The representatives of EU Member States signed a joint declaration on 15 January 2019 (“Declaration”) on the legal consequences of the judgement of the Court of Justice of the European Union (“CJEU”) in the Achmea case and on the upcoming end of foreign investment protection in the EU based on bilateral investment treaties concluded between EU Member States (“intra-EU BITs”).  

Achmea case  

We have already informed you about last year’s ground-breaking judgment in case Slovakia v Achmea (C-284/16) in which the CJEU concluded that an arbitration clause included in the CzechoslovakiaNetherlands intra-EU BIT of 1991 has an adverse effect on the autonomy of EU law and, hence, shall be deemed as precluded by Articles 267 and 344 of the Treaty on the Functioning of the EU. In other words, the arbitration clauses in intra-EU BITs are incompatible with EU law.

The CJEU based its decision on the fact that an arbitral tribunal established to resolve an investment dispute in line with an intra-EU BIT may be called on to interpret or apply EU law, in particular, the free movement provisions. Such tribunal, however, cannot ask the CJEU for a preliminary ruling on the points of EU law. Thus, it could prevent those disputes from being resolved in a manner that ensures the full effectiveness of EU law. The CJEU also stressed that its conclusions relate only to investment, not commercial arbitrations. 

Conclusions adopted by the Declaration  

The European Commission, agreeing with the aforesaid conclusions of the CJEU, initiated a political debate on the further fate of intra-EU BITs in response to the Achmea case. The debate culminated in the signing of the Declaration by EU Member States that agreed that “an arbitral tribunal established on the basis of investor-State arbitration clauses lacks jurisdiction, due to a lack of a valid offer to arbitrate by the Member State party to the underlying bilateral investment Treaty.”  

EU Member States, thus, pledged to take the necessary measures to inform investment arbitral tribunals about the legal consequences of the Achmea judgment as summarised in the Declaration and to request courts, including in any third country, to set aside or not to enforce arbitral awards related to intra-EU BITs.  

The Declaration justifies the foregoing by claiming that when investors from one EU Member State exercise one of the fundamental freedoms of free movement (i.e., goods, people, services, and capital), they act within the purview of EU law and enjoy the protection granted by those freedoms. The protection includes in particular non-discrimination, proportionality, legal certainty, and the protection of legitimate interests. Based on this, and when simplified, the additional protection under intra-EU BITs is not needed within the EU Common Market.  

EU Member States, however, stressed that the Declaration should not affect settlements and arbitral awards rendered in intra-EU BIT cases that can no longer be annulled or set aside and were voluntarily complied with or definitively enforced before the Achmea judgment.  

Consequences of the Declaration and investment protection in the EU  

The Declaration will inevitably affect several pending investor-State arbitrations and probably also the enforcement of already rendered (but not yet fulfilled) arbitral awards.  

Furthermore, the Declaration sets down a commitment for EU Member States to terminate all intra-EU BITs concluded between them by no later than 6 December 2019.  

Last but not least, EU Member States informed the investor community that “no new intra-EU investment arbitration proceedings should be initiated.” Therefore, investors will have to eventually consider restructuring their foreign investments in order to obtain the relevant international protection.

Authors: Dušan Sedláček, René Cienciala
Source: Lexology

On 1 January 2019, the amendment to the Czech General Health Insurance Act1 came into effect, introducing a new system of reimbursements for medical devices used during outpatient care, i.e. consumer medical devices. The amendment covers consumer medical devices that are prescribed on a prescription and that patients pick up in pharmacies or at dispensing sites, e.g. glucose meters or other diabetic aids, orthoses, wheelchairs, crutches, hearing aids, glasses, contact lenses or incontinence pads. 

The amendment was drafted in response to the 2017 judgement of the Constitutional Court, which declared the hitherto reimbursement regulation of consumer medical devices – which was based on code listings issued by health insurance companies – unconstitutional and repealed it as of 31 December 20182 . The lawmakers were thus under pressure to quickly adopt a new regulation complying with the Constitution.  

The elementary principles underlying the new reimbursement regulation are as follows: 

• The new regulation only applies to medical devices prescribed as part of outpatient care.
• It does not apply to the reimbursement of medical devices provided for inpatient care3 , i.e. hospital medical devices – so-called separately billed material (e.g. implants, cardio stimulators, valves, cannulas, catheters, probes, staplers, devices for laparoscopy or stents).
• The State Institute for Drug Control (“SUKL”) will act as the regulating body while the Ministry of Health will act as the appellate body.
• Individual types of medical devices are divided into reimbursement categories, listed in Appendix 3 to the General Health Insurance Act (the so-called categorization tree). The Act itself lays down a reimbursement limit as well as other reimbursement conditions (prescription and indication restrictions) for each category. The reimbursement limit for the category of glucose meters, for instance, is set at CZK 435 per piece (excl. VAT), and this category is also subject to prescription, indication and volume restrictions.
• The reimbursement category is the cornerstone of the new reimbursement regulation. In principle, each specific medical device should be classified under one of the reimbursement categories.
• The new reimbursement regulation is based on the notification principle. Individual medical devices will not be classified by administrative decisions issued in formal proceedings. Instead, the manufacturers themselves will notify SUKL of the classification of their medical device in a given reimbursement category.
• Only in the event SUKL discovers – either on its own or as a result of a complaint lodged by a health insurance company or a competitor – that the manufacturer classified the device incorrectly will it open formal administrative proceedings for the failure to place the medical device in the appropriate reimbursement category. If SUKL fails to open proceedings within the statutory deadline, the medical device will be automatically classified in the reimbursement category as notified by the manufacturer. Even then SUKL can still decide, based on statutory grounds, to declassify the device from the reimbursement category.
• Manufacturers will be able to file their notifications only starting from 1 June 2019. However, unless the manufacturers manage to fulfil the notification duty as regards the currently reimbursed medical devices by 30 June 2019, these “historically” reimbursed medical devices will no longer be reimbursed as of 1 August 2019. 
• The “historically” reimbursed medical devices notified in a timely manner will start to be reimbursed pursuant to the new legal regulation as of 1 December 2019.
• Medical devices that will be entered in the reimbursement system for the first time and duly notified already in June 2019 will be reimbursed from 1 October 2019.
• Unclassified medical devices that cannot be placed in any reimbursement category will be reimbursed only if approved by the Ministry of Health; the reimbursement limit will amount to 50% of the final price. If, however, the manufacturer enters into risk-sharing agreements with all health insurance companies, the reimbursement limit will amount to 100%, so the medical device will be fully reimbursed.
• Custom-made medical devices are governed by a special regime and do not have to be notified.4 No transitional period applies to these devices and the new reimbursement regulation is, as opposed to serially manufactured medical devices, applicable already from 1 January 2019.
• The Act expressly regulates highest price agreements made between the manufacturer and insurance companies and price competitions. 
• Detailed rules are set out with regards to the so-called circulation regime, under which a health insurance company remains the owner of the medical device that is provided to the patient for use.
• The types of medical devices that may be distributed by contractual dispensing sites are specified in detail. According to the explanatory memorandum, the aim of the lawmakers was to eliminate the risk that the dispensing site would be supplying an entire range of medical devices5 . The other types of medical devices may be dispensed only in standard pharmacies.  

Needless to say, the above overview of the main features of the new reimbursement regulation is not exhaustive. Since this is a complex area posing numerous questions, we are organising a training session on this topic, and we will keep you posted on when it will take place.

The Ministry of Health, SUKL and the health insurance companies are cooperating in order to respond to questions regarding the reimbursement regulation and post their answers on the website of the Medical Device National Information System6 . 

To conclude, we want to point out that the lawmakers have rather surprisingly not made any changes to the reimbursement regulation of hospital medical devices. In fact, the Constitutional Court has ruled that the reimbursement regulation of hospital medical devices – which is also based on code listings issued by health insurance companies – suffers from the same defects as the reimbursement regulation of consumer medical devices 7 . However, the Constitutional Court has not repealed it as it had not been proposed by the petitioners. It appears, therefore, that the rules governing reimbursement of hospital medical devices are awaiting their potential repeal by the Constitutional Court at a later time. Manufacturers and other stakeholders will have to get used to the fact that there is a dual system of medical devices reimbursement in the Czech Republic as there are completely different rules governing consumer versus hospital medical devices.

To view all formatting for this article (eg, tables, footnotes), please access the original here.

Authors: Václav Audes, František Neuwirth
Source: Lexology

On 1 January 2019 price regulation 1/2019/FAR1 of the Ministry of Health of the Czech Republic entered into effect. The regulation introduces in particular the following changes: 

•  The maximum mark-up will be reduced in the 7th band and in the 8th band to 4% and to 2% respectively; the surcharge in these bands will be increased. After the change the maximum mark-up amount will be regulated as follows: 

•  The price regulation now expressly deals with discounts and bonuses. If in connection with the supply of a reimbursed medicinal product a discount or bonus is granted and if it is possible to unambiguously determine their amounts and allocate them to a particular individual item in a tax document (invoice) already at the date of taxable supply – regardless of whether such a discount or bonus is provided or obtained at the date of taxable supply or at a later date –, then such a discount of bonus will be reflected in the unit price. 
• Changes are made to definitions of terms used in the price regulation. In particular, the new term “other person placing a regulated product on the market” is being introduced, the meaning of which is a distributor who places medicinal products on the Czech market but who is not a marketing authorization holder for these products and does not supply these products to the marketing authorization holder for these products. This new term will also be included, among others, in the definition of the manufacturer’s price.  

In contrast to the original intention announced by Deputy Health Minister Filip Vrubel2 no cap on the distributors’ mark-up was introduced, i.e. the maximum mark-up was not divided into separate caps for distributors and pharmacies. The maximum mark-up thus remains shared between distributors and pharmacies. The Czech Chamber of Pharmacists expressed their disappointment in this connection3 . 

Also, on 1 January 2019, the related price decision 1/19-FAR4 of the Ministry of Health entered into effect. This decision changes the list of ATC groups which are not subject to a maximum price regulation. 

The State Institute for Drug Control issued a notice5 on the discussed price regulation and price decision which covers primarily the new list of “deregulated” ATC groups.

To view all formatting for this article (eg, tables, footnotes), please access the original here.

Authors: Václav Audes, František Neuwirth

Source: Lexology

The largest Czech-Slovak law firm HAVEL & PARTNERS is the most sought-after employer among law firms in the Czech Republic for the fifth time. This comes from the latest results of the survey TOP Employers, which was organised for the eighth year by the Association of Students and Graduates. In addition, the law faculty students with the best study results ranked the firm first for the third consecutive year in the Lawyer category, where international law firms dominated before HAVEL & PARTNERS. The survey TOP Employers 2019 this year involved a total of 11,577 university students. 

“We are very pleased that we remain the most attractive employer among law firms in the Czech Republic for the incoming generation of lawyers. These excellent results are a confirmation to us that HAVEL & PARTNERS is a strong and established brand. I would like to thank all students for the vote in the survey, and I believe that we will start successful cooperation with many of them,” Jaroslav Havel, managing partner of the firm, says of the current award.

The results of the TOP Employers 2019 study correspond with the position of the firm in the legal market. It is the largest and most successful domestic law firm, which has also long been confirmed by the results of the Law Firm of the Year competition, in which HAVEL & PARTNERS has clearly triumphed. Currently, the firm employs more than 200 lawyers in its offices in Prague, Brno and Bratislava, of whom there are more than 100 attorneys and 29 partners, as well as about 80 students of mostly law faculties.

“Students who will become a part of our team will not only gain immediate access to extensive corporate know-how, but also, at the beginning of their careers, they will have the opportunity to work with top experts and experienced senior lawyers for the most demanding clients from among nationally and globally successful companies in their fields. Other reasons why we are an attractive employer to our younger colleagues are our extraordinary, continuous 18-year economic growth and our business development in the European context, enabling the unique professional and wage growth of talented colleagues,” says Josef Hlavička, a firm partner responsible for human resources.

As part of the award ceremony of the Czech Lawyer of the Year 2018 Competition, the largest Czech-Slovak law firm HAVEL & PARTNERS handed over a CZK 100,000 check to the Krása pomoci Foundation which helps senior citizens, whose founder is Taťána Gregor Brzobohatá. During the gala evening, the Foundation’s director Michaela Stachová accepted the check.  

“Prominent Czech philosopher and writer Ladislav Klíma once wrote that ‘the degree of respect for old age indicates the degree of nobility and the true value of all nations and cultures’. Not only the State but also the private sector should therefore support organizations that help senior citizens for the long term and systematically. Our support for the Krása pomoci Foundation has lasted for more than ten years. In addition to direct financial support, we also provide pro bono legal services, last year especially in the field of labour law and in connection with the GDPR,” said Robert Nešpůrek, a partner of HAVEL & PARTNERS, who handed over the check for the firm.

Our law firm has provided the Krása pomoci Foundation with more than 500 pro bono hours. “We thank HAVEL & PARTNERS for its support and help throughout the existence of our foundation. The financial donation will be used for home care for seniors so that they can live the end of their life with dignity and in “their” environment,” said Michaela Stachova, the Foundation’s director at the gala evening.

“We usually hand over the charity check at the gala evening of the Lawyer of the Year Competition. In previous years, we supported, for example, the non-profit organization Bílý kruh bezpečí, helping victims of crime, the AutTalk Endowment Fund which supports parents in managing care for their autistic children, and the Naše dítě Foundation,” adds Nešpůrek.

In addition to direct financial support of charities and projects, which exceeded CZK 770,000 in 2018, HAVEL & PARTNERS also focuses on pro bono legal aid. Last year the firm worked more than 900 pro bono hours, which was about a quarter more than in 2017. With this form of legal assistance, our firm supported the already mentioned Krása pomoci Foundation and the AutTalk Endowment Fund of Kateřina Sokolová, Czech Radio’s Endowment Fund Světluška, the Association/Fund to defend the unfairly prosecuted, the Prague Museum of Decorative Arts, the Czech Technical University, and many others.

As part of its CSR activities, HAVEL & PARTNERS also supports the involvement of its employees and associates as volunteers who participate in charity runs and sales, provide advice to children from children’s homes, organize charity breakfasts and fundraising, etc. The firm has also included charitable organisations and sheltered workshops in the list of its regular suppliers of goods and services.

(The upcoming end for intra-EU investment arbitrations)

(Ultimate Beneficial Owner Register: New duty for every legal entity) 

HAVEL & PARTNERS’ real estate team, led by partner Lukáš Syrový and associate Adam Karban, has provided comprehensive legal advice to the international development group Panattoni and the real estate investor AEW on the construction of a distribution hall in Pavlov near Prague and subsequent negotiation on lease documentation with the Czech-Slovak company ViaPharma that will build a modern distribution base for the Dr. Max pharmacy network there.

The total investment in the tenant’s property and technology shall exceed CZK 1 billion. The leasable area of the building will reach approximately 22,900 square meters and will include warehouse and office premises, including premises for the location of a pharmacy.   The construction of the hall for ViaPharma is another milestone in the successful Panattoni Park Prague Airport II project located near Prague International Airport.

HAVEL & PARTNERS, led by partner Lukáš Syrový and senior associate Albert Tatra, has provided comprehensive legal advice to the investment company ZFP Investments, which manages the real estate fund ZFP, on the sale of its 100% stake in the company Florenc Office Center which owns  the office building of the same name in Prague. The South Korean financial group Shinan Investment Corporation became the new owner of the property.

Thanks to its location in the wider centre of Prague, and with its 11,000 square meters of office space on ten floors and 170 parking spaces, Florenc Office Center is one of the lucrative properties in Prague. The building built in 2003 is rented by the Czech division of the international consulting company KPMG.

ZFP Investments, investiční společnost, a.s. is a subsidiary of IAD Investments, správ. spol., a.s., the oldest Slovak management company operating in Central European countries for more than 25 years. The fund has owned Florenc Office Center since 2014.

Since the New Year the largest, and according to the Law Firm of the Year competition, the most successful Czech-Slovak law firm HAVEL & PARTNERS has again significantly extended the number of attorneys in its top management. With effect from 1 January 2019, Filip Čabart and, in Slovakia, Juraj Steinecker were promoted to the position of partner. At the same time, Jiří Buryan, Martin Ráž and Petr Opluštil were promoted to the position of counsel, the second highest managerial level, and Martin Drahotský and Veronika Filipová became senior lawyers. Thanks to these career shifts, the number of the firm’s partners has increased to 29, of whom 25 got to this position on the basis of internal promotion. HAVEL & PARTNERS has long been building on the extraordinary stability of its senior lawyers’ team, providing a unique opportunity for rapid career growth.

“We are aware that only top lawyers will keep the top-ranked law firm on top. That’s why within the firm we are developing a motivating environment with a clear vision of career growth that can be much faster than at our competitors,” says Jaroslav Havel, managing partner of the firm, explaining:“In terms of clients and work, the firm has always grown to such an extent that we could create other partner positions and offer them to our best and most talented colleagues. Some of them have achieved partnership faster than the average 8-10 years. The second highest managerial position of counsel was then created in 2014, together with the economic and personnel development of the firm, when in some areas it was necessary to extend the competencies of the most experienced lawyers who typically do not aspire to the position of partner, or for whom the position of counsel is a pre-level to the position of partner, and also to support their academic growth, pedagogical or other professional activities. Currently, seven of our colleagues are in the position of counsel. I am glad that all the newly promoted lawyers have given the long-standing support to individual legal teams and that we are successfully pursuing the strategy of raising the next generation of top senior colleagues in the firm.”

One of the firm’s new partners, Filip Čabart, will be co-responsible for managing the banking and finance team. Filip specialises in all types of financing, including syndicated loans, dealing with claim portfolios, and legal and regulatory aspects of providing financial services and collective investment, securities offerings and admission to trading on public markets. In recent years, he has been involved in numerous international and domestic transactions, providing legal advice to major international and domestic financial institutions and major companies.

The second new partner, Juraj Steinecker, will join the management of HAVEL & PARTNERS’Bratislava office and develop its practice in the field of competition law and M&A, which he has been specialising in for a long time. In the past, Juraj has represented clients from different sectors before competition authorities and courts in matters of anti-competitive agreements, and in merger notification matters. He also advises on competitive aspects of mergers and acquisitions, and on compliance matters.

The largest Czech-Slovak law firm HAVEL & PARTNERS has provided comprehensive legal advice to the joint stock company SNEO,owned by the City District of Prague 6, on the transfer of the Na Dračkách site, unique in its location at the border of the Ořechovka and Střešovice districts and with an area of approximately 1.2 hectares, usable for future residential construction. The transaction involved the sale of a 90% shareholding in the newly established company Areál Dračky and the option to buy the remaining 10% shareholding.

The buyer was DRA development s.r.o., a subsidiary of the investment group Penta Investments. The buyer was selected in a public tender, in which only 7 candidates submitted their bids.

HAVEL & PARTNERS’legal teams, led by Jan Koval (M&A), Adéla Havlová (Public), Josef Hlavička (Real Estate) and managing associate Josef Žaloudek (Tax), worked on the transaction involving advising on M&A and the public sector.

Authors: Václav Audes (Partner), František Neuwirth (Associate)

On 1 January 2019 price regulation 1/2019/FAR[1]of the Ministry of Health entered into effect. The regulation introduces in particular the following changes:

• The maximum mark-up will be reduced in the 7^th band and in the 8^th band to 4% and to 2% respectively; the surcharge in these bands will be increased. After the change the maximum mark-up amount will be regulated as follows:

Band	Base from (CZK)	Base up to (CZK)	Rate	Surcharge (CZK)
1	0.00	150.00	37%	0.00
2	150.01	300.00	33%	6.00
3	300.01	500.00	24%	33.00
4	500.01	1,000.00	20%	53.00
5	1,000.01	2,500.00	17%	83.00
6	2 500.01	5,000.00	14%	158.00
7	5,000.01	10,000.00	4%	658.00
8	10,000.01	9,999,999.00	2%	858.00

• The price regulation now expressly deals with discounts and bonuses. If in connection with the supply of a reimbursed medicinal product a discount or bonus is granted and if it is possible to unambiguously determine their amounts and allocate them to a particular individual item in a tax document (invoice)already at the date of taxable supply – regardless of whether such a discount or bonus is provided or obtained at the date of taxable supply or at a later date –, then such a discount of bonus will be reflected in the unit price. 
• Changes are made to definitions of terms used in the price regulation. In particular, the new term “other person placing a regulated product on the market” is being introduced, the meaning of which is a distributor who places medicinal products on the Czech market but who is not a marketing authorization holder for these products and does not supply these products to the marketing authorization holder for these products. This new term will also be included, among others, in the definition of the manufacturer’s price.

In contrast to the original intention announced by Deputy Health Minister Filip Vrubel[2] no cap on the distributors’ mark-up was introduced, i.e. the maximum mark-up was not divided into separate caps for distributors and pharmacies. The maximum mark-up thus remains shared between distributors and pharmacies. The Czech Chamber of Pharmacists expressed their disappointment in this connection[3].

Also, on 1 January 2019, the related price decision 1/19-FAR[4] of the Ministry of Health entered into effect. This decision changes the list of ATC groups which are not subject to a maximum price regulation.

The State Institute for Drug Control issued a notice[5] on the discussed price regulation and price decision which covers primarily the new list of “deregulated” ATC groups.

---

[1] Price regulation of the Ministry of Health 1/2019/FAR of 12 December 2018 on the regulation of prices of medicinal products and food for special medical purposes; available at: http://www.mzcr.cz/Odbornik/dokumenty/cenovy-predpis-1/2019/far_16489_1953_3.html.

[2] See https://www.mzcr.cz/dokumenty/namestek-filip-vrubelproti-emergentnimu-systemu-broji-tikdo-se-boji-o-zisky_15884_1.html

[3] See https://www.lekarnici.cz/Media/Tiskove-zpravy/Do-noveho-cenoveho-predpisu-ministerstva-zdravotni.aspx

[4] Price decision of the Ministry of Health 1/19-FAR of 12 December 2018 which sets out a list of ATC groups which are not subject to a maximum price regulation; available at: http://www.mzcr.cz/Odbornik/dokumenty/cenove-rozhodnuti-1/19/far_16490_1953_3.html

[5] See http://www.sukl.cz/leciva/cenovy-predpis-ministerstva-zdravotnictvi-1-2019-far-a