CZECH REPUBLIC Law and Practice Contributed by: Jan Kohout and Illia Antonov, PRK Partners
7. Designation, Compliance and Circumvention 7.1 Executive Body
7.3 Circumvention 7.3.1 Prohibiting Provisions
No specific provisions of Czech law impose further prohibitions on the circumvention of sanctions beyond those set out in EU legislation, which is directly appli - cable in its entirety in the Czech Republic 7.3.2 Criminal Penalties Circumvention of sanctions under the EU regulations is treated as a breach of international sanctions per se, ie, as a breach of any other restriction under the EU sanctions regulations. Arguably, the newly introduced criminal offence of breaching sanctions by negligence does not cov - er the negligent circumvention of EU sanctions, as the relevant anti-circumvention provisions of the EU sanctions require indirect intent within the meaning of Czech criminal law. Given that the criminal offence of breaching sanctions by negligence was introduced with effect as of 1 January 2026, this conclusion may be subject to a different interpretation in Czech court practice.
Besides the UN and the EU authorities responsible for the designations at the respective UN and EU level, the Czech Government decides on designations on the national level based on the reasons and proposals made by the Czech Ministry of Foreign Affairs after consultations with other relevant state authorities. 7.2 Scope of Designation Under the Czech national legislation, the indirect des - ignations via control by a designated person is used. While the interpretation of control under the Czech civil and corporate law may differ from the EU level, the concept largely follows the indirect designations made on the EU level. A relevant national decision providing interpretation of the indirect effects of a sanctioned person within an ownership structure is the decision of the Prague Municipal Court of September 2024, referred to in 2.2.3 Civil Enforcement Action , in which the Czech court, in the legal case of a company from the Stra - bag group and one of its owners, Mr Deripaska, con - firmed that national authorities may, for the purpos - es of setting the conditions for granting a subsidy, impose broader conditions regarding the absence of sanctioned persons in the applicant’s structure than the definition of beneficial owner under national leg - islation, which generally requires a threshold of 25% ownership or other form of control.
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