05 Sep, 2011

Collyer Bristow and Diag Human take on Czech hard liners in multi-million pound action


Leading London law firm Collyer Bristow, is fighting a case against the Czech government which could have serious implications for their EU membership and the possibility of being downgraded by the major rating agencies.


The sum at stake is £326.93 million, which is equivalent to 0.3% of the country’s annual GDP. However, if Collyer Bristow is successful there could be a stampede of similar cases with disastrous results for the country’s economy.


Collyer Bristow are representing Diag Human which has been locked in dispute with the Czech government for 16 years.


Diag Human planned to trade in blood plasma with Czech transfusion centres in the 1990s but an unwarranted attack by then Health Minister Martin Bojar caused the deal to fall through.

Originally awarded £12.01 million in 1997, after the Czech Government lost an arbitration to Diag Human, the company has continued to sue the Czech state claiming hundreds of millions for lost profit.


Until recently there has been very little coverage outside the Czech Republic, most of that being in Germany, but the case has been brought back into the media because of a landmark ruling in Diag Human’s favour.  


In 2008, an arbitration court ruled that Diag Human should receive £326.92 million in damages from the Czech State.  However, this has not been paid and interest has meant the damages are estimated to have grown to £367.33 million.  

Collyer Bristow have secured a judgement from London courts on the enforceability of the award in the UK, suggesting that the plaintiff may be able to seize Czech government assets in the UK in the not-too-distant future.

The intransigence of the Czech Government is difficult to understand especially considering the international consequences of their belligerence.


There are several reasons why this could adversely affect the country:                                                          

1.       Diag Human’s claim is itself around 0.3 of GDP. That’s a lot of money for any country.


2.       Failure to pay Diag could derail their bond payments and put them in technical / actual default on the bonds. That would take credit ratings sharply down.


3.       The action itself could attract other claimants who are also owed money by the Czech Republic which could increase their outflows and further impact on GDP.


4.       Banks and other creditors are likely to get very nervous.

A spokesman for Collyer Bristow commented: “The Czech Republic joined the EU in 2004, however, they seem disinclined to play to the rules of the club.


“Failure to pay Diag Human could derail their bond payments and put them in technical and /or actual default on the bonds. That would take credit ratings sharply down.  The Government really need to face up to their financial responsibilities and present a mature, and responsible fiscal face to the world.”





















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