The Municipal court in Prague decided on 9.2.2017 that criminal proceedings against the company Agrotec will be terminated because the company “has used all efforts to prevent the commitment of the crime” by one of its managing employees and therefore fulfilled the conditions for its exculpation. The criminal proceedings were initiated against the company Agrotec due to suspicion of manipulation of public tenders for the supply of tires to the Czech Post. One of the managing employees of Agrotec allegedly achieved – through a close cooperation with one of the managers of the Czech Post – the termination of the tender and continuation of the old supply agreement. Further, based on unofficial information, Agrotec allegedly had access to offers of competitors and obtained confidential information about public tenders which provided them with an advantage in public tenders.

The amendment of the Act on the Criminal Liability of Legal Entities, which entered into effect last December, introduced a new possibility of exculpation for crimes committed by legal entities if the legal entity used all efforts which could be reasonably required in order to prevent the commitment of the unlawful act committed by certain persons which conduct is attributable to the legal entity. The Municipal Court in Prague – in a not yet published decision – now provided first guidance how this provision will be interpreted in court proceedings. Agrotec had an Ethical Codex in place, provided trainings for its employees and the employment contracts included the commitment of employees to comply with the Ethical Codex.

The decision of the Municipal Court was appealed by the prosecutor to the Higher Court in Prague. It is now up to the court of higher instance to confirm or refine the lower courts’ take on the conditions for exculpation. Nonetheless, the first decision in the Czech Republic regarding exculpation of legal entities sends a message to companies that their compliance efforts may pay-off in criminal proceedings.