Contracts Register: Further Changes and Discussions

Most contracts concluded with public entities such as the Czech Republic, regional or local authorities, state-funded organizations, health insurance companies, public universities, state funds or companies in which the state or a local government directly or indirectly hold a majority share shall be registered with the Contracts Register.

Recently, some obligations and exceptions from the obligation to register became effective.

All contracts that shall be published in the Contracts Register now become effective only upon their registration therein. In case that the publication does not occur within 3 months from the conclusion of such contracts, these contracts will be deemed void from the very beginning. Furthermore, this registration obligation and the eventual negative consequences shall be applicable without regard to the governing law of the contracts.

The publication obligation does not apply to contracts for pharmaceuticals and medical devices and to contracts concluded in emergencies. Such contracts are valid regardless of their publication in the Contracts Register.

Also, further exemptions from the publication obligation have been introduced, inter alia, for the contracts concluded in the ordinary course of business by industrial or commercial entities or those established for research, development or testing. This exception is often discussed and criticized. On the one hand, the transparency of disposal of public sources became limited. On the other hand, the competitiveness of the obliged entities might be threatened. Some of the new MPs have already announced their intention to challenge this exception within the current electoral term.

The future of the whole Contracts Register Act remains uncertain. A group of Czech senators considers this act unconstitutional and has recently filed a complaint to the Czech Constitutional Court.  These senators argue that the Contracts Register distorts the competition within the Czech market to the detriment of public sector entities and that it does not comply with European legislation. The Czech Constitutional Court is  currently reviewing this complaint. Therefore, the reader should remain cautious when contracting with public entities and make sure that their contract has been properly registered if applicable.

JVa

Mgr. Ing. Jan Valíček