25 | Events | Corporate law

The Czech Constitutional finally issued decision on the question whether legal entities are entitled to get a pecuniary satisfaction after the new Civil Code starting from 2014 did not explicitly mentioned this right but before 2014 according to the old Civil Code the legal entities had this right. The Constitutional Court in decision from 22th January 2025 file no. Pl. ÚS 26/24 states:

Legal persons are entitled to the protection of their reputation. According to Article 10(1) of the Charter, everyone has the right to have their human dignity, personal honour, good reputation and name protected. Although some of these rights, such as human dignity and personal honour, belong by their nature exclusively to natural persons, this does not mean that the protection of good reputation (and name) cannot be constitutionally guaranteed also in relation to legal persons. Legal persons are not just a legal fiction for their own sake, but are mainly an instrument through which people can fulfil their interests. Good reputation plays a key role in the performance of legal persons in legal relations and in the fulfilment of the rights of individuals associated in them, and in the event of an unauthorised interference with it, they may suffer both material and non-material damage.

The protection of constitutionally guaranteed rights should not be theoretical and illusory, but practical and effective. The inability of legal entities to demand adequate compensation for non-pecuniary damage constitutes a legal restriction of their fundamental right to protection of reputation, as it denies them the possibility of obtaining compensation for non-pecuniary damage caused, and at the same time, other means cannot be considered sufficiently effective instruments of protection.

Such a restriction of access to effective protection is not adequate. The restrictive approach of the legislator to compensation for non-pecuniary damage for legal entities may serve as a prevention of excessive application of claims for adequate compensation or their abuse. However, this goal could also be achieved by less restrictive means, in particular through decision-making practice.

The current legal regulation primarily leads to an unsystematic distinction in the protection of the reputation of legal entities and compensation for non-pecuniary damage caused to them. The range of cases for which the legislator has established the possibility of compensation for non-pecuniary damage is the result of its legal and political considerations, but this cannot be arbitrary if it concerns the method of protecting a constitutionally guaranteed right and limiting its effectiveness. A non-uniform approach weakens the systemic coherence of legal protection, which can lead to injustice and to similar interventions being compensated differently without there being a reasonable reason for this. Moreover, cases in which non-pecuniary damage is compensated are mainly related to the participation of a legal entity in business relations, or to interference with protected interests that are primarily of a property nature and which are more likely to be remedied within the framework of compensation for damage. This puts non-profit legal entities in particular at a disadvantage, for which the damage will be predominantly (sometimes exclusively) of a non-pecuniary nature.

The Constitutional Court has ruled that the legal regulation that prevents legal entities from claiming adequate compensation for non-pecuniary damage caused by an attack on their reputation is unconstitutional. However, the most appropriate means of overcoming the unconstitutionality is not the repeal of the provisions under review or their parts, but the creation of a law based on analogy, for which the necessary prerequisites are met. Therefore, when protecting the reputation of legal entities, the same catalogue of means as those provided for protection against unfair competition in Section 2988 of the Civil Code should be used analogously, including the possibility of claiming adequate compensation.

The Constitutional Court also stated that the right to protect reputation cannot be abused, for example, to conduct strategic lawsuits against public participation (SLAPP). The aim of these strategic lawsuits is to limit or penalize the exercise of freedom of expression in matters of public interest and the exercise of related political rights – typically by journalists, trade unions, academics, civic activists, whistleblowers. The consequence of such litigation may be the weakening of free public debate and civil society, to which the Preamble of the Constitution directly refers and which is an important safeguard of democracy and the rule of law. It is primarily up to the courts to distinguish in individual cases the exercise of a right worthy of protection from harassment and abuse of a right that does not enjoy protection. In specific cases, it is necessary to consistently weigh the right to protection of reputation with the right to freedom of expression and information under