The Czech Republic has successfully concluded an international arbitration dispute with the French company JCDecaux. The arbitral tribunal ruled that the state does not have to pay the demanded compensation of approximately CZK 550 million, which the company claimed due to the termination of the contract for the lease of advertising space between its subsidiary Rencar and the Prague Public Transit Company (DPP).
The key argument for the tribunal's decision was that the actions of the Public Transit Company cannot be attributed to the Czech Republic as a state under international law. According to Michal Žurovec, spokesperson for the Ministry of Finance, the contract was terminated by an independent decision of the DPP, which was not influenced by the government or the city magistrate. Given this conclusion, the tribunal no longer had to deal with other aspects of the case and awarded the Czech Republic compensation for the costs of proceedings in the amount of approximately CZK 33 million.
“This is another in a series of confirmations of the high-quality background and expertise of the Ministry of Finance in the field of international arbitration disputes. All colleagues who contributed to this success deserve a big thank you,” said Minister of Finance Alena Schillerová.
The roots of the dispute date back to 2016, when DPP terminated a long-term contract with Rencar for the lease of advertising space in the Prague metro premises. JCDecaux disputed this move in Czech courts, but unsuccessfully. In November last year, the municipal court definitively confirmed an earlier verdict to dismiss the claim. The arbitration proceedings were another attempt by the company to seek financial compensation at the level of international investment protection.
Relations between the JCDecaux group and public administration in Prague have undergone a fundamental transformation in recent years. In addition to the dispute with the public transit company, the contract for the operation of city furniture also ended in mid-2021. The Prague City Hall decided not to extend the contract and replace the existing bus shelters of the French company with its own furniture, which Prague manages through its municipal companies.