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Update concerning the compensatory damages pursuant to Crisis Act

On 19 March 2020, we have published article regarding the possibility of compensation of damage caused by the governmental emergency measures.

Until 23 March 2020, the emergency measures were mostly regulated by regulations declared by the government pursuant to Act No. 240/2000 Coll., on the crisis management (hereinafter the “Crisis Act”). Even though pursuant to Sec. 36 of the Crisis Act the government is probably liable for the damage caused to the entrepreneurs due to the emergency measures declared pursuant to Crisis Act, amount and extent of the compensatory damages is still being discussed among the lawyers.

Nonetheless, as of 24 March 2020, the major part of the economically sensitive measures issued originally on the basis of the Crisis Act were replaced by the emergency measures declared by the Ministry of Health pursuant to Act No. 258/2000 Coll., on public health protection (hereinafter the “Public Health Act”) which does not establish any specific liability of the state for damages arisen on the basis of the measures adopted on the basis of the Public Health Act, unlike the Crisis Act.

The legal interpretation of this issue is not certain and opinions of legal experts vary. Even though it is always reasonable to be prepared for the worse possibility of the restrictive interpretation, i.e. that the state shall bear no liability for damage arisen on these newly adopted measures, our law firm and many other experts are currently seeking ways as how to interpret these new measures under the Crisis Act regime.

Additionally, we would like to add that according to our opinion, the current approach of the government can be interpreted as purpose-built. Moreover, some of the governmental officials have already openly via media admitted that the compensation pursuant to the Crisis Act will not be an option. The important question is, how will the Czech courts consider the claims of damaged entrepreneurs in the future.

We strongly believe that in terms of legal certainty and the citizen´s trust in state it is undesirable to put citizens into such difficult livelihood situation due to the change of the legal base pursuant to which are declared the materially same emergency measures. It is the state who disposes with the possibilities of macroeconomic regulations, taxation etc. that can be used to dislocate the negative impact in a way that would bearable for the whole society.

We will closely monitor any changes regarding the abovementioned and keep you informed.

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