“The decision-making processes of German companies are often geared towards a mindset that is not necessarily intended to be creative, but is generally very efficient. Czechs sometimes find this difficult, as they often solve problems in a creative way,” says lawyer Vojtěch Steininger in an interview.
The Prague-based lawyer Vojtěch Steininger says among other things: “Particularly in commentaries on the new Civil Code, we see that their interpretation often ends precisely where the first problem begins. It is quite complicated to constantly explain to German clients that we have a new code and it is not yet really clear what each problematic provision means and how the courts will interpret it. In Germany, the Civil Code of 1896 still applies. It is hard for them to comprehend that we are already on our fourth Civil Code in the last hundred years.”
LIDOVÉ NOVINY: How did your connection with German law come about?
STEININGER: My connection to Germany, or rather to German law, has been with me for a very long time. I completed part of my secondary education in Germany, and I also completed a postgraduate programme at the Faculty of Law in Munich. After that, I worked both as a junior lawyer and as an associate in German-speaking law firms.
German employees have a clearly defined procedure for how they should conduct themselves at work. Unexpected events usually throw them off balance, which is why everything is thought through in advance.
When my colleague and I later set up our own law firm, it was clear that we would focus on clients from Germany, Austria and Switzerland. We offer them services in Czech and international law. A new colleague, who is a German lawyer, recently joined us, so we can now also offer our clients services in the field of German law.
LIDOVÉ NOVINY: Does your experience confirm the stereotype that Germans are very precise in their professional lives and like to have everything planned, whilst Czechs tend to be more creative?
STEININGER: That is actually true. The vast majority of German companies follow a very similar work ethic and decision-making processes. Employees have a clearly defined procedure for how they should go about their work. Unexpected events usually throw them off course, which is why everything is thought through in advance. Their business processes are often geared towards a mindset that isn’t necessarily meant to be creative, but is generally very efficient. Czechs sometimes struggle with this, as they are used to solving problems creatively – sometimes even too creatively. The Germans are then often genuinely surprised by the ideas Czechs come up with – for better or for worse (laughs).
LIDOVÉ NOVINY: To what extent is this difference in mentality evident in the legal sphere?
STEININGER: The German view of the law is less formalistic than in the Czech Republic. However, this is also an unintended legacy of our old Civil Code, which was in force until 2013. Today, the situation has improved significantly thanks to the new Civil Code. On the other hand, German legal commentaries are incredibly detailed: they run to thousands of pages, in which legal experts analyse even the smallest details of all the theoretical aspects of a provision. You can find an answer to almost every question there, but I’m not sure if that is unequivocally the better solution.
We are more creative in this respect too: we haven’t worked everything out in minute detail and often have to draw conclusions from general principles and regulations. On the other hand, we see – particularly in commentaries on the new Civil Code – that their interpretation often ends precisely where the first problem begins. It is rather complicated to constantly explain to German clients that we have a new Civil Code and it is not yet really clear what problematic provisions mean and how the courts will interpret them. In Germany, the Civil Code of 1896 still applies. It is hard for them to comprehend that we are already on our fourth Civil Code in the last hundred years.
LIDOVÉ NOVINY: Hasn’t the new Civil Code also led to a relaxation of legal relationships between people? After all, it places significantly less emphasis on formal requirements.
Admittedly, we will have to wait a long time, perhaps even several decades, for a stable judicial interpretation of some provisions, but this is an acceptable price to pay for having a sophisticated and ‘Western-style legal system.
STEININGER: That is certainly true; it has brought us closer to the Western legal world. Whilst interpretation problems have arisen and legal certainty has diminished, the law is significantly more humane. Under the old Civil Code, many contracts were absolutely void due to formal defects, and there was nothing one could do about it. Now, contracts are generally valid rather than invalid, which is much more convenient for lawyers and gives us more leeway.
We can focus more on the content of the contract rather than on whether it is valid or invalid for formal reasons. Although we will have to wait a long time, perhaps even several decades, for a stable judicial interpretation of certain provisions, this is an acceptable price to pay for having a sophisticated and ‘Western-style’ legal system.
LIDOVÉ NOVINY: What typical problems do German entrepreneurs face when they wish to invest in the Czech Republic?
STEININGER: It depends on the type of investment they are making here. If they acquire a share in a company, they encounter one of the most absurd formalities: the requirement to have documents apostilled if they are to be used in another country. Put simply: if a German has their signature on a document certified in Germany, this is not recognised in the Czech Republic. In addition to the certification clause, the document must also bear a so-called apostille – that is, a special stamp or endorsement confirming that the notary who certified the signature is indeed a notary of that country.
The reverse also applies: Czech documents must be apostilled for use in Germany, even though this is not usually strictly required there. The Czech authorities, on the other hand, are extremely strict, and it is out of the question for them to enter details in the commercial register, for example, if a power of attorney bears only a signature certified in Germany but lacks the apostille.
LIDOVÉ NOVINY: To what extent does this affect practice?
STEININGER: It costs around 20 euros and can easily take a week or longer for a German court to confirm via the apostille that the notary in question is indeed registered as a notary in Germany. In the Czech Republic, the apostille is issued by the Ministry of Justice. For German investors in the Czech Republic, this is a real nuisance; it is a completely unnecessary step. It is a paradoxical situation: Germany is our largest trading partner, yet of all our neighbouring countries, the Czech Republic has not concluded an agreement with Germany alone that would waive the requirement for document apostillisation – and this despite the fact that both countries are in the EU and the Czech Republic has such agreements with, for example, Mongolia, Vietnam and North Korea!
So, if you have a signature certified by a North Korean notary, you do not need an apostille, but if you do this in Germany, you have to go through the tedious process of obtaining an additional stamp. It remains a mystery to me why the Czech government was not more proactive and did not initiate an international agreement with Germany that would have abolished this requirement. Fortunately, apostilles have been abolished since 2019 by an EU regulation, but this does nothing to change the fact that the Czech state has been making life difficult for businesses for practically 30 years since the Velvet Revolution.
LIDOVÉ NOVINY: What other disadvantages of Czech law do German investors face?
STEININGER: Germany is our largest trading partner, but of all our neighbouring countries, the Czech Republic has not concluded an agreement with any other country apart from Germany that waives the requirement for documents to be apostilled – and this despite the fact that both countries are in the EU and the Czech Republic has such agreements with, for example, even Mongolia, Vietnam and North Korea.
German investors often plan to build something in the Czech Republic, such as a factory. And this brings us to a ‘magical chapter’ of Czech law: building regulations. They are incomprehensibly complicated and essentially unworkable – for Germans, this is always a major disappointment. There are nonsensical administrative requirements, long deadlines, and everything is so complicated that they often decide to build the factory elsewhere. We compete with other countries in the region not only on precise parameters such as labour costs or tax rates, but also on the competitiveness of our own legal system. We are hampering our own economic growth with absurd regulations. The Czech state is not even capable of building a central motorway network. I don’t understand that.
LIDOVÉ NOVINY: Does the Czech legal system generally tend to deter German entrepreneurs?
STEININGER: Not at all; I don’t want it to be understood that way. Certainly, our legal system could be more accessible. These are typical problems dating back to the revolution that still haven’t been resolved. Nobody is doing anything about it, and as a practising lawyer, it annoys me that we are still dealing with the same problems. Sometimes people in the ‘West’ still look at us as if we were people from the Middle Ages, and occasionally I think that there is – unfortunately – a grain of truth in that. But I don’t mean to say that certain aspects of the law in Germany don’t also function in a slightly medieval way (laughs).
LIDOVÉ NOVINY: What exactly do you mean by that?
STEININGER: Registering a newly founded company in the commercial register is often more complicated and time-consuming in Germany than it is here. The duration depends primarily on the founders, or rather on how quickly they can obtain the necessary documents – such as opening a bank account or obtaining the consent of the property owner in who’s building the new company will have its registered office. Once the documents are available, a Czech notary can enter the company into the commercial register practically immediately.
In Germany, it depends on how quickly the competent registry court, to which the newly established company is subject, works, and the registration can take several weeks after the required documents have been submitted. In Germany, there is no such thing: the commercial register is subject to a fee. If you need an extract from the land register, you have to go to an attorney or the relevant court and apply for it there. Furthermore, in Germany you can only obtain a land register extract if you can demonstrate a legitimate interest – for example, as a prospective tenant of a flat, to check whether the flat actually belongs to the landlord.
LIDOVÉ NOVINY: Is it more difficult to set up a business in Germany than in the Czech Republic?
STEININGER: For a Czech, certainly. Unfortunately, we are still viewed as a suspicious people from the East. I was very surprised by all the procedures one has to go through at a bank. Recently, I opened an account at a Czech bank for a client from the Philippines – it took 25 minutes.
Few realise how efficiently the Czech Commercial Register operates, with a decision-making period of just five days. Most Western countries can only dream of such efficiency. It is also excellent that both the Czech Commercial Register and the Land Registry are accessible online and essentially free of charge.