Legal persons also have the right to protect their reputation. This is exactly what a recent ruling of the Constitutional Court confirms. It dealt with the question of whether legal persons are entitled to compensation for non-pecuniary damage caused by interference with their reputation. It concluded that the protection of reputation must be effective and practical. What exactly does this ruling imply and what impact does it have on legal persons?
Reputation can be defined as a positive opinion of a person or entity based on their actions, values and performance. In the legal environment, the protection of reputation has a legal basis in Article 10(1) of the Charter of Fundamental Rights and Freedoms, which guarantees the preservation of human dignity, personal honour, reputation and the protection of the name.
While some of these rights, such as human dignity and personal honour, apply only to natural persons, reputation and name are also protected in relation to legal persons. These entities are not mere legal fictions but instruments through which people pursue their interests. The reputation of a legal person may affect its legal relations, economic activity and property and non-property interests.
Tip: In a recent case, the Constitutional Court dealt with freedom of expression in the context of the spread of toxic addiction. Read how it ruled in a case about the dissemination of information about cannabis.
The case before the Constitutional Court concerned a dispute between the legal entity Milion Chvilek, z.s., and the general courts, which, in accordance with previous case law, decided that the legal entity was not entitled to compensation for non-pecuniary damage caused by unjustified interference with its reputation. The Supreme Court concluded that the provisions of the Civil Code do not allow legal persons to claim adequate compensation for non-pecuniary damage.
The legislator made a distinction between natural persons and legal persons – legal persons could only seek to restrain such conduct but could not seek compensation. However, the complainant considered this unconstitutional and therefore decided to turn to the Constitutional Court.
The Constitutional Court, which examined the case, focused on whether the provisions of section 135 and section 2894(2) of the Civil Code were not in breach of the constitutional order. The Full Court held that the right to protection of reputation is constitutionally guaranteed for legal persons and that the legal remedies provided for unfair competition, including the right to adequate compensation, must be applied by analogy to protect their rights.
Even within the European Union, the regulation of this issue is not uniform. The right to compensation is granted, for example, in Poland, Croatia and in most countries, but there is no blanket solution within the EU.
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The Constitutional Court has granted legal persons the right to good reputation and has given a new interpretation of civil law so that legal persons can also be entitled to claim compensation (monetary compensation).
Thus, the Constitutional Court ruled that the legal interpretation which prevents legal persons from claiming compensation for non-pecuniary damage is contrary to the Constitution. It also emphasized that the protection of reputation must be practical and effective, not theoretical and illusory. The impossibility of claiming compensation constitutes a restriction on constitutionally guaranteed rights which cannot be justified by the argument that it is a prevention of excessive claims.
The Court therefore held that measures similar to those in cases of protection against unfair competition should be applied. This includes the possibility of seeking compensation for non-pecuniary damage, which may include financial compensation or other measures to remedy the damage caused.
Rights related to the nature of humanity cannot logically be granted to legal persons, so some distinctions still need to be maintained.
In its decision, the Constitutional Court also avoided fears that a situation could arise where a legal entity threatens its critics that it will demand millions of euros in compensation if they speak out against it. This would put pressure on the legal entity ‘s critics and stifle their freedom of expression (as we know, for example, from the famous litigation in France).
The Constitutional Court has therefore warned against the abuse of this right, for example in the form of strategic lawsuits. It urged that each case should be judged individually. In cases of conflict between the protection of reputation and freedom of expression, it will be necessary to carefully assess which right prevails in a particular situation.
This decision thus strengthens the legal protection of legal persons and also underlines the need for a balanced approach to the effective enforcement of constitutionally guaranteed rights.
It is true, however, that it is very activist and does not respect the will of the legislator, which was previously correctly taken into account by the courts.
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