Advertising is the Only Purpose of Billboards

The Czech Supreme Administrative Court decided that the only purpose of billboards is advertising.

We have prepared a short summary of this decision within our engagement in GALA and it is available here: http://blog.galalaw.com/post/102gdqn/advertising-is-the-only-purpose-of-billboards

Bribery and corruption – brief guide through certain foreign Anti-bribery and Anti-corruption regulation and their comparison to the Czech regulation

It is not unusual to encounter a reference to anti-bribery or anti-corruption laws in international trade, particularly as a contract clause, where the parties undertake to comply or declare their compliance with such legislation. We would like to present you a brief summary of the most common sources of anti-bribery law, the British 2010 Bribery Act, the US FCPA and the OECD Anti-Bribery Convention. We have also included a brief comparison with Czech law at the end of the article.

United States Foreign Corrupt Practices Act (FCPA)

The purpose of this act is to prohibit U.S. citizens, entities and foreign corporations trading securities in the U.S. from bribing foreign government officials. The same rules apply to foreigners if they are in the U.S. territory at the time of the corrupt conduct.

FCPA considers as bribes not only direct payments, but also indirect payments made to any other recipient in furtherance of influencing or transferring a part of the payment to a foreign official. To be held liable, the person offering a bribe indirectly must have knowledge (including conscious disregard and wilful blindness) of the prohibited use of their money. Due to the possibility of indirect bribing (even for example through business partners), companies conduct internal audits, background checks of their suppliers, due diligence, or they often include anti-bribery provisions in their internal policies.

Shockingly, it is perfectly legal under the FCPA to provide grease payments to foreign officials. Such payments do not affect the decision of the foreign official and therefore are not considered a bribe. This leaves a significant grey zone for speculations whether a certain payment should be considered a bribe or not.

Donald Trump has repeatedly stated that he sees it as unfair for American businesses to not be able to bribe foreign officials in order to help international trade and he has tried to abolish this act.

An official summary can be found here. Full text of the FCPA here.

UK Bribery Act 2010

This criminal law act replaces the existing common law rules and is considered „the toughest anti-corruption legislation in the world“. Up to 10 years of imprisonment or even an unlimited fine can be imposed as a punishment in accordance with this act. The full text can be found here.

Some of the criminal offenses under this act are similar to the ones known to Czech law – acceptance of a bribe and bribery. However, the group of officials that can participate in corruption is wider. It covers any function of a public nature; any activity connected with a business, trade or profession; any activity performed in the course of a person’s employment; or any activity performed by or on behalf of a body of persons whether corporate or unincorporated.

The standard in deciding what would be considered a breach of duty of the official is what a reasonable person in the UK might expect of a person in such position. Local practices or customs should be disregarded when deciding this, unless they form part of the “written law” of the respective jurisdiction.

Direct as well as indirect bribing of foreign officials is prohibited, but the term “international officials” includes not only officials of a foreign country, but also of an international governmental organisation. In such cases, only the person offering the bribe would be prosecuted, not the foreign official.

The most discussed part of the Act is its article 7, which creates a new offence of failure of commercial organisations to prevent bribery. A commercial organisation can be guilty of the offence if the bribery is carried out by an employee, an agent, a subsidiary, or another third-party, whom can also be separately prosecuted. Article 7 applies to all organisations which have business in the UK; therefore, it is possible that a German business with retail outlets in the UK which pays a bribe in Spain can be subject to this Act.

The offence under article 7 is one of strict liability, with no need to prove any kind of influence of the bribe on a certain decision. The commercial organisation has a defence if it can show that, at the time of the bribery, it had adequate procedures designed to prevent persons associated with the organisation from undertaking such conduct in place. The burden of proof in this situation is on the organisation.

Adequate anti-bribery procedures are described in a guide published by the Ministry of Justice of the UK, which can be found here.

The only exception from the Bribery Act are military and intelligence service operations.

OECD Anti-Bribery Convention

This international convention was concluded as a result of the efforts of the OECD Working Group on bribery in international business transactions. It has been ratified by all 37 member states of the OECD (including the Czech Republic) as well as by Argentina, Brazil, Bulgaria, Costa Rica, Peru, Russia and South Africa.

The signatory countries have undertaken to put in place legislation that criminalises bribing a foreign public official by both natural and legal persons. The Convention also includes provisions on extradition, but does not apply to the act of accepting a bribe. The OECD has no authority to implement or enforce the Convention, but it monitors situation in the participating countries via its Working group on bribery.

In 2009, the signatory countries adopted a series of recommendations to update to the Convention, another update is expected to come into force this year.

The Convention and other relevant documents can be found here.

Comparison with Czech law

In the Czech Republic, this issue is governed by the Criminal code. Its scope is defined both by the territorial principle (the whole territory of the Czech Republic) and the personal principle (citizens of the Czech Republic can be prosecuted for criminal offences committed abroad). If a bribe is offered by a Czech citizen to a foreign person abroad, it is considered a criminal offence punishable under Czech law. The same applies when a foreign citizen pays a bribe in the Czech Republic.

The conduct prohibited by both the FCPA and the Bribery Act is practically identical to the conduct described by two offences under the Criminal code – bribery (Section 332) and indirect bribery (Section 333). Both the person offering and accepting a bribe can be prosecuted according to these provisions. The criminal code defines “a bribe” as any unjust advantage, financial or other. The offence of bribery can be conducted not only against an official, but also in connection with own or other person’s business.

According to the Act on Criminal Liability of Legal Entities, both aforementioned crimes can be committed by a legal entity, if the conditions of its criminal liability are fulfilled. Similarly to the British Act, the legal entity has a defence if it can show that all reasonable efforts have been made to prevent the crime (Section 8 par. 5). The burden of proof is on the prosecuting authority, in compliance with the principles of the Czech criminal proceedings.

The Court of Justice of the European Union declares the so-called „Privacy Shield“ between USA and EU invalid

Today the Court of Justice of the European Union (CJEU) issued its decision concerning in particular the two key tools for the administrators of personal data and for their transfer abroad to countries outside EU – these are the standard contractual clauses and the so-called Privacy Shield (i.e. the Decision of the Commission allowing for the transfer of personal data from the EU to US under the EU-US shield).

Firstly, the CJEU confirmed that the decision of the European Commission, by which the standard contractual clauses are stipulated (which are used in contractual relationships between the administrators of personal data and administrators and processors from countries outside the EU) is valid. In other words, usage of these standard contractual clauses is one of the key elements of ensuring sufficient framework of personal data processing for their transfer to countries outside the EU. However, the CJEU at this point stressed out that conclusion of these contractual clauses alone does not provide for the level of protection essentially equivalent to that guaranteed in the EU. The circumstances standing outside the willpower of the contractual party of the clauses, for example legal system of respective country and the access of the state bodies or offices to these transferred personal data from EU, must be taken into consideration. According to the CJEU it is the obligation of the administrator and the receiving person to verify, prior to the transfer of the personal data, whether the level of protection is comparable to the one guaranteed by the EU and at the same time the receiving person shall notify the administrator about any amendment to the legal regulations, which would prevent securing the level of protection comparable to EU and to stop the transfer of the personal data.

The second assessed tool for the protection of personal data was the decision of Commission about the so-called “Privacy Shield”, which was intended to secure that the protection standard used in the EU also applies in the USA. However, the CJEU declared this decision invalid.

The basis of this decision was a complaint filed by Mr. Schrems with the Irish data protection office against Facebook Ireland Ltd., which transferred the personal data of Mr. Schrems to Facebook Inc., seated in the USA. It is interesting that the predecessor of the “Privacy Shield”, i.e. the previous agreement between the USA and EU on protection of personal data, so called “Safe Harbour” was also declared invalid on the basis of the complaint of Mr. Schrems regarding transfer and especially storage of personal data by Facebook Ireland Ltd. on servers located in the USA (it is the CJEU decision dated October 6, 2015, file No. C-362/14).

In today’s decision the CJEU expressed its doubts on whether the USA provides the personal data protection comparable to the EU, especially due to the fact that the USA reserved the right to access these transferred personal data by state bodies and institutions to the extent necessary for protection of the interests of the USA. At the same time the CJEU specified that the USA neither has any law nor other legal regulation on personal data protection, whereas there are no safeguards and securities for the personal data subjects, which would limit the access of the state bodies and institutions of the USA to the personal data transferred from the EU. For example, the impossibility of judicial review of processing of subjects’ personal data in the USA, impossibility of the personal data subject to exercise its rights specified in the GDPR, non-existence of reasons and the extent of the personal data processing by surveillance programs of the intelligence bodies of the USA, ombudsperson established under the Privacy Shield is not independent since he is a member of the government administration of the USA and elected and recalled by the Secretary of State of the USA.

From the above decision we presume that the transfer of the personal data to the USA should not be possible at this moment, not even under the standard contractual clauses, because in the opinion of the CJEU, the USA do not ensure the level of protection comparable to the EU. However, due to the fact that the personal data from the EU flow to the USA constantly (also due to global groups of companies having their controlling company or headquarters in the USA), the topic of transfer of personal data to the USA will be intensively debated in upcoming days.

Business Bulletin No. 3/2020 – COVID EDITION II

Obligatory face masks have become a symbol of the COVID-19 pandemic, including the Czech Republic. However, as of 1 July 2020, the extraordinary measure requiring the respiratory protection the Czech Republic ceased to be effective (except for local outbreaks). As the restrictive measures loosen and everyday life is slowly getting back to normal, we have prepared a second (and  hopefully the last) special edition of our Business Bulletin dedicated to the pandemic and management of its consequences. We have summarised new important measures which aim to help businesses to overcome these difficult times – most importantly the ‘COVID-Ubytování’ scheme, which is meant to help businesses providing accommodation services, furthermore the compensatory bonus for employees performing work under other than employment contract, or postponement and pardon of social security payments. New subsidy system called ‘COVID – Nájemné’ has also been launched – its aim is to help businesses which had to temporarily close down their establishments due to the restrictions. Final part of this edition contains summarised information on effective and planned aid for entrepreneurs in the field of taxes, guarantees and subsidies.

Privacy Law: A Global Legal Perspective on Data Protection Relating to Advertising & Marketing

In cooperation with other partnered legal offices within GALA and with the International Advertising Association, we prepared a comprehensive publication focused on legal regulation of data protection relating to advertising and marketing.

The publication is divided into two volumes – Volume 1 covers the issue worldwide, while Volume 2 is dedicated to the EU member states.

Short press release related to the publication is available on the GALA website. Hard copy is available on Amazon (Volume 1, Volume 2)

Global Advertising Law Developments in Response to COVID-19

Within the GALA worldwide alliance we prepared a short overview of development in the field of marketing and advertising in times of the global coronavirus pandemic. It is a short insight into the current situation in more than 50 countries of the world.

You may find the overview here.

Facebook to cooperate with fact-checking subjects

Plain packaging update

Within the GALA (Global Advertising Lawyers Alliance), we prepared a brief information on plain packaging of tobacco products and its use in the world. No such obligation has yet been introduced in the Czech Republic, but it may be otherwise in the future.

You may find the Information here.

Business Brunch 2 – COVID-19 pandemic and its influence on business

Great success of our HR Meeting and interest of our clients in taking part in similar meetings on current topics of business, contracts, compliance and commercial and civil law made us organize the first Business Brunch in 2020. We planned Business Brunch as a block of three meetings a year, each dedicated to a current topic. Each Business Brunch will consist of three parts – legal news, seminar on current topic and questions.

In second Business Brunch, we will inform you of new case law of courts and authorities and the main topic will be dedicated to the influence of COVID-19 pandemic on business with a focus on

• contractual relationships – force majeure, impossibility to perform or amendment of contracts
• damages against the state and its exercise – damages under the Crisis Act and Act on Liability of State caused within the Performance of Public Authority (how to do it, risks and options)
• crisis and emergency plans – how to prepare for crisis situations, how to prepare internal guidelines and implement them, practical examples
• support for entrepreneurs and related risks of its drawing – overview of current support for entrepreneurs and information on risks related with its exercise

As a consequence of current measures, the second Business Brunch will be held ONLINE.

You can sign in on brunch@randls.com. Organizational and sign-in details are here.

Business Bulletin No. 2/2020 – COVID EDITION I

We are still in very difficult times, but things are getting better and we hope that we will all be able to work on much more positive matters very soon. Following a recent decision of the Municipal Court in Prague, which cancelled several extraordinary measures of the Ministry of Health, the Government issued new emergency measures; the most important are changes of free movement restrictions. In this Business Bulletin we summarize measures, which we find the most important for businesses, and provide a timetable of easing of emergency restrictions. We inform
you about the content of new acts, such as deferral of rents and loan moratorium and Lex Covid. Finally, we inform about the state aid to businesses in the areas of taxes, guarantees and subsidies.

Business Brunch – pleasant breakfast with lunch and legal information and news from practice in one

Great success of our HR Meeting and interest of our clients in taking part in similar meetings on current topics of business, contracts, compliance and commercial and civil law made us organize the first Business Brunch in 2020. We planned Business Brunch as a block of three meetings a year, each dedicated to a current topic. Each Business Brunch will consist of three parts – legal news, seminar on current topic and questions.

For the first Business Brunch, we have chosen the topic which in practice is one of the most often and discussed and which usually interconnects all departments within company – on 18/02/2020 we will talk (in the first part dedicated to legal news) about the large amendment to the Business Corporations Act which we will briefly introduce you to and highlight the most important changes to be brought by the amendment. We will dedicate the main part of the Business Brunch to a topic called „Directors, Board of Directors and duties of Czech companies within international groups in a nutshell“. You may also look forward to a great food – we will test miniburgers and donuts!

You may sign in for the brunch at brunch@randls.com. Organization and sign-in details are here.

CJEU decided on removal of information by hosting services providers (Facebook)

The Court of Justice of the European Union (CJEU) issued a decision on application of injunction related to the removal of information kept on servers of hosting services providers.

The subject-matter of the dispute was the removal of posts infringing personal rights of Ms. Eva Glawischnig-Piesczek (an Austrian politician) which she sought on the company Facebook Ireland Limited. The dispute was held in Austria, reaching its way to Oberster Gerichtshof (i.e. Austrian Supreme Court) which decided to submit the case to CJEU, requesting a preliminary ruling since the matter is related to Directive on electronic commerce. The injunction of the Austrian court requested Facebook to removal specific post of the user by which rights of the plaintiff were infringed, including eventual copies or references, and ordered to remove also the “statements with identical wording and/or having equivalent content of which it (i.e. the hosting service provider) is not aware.”

The subject-matter of the interpretation was therefore the comparison of the right to the protection of personality with reasonable obligations that can be imposed on the hosting service provider, which in this case is Facebook Ireland Limited.

CJEU pointed out that courts of a Member State may not, first, grant an injunction against a host provider requiring it to monitor generally the information which it stores or, second, require that host provider actively to seek facts or circumstances underlying the illegal content. At the same time, it is not possible to apply the rules of the Directive to services of providers established outside the EU, even though CJEU urges the unification of the policy internationally.

Nevertheless, courts of a Member State may order removal of information which the hosting services provider stores and the content of which is equivalent to the content of information which was previously declared to be illegal, or to block access to that information. Courts of a Member State may also order removal or blocking of similar information or information identical in its sense to the information previously declared to be illegal. They nevertheless have to define them in the injunction in such a way so that the hosting provider is not required to independently assess the content of information which he should remove or block.

As regards the international impact, CJEU ruled that blocking of information internationally has to be done in accordance with the relevant international law.

It is thus one of the interesting decisions that brings a partially practical solution in the area of removing illegal content from servers of hosting service providers.

The decision is available here.

New Incoterms 2020

After long 10 years, the International Chamber of Commerce (ICC) published a new issue of the Incoterms delivery terms this September. In the new Incoterms 2020, the ICC is following trends in the international commerce and meet demands of businessmen. The most important changes are particularly as follows.

DAT (Delivered at Terminal) term was renamed to DPU (Delivered at Place Unloaded). The purpose of this change is to reflect that goods can be delivered unloaded not only to a terminal (such as warehouse, port etc.), but also to any other place (such as buyer’s plant site).

Further, Incoterms 2020 newly foresee that a party can arrange for carriage of goods on its own. For instance, FCA (Incoterms 2010) delivery term provides a buyer’s obligation to contract on his own cost for the carriage of the goods, whereas now the buyer shall contract or arrange for carriage of the goods.

New wording of the FCA term also allows the parties to agree for the buyer to direct the carrier to issue the onboard bill of lading to the seller. The purpose of this change is to allow the parties to use the FCA term also in situations, where a document evidencing that the goods was delivered on board of a vehicle (e.g. a ship) is required by a bank according to a letter of credit.

Incoterms 2020 are intended for use as of January 1, 2020; however, you can already agree in a contract to use them. Alternatively, you can continue to refer to the previous edition Incoterms 2010 in the future, should you find it more suitable for your business. Nevertheless, it can be expected that most companies will start using the latest Incoterms 2020 in the coming months. According to information from the ICC Czech Republic, a Czech translation of Incoterms 2020 should be released in October 2019.

Business Bulletin No. 2/2019

We have prepared the second issue of this year’s Business Bulletin in a new design. We hope that it will be clearer, easier to read and more user-friendly. We have also added links to our Facebook and LinkedIn pages. We believe that news which we regularly add there will help you to better understand the world of law and keep track of current events. Of course, the most important are the news in the field of law – the legislation news is about simplifying the process of liquidation of legal entities and the proposal of a new digital tax for providers of digital services in our territory. In the case law section, we have chosen a court decision on the representation of a legal entity by its employee. As a practical tip we draw attention to the new search functionality in the international TMview database, where it is now possible to use visual search.

Business Bulletin No. 1/2019

In this issue of Business Bulletin, we bring to you information on updates and changes in legislation which came into effect at the turn of the year 2018 and 2019. As far as newly passed legislation is concerned, we will be focusing in on the amendment to the Trademark Act, which significantly changes certain procedures of the Industrial Property Office, especially the automatic rejection of proposal of a trademark identical to an older, already registered trademark. Registered owners of trademarks are now responsible for monitoring any new trademarks and submitting objections, when necessary. In regards to new legislation that is currently being discussed, we will briefly inform you about the proposal of the amendment to the Act on Banks, as well as the current state of the Act on the Protection of Personal Data and related legislation. As for the case-law updates, we have selected a decision of the Supreme Court regarding the consequences for companies where the function of one of the jointly-acting managing directors expires. Finally, we will provide you with a practical summary regarding the registration of the actual owner of a legal entity into the
registry.

Business Bulletin No. 3/2018

In this year‘s third issue of Business Bulletin we focused on the extensive amendment to the Business Corporations Act, with its main objective to eliminate the excessive legal obligations in the business environment. The amendment is finally ready to be submitted to the Chamber of Deputies. Also find about the current state of the proposed Act on the Processing of Personal Data and its ancillary act, which proposes changing many related laws, e.g. the Criminal Code or the Act on free Access to Information. You will also read about proposed amendment to the VAT Act, which changes the opinion on how the statutory body will be perceived in the VAT system. In the case law section, we summed up another of a series of rulings related to concurrence of function or the decision of the Office for Personal Data Protection, regarding a substantial fine for breaching obligation to take steps to prevent personal data against leak.