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Czech Constitutionalism vs. Populism

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[Though the following post has nothing to do with Russia, I had been receiving some questions so I am making this information available to those interested. –Thanks, RA]

As announced in a press release dated 9 December 2009, my law firm, Amsterdam & Peroff, has been retained by RPG Industries to defend its fundamental rights and interests in the Czech Republic. The case, which already had a political dimension given the intervention attempt on behalf of a member of government, has taken on a much larger meaning in national politics as this week we announced at a press conference the introduction of a historic complaint before the Constitutional Court regarding the separation of powers and other basic guarantees.

It is my argument that certain members of the Czech Social Democratic Party (CSSD) are acting in violation of the constitution to carry out a classic populist tactic right before an election – promising voters an intervention against private property to purchase their support. Nevertheless, in legal terms, their claim is groundless.


Our firm working with Jan Kalvoda, one of the leading Czechconstitutional specialists, to argue this important case, which Ibelieve sets a significant precedent in striking a blow against a lacarte respect for judicial independence. From a legal standpoint, thepleading is not only a clarion call for the separation of powers, butalso seeks to open a national debate on relations between the publicand private sectors.

The overall case involves the interpretation of a privatizationagreement between RPG and the government of the Czech Republicregarding the acquisition of 45,000 apartment units of the former OKDmining company in Ostrava. Specifically, there has been a longsimmering dispute over the interpretation of a clause in the agreementrelating to a first right of refusal in the event of a sale. However,as 45,000 units represent more than 100,000 votes in a country whereelections are won or lost on the slimmest of margins, some politicalopportunists have begun to spread lies and misinformation to thetenants about the contract.

Mr. Lubomir Zaorálek, a majordomo of the CSSD and the chairman ofParliament’s Chamber of Deputies, has jumped into the dispute and usedhis offices to launch a public attack campaign against RPG. Mr.Zaorálek claims to speak on behalf of all the tenants, and, joined byparty leader, Jiří Paroubek , has promised voters that if elected hewould seize control of the properties and force their sale at theoriginal discounted price – despite the 6 billion koruna investmentmade by RPG into renovations. The absurdity and illegality ofZaorálek’s conduct is detailed in our constitutional complaint.

Our position is that RPG has fully complied with all the terms andrequirements of the contract – a fact which is proven by the conclusionof an independent audit. Rather than allowing the audit results tostand, Mr. Zaorálek, without notice to RPG, places before the Chamberof Deputies certain resolutions which have essentially issued adecision that RPG had breached its contract with the state.

As the lawyers among you no doubt imagine, this act is ultra-vires,that is beyond the power of the legislature. It is not for thelegislature to make legal filings with respect to a specific case, andthereby vitiate the separation of powers and as well clearlydiscriminate against the legislative victims. Nor is it common to seethe legislature being used to personally attack and slanderindividuals.

Our legal theory is that Zaorálek had instrumentalized the Chamber,and in fact the State, for an improper purpose, which lacking any othermotive, we can only presume is directed toward buying votes for theupcoming elections by promising to force a sale of private property. Itis not an unprecedented measure for a populist politician to take, butit is surprising that it can still happen in a democratically matureand stable country with rule of law such as the Czech Republic.

Just a few hours following our announcement of the constitutionalchallenge, Mr. Zaoralek held a press conference in reaction. I waspersonally described as “a political mercenary,” and he accused myclient and I of attempting to squelch parliament’s right to freespeech. The CSSD’s definition of free speech apparently means thatparliament can usurp the powers of the judiciary when it chooses to doso.

I will continue to post updates on this case and other political trends in Central Europe, so stay tuned for more developments.