Czech State Caught Playing Foul Trying to Block Lost Arbitration

The Czech Republic is desperately trying to block the proceedings of an arbitration case against a private citizen that the state has already lost. The arbitration proceedings between the Czech state and Diag Human - a blood plasma trading company owned by Swiss-Czech businessman Josef Stava (Josef Šťáva) - resulted in a 2008 ruling in favour of Diag Human. As a result, the state was ordered to pay CZK 8 billion in damages.

In a massive operation, the authorities are now trying to block the naming of independent arbiters and attempts are being made to occupy all three seats of the supposedly independent tribunal solely by state appointees.

In 2008 the fourth consecutive - and this time final - arbitration ruling concluded after thirteen years of legal struggle that the Czech Republic has unlawfully intervened in market competition, destroyed a private investor's position and caused damage that has to be compensated. Based on the expert opinion of Ernst and Young, the damages (with interest) reached CZK 8.3 billion with daily interest of CZK 1.2 million until the day of payment. After more than two years since this calculation was made, the sum has reached CZK 10 billion, but the Czech coalition government still does not dare to negotiate with the claimant or to pay the compensation in what is probably the most politicized arbitration case in the history of the Czech Republic.

The first state appointed arbiter Milan Kindl was soon sacked from a regional Plzeň university law faculty for providing law degrees to politicians, law enforcement or organized crime figures without any proper study activity. The shortest "study" in his class took only eight weeks - without students' presence.

The second state appointed arbiter Petr Kužel is the President of the Czech Chamber of Commerce and a government political party official. He was Mr. Kindl´s student and left a faculty in a hurry after the scandal was revealed. His appointment was dismissed by the Czech Supreme Court in November 2010 as unlawful and all his decisions in the case declared invalid. Nevertheless, the Czech state is trying to name him again with the help of a court. The latest in this deliberate attempt to block the closing of arbitration is an attempt to name Mr. Jiri Schwarz as the third arbitrator to replace renowned Swiss law professor Max Bauman, appointed by the claimant, Diag Human. Jiri Schwarz is a former Dean of the Prague School of Economics and currently and advisor to Czech president Vaclav Klaus. Schwarz has recently also become an advisor on anti-corruption policies to the Mayor of Prague.

But Schwarz was lately caught up in a significant conflict of interest, as a member of the board of a Czech private foundation NADACE MACHINERY FUND, co-founded by a Swiss based European Machinery Foundation, Romanshorn. The same group of people is connected to an anonymous offshore company Towit that has intervened in the arbitration case in January 2010 claiming to hold twenty percent of its value together with another anonymous offshore company Dumfries Holding Ltd from St. Vincent and Grenadines. State appointed arbiter Kuzel accepted their claim without any consultation with the senate. Czech Republic representatives have soon supported the claim and withdrew their support only after investigative television program in Czech TV has repeatedly documented personal contacts between Kindl and Schwarz and the two offshore companies. The present stalemate caused by state insistence to keep disqualified arbitrators is reviewed in no less than five different court cases in front of different Czech courts.


SOURCE: All Voices