The law is constantly developing and the task of lawyers is not to be left behind, thinks Tomáš Pokorný from AK Vych & Partners. We interviewed him, as a specialist in construction law, and the owner of the office, Jan Vych. "The inviolability of property is one of the cornerstones of our constitutional order, so I expect a number of lawsuits in this area," says Vych about confiscation of property from Russian citizens.

What do clients from the construction industry most often contact you with, what services do they request?

TP: Requirements for the preparation and review of work contracts prevail. Our existing clients have already learned to a large extent that it is not worthwhile to prepare a contract without a legal advisor. From the next agenda, I would mention support in the preparation of bids for tenders and, to a lesser extent, court cases. We try to protect clients from them by finding an amicable solution with the other party. Litigation in the construction industry is usually long, expensive and with an uncertain outcome.

JV: I would add Tomáš, because it always happens to us that a new client, in particular, turns to us only when a dispute arises from the contract. And as my colleague rightly stated, disputes are long, complex and expensive, therefore it is extremely important to invite a lawyer to prepare the contract. Recently, in our construction agenda, we often encounter the "struggle" of our clients in the framework of territorial management, when the municipalities on whose territory the building is to be located make senseless and, in our opinion, illegal demands for the conclusion of so-called planning contracts. Even here, however, it is always a long shot.

Who are typically your most frequent clients from this industry?

JV: Our typical clients in this area are medium-sized entities that implement development projects in the order of tens of houses or apartments. To some extent, natural persons who bought real estate in these development projects and for some reason got into a dispute with the developer also come to us.

What worries your clients from the construction industry the most today?

TP: I think what worries them the most today is tomorrow. Many companies are now struggling to meet their contractual obligations due to rising prices and labor shortages. This is reflected in the fear of concluding new contracts, when neither party wants to bear the inflation risk in particular. With high inflation in full swing, it's bad to plan because you can't calculate the costs. I assume that the vast majority of the existing contracts will be completed, but construction activity will slow down until prices stabilize. The slowdown will then continue to negatively affect the real estate market.

Have any specific legal issues arise for you during the covid-19 pandemic?

TP: Of course, a big topic was the delay in fulfilling contracts due to so-called force majeure. However, the construction industry has always struggled with a higher power, albeit for reasons other than covid-19. The real news was the closing of the borders and the impossibility of the arrival of workers from abroad. The ban on leaving the republic came as a shock to me as a lawyer and as a citizen.

JV: I would just add to what Tomáš stated that we dealt with a number of cases where one or the other party referred to the impossibility of performance due to force majeure related to covid. In all cases the courts have rejected this argument, rightly so in my view.

Do you get disputes between clients and contractors arising from the current situation - due to the energy crisis, raw material crisis, lack of workers, in general due to obstacles that prevent the execution of orders according to contracts?

TP: They are coming to us more and more often, and we are certainly not at the end yet. However, the parties usually have an understanding of the current situation and try to accommodate each other, even if they "clatter guns" at the beginning. The completion of the work is in the interest of both parties. However, we have also recorded the opposite cases, when one party did not really have any problems, but tried to take advantage of the existing seemingly unclear situation.

The situation is worse in public contracts, where there are strict legal conditions for changing the price of the work. In this case, the parties cannot just sit down and negotiate.

JV: I would just add that in the case of public procurement contracts can be negotiated, but the possibilities of the parties are significantly narrowed.

Could you give a specific case?

JV: With regard to the obligation of confidentiality, we can only be specific about the facts, not about the names of the persons involved. One of our most important clients was damaged by the loss of the so-called alternative energy supplier's ability or willingness to supply electricity and gas to him and his subsidiaries at previously contracted prices. With regard to the very respectable legal erudition of this client, we were instructed to take a relatively uncompromising approach towards this energy supplier right from the start. Thanks to this, we managed to eliminate the client's damages by hundreds of millions of crowns. Although the original supplier completely stopped deliveries in the final, but before that happened, we rehabilitated a lot of open positions and money for the client. Now we legally support it when negotiating new contracts with other suppliers, precisely in the public procurement regime.

How has the war in Ukraine changed your work?

TP: The war itself did not fundamentally change our work. Law is constantly evolving and catching up with the world, and it is our job not to be left behind. Don't get stuck in the "good old days". The war conflict is a new impulse for the world and thus also for the legislators, new legislation has been created regarding especially the provision of asylum to war refugees, there is talk of confiscation of the property of Russian citizens of the state. By the way, this will also be a big legal topic, similar to the ban on leaving the republic. For now, the property was only "frozen", so it was not possible to deal with it. Currently, our legal system only allows confiscation of state property in connection with a conviction for a specific crime committed by a specific person.

JV: I also see the issue of asset freezing as a big topic for the future, and we will monitor the upcoming legislation. The inviolability of property is one of the cornerstones of our constitutional order, so I expect a number of lawsuits in this area. As much as I condemn the war in Ukraine, I think that the imposition of sanctions on "anything Russian" is somewhat extensive, and the individual states of the European Union should be able to decide on the (in)applicability of sanctions in individual cases in their autonomy.

Do you have a legal opinion on the upcoming construction law? Or its current form?

TP: You are right to ask about the "existing form". Three draft amendments are now in the Chamber of Deputies. Before talking about the proposal as a whole, I would rather point out one particularity. According to the new rules, it will be possible to additionally authorize construction only if the builder proves that he acted in good faith. Translated: it will be possible to additionally approve black buildings only if the builder proves that he did not know that it was a black building. The rules set in this way will hopefully deter unauthorized construction. The possibility of changing the building (new "intention") before completion remains.

Source: construction.cz