“The management processes of German companies are often designed not to be or to be too creative, but to be highly efficient as a rule. The Czechs sometimes have a hard time with this because they solve problems creatively,” says attorney Vojtěch Steininger in an interview.
In an interview, Prague attorney Vojtěch Steininger says: “Especially with the commentaries on the new Civil Code, we see that their interpretation often ends where the first problem begins. It is quite difficult to explain to German clients that we have a new code and not much is known yet about what a problematic provision means and how the courts will interpret it. In Germany, the Civil Code of 1896 is still in force. It is hard for them to understand, but we have already the fourth Civil Code within the last hundred years.
LIDOVÉ NOVINY: How did you come to your relationship with German law?
STEININGER: The connection to Germany or to German law has been with me for a very long time. I attended part of my high school in Germany, and I also did postgraduate studies at the law school in Munich. After that, I worked as an intern and as a lawyer in German-speaking law firms. German employees have a clear idea of how they should do their work. Germans are usually thrown off track by unexpected events, so they think ahead.
Later, when my colleague and I established our own law firm, it was clear that we would focus mainly on clients from Germany, Austria and Switzerland, to whom we would offer services in Czech and international law. Recently, we have been joined by a new colleague who is a German lawyer, so we can offer our clients services in the field of German law as well.
LIDOVÉ NOVINY: Does your experience confirm the cliché that Germans are very precise in their working life and like to plan everything, while Czechs are more creative?
STEININGER: It really is. The vast majority of German companies have a very similar work ethic and similar management processes. Employees have a clear idea of how they should do their work. Germans are usually thrown off course by unexpected events, so they think ahead. Their business processes are often geared toward a way of thinking that is not, or should not be, overly creative, but is usually very efficient. Czechs sometimes have a hard time with that because they are used to solving problems creatively, sometimes too creatively. That’s why Germans are sometimes really surprised by what Czechs are capable of – for better or for worse (laughs).
LIDOVÉ NOVINY: To what extent is this difference in mentality reflected in legislation?
STEININGER: The German understanding of law is less formalistic than that of the Czech Republic. But that 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 extremely detailed, with thousands and thousands of pages of legal scholars dissecting all the theoretical angles of a particular provision down to the smallest detail. You can find an answer to almost any question there, but I don’t know if that’s really the better solution.
Again, we are more creative, we don’t have everything in detail, sometimes we have to derive it from general principles and provisions. On the other hand, especially with the commentaries on the new Civil Code, we see that their interpretation often ends where the first problem begins. It is quite difficult to keep explaining to German clients that we have a new code and it is still not entirely clear what a problematic provision means and how the courts will interpret it. In Germany, the Civil Code of 1896 is still in force. It is hard for them to understand, but we already have the fourth civil code within the last hundred years.
LIDOVÉ NOVINY: Hasn’t the new Civil Code also brought a loosening of legal relations between people? Much less adherence to formal requirements.
STEININGER: Yes, it has, it has brought us closer to the Western legal world. There are more problems of interpretation and less legal certainty, but the law has become much more human. Under the old code, many contracts were absolutely invalid because of formal errors, and there was nothing you could do about it. Now contracts are always valid and not void, which is much more convenient for lawyers because it gives us a free hand.
We can focus more on the content of the contract than on whether it is valid or invalid on formal grounds. We may have to wait a long time, perhaps even several decades, for a stable judicial interpretation of some provisions, but this is an acceptable tax on a sophisticated and “Western” law.
LIDOVÉ NOVINY: What typical problems do German entrepreneurs face when they want to invest in the Czech Republic?
STEININGER: It depends on the type of investment they are making here. When they buy a stake in a company, they have to comply with one of the most nonsensical formalities, namely the obligation to apostilize documents to be used in the other country. Simply put, if a German notarizes his signature on a document in Germany, it will not be taken into account in the Czech Republic. In addition to the authentication clause, the document must also bear a so-called apostille, i.e. a special stamp or clause confirming that the notary who authenticated the signature is indeed a notary in that country.
The Czech authorities are extremely strict and it is impossible for them to enter data in the Commercial Register on the basis of a power of attorney whose signature is certified in Germany but the apostille is missing. Conversely, Czech documents must also be apostilled for use in Germany, but this is usually not mandatory there
LIDOVÉ NOVINY: To what extent does this affect practice?
STEININGER: It costs about 20 euros and it takes a week or more for the German court to confirm by an apostille that the notary is indeed registered as a notary in Germany. In our country, the Ministry of Justice apostilles the documents. For German investors doing business in the Czech Republic, this is literally a nuisance, because it is a completely unnecessary step. It is a paradoxical situation: Germany is our largest trading partner, but of the neighboring countries, only the Czech Republic does not have an agreement with Germany that would remove the requirement for an apostille. This is despite the fact that both countries are in the EU, and despite the fact that we have such agreements with Mongolia, Vietnam and even North Korea!
So if you have your signature notarized by a North Korean notary, you don’t need an apostille, but if you do it in Germany, you have to go through a lengthy procedure to get another stamp. I wonder why the Czech government was not more proactive and initiated the signing of an international agreement with Germany to remove this requirement. Fortunately, the apostille will be abolished by a European regulation starting in 2019, but that does not change the fact that the Czech state has made it difficult to do business for practically 30 years since the Velvet Revolution.
LIDOVÉ NOVINY: What other negative aspects of Czech law do German investors face?
STEININGER: German investors often have the intention to build something in the Czech Republic, for example a factory. And this brings us to a magical chapter of Czech law, the building regulations. They are incomprehensibly complex and basically impossible to implement, which is always a big disappointment for Germans. There is pointless paperwork, long deadlines and everything is so complicated that they often decide to build theFactory somewhere else. We compete with other countries in the region not only on exact parameters such as labor costs or the level of taxes, but also on the competitiveness of our own legal system. We block our own economic growth with absurd regulations. The Czech state is not even capable of building an efficient highway network. I don’t understand that.
LIDOVÉ NOVINY: Are German entrepreneurs discouraged by the Czech legal environment as such?
STEININGER: Certainly not, I would hate to make it sound that way, but our law could certainly be more accommodating. These are typical problems since the revolution that are still not solved. Nobody does anything about it, and it annoys me as a lawyer that we still have to deal with the same problems. Sometimes in the “West” we are still seen as people from the Middle Ages, and sometimes I think there is – unfortunately – some truth in that. That’s not to say that some aspects of the way the law works in Germany aren’t a little medieval. (laughs)
LIDOVÉ NOVINY: What do you have in mind?
STEININGER: The registration of a newly founded company in the commercial register is often more complicated and also more protracted in Germany than it is here. Here, the time between the notarial deed of incorporation and the entry in the commercial register depends primarily on the founders and on how quickly they can obtain the necessary documents. These include, for example, the establishment of a bank account or the consent of the owner of the house where the new company will be based. As soon as the documents are available, the Czech notary can register the company directly, i.e. basically immediately, in the Commercial Register.
In Germany, it depends on the speed of the registry court in whose jurisdiction the newly established company falls, and it may therefore take several weeks for the company to be registered after the required documents have been submitted. Few also appreciate that the Czech Commercial Register functions relatively well, with a deadline of five days for a decision. Most Western countries can only dream of this. It’s also great that the Czech Commercial Register and Land Register are accessible online and basically free of charge.
There is nothing like that in Germany; the commercial register is subject to fees. And if you want an extract from the land register, you have to go to a notary or the relevant court and get one there. In addition, in Germany you can only get an extract from the land register if you have a legitimate interest – for example, as a prospective tenant, if you want to find out whether the apartment really 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, definitely. Unfortunately, we are still seen as a suspicious nation from the East.
I was very surprised at what it takes to break the bank. I recently opened an account in a Czech bank for a client from the Philippines, and it took 25 minutes.