Class II
Masaryk University – Law Faculty
October 2011
How does the dispute begin:
 Contract between U.S. and Czech Company for
Czech to produce and send to U.S. high tech
automotive parts:
 What are the contract terms? What’s “the deal”
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 Contract explains the terms, including how the
dispute will be resolved: in court or by arbitration;
and where resolved – whether in the U.S. or in the
Czech Republic – or somewhere else.
 Let’s suppose the auto entertainment systems are
shipped but the U.S. manufacturer claims there are
not enough to meet the contract.
 Not all disputes are worth fighting about:
– Cost of the dispute
– Damage to the relationship: if you fight with your customer
(even if you are right), no new orders.
– Damage to reputation (yours or the U.S. company’s)
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U.S. Company: “we’re going to Court in the U.S.“
Very expensive for Czech Company.
Why? What is the process in U. S.?
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 Unlike cases in the Czech Republic, or in the E.U.
generally (except for the U.K.), cases in the U.S.
allow extensive and expensive “discovery”. What
is that ?
– Pre-trial testimony from anyone with information about
the case (“depositions”).
– Document Production: all of your documents, including
all of your private emails (except for those with your
attorney).
– This includes the email that you thought you had deleted.
– These can be very damaging – to either side.
– Obtaining emails from your opponent may help you
prove your case. Expensive but could be big help.
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 VIDEO CLIP
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 VIDEO CLIP
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 The Trial
 U.S. courts allow jury trial, or trial without juries.
- 6 or 12 persons decide the facts; the judge instructs the jury on
what the law is:
 What each side must prove to win.
- Juries are difficult to predict and can reach a result based on
emotional responses.
- This is dangerous for both sides, but juries often favor the
“home team” – the person or company from that area.
- Jury trials take longer and are more expensive.
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 Or, cases in the U.S. can be decided by a judge alone, without a
jury.
 If tried by a judge, he or she then decides the facts and applies the law.
 How are judges in the U.S. selected, and what does this tell you about the
fairness of the judge?
 Attorney’s fees are usually paid by each side, regardless of who wins.
 These are risks for a U.S. trial. But there are risks in the Czech Republic,
too.
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 Judges in the Czech Republic are in career
positions
– Not having served as lawyers first, they may not see
the case in the same way as the lawyers do.
– If the judge is not good, or does not work hard, can he
be replaced?
– There is no (or limited) pre-trail discovery: you will
hear the positions for the first time during the trial,
limiting your ability to prepare for it.
– You will not have access to the documents from the
other side, so you may not know the full story.
– Attorney’s fees will be paid by the losing side.
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 Cost and uncertainty of Litigation cause parties
to look for other methods of resolving disputes:
what are they and how do they work?
 A. Arbitration
– Agreement to resolve disputes through a private, but
binding method of resolving a dispute.
– Provided for by the contract: specific provision
instead of litigation.
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 Arbitration resolves a dispute outside of court,
but in a binding way.
 Arbitrator’s decision (an “Award”) is then
entered into Court as a judgment
 Same as if the case had been tried in Court
 Judgment entered in Court of one country after
arbitration will be enforced in another country
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 If a case is arbitrated in one country, can the
resulting decision be enforced in another?
 International Arbitration has become common
since 1958.
 “New York Convention” on International
Arbitration, sponsored by United Nations.
 This is a treaty – an agreement among countries to
enforce arbitration awards in other countries.
 More than 140 countries agree and jointed treaty
 Czech Republic joined in 1993.
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– Some types of disputes may still be presented to
Court.
 Example: where urgent remedy is needed – someone is
taking your intellectual property and is about to put it
on the internet.
 One of your former employees has taken customer files,
copied them and is about to give them to a competitor.
 Your customer is making damaging statements to the
news media about your product.
 Arbitration may be too slow to effectively
prevent these harms.
– So contracts provide for court for some exceptional
situations.
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 More routine disputes can be reserved for
arbitration. For example:
– Was the product defective?
– Was the charge proper?
– Did both parties expect that the quantity to be shipped
could be decided only by the Buyer?
– If the product was lost in shipment, whose fault is that?
Must the customer pay; or the manufacturer?
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 The Appeal:
– In the U.S., almost every case can be appealed after
the trial.
– An appeal in the U.S, is not another trial.
– It is a review of the trial court to decide if the court
made a legal error. Did the trial judge
misunderstand the law or apply it incorrectly?
– Appeals that raise important social issues can be
heard by the highest court, the Supreme Court.
– Not a “right”; the Supreme Court selects only a few
cases that it considers most important. These are the
cases that will affect major issues.
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 Czech Republic Appeals
– Similar: appeals may be taken to the Regional
Courts, challenging whether the trial court correctly
applied the law.
– Further appeals to the Supreme Court are
discretionary: the Court only takes those cases
considered to have wide application and importance.
– Difference: in the U.S., an appeals court’s decision
will control or bind the trial court in similar cases. In
the C.R., the decisions are not published and are not
binding (except for the Supreme Court).
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 U.S. use of precedents may provide guidance for
how your case will be decided.
– Similar facts should lead to similar result
– Trial judge is required to apply the precedent of court
decisions.
 Let’s Take a Possible Case you might encounter:
 If you were the Czech business person in a dispute
with the U.S., and the facts and contract were as
provided to you before this class, where and how
would you bring the case, and why?
 What are the things you would think about?
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