After Czech Velvet Revolution, plodding legal evolution

Last May, pensioner Jaroslav Dusek signed a contract with a small company to build his new home, and made the down payment. But the firm refused to start construction, demanding more money. After delivering the next payment and waiting two month, Mr. Dusek gave up and tore up the contract.

"That's 70,000 koruna (about $2,500) down the drain," he fumes, standing over his empty building site. "There is no chance of getting back what they owe me. If I take them to court it could take 10 years to settle and by that time the company will surely have disappeared. I would end up paying all the court expenses, too. There is no legal protection in this country."

Dusek's tale is common in the Czech Republic, where business law is just 13 years old. While this country once led the class among postcommunist transition states in terms of economic growth and political stability, commercial law is an area that is lagging.

"It is easy to break a contract, refuse to pay debts, and get away with it," says Jan Hanousek, head of the Center for Macroeconomic Research at Prague's Charles University. "This kind of behavior is embedded in business and politics here. When you sign a contract in this country, most people consider it little more than a piece of paper and, if you take someone to court, don't expect results any time soon."

European Union reports have repeatedly criticized Czech efforts at judicial reform, especially in the fields of business and contract law. Notorious for drawn-out court cases - tens of thousands of cases are backlogged in Czech courts - the justice system is also known for contradictory rulings and petty corruption.

The government has tackled business and contract law in several reforms since the late 1990s, bringing in reams of new legislation, but legal experts say enforcement is ineffective and the legal system still glacially slow.

As it moves toward joining the EU next year, the Czech Republic has come under increasing pressure both to upgrade its court system and enact and enforce new laws governing the marketplace.

"The EU has made clear that the Czechs will not see a single euro in development aid unless they reform their public procurement system," says Petr Greger, director of the Euro-Czech Forum, a joint institution of EU chambers of commerce. As a result, changes were made in June this year to make the public procurement process more transparent and competitive.

The European Court of Human Rights in Strasbourg and other international arbiters have also found fault with the Czech legal system. At least 50 complaints are pending before the European Court against the Czech government, claiming that the unreasonable length of court proceedings is a violation of human rights. The Czech state has already lost two such cases this year and has been forced to pay compensation.

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