Czech Republic – Insolvency Law Changes

czech-republic-map-300x200An amendment of the Czech Insolvency Act was published in the Collection of Laws on 3 March 2017 and becomes effective on 1 July 2017. It brings important changes for personal bankruptcies, as well as regulation of corporate insolvencies. Two issues that might be of interest to corporations, regulation of forum shopping and prohibition of voting by the group creditors, are discussed in this article on our Insolvency and Restructuring blog.

 

Want to Use Public Funds? You Have to Disclose Who Your Ultimate Beneficial Owner Is

If you are or will be doing business with Slovak state, local government, municipality or a legal entity financed or controlled by the state, or you are receiving EU funds, as of February 1, you must be registered in the new Register of Public Sector Partners (the “Register”) and disclose your ultimate beneficial owners (UBO). The purpose of this new law is to enhance transparency in the use of public funds. This should be achieved by disclosing the ownership structure and ultimate beneficial owner(s). The Register replaced the Register of Beneficial Owners that was established for purpose of public procurements.

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Poland’s Ruling Party Favors Constructing New Mega-Airport

AirportThe leader of Poland’s ruling party, Jarosław Kaczyński, has come out strongly in favor of construction of a new mega-airport outside of Warsaw.

The new mega-airport proposal was initially vetted as part of Poland’s plan for constructive development, announced by the Law & Justice Party when it won Poland’s parliamentary elections and gained control of Parliament a year and half ago.

Despite strong support for the project by the management of LOT Polish Airlines, the proposal has been subject to much discussion and criticism as being uneconomic, too expensive and a waste of resources already invested in the two Warsaw airports, Chopin Okęcie and Modlin.

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Real Property Reprivatization Decisions in Warsaw May Be Revoked

WarsawLegislation recently passed by the Polish Parliament grants a Parliamentary Commission the right to rescind reprivatization decisions previously issued with respect to real property in the city of Warsaw. Such a rescission would remove the legal grounds for return of the property to the ex-owner or its legal successor, which could lead to seizure of the real property by the government.

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Investment environment in the Czech Republic 2017

cee-mapIn this Article, I will share with you some legal insights regarding investment in the Czech Republic and summarize important points characterizing legal environment here in 2017.

If you are thinking about investing in the Czech Republic you will need to consider a wide range of factors from technical to tax. It is likely that you will be focused on particular business opportunities and whether they are worth your money or not. You will be dreaming about high returns, multiplied EBITDAs and, with this in mind, you will use your imagination to compile the perfect plan to increase the value of your investment. I honestly believe that legal matters may be some of the last aspects you consider – particularly as they deal with the least pleasant pictures of conflicts, stress and gradual devastation of the investment.

But wait a moment and consider a different angle: Everybody likes to be protected, right? Well, this is exactly what the law is for!

Let’s look at the investment environment in the Czech Republic in 2017 through our brand new glasses and try to summarize the most important points. Continue Reading

The Obligation to Re-employ Following an Invalid Termination of Employment

Human_Resources_HR

I was driven to write this article by two pieces of seemingly unrelated information. The first was the fact that, in the Czech Republic – after adoption of the last substantial amendment to the Czech Labor Code – there is currently another substantial and apparently complex amendment to the Czech Labor Code in progress. The second comes from the unpleasant discovery that, at least for the following four years, there is seemingly no plan for anything similar in Slovakia.

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Real Estate Acquisition: Factors to Consider Before a Transaction

The legal rules of real estate acquisition in Hungary differ dependent on whether the acquisition is for arable or non-arable land (residential and commercial properties), by Hungarian residents or non-residents and whether by natural or legal entities. Such diversity in the regulation is due to the fact that real estate is viewed as limited in number or volume and, particularly in relation to arable agricultural land, is considered to be a very precious natural resource. Strict legal regulation of the trading of real estate is additionally justified by its high market value and the risk of speculative transactions.

In many cases, it can be more cost effective to acquire a business entity that owns real estate, as far as transfer tax and company tax on income resulting from sale of ownership interest are concerned. Continue Reading

Be Fair, or the (Polish) Government Will Chase You!

Shopping MallPolish law continues its drive toward regulating commercial activities in Poland. This time, it is with the new Act on Counteracting Abuse of Contractual Advantage in Trading Agricultural and Grocery Products, signed into law by the President, will enter into force in six months’ time, on 12 July 2017.

The Act aims to restore the even playing field in commercial relations between small suppliers of food product and big distributors that treat such suppliers unfairly by making them accept time-extended payment deadlines and requiring additional remuneration for exposing their produce in premium shelf space, and terminate contracts with them without good reason. Why big retail chains resort to such practices, the government has concluded, is that they have a surplus of bargaining power – which stems from their strong economic position – over independent grocery suppliers.

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EU Plans Changes in Investor Dispute Settlement Mechanism

European FlagThe system of investment protection is experiencing radical changes at the level of the European Union (EU). While so far, the protection of foreign investments was guaranteed by bilateral agreements, this is about to change and a unified multilateral system is proposed to be established. How does this initiative influence investor-to-state dispute settlement mechanism (ISDS)?

Current System of the ISDS

Under the current ISDS regime, in case of a breach of investment protection standard included in a bilateral investment treaty, an investor can seek protection against measures of a host state before an arbitral tribunal composed of arbitrators selected by parties to hear the particular case.

Despite the fact that this method of ISDS is included in almost 3,200 bilateral investment treaties worldwide, it is nowadays facing a strong criticism. Lack of neutrality, transparency and legitimacy and, at the same time, unpredictability and expensiveness are the most frequently used arguments of opponents of this system.

And precisely solution of these shortcomings had EU in mind when it presented its proposal to replace the current ad hoc system of ISDS in which tribunals are constituted on case-by-case basis by a permanent investment court.

What Can be Expected?

Transformation of the current ISDS mechanism shall be conducted in two steps.

Firstly, provisions on permanent bilateral investment courts will be included in newly negotiated free trade agreements and later, once a greater consensus is built, these will be replaced by a multilateral investment court. This is considered to be a final destination of the ISDS reform within the EU efforts to create a unified multilateral system of investment protection.

While the first step was already taken when the EU included in its newly negotiated trade agreements with Canada and Vietnam provisions regulating establishment of a bilateral investment court, the second phase has started only recently. On 14-15 December 2016, the Canadian government and the EU hosted a first of a series of intra-governmental discussions aimed on establishment of a permanent multilateral investment court.

Permanent Multilateral Investment Court

Given that only the first meeting on establishment of the multilateral investment court took place, limited information is now available on how this should be organized. However, the EU has suggested that, same as with the bilateral investment courts, also with respect to the multilateral investment court, the inspiration will be taken from domestic and other, already existing international judicial bodies.

The main features of the new multilateral investment court thus should be as follows:

  • Two-tier system – Unlike the current ISDS system, there should be a First Instance Panel, decisions of which could be appealed to an Appellate Panel based on factual, as well as legal reasons.
  •  Permanent judges – Judges will no longer be selected by parties to a dispute; however, the cases will be allocated randomly to judges who are appointed by agreement parties, i.e. states. The judges shall fulfill strong ethical criteria and also new provisions ensuring their impartiality should be implemented. As a result, a double-hat syndrome allowed under the current regime enabling arbitrators in one case to act as counsels in a different one should be limited.
  •  Permanent staff and secretariat of the multilateral investment court.
  •  Strengthened transparency of proceedings.

While many see this initiative as a step forward, especially because it is expected to increase predictability, consistency and impartiality of decisions, it also has its critics. For example, loss of investor’s right to nominate its judge or extension of a time necessary for resolution of a dispute caused by introduction of the Appellate Panel are seen as problematic.

What Is Next?

Given that the talks are at their very beginning, we shall see how they will proceed and whether enough states will express their interest in being part of this project because the multilateral investment court should be set up only once a minimum number of participants is found.

The next informal ministerial meeting is planned to take place on 20 January 2017 at the world Economic Forum in Switzerland. Luckily, and as opposed to highly criticized negotiations of the Transatlantic Trade and Investment Partnership, negotiations on the multilateral investment court should be conducted in public and transparent manner.

We will keep you posted.

The Polish Dream of Electric Cars

Electric CarCertain changes in regulations, somewhat challenging for the renewable energy sector, and the government’s declarations of support to the coal industry might suggest that Poland is not much interested in “going green”. Still, it turns out that electric cars may fit in its energy strategy just well.

Surely, the electric cars are as “green” as the energy powering them. In the case of Poland though, the energy is still sourced mainly from the coal-fired power plants. Nevertheless, Poland is notorious for its air pollution, and in the cities in particular, this is to a great extent caused by exhaust emissions. Expansion of electric vehicles may thus be a relief to the lungs of many people now suffering from the poor air quality.

Dream Big

The Plan for Development of E-Mobility in Poland, announced by the Ministry of Energy in September 2016, and revised after consultations in November 2016, assumes that by 2025 there will be 1 million electric vehicles on the Polish roads. Reaching this target requires a drop in the prices of such vehicles, and further development of the energy grid and recharging infrastructure. Car-pooling and car-sharing are also taken into account as possible support to the transition, since these models allow the costs to be shared among many individuals, making the electric vehicles more affordable.

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