Czech Republic underwent extensive social and political change during the last 20 years. One of the major legal changes that will affect almost every facet of daily life will be the so far largest reform of the private law coming into force on 1 January 2014.
It’s been more than a year since all three cornerstone statutes were adopted – the New Civil Code (Act 89/2012), Act on Commercial Corporations (Act 90/2012) and Act on Private International Law (Act 91/2012). Adoption of these three key codices capped more than 12 years of practical private law reform efforts. These three Acts are scheduled to come into force on 1 January 2014. Additional legislative changes are simultaneously in the process, in areas of implementing legislation, procedural or tax laws.
New Civil Code
The current Civil Code has been in force since 1964 and understandably it copies the then social and political environment, as well as prevalent legal theories, which dictated that one had to follow, in conducting one’s private affairs, not just the Civil Code but also a number of specialised tie-in codices such as the Act on Family, the Labour Code or the Commercial Code. The Civil Code underwent over the years more than 68 amendments, introducing smaller or large changes, before being replaced altogether next January with the New Civil Code.
The New Civil Code (NCC) emphasizes the Czech democratic legal traditions as well as the standards of European private law. The NCC aims, with few exceptions, to regulate all private-law relationships in one codex. For this reasons it contains 3081 Sections. It subsumes or reshapes a number of regulations hitherto contained in separate Acts, which it simultaneously replaces (there are more than 100 existing laws being effectively superseded by NCC). NCC is structured into five areas – General Chapter, Family Law, Property Law, Relative Property Laws and Transitional & Joint Provisions.
Abolishment of the Commercial Code
The current Commercial Code has been in force since 1991. It was designed as a self-contained codex standing alongside to the Civil Code and representing a largely independent branch of private law focusing on relationships between entrepreneurs. It has come into being after 40 years of devastation of private law by the communists between 1948 and 1989, and it reflects the speed with which it was necessary to formulate new rules regulating changed social situation in the free Czechoslovakia. The Commercial Code (especially in its Part II) also contains the statutory framework for the company law.
The Commercial Code is a compendium of not entirely coherent regulation expounding onto the existing Civil Code and as such it had been subject to more than 70 amendments, so it could simultaneously serve as a social as well as commercial codex. A large body of changes were triggered by the needs of the Czech economy in transition but also by the need to harmonize the general body of the Czech law with the EU legislation after Czech accession to the EU.
This division of private law has brought about some practical difficulties as it was not always clear what codex (Civil or Commercial) governed certain situations and relationships. For this reasons, the concept of abolishing separate commercial law and integrating its rules into the new civil code has won during the plans to re-codify the Czech private law. Large majority of Commercial Code provisions will therefore be abolished as of the end of 2013 and some of these provisions will be re-integrated into the New Civil Code (for instance the general provisions on commercial secrets, business name or provisions regulating certain contractual types and securing liability).
The NCC will thus become the center of gravity for the Czech private law as of 1 January 2014. Only regulation of purely corporate matters and co-operatives, as currently contained in Part II of the existing Commercial Code, will remain separate in the form of the new Act 90/2012 on Commercial Corporations (ACC).
Corporations under ACC include all forms of commercial corporations (i.e., limited liability companies, joint-stock companies, special limited partnerships, public partnerships, European corporations or European Economic Interest Groupings) as well as co-operatives in all their forms however its objective is to regulate largely the national forms of these corporations, as the European forms are sufficiently governed by EU special legislation.
International Private Law
The existing regulation is contained in Act 97/1963 (IPL). This Act formulates conflict-of-law rules for relationships having international elements. It also regulates international code of procedure and legal standing of foreigners.
Besides IPL there exists a large body of international treaties, whether those related to the Czech accession to the EU or arising from other reasons. IPL provisions are applied only unless otherwise specified in a binding treaty, which had been duly published in the Czech Collection of Laws or in Collection of International Treaties. This is a constitutional principle contained in the Czech Constitution (Articles 10 and 10a).
The IPL will also be abolished as of 31 December 2013 and replaced as of 1 January 2014 by the new Act 91/2012 on International Private Law (NIPL).