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Czech Republic > Legal Developments > Law firm and leading lawyer rankings

Editorial

Online or Void – New Rules for Contracting with Czech State Entities

Do you do any business with the Czech state or municipal entities in Czechia? The question also applies to corporations or entities controlled or directly financed by government. If the answer is yes, you need to make sure that contracts concluded with such entities have been uploaded to an online public register.

Do you do any business with the Czech state or municipal entities in Czechia? The question also applies to corporations or entities controlled or directly financed by government. If the answer is yes, you need to make sure that contracts concluded with such entities have been uploaded to an online public register. The regulation has a broad impact as it also covers public hospitals, schools, research institutions and of course most governmental agencies.

The obligation came into effect on 1 July 2016 but there was a one-year grace period during which non-compliance beared no consequence. No contract concluded after 2 July 2017  may become effective before its publication. If neither party complies within three months, the contract automatically terminates without ever becoming effective. Either party (the “public” or the “private” party) may upload the contract, so it is advisable to agree in advance who will be responsible.

As always, there are exceptions. In some cases the state or a municipality creates legal entities to conduct certain business or research and development. These entities are exempted from the obligation. Also, the parties should redact some details before the upload. The most interesting exemptions are for personal data and trade secrets. We expect extensive discussions around the application of the later one. Which interest will prevail? Open information about the use of public funds or the trade secret protection? The new law itself does not provide much insight to the question as it is inconsistent in defining of the scope the trade secret exemption. 

The law is quite controversial and there is a pending application to the constitutional court requesting that the law be struck down. The arguments are not very strong but we may still see some development in near future, especially after the parliamentary election.   

Interestingly enough, the new law may be a substantial contribution to the open data buzz, at least in Czechia: The contracts must be published in a machine-readable and open format.

Jakub Císař

jakub.cisar@novalia.cz 

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