emergency measures and impacts of coronavirus disease already raise questions also in connection with Czech labor law and possible measures under the Czech Labor Code (see our article Emergency Measures and State of Emergency in Czech Republic), but also in terms of application of several provisions of the Czech Civil Code, i.e. on subsequent impossibility of fulfilment of an obligation under the Section 2006 of the Czech Civil Code, indemnity effect due to the force majeure in relation to compensation for damage pursuant to Section 2913 (2) of the Czech Civil Code, substantial changes in circumstances within the meaning of Section 1765 of the Czech Civil Code, or even the interpretation of the scope of insurance coverage according to the agreed scope of insurance. 
 
For more information, contact us at:
 
JUDr. Mojmír Ježek, Ph.D.
 
ECOVIS ježek, advokátní kancelář s.r.o.
Betlémské nám. 6
110 00 Praha 1
e-mail: mojmir.jezek@ecovislegal.cz
www.ecovislegal.cz
 
About ECOVIS ježek advokátní kancelář s.r.o.
The Czech law office in Prague ECOVIS ježek practices mainly in the area of Czech commercial law, Czech real estate law, representation at Czech courts, administrative bodies and arbitration courts, as well as Czech finance and banking law, and provides full-fledged advice in all areas, making it a suitable alternative for clients of international law offices. The international dimension of the Czech legal services provided is ensured through past experience and through co-operation with leading legal offices in most European countries, the US, and other jurisdictions. The Czech lawyers of the ECOVIS ježek team have many years of experience from leading international law offices and tax companies, in providing legal advice to multinational corporations, large Czech companies, but also to medium-sized companies and individual clients. For more information, go to www.ecovislegal.cz/en.

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