The Czech government faces a financial black hole as a result of a decades old legal dispute. Local media point out that the European country’s 2024 draft state budget fails to provide any security for an award worth billions to Liechtenstein-based blood plasma company Diag Human. That award is the subject of an upcoming public hearing in the Court of Appeal in England, the latest step in a legal battle that has lasted more than 30 years. With a reported deficit of 252 billion Czech Koruna, the draft Czech budget is already in a dire state, and the upcoming hearing makes the situation all the more precarious.
On 7 December 2023, the English Court of Appeal will decide whether Diag Human, and its founder Josef Stava, will be allowed permission to appeal the lower court’s decision on whether the Czech Republic should have to provide security for an award worth over $730 million USD (16.8 billion Czech Koruna). This is yet another significant development in what has become one of the largest litigation cases in the country’s history since the dispute began in the 1990s.
Should Diag Human and Mr Stava be successful in their endeavour, there is one problem: the Czech budget does not set aside the budget reserves necessary to provide this security. This is to say nothing of the millions that the Czech government spends every year on legal fees in the case. The Czech Republic has also provided an unlimited undertaking to cover Diag Human and Mr Stava’s costs in the event that they are successful in the English proceedings, compounding the costs further. Again, there is no provision for this undertaking in the draft budget.
If it is found that the Czech government is made to provide security for the award, it will have strong implications for the Czech government’s efforts to prevent a budget overrun, which was one of the platforms that Prime Minister Petr Fiala ran on in the 2021 elections.
The Czech government will have breathed a sigh of relief when Mr Justice Bright ruled in the English High Court on 7 July 2023 that the Czech Republic did not have to provide security for the $730 million USD (16.8 billion Czech Koruna). However, Diag Human and Mr Stava are seeking to launch an appeal based on the conduct of the Czech Republic, which Diag Human and Mr Stava contend is a breach of both the rule of law and the international obligations of the Czech Republic.
In 2022, Diag Human and Mr Stava had been awarded the $730 million USD after the Czech Republic was found to have breached the fair and equitable treatment standard under the Czech-Swiss bilateral investment treaty. Because of the extraordinary length of time that it has taken to reach a resolution, the value of the award continues to increase by around $56 thousand USD (1.3 million Czech Koruna) every day, once interest is taken into account.
Because the Court of Appeal hearing will be held in public, the hearing may be televised and broadcast on the Internet. Should the English Court of Appeal rule in favour of Diag Human and Mr Stava on their permission to appeal application, the hearing on the appeal itself will be heard by the Court this very same day. In this case, Diag Human, Mr Stava, and the Czech government may be facing a very dramatic change in the current state of affairs.
Followers of the case will watch the hearing closely, both for the outcome and for any facts that can be gleaned from the public evidence. As of yet, it is uncertain whether the hearing will move the case closer to a conclusion.