Czech Republic facing serious problems in Diag Human arbitration case

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A drawn-out legal dispute between blood plasma technologies and production company Diag Human and the Czech state has taken a dramatic turn. Last week the company, which claims it is owed close to ten billion crowns by the Czech state for damaging Diag Human’s interests, successfully applied to an Austrian court to order the seizure of famous Czech artworks on display in Vienna. Just days after two paintings and a sculpture from the National Gallery and the Moravian Gallery were impounded by court bailiffs, a Paris court has recognized a similar claim, putting Czech state assets in France at risk. Commentator Jan Urban, who has written a book about the longest ever arbitration involving the Czech state, says the Czech Republic has got itself into a bind.

“The Czech Republic is paying a very high price for many years of mixing politics with law –in this particular case. And I think we are witnessing the beginning of an avalanche in which more countries will very probably follow the same procedure. I would not be afraid of confiscation of buildings or works of art but rather of Czech bonds and other financial tools.”

Do you know of any other country specifically where this may happen?

“There are 142 signatory countries to the New York convention and all of them are potential areas where Diag Human could make the request. I know that Diag Human lawyers are diligently studying the most “friendly” jurisdictions that they could use.”

But I am sure that what they have confiscated is only a fraction of what they are owed....

“Definitely so, the amount in this dispute is over 10 billion crowns now and I would say that this is simply a call for negotiation and a lot depends on the reaction of the Czech Republic.”

So they are expecting to get the money...rather than confiscating assets?

“Yes.”

What then are the chances of property or assets being confiscated in other countries? Or was Vienna just a call for the Czech Republic to respond to?

“Absolutely, because after 16 years of a highly politicized drawn-out dispute in which the Czech Republic on five occasions used its criminal police against the claim as well as its internal and external intelligence services and played all manner of dirty tricks –nobody is interested in prolonging this dramatic dispute any longer. So I think that this dramatic move Diag Human decided to make is in a way the last call for negotiations and an attempt to end this arbitration by some compromise.”

What are the options now for the Czech Republic? What should the Czech authorities best do under the circumstances?

“Negotiate, hire the best available lawyers in those countries and pray. Because they have bungled so much in the last few years that their chances of success are miniscule in my opinion.”