Sára Tichá for EPRAVO.CZ: International Jurisdiction of Czech Courts in Liability of Company Officers under Section 159(3) Civil Code

How is international jurisdiction determined in cases where a creditor claims against a member of an elected body of a company on the grounds of liability for the company's debts under the Civil Code? This question was recently addressed by the Supreme Court, which relied on the key judgment of the CJEU in ÖFAB.

Under Section 159(3) of the Civil Code, a member of an elected body of a company is liable for the company's debts if he has failed to fulfil his obligation to compensate the company for damage caused by a breach of his duties in the performance of his duties, to the extent that he has not compensated for such damage. However, where can a creditor bring an action, for example, if the debtor is a Czech company but the member of the elected body is domiciled in another state? The Supreme Court has confirmed that, as in the ÖFAB case, this institution of liability must be qualified as an obligation to compensate for damages. International jurisdiction must therefore be determined in accordance with the rules of the Brussels I bis Regulation for tort and quasi-tort liability cases.

In practice, this means that the action may be brought either before the courts of the EU Member State where the defendant is domiciled or has its registered office, but also before the courts of the place where the creditor suffered the damage, or before the courts of the place where the activities carried out by the company are most closely linked and where information on the company's financial situation is available. The Supreme Court has thus confirmed that creditors are not necessarily required to litigate in the defendant's place of residence or registered office, as provided for by the general rule of international jurisdiction, but are given several options where to pursue their claims.

The full article by Sara Tichá can be found HERE