Legal context of Covid-19

Epidemic of coronavirus, designated as SARS-CoV-2, which is a disease inflictor of Covid-19 (Covid-19), affects all areas of life, including legal relations. The aim of this document is to assist you to get at least a basic view of some of the impacts of this epidemic and of measures adopted by authorities of the Czech Republic in this connection (the Measures) on relations with your employees, contractual relationships and some other legal relations.

To the extent prescribed by law, the state shall be liable for damage caused in consequence of certain Measures which may typically consist in impossibility to pursue business at all, or in a usual way. Such liability was clearly also the reason for the change of the attitude of the Czech Government to the Measures adopted under the state of emergency, and currently, is subject to discussions as to the extent to which the state shall compensate the damage to the entrepreneurs. The government´s practice was successfully challenged in court proceedings. We are dealing with the liability of the state in Section 3.

The Measures seriously interfere with employment relationships where they affect the very possibility of the employees to work and of the employer to assign work to the employees which is connected with the emergence of obstacles to work, obligation to pay the corresponding compensation of wages, which the state compensates under stipulated conditions, or with even a possibility to terminate the employment relationship. We are dealing with these issues in Section 4.

In relations (not only) among the entrepreneurs, the Measures may lead to a change of existing contractual relationships (emergence of liability for default or for damage) or to a possibility to terminate such relationships (whether by withdrawal from a contract or as a consequence of frustration of a contract). A breach of Measures or breach of an obligation to take preventive measures may lead to a rise of a new liability for damage. It will be essential to seek solutions which will not only comply with the law, but which will also satisfy the requirements of good morals within the meaning of equitable distribution of economic impacts among the affected parties. Some Measures which are allegedly aimed at mitigating consequences of the combat against Covid-19 directly interfere with particular, previously arisen as well as newly arising, contractual relationships and newly regulate the rights and obligations of contractual parties. We are dealing with these issues in Section 5.

For your information, we attach brief overviews of selected Measures (reserving their incompleteness or further corrections also with regard to a very dynamic development), together with a brief (not always exhaustive) summary of their contents (the contents of some now valid Measures are stated in greater details; please note that, for the time being, the overview of Measures are in Czech only, while we will gladly provide you more information in English or German upon your instruction). We are dealing not only with restrictive Measures but also with Measures the aim of which is to mitigate impacts of the fight against Covid-19, whether by reliefs from statutory obligations or by an opportunity to receive financial assistance from the state (Section 6).

Due to the Measures adopted, damage on the part of entrepreneurs and significant difficulties with fulfilment of previously concluded contracts may often arise. With regard to the above-mentioned, we recommend gathering relevant evidence of all damage caused in consequence of the Measures and to claim such damage in time. At the same time, we recommend identifying and reviewing problematic contractual relationships, in particular, as regards contractual provisions on so-called force majeure and material change in circumstances, and assessing legal consequences in case of a breach of such contracts.

The opinions formulated in this document may not be relied on in any particular case that requires individual assessment at all times. It may not be excluded that competent authorities will reach other conclusions at their decision-making procedure than those presented herein. With regard to the dynamics of the development of the Measures, further changes are expected.

We are, of course, gladly at your disposal, should you wish to get further information, or necessary legal assistance.

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