William Malcolm

JCDecaux Initiates Arbitration Proceedings Against Czechia

JCDecaux International Group has launched an arbitration dispute with the Czech Republic over the termination of the lease of advertising space by the Prague transport company. The specific amount of the claimed damage is not stated in the lawsuit.

The company sent a pre-litigation appeal at the end of February. At that time, it calculated the damage after the Czech party’s actions at 40 million euros. The Transport Company (DPP) has rejected the company’s claim and wants to cooperate with the state and provide assistance in the event of arbitration.

According to the Ministry, JCDecaux claims that the transport company allegedly breached previously provided guarantees concerning the lease of advertising space to Rencar Praha, in which JCDecaux has a stake.

“The Ministry of Finance confirms that on 31 August it received a lawsuit against the Czech Republic from the French company JCDecaux, under the Agreement between the Czech Republic and the French Republic on the Promotion and Reciprocal Protection of Investments and appointment of arbitrators of both parties, “said Žurovec.

The Ministry of Finance says it is ready to defend the Czech Republic’s interests as standards. Adding that the ministry has long achieved high success in international investment arbitrations.

At the beginning of September, the Municipal Court in Prague confirmed the invalidity of the agreements between the Prague Transport Company (DPP) and the company Rencar from the JCDecaux Group for the lease of advertising space in Prague’s public transport. However, the case will be dealt with again by the District Court for Prague. Simultaneously, the Municipal Court returned the case to the court of the first instance because, according to the Senate members, it was not clear what it was ruling on in one of the paragraphs.

The 1997 contract concerns the exclusive right for Rencar to run public transport advertising, for a total of approximately 130,000 advertising spaces. The company terminated the agreement in 2016 because it was disadvantageous for them. Initially, it was to be valid until 2031. After the contract’s termination, DPP began to organize partial tenders for the rental of advertising space in the subway, buses, trams, or so-called city light showcases.

According to the Ministry of Finance, Czechia is currently facing seven international arbitrations. The total amount of all sued claims exceeds CZK 65 billion 52 billion claimed by Diag Human. At the same time, on 18 September, the last of three arbitrations conducted against the Czech Republic by businessman and former senator Václav Fischer was completed. In the arbitration, he claimed 21 million euros for the impairment of his investment caused by allegedly illegal bankruptcy. “The proceedings were terminated for procedural reasons on the part of the plaintiff,” the Ministry of Finance stated. In the previous two arbitrations with Fischer for about CZK 10 billion, the Czech Republic succeeded in May.

So far, 33 arbitrations against the Czech Republic have been completed. A total of 27 of them ended successfully for the state. Three disputes were settled by settlement, and the Czech Republic lost three arbitrations.