CZECH REPUBLIC Law and Practice Contributed by: Martin Řanda, Jan Lexa, Vít Fišer and Adam Vopelka, act legal
7. Personal Liability 7.1 Directors and Other Officers Public Law Liability
age, further stimulated the market. Annex 1 of this Act specifies certain operational activities that require operators to provide financial security to cover the costs of preventing or remedying environmental dam- age. This obligation can be fulfilled through an insur- ance policy, which in turn has encouraged insurers to develop appropriate insurance products. Another statutory obligation is established under Act No 224/2015 Coll, on the Prevention of Major Acci- dents. Section 33 of this Act requires operators of certain facilities to maintain liability insurance covering damages from major accidents throughout the facil- ity’s operation, including during the testing phase. As a result, insurers in the Czech Republic now pro- vide products covering a wider range of environmental risks associated with business activities. These insur- ance policies are designed to not only meet obligations under Act No 167/2008 Coll and Act No 224/2015 Coll but to also cover other potential environmental risks arising from business operations. Coverage levels differ between insurance providers, though a common limitation was the exclusion of pro- gressive (gradual) environmental pollution. Neverthe- less, it is currently possible to find insurance products on the Czech market that also cover damages caused by this type of pollution. There is no explicit provision in the environmental leg- islation that makes a financial institution (eg, a bank) or lenders liable for environmental damage resulting solely from lending money to a polluter. However, as a legal entity, a financial institution or a lender can also be held liable (see 6.1 Liability for Environmental Damage or Breaches of Environmen- tal Law ). 9.2 Lender Protection Lenders protect themselves by conducting due dili- gence such as pre-contractual assessment, requiring statements from necessary institutions and focusing 9. Lender Liability 9.1 Financial Institutions/Lenders
Both the company as a whole and a specific individual (eg, managing director, operations director) whose conduct constituted the elements of the offence may be prosecuted for a criminal or administrative offence. The principle of concurrent and independent adminis- trative/criminal liability applies. Liability for Environmental Damage Civil liability: duty of due care This duty is imposed by the Business Corporations Act. If company directors breach their obligations – for instance, by failing to implement adequate measures to prevent pollution, as a result of which the compa- ny is subsequently fined by the Czech Environmental Inspectorate – the company may incur damage. Such damage, corresponding to the imposed fine and the costs of remediation, must be recovered by the com- pany from the manager concerned. This is known as recourse liability. Administrative liability under Act No 167/2008 Coll Under this Act, the operator of a hazardous activity is liable for environmental damage. The Act does not target directors or managing directors directly – their personal liability under this Act cannot arise. Insurance Managers may insure themselves against the risk of personal liability. The standard product available on the market is directors’ and officers’ (D&O) liability insurance.
8. Insurance 8.1 Environmental Insurance
In the past, environmental insurance was not frequent- ly arranged in the Czech Republic; however, growing public concern about the environment has led insurers to expand the availability of such products. The transposition of EU Directive 2004/35/EC into Czech law through Act No 167/2008 Coll, on the Prevention and Remediation of Environmental Dam-
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