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The fact

After careful consideration, the Supreme Court agreed with one company on compensation for the Covid restrictions, with this decision also opened the way for other companies. The appeal is by an operator of a grocery shop in Prague, which was ordered to close partially and then completely as a result of the anti-crisis measures. The company demanded compensation of 1.1 million crowns as loss of earnings for the period from October 2020 to February 2021.

In the initial phase of the pandemic, before the special pandemic law was passed, most of the measures to curb the spread of the virus were based on the crisis law. It states that the state is obliged to compensate damages caused to legal and natural persons in causal connection with crisis measures and exercises.

Initially, the company’s claim was rejected by the Prague 7 District Court as a court of first instance, and later, by the Prague Municipal Court as an appellate court, which upheld the decision. According to the latter, the state is liable for the damage only if two conditions are met. First, it must be an individually determined crisis measure directed against a specifically defined person or group of persons. Secondly, the damage must be caused ‘by the implementation of emergency measures’.

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The Supreme Court’s intervention

The Supreme Court has now overturned the decision and, on the contrary, ruled that according to the interpretation of the Crisis Act, the operator is entitled to compensation. “The Supreme Court came to the conclusion that the conditions added by the Court of Appeal to establish the state’s liability for damages in this case were not adequate,” said Judge-Rapporteur Pavel Simon.

Indeed, examining the decision of the Court of Appeal, the Supreme Court noted that there was nothing to indicate that the legislature intended to limit the state’s obligation to compensate damages to individually targeted crisis measures. ‘It can therefore be assumed that he also had in mind crisis measures that would affect the entire territory of the Czech Republic,’ NS Simon explained. In his opinion, the argument about the unpredictability of an emergency situation consisting of an outbreak of a highly contagious disease that would affect the entire territory of the state is not adequate.

The second argument of the court of appeal, that the appellant is not entitled to damages because the crisis measure was not ‘applied’ specifically to her, was then described by Simon as absurd.

The compensation

The damage claimed by the Prague company represents the loss of profit for the period from 28 October 2020 to 28 February 2021 in the amount of CZK 1,100,123. The company itself emphasized that, according to the Crisis Act, the state is objectively liable for damages caused by crisis measures taken, regardless of whether their adoption was correct and necessary. The Supreme Court ruled in favor of the operator on this very issue.

What the court could not decide on was the amount of compensation itself. “The court of first instance came to the conclusion that it did not have the right in question. However, the Court of Appeal did not rule on the issue, thus preventing the Supreme Court from ruling on the matter at this stage of the proceedings,’ Simon explained.

As of today, the dispute will again have to be decided by the Prague Municipal Court, which will examine whether the plaintiff is entitled to compensation.

 

Sources: https://finmag.penize.cz/; https://www.irozhlas.cz/

Sources of images: https://edition.cnn.com/

Graphic source: https://storyset.com/

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