Marathon Czech international legal battle takes new turn with billion dollar claim

One of the longest running legal battles in Czech history has just taken a new turn with the possible bill for the state escalating substantially. The company Diag Human is now taking a new tack in its battle for damages and is reportedly seeking at least a billion US dollars. Prague is hiring big legal guns in the US in its defence.

The Czech Ministry of Finance, photo: Filip Jandourek, Czech radioThe Czech Ministry of Finance, photo: Filip Jandourek, Czech radio It will be 27 years in March since the company Diag Human signed the original deal with the former Czechoslovak health ministry to take and process blood plasma. Blood products are a massive and lucrative market but the hopes of Czech Swiss-based millionaire Josef Št’áva to cash in were shattered when the Czech state later pulled out of the deal.

Since 1996 Josef Št’áva has been suing the Czech state for ever increasing amounts in a case which already qualifies as the longest running in the country’s legal history.

In the latest turn of events, Diag Human is seeking at least a billion US dollars and it is taking a different legal tack from before. Whereas its many previous cases were based on approaches to various courts using commercial law covering businesses, Diag Human is now grounding its case on an international investment protection agreement between the Czech Republic and Switzerland.

The Czech Ministry of Finance was officially informed about the latest move in December last year. It has two months to nominate its own arbiter.

And Prague has already taken steps to deploy its own big legal guns for a case which according to some reports could last for at least three years. A tender held by the finance ministry recruited top US legal firm Arnold & Porter Kaye Scholer to represent the country.

Washington-based Arnold & Porter is one of the biggest law companies in the world with a reputation for taking on flagship cases. It was active in one of the biggest mining disaster cases in US history, represented some of those whose careers and prospects were damaged during the Joseph McCarthy proceedings in the 1950s, and recently defended the publisher of Dan Brown’s Da Vinci code against copyright infringement. The bill for these legal services alone is expected to amount to around 60 million crowns.

Over the last 20 years of legal warfare, Diag Human has notched up some successes already against the Czech state. One arbitration finding in 2008 broadly ruled in its favour, though Prague challenged the validity of that ruling saying that it was not valid. Both sides later appealed against the finding with Diag Human seeking higher damages than those initially awarded.

On the back of that finding Diag Human has also sought to harass the Czech Republic and confiscate Czech property abroad. In one instance, three Czech paintings, including one by the Cubist painter Emil Filla, were confiscated from an exhibition in Vienna in 2011. And a similar threat existed in France after a Paris Court also recognised Diag Human’s claims.