October 23, 2017 / Law /

The court settlement in cases when both parties have the professional quality of an entrepreneur is the common phenomenon especially in the case of the bigger and unsure court disputes when the opinions of both parties seem reasonable.

In the civil law dispute, in which one of the parties may be a unit of the public finances sector, it is much harder to reach such agreement, among others due to the art. 5 of the act on the responsibility of breaching public finances discipline according to which the basic breach of the public finances discipline is the non-compliant with the rules rescheduling of the payment of debts, dividing it into installments or allowing the termination of the debt towards the State Treasury, local authorities or other unit of the public finances sector.

The lack of a clear legal basis that would allow the unit of the public finances sector to settle an agreement is an obstacle in making this decision which is beneficial for the unit, especially in a situation when even dividing the benefit into installments would mean a breach to the public finances discipline.

On 1st June 2017 amendment to the act on public finances entered into force adding art. 54 according to which:

  1. The unit of public finances sector may conclude an agreement in the case of the civil law due amount when it is established that the results of such an agreement are more beneficial for this unit or the State Treasury or the budget of the local authorities than the probable result of the legal proceedings or arbitrage.
  2. The evaluation of the results of the agreement shall be made in writing including the circumstances of the case, especially the legitimacy of the disputed demands, the possibilities of their fulfillment and the predicted time and cost of the legal proceedings or arbitrage.

This provision provides the units of the public finances sector with a clear basis enabling making agreements in the case of disputes over the civil law due amount. It is important that the legislator did not only indicate the financial results for this unit as a evaluation criterion for the profitability of the agreement, which lets including also other criterion that may influence the evaluation of a particular agreement proposal as more beneficial than conducting a long-lasting and unsure proceedings.

The amendment above is also a good information for the entrepreneurs in a dispute with the units of the financial sector who as a rule in such disputes were interested in the possible court settlement.