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Coronavirus - Business interruption loss recovery - Czech Republic

  • Czech Republic
  • Coronavirus - Country overview
  • Recoveries

09-04-2020

How to navigate the financial recovery process

  • the state is responsible for damages caused by the crisis measures adopted under the Crisis Act. No unlawful behaviour of the state is required
  • business party is liable for damages caused by a breach of contract. Force majeure may apply if no breach of the contract occurred before the COVID-19 pandemic
  • the claim against the state must be raised within six months after suffering the damages. Usual time limitations apply when raising the claim against a business party (three years, ten years if the breach was intentional)
  • lost profit is most probably covered against the state. A weaker party cannot waive its right for damages suffered in the future
  • contractual penalty can be claimed against the business party, notwithstanding any force majeure event. Moderation by court is possible
  • not only is it important to prove the amount of damages, but also to fulfil a duty to mitigate the damages, if possible. Evidence should thus focus both on damages and mitigation
  • there may be a different regime for damages against the state suffered in the second week of the quarantine (24. 3. - 1. 4. 2020) as the quarantine was not allegedly imposed under the Crisis Act
  • as a creditor in the insolvency proceedings, you may ask the insolvency trustee to raise the claim against the state on behalf of the insolvent debtor
  • the court fee is proportional to the value of the claim and must be paid if the claim is raised before the court (e.g. CZK 100M claim, CZK 2,6M court fee)