The Constitutional Court of the Slovak Republic finds an occasional obligation for plaintiff to place defendant’s potential costs in escrow prior to ruling.
Defendant, a Slovak bank, was sued by an offshore company for approximately 127 Million EUR. Defendant argued that the combination of a speculative claim by plaintiff, combined by plaintiffs seeming lack of assets, placed defendant in the unenviable position of potentially going uncompensated in the event it prevailed. Thus, defendant asked the court to order plaintiff to place fees in escrow for the possibility that Defendant prevailed during the trial and was entitled to restitution of costs.
Defendant’s motion was denied by both the district court and the county court. Both courts argued that the defendant did not prove plaintiff’s lack of means, but only that Plaintiff has no registered assets in Slovakia. This, according to the courts, does not constitute Plaintiff’s lack of means. Subsequently, Defendant petitioned the Slovak Constitutional Court.
The Slovak Constitutional Court found that the substance of the dispute are two issues. The issue of the abuse of law and the issue of preventing the abuse of law by granting Defendant’s request. It stated that Plaintiff’s financial standing can help the court to understand the parties’ expectations during a lawsuit. Plaintiff’s financial standing is a relevant part of the court’s analysis on the use of law regarding the law’s aim and purpose. If the plaintiff is an offshore company that has no assets in Slovakia, it can abuse its background to produce lawsuits with almost no risks in case of loss.
The Slovak Constitutional Court ruled that the courts did not search for a fair balance between Plaintiff’s right to sue and Defendant’s right not be a victim of formal imperfectness of the law. The judgement was remanded to the county court for further proceedings accordingly.