Our company has been cooperating with a Slovak business partner. After several years of a good relationship and good payment discipline on the Slovak partner’s side, they suddenly stopped paying our invoices. Before we discontinued our deliveries, their debt had risen to a significant amount. As soon as we realized they would not pay us voluntarily, we filed for a European order for payment. Once the court awards this payment order to us, we will be authorized to attach the Slovak company’s assets to satisfy our claim. We know that they own an administrative building and land with a high value, and we found out that they were advertising its sale. We are afraid their intention is to sell the valuable assets, take the money out of the company, and then leave it empty without meeting their obligations to us and probably other creditors. How can we prevent them from selling this valuable asset? We believe that what they are intending to do is cause damage to us as their creditor and we want to protect our rights. Are the directors of the company criminally liable for this? What can we do?

We believe that first of all you can file a petition for a measure to secure your claim to the Slovak court. This possibility arises under section 343 of the Slovak Code of Civil Disputes Procedure. The court may establish a pledge over the administrative building and the land owned by the Slovak company to secure your claim.

However, Slovak courts are not very keen on issuing security measures. The claimant should convince the court that there is a serious threat that the claimant’s receivable is endangered, or, more precisely, that there will not be enough assets on the debtor’s side to satisfy the claimant’s receivable in the case the court decides in the claimant’s favour. If your debtor advertises the sale of immovable assets and has no other assets of substantial value, this looks like good grounds for a favourable court decision on granting a security measure.

In the case the court grants the security measure (i.e. it establishes a pledge over the immovable assets) your debtor will be able to sell the building and the land; however, the pledge established in your favour to secure your receivable will stay attached to the building and the land. In practice, this means that the debtor will either not be able to sell the asset or that the buyer will buy the asset knowing that they will have to endure the sale of the asset once you receive a court award and your Slovak debtor will not satisfy it voluntarily.

The criminal liability of the directors comes into consideration as well. Slovak law recognizes a special category of “insolvency criminal offences” for which, if found guilty, the directors may be sentenced and banned from activities or even imprisoned for up to several years. These offences include damaging the creditor as well as the preferential treatment of the creditor.

If the court does not grant a security measure to you, or the Slovak debtor manages to sell the immovable assets prior to you receiving the court’s protection, the criminal offence of damaging the creditor or the criminal offence of the preferential treatment of the creditor comes into consideration. Damaging the creditor is specified as defeating their satisfaction by damaging or impairing the asset, or by making it unusable by concealing, selling, exchanging, or otherwise removing even a part of the debtor’s assets. The definition of this offence is wider, but the quoted part above includes the sale of assets. Therefore, if the Slovak company sells the building and the land without satisfying your claim, the liability of its directors comes into consideration.

The police investigators would have to verify the intention of the sale, what happened with the proceeds of the sale of the immovable assets, whether there were other creditors and how they were satisfied, whether the sale price was at market level, and other matters. It may be the case that that the directors used the proceeds of the sale for the preferential treatment of other creditors, and their actions fall under this criminal offence.

In any case, we recommend that you file a criminal complaint describing the events along with all the evidence you have, including advertisements, your estimate of the purchase price of the building, and your suspicion that the directors are acting with an intention to avoid the payment of your claims. Whether the police find enough evidence to accuse the directors from any criminal offence is not a certain matter, but you can at least act and utilize all possible means to protect your rights.

Our embassy represents one of the EU member states in Slovakia and has been asked by our domestic court to deliver that court’s decision in a family matter to a Slovak citizen now living in Slovakia. Our court sent us a form named Request for Service Abroad of Judicial or Extrajudicial Document together with an official Slovak translation of the court’s decision which should be delivered to the Slovak citizen. The court’s request for service refers to the Hague Convention of 1965 and contains a Certificate which should be signed and stamped by the authority who delivered the request to the addressee and then sent back to the court. How should we proceed? Should we deliver the court’s decision to the Slovak citizen and then fill in the Certificate and send it back to our court? What should the delivery method be? Should we use a courier service?

First of all, it is interesting that despite the fact you are an EU member state, your domestic court chose to deliver the judicial document under the Hague Convention. Since the adoption of EU Regulation No. 1393/2007 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters, the EU member states proceed under this Regulation when they deliver documents in civil matters to each other instead of using the Hague Convention.

Nevertheless, the Hague Convention delivery method is still admissible even between EU member states who are parties to this convention. If your domestic court chose this method, you should follow it and first of all check how the court requires that the service of the document is to be executed. This should be marked on the Request for Service Abroad of Judicial or Extrajudicial Document which you received. In most cases, foreign courts request the delivery of judicial documents in accordance with the provision of sub-paragraph (a) of the first paragraph of Article 5 of the Hague Convention (this option is marked by X on the first page of the form). This means that the “central authority” of the Slovak Republic should serve the document itself, or it should arrange to have it served by an appropriate agency by a method prescribed by Slovak law for the service of documents in domestic actions.

In Slovakia, the central authority is the Department of Private International Law of the Ministry of Justice of the Slovak Republic; the appropriate agencies serving the documents are the Slovak courts. In our view, your domestic court should have sent the request to the Slovak Ministry of Justice instead of sending it to your embassy.

However, we believe that instead of returning the request back to your domestic court, you can now send the request together with the translation of the judicial document to the Department of Private International Law at the Slovak Ministry of Justice. You can also send it directly to the first instance court residing in the district where the Slovak citizen who should be served is living. The second option saves time, because the Ministry of Justice would only do the same thing and send the document to the relevant court in order to have it served to the addressee.

How do you determine which is the relevant court? It is not difficult. For example, if the address of the person to whom the document should be served is in Nitra, you should deliver the request to the Nitra District Court. The same applies if the address is in a village or a smaller town falling within the Nitra administrative district.

The Nitra District Court should know exactly how to proceed as clear instructions for district courts in this regard can be found on the web page of the Slovak Ministry of Justice. Service under Article 5(1)(a) of the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters is done either by the court summoning the addressee and handing over the documents or by the postal service (a special form of delivery called “service into one’s own hands” with the possibility of an alternative service by deposit under strict circumstances prescribed by law). The postal service is used only if a Slovak translation is attached to the documents or if it can be concluded that the addressee understands the language of the document. The Nitra District Court will also fill in the Certificate confirming the actual delivery and its method.

You should not try to deliver the document to the addressee by your own means (postal service or courier). Even if you successfully deliver the document to the addressee and send the Certificate confirmed by you back to your domestic court, it may not consider the document to have been delivered.

Our firm has a business partner in Slovakia. Our relationship went well, we had been delivering goods to Slovakia and our Slovak customer always paid on time. However, our last invoice stayed unpaid even though we followed up with the customer several times. How does the business debt collection process work in Slovakia? Is the Letter Before Action legally required before we can make a claim to the court? 

If you have exhausted all the usual methods of encouraging the customer to pay their debt voluntarily, such as written payment reminders, regular e-mails, and phone calls, it is appropriate to move forward and initiate the process of debt collection. Before you hire a qualified Slovak attorney, you may wish to send a letter to the customer, inform them that you intend to take legal action, and give them a final chance to pay the owed amount.

However, the official Letter Before Action (i.e. a letter laying out the owed amount and the date the payment must be made by) is not a legal requirement without which it would not be possible to file a court claim.

Once the Slovak attorney takes on the case, they usually write a “pre-court claim” to the customer. In that pre-court claim, the attorney outlines that there is going to be legal action and informs about the contractual or statutory delay interest penalty as well as the court fees and costs of legal representation. In some cases, the attorney’s letter helps and motivates the debtor to pay up. As mentioned though, this is a usual practice and not a condition of further court process.

If the customer still does not pay and you have instructed the Slovak attorney to pursue the matter to the court, a fastened civil procedure may be used for the claiming of the unpaid invoice. The specific term for this kind of procedure is a “Notification Procedure” (in Slovak Upomínacie konanie). In this procedure, the claim can be filed exclusively electronically by filling in the particular electronic forms, signing them with a qualified e-signature, and submitting them through the e-claims webpage of the Slovak Ministry of Justice. The court fee for filing a Notification Procedure claim is three per cent of the claimed amount, which is half of the court fee payable in the usual civil procedure (six per cent).

Your Slovak attorney will ask you to provide evidence documenting your claim, such as the Contract, General Terms and Conditions, Order, Invoice, and Acknowledgement of Goods Receipt. The advantage of filing electronically is that the scans of the documents in electronic form are sufficient and you do not need to send anything in paper form.

After the claim, or rather the Petition for Issuance of Payment Order (in Slovak Návrh na vydanie platobného rozkazu), is filed and the court fee is paid, the court has ten business days to issue the Payment Order. The Payment Order is a judgement ordering the debtor to pay the owed amount to the claimant.

When the debtor receives the Payment Order, they have fifteen days to dispute it, or in the more specific Slovak terminology, to file an objection against the Payment Order to the court. It may be the case that the debtor ignores the Payment Order and does not dispute it. If this happens, the Payment Order becomes final and represents an enforceable title. Based on this, you can appoint a debt collector (in Slovak exekútor) who will start with the process of attaching the debtor’s assets in order to satisfy your claim.

More often than not, the Payment Order is disputed by the debtor and they file objections. Although the court has the right to reject such objections based on insufficient reasoning, this rarely happens. Usually Slovak courts accept any objections, even if they are poorly reasoned, in which case they cancel the Payment Order and the process continues in a way usual for civil procedures. Your attorney receives the objections, confirms that you wish to continue in the claiming process, and provides a statement to the objections. The case is then heard in front of the court, and the first instance court decision can be appealed in front of the appellate court.

In our experience, the real upside and practical advantage of the Notification Procedure is the lower court fee. However, sometimes the debtor does not react and does not even dispute the Payment Order. In that case, it is the fastest way to collect your unpaid invoice.

On 18 July 2019, we signed a contract with our business partner. When signing the contract, we verified in the Commercial Register that the executive manager was authorized to act on behalf of the company. Now the company has a new executive manager, and they refuse to pay us under the contract. The new executive manager claims that the former executive manager was removed from his position on 17 July 2019, i.e., the day before he signed the contract with us, thus making that contract null and void. The entry in the Commercial Register shows that the new executive manager was registered on 6 December 2019. So is the contract signed by the dismissed manager valid?

We signed another contract with the same business partner. This other contract was signed by a manager acting under a power of attorney dated 12 May 2019 and issued by the former executive manager at a time when he had not yet been dismissed. However, the authorized manager signed the contract on 21 December 2019, i.e., after the date when the new executive manager was registered in the Commercial Register. We are concerned that even with this second contract, the company might claim that it is null and void because it was signed by a person authorized under a power of attorney issued by the dismissed executive manager. Is our concern justified?

To answer your first question, the contract may be binding for the company even though it was signed by an executive manager who, at the time of signing the contract, had already been removed from his position by the company’s General Assembly. With respect to your company, it is irrelevant whether or not the executive manager had been dismissed. What is important is whether or not you knew about the dismissal.

Pursuant to Section 27 (3) of the Commercial Code, with respect to third parties, the data entered in the Commercial Register is effective as of the date of its publication. The only time this does not apply is if your business partner proves that you knew about the executive manager having been dismissed. This is the “positive component” of the principle of material publicity protecting third parties against the burden of verifying if the respective entry in the Commercial Register is still up to date, or if the executive manager happened to have been dismissed in the meantime.

So unless your business partner proves that at the time of signing the contract you knew that the executive manager signing the contract no longer held the position of executive manager, the contract will be considered as having been signed by a person fully authorized to act on behalf of the business partner. Please note that even if it is proven that you knew that the manager had already been removed from his position at the time of signing the contract, it does not automatically mean that the contract is invalid, or that the terms and conditions of such a contract are not binding for the company. The other thing to take into account is whether or not the law requires that specific type of contract to be concluded in writing. If the written form is not required and an oral form is sufficient under law, such as in the case of a standard contract for the provision of services or delivery of goods, what is especially important when assessing the validity of the contract is if the behaviour of the company suggested that they had agreed to the contract content. If, for instance, the company accepted the services or goods, or if they paid part of the price in accordance with the contract, or if the new executive manager referred to the contract in subsequent email communication, or if the company’s employees behaved in compliance with the contract even after the former executive manager was no longer there, this may help you prove that the company’s will to adhere to the contract followed from other facts and that the missing signature of a person authorized to act on behalf of the company is not decisive. Such a contract not signed by an authorized person would serve as proof of the content of the oral agreement.

The answer to the second question is also favourable for you. The power of attorney does not expire, under any circumstances, with the dismissal of the executive manager who issued it. The new executive manager may revoke the power of attorney issued by the former executive manager, but the right to act under the power of attorney shall definitely not cease to exist merely on the grounds of the dismissal of the executive manager who issued it. The fact that the former manager who signed the power of attorney no longer holds the position has no effect on the validity of the power of attorney.

The power of attorney is issued by the company, where the manager merely acts on the company’s behalf. Even though it is important who acts on behalf of the company, unilateral legal actions, such as powers of attorney, are governed by the same principles as any bilateral or other legal act, or any other action on behalf of the company for that matter. If it were true that the executive manager’s dismissal would make the powers of attorney he had signed on behalf of the company expire, it would also have to invalidate other legal acts executed by the manager acting on behalf of the company. This would create enormous legal uncertainty, and it would have no inherent sense. If a company has expressed its will, that expression of its will cannot change by the fact that there is a change in internal organization.

Our family business produces wooden products with a unique pattern and design. We use our own technological procedures, which we consider to be our know-how. As the demand for our products has grown, we have expanded production and hired new employees. We are aware of the risk that if we teach them to work with wood and they learn our know-how, they may start their own business or disclose our procedures to a competitor. Can we prohibit competitive activity and working with competitors in the business cooperation agreement that we sign with such new collaborators? How can it be done right?

Yes, you can agree in your business cooperation agreement on the prohibition of competitive activity and cooperation with companies doing business in a competitive area.

However, such an agreement must be sufficiently specific, and it must meet the essential requirements of a “non-compete clause”. Although this clause is used primarily in commercial representation agreements, according to the judicial interpretation, the legal terms of this clause should also be adhered to in other types of agreements, including cooperation agreements.

The non-compete clause should therefore be agreed in writing and should define the details of the competitive activity that is to be prohibited. In your case, this could be any business or employment activity in the production of wooden products, which you need to specify in more detail (such as “wooden toys for children” or another particular type of toy).

The clause should also define the territory where the collaborator is prohibited from conducting competitive activities, such as the territory of the Slovak Republic and the Czech Republic, or the territory of all states of the European Economic Area.

In addition, the competition clause should define the pool of customers the prohibition relates to. As the competition clause applies to commercial representation (such as distribution of certain products to a specific pool of potential customers) within the meaning of the Commercial Code, it will be necessary to find an appropriate analogy to the “pool of customers” that could be applicable to a cooperation agreement for the production of wooden products.

In your case, the pool of customers is likely to be closely linked to the type of products that the non-compete clause applies to. So, if it is wooden toys, the pool of customers can be defined as “toy producers”, because if your collaborator decided to work with another company later on, their primary customer would be another toy producer. However, their customers can also include toy distributors and retailers, as the collaborator can supply toys directly to a retail chain.

It will be important to define the period for which you want to limit the competitive activity of the collaborator. According to the Commercial Code, it should not be more than two years after the collaborator terminated the cooperation agreement with your company. However, the period should always be reasonable, so if the collaborator was in a relationship with you for only one year and the agreement would limit them from conducting any competing activity for two further years, a court could view that as an unreasonable prohibition.

Court decisions also show that the prohibition of competition should be offset by some consideration, otherwise such a restriction could be considered disproportionate. It is not defined what a reasonable consideration is. This could be some one-off severance pay calculated based on the contractual agreement.

To ensure that the collaborator complies with the restrictions arising from the non-compete clause, you can define a contractual penalty in the agreement. It should also be clearly defined and adequate. The appropriateness of this penalty must be assessed case by case, such as when based on the income of the collaborator while working with your company, or based on the consequences that a breach of the non-compete clause may cause you.

Also note that there are other possible ways of protecting yourself against the use of your technological procedures or design by your competitors. These include a utility model and trademark registration. The cost of such registration is higher than the cost of including a non-compete clause in a cooperation agreement, but in our view, they provide better protection than a non-compete clause.

I own a company that communicates daily with customers through a customer support department. Our employees’ job is to answer customer inquiries using work email addresses separately created for each employee. I suspect that one of the employees uses his work email to communicate with his private contacts during working hours. In our company, employees are only authorized to use the Internet, work devices, and email addresses for work purposes. As the employer, am I allowed to check the content of my employee’s work email?

You can monitor an employee’s communication via their work email only if you comply with the conditions set out by the Labour Code.  Otherwise, you will be violating the employee’s right to privacy.

According to Section 13(4) of the Labour Code, the employer may check on an employee if both of the following conditions are met:

1. there are serious reasons for monitoring due to the special nature of the employer’s activities; and
2. the employee was informed in advance about the possibility of being monitored by the employer.

Neither “serious reasons” nor “special nature of the employer’s activities” are defined in the Labour Code, so we recommend that you define the specific reasons as to why it is necessary to monitor emails in your Code of Conduct. In your case, one thing you could do is assess how many customer inquiries the employee handled in a week compared to other employees. If the number of handled inquiries was lower than some predefined limit, you could inquire as to why the employee had failed to do his job.

You can inform employees about checking their emails by sending them an email with a notification that their work email communication will be inspected. However, if you stipulate that employee communication may be subject to monitoring in your Code of Conduct, employees will be considered to be informed about the monitoring by having read the Code of Conduct. The Code of Conduct must provide more details on the scope, possible methods, and usual duration of such monitoring. The Code of Conduct is a binding document that all employees must become acquainted with when they start working for their employer, i.e., they are duly informed about possibly being subject to monitoring. If you intend to pass a new Code of Conduct or amend the existing one, it is necessary to verifiably acquaint all existing employees with this fact (such as by means of a mass email message).

When drafting a Code of Conduct, we advise you consult a human resources expert or a lawyer so that you (as the employer) can protect your legitimate interests, comply with the law, and preserve your employees’ right to privacy.

I am a Slovak citizen who has lived in the United States for twenty years. I married an American, and I have American citizenship. Our son was born in the United States ten years ago. Does our son automatically have Slovak citizenship in addition to American citizenship? What should I do to obtain a Slovak passport for our son?

Yes, a child born to a citizen of the Slovak Republic abroad acquires Slovak citizenship “by blood”. So, your son automatically acquired Slovak citizenship. What remains for you to do is to obtain a certificate.

First you need to show to the Slovak authorities that you are or were a Slovak citizen at the moment of your son’s birth.

If you had a valid Slovak identity document (an ID card or a passport) at the time of your son’s birth, and that document is still valid, all you have to do is to present the original of the document in person to the competent authority.

If you did not have a valid identity document at that time, or if you currently do not have a valid Slovak identity document, you should send a request for issuance of a Certificate of Citizenship of the Slovak Republic for a Child to (i) the District Office in the seat of the region – the Department of General Inner Affairs; (ii) a diplomatic mission; or (iii) a Consular Office of the Slovak Republic abroad. Attached to the request must be documents proving that you were a citizen of the Slovak Republic at the time of the child’s birth.

To obtain a Slovak passport for your son, you need to get his Slovak birth certificate, which you can request by submitting a Birth Registration Application. A Birth Registration Application can be submitted to the Embassy of the Slovak Republic in the country of your residence, or to a Registry Office in the Slovak Republic at your existing or last registered permanent residence.

The legal period for the application processing is two months (but expect a minimum of six weeks).

Other documents that need to be submitted along with the completed Birth Registration Application include your child’s American birth certificate with an apostille, translated by a Slovak court translator or a Slovak embassy; a copy of the parent’s birth certificate (this does not have to be authenticated); the marriage certificate of the child’s parents, including an apostille with an official translation (unless the parents have requested their marriage be entered in a special register); the parent’s identity card or passport (at least one document issued before the child’s birth and still valid today); and a copy of a passport or another identification document of the mother if she is a foreign national.

If you got married abroad, we recommend that you also submit an application for Marriage Registration in the Special Register.

Original documents are not returned, so if you have only one original it is better to use a notarized copy.

Once you obtain the birth certificate, you can apply for a passport.

You can also apply for a passport from abroad, even electronically.

1. A limited liability company wants to claim damages from its executive manager for signing a disadvantageous loan agreement. How can the executive manager be released from such a liability?

The executive manager will be released from liability for damage caused to the limited liability company as a result of signing a disadvantageous loan agreement by proving that they had acted with due professional care and in the interests of the company when selecting the loan and signing the loan agreement. The executive manager can prove that they acted with due professional care and in the interests of the company, for example, by submitting an analysis of several offers from various credit institutions prepared by a competent person where the analysis would show that the offer accepted by signing the loan agreement was evaluated as the best option.

If the executive manager concluded the loan agreement without obtaining sufficient information to make the best decision, such as by comparing several available credit products, they are most likely not to be released from liability.

Simply put, the executive manager could be released from such a liability for damage if they demonstrated that they had used all reasonable efforts to file the tax return in time.
In the case of a smaller company, with no extensive division of powers and responsibilities, the manager could, for instance, submit a contract with a third party to demonstrate that they had fulfilled the obligation to file the tax return in a timely manner by concluding a contract with a third party under which this obligation was outsourced. At the same time, the manager would have to prove – for instance, by email communication – that they had been actively involved and had checked sufficiently in advance that the tax return would be filed on time.

In the case of a larger company in which, based on the internal division of powers and responsibilities, the responsibility for filing the tax return in time would rest with a dedicated employee, it is possible that the manager could be released from liability by proving that the company’s internal processes had been sufficiently established, including clear division of powers and responsibilities, to make sure that the tax return was filed in a timely manner.

In the case of further questions, or if you need legal advice on this topic, do not hesitate to contact us.