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Major amendment to Code of Administrative Justice – evolution or revolution?

After more than twenty years, the Code of Administrative Justice is about to undergo a significant amendment to reflect the decision-making practice of the Supreme Administrative Court (SAC), and to overcome or eliminate the shortcomings of previous inconsistent legislative amendments. According to the legislators, proceedings before administrative courts should be more efficient and economical. However, the question remains whether this will not be to the detriment of the protection of the subjective public rights of natural and legal persons.

Reimbursement of costs of proceedings to administrative authorities

Currently, administrative authorities are not entitled to compensation for their costs of proceedings before administrative courts if they win the case: according to the current case law, the state (executing public administration) has a sufficient apparatus and personnel to participate in the court proceedings, and thus does not incur costs beyond what is common in the normal course of their activities. This should now change: referring to the principle of equality of all parties to proceedings, the amendment proposes that if a case is lost, the plaintiff (legal or natural person) will have to reimburse the administrative authority for the costs of the proceedings. Submitting the decisions of administrative authorities (e.g., the Appellate Financial Directorate in tax cases) for judicial review could thus become rather costly should one fail to succeed in the proceedings.

Limited review by the SAC

Currently, if the plaintiff is unsuccessful in the proceedings before a regional court, they can lodge a cassation complaint with the Supreme Administrative Court. Depending on the cassation objections, the SAC will examine the case from both factual and legal perspectives. The amendment proposes to limit the scope of cassation objections to legal objections only. This may be particularly problematic in tax disputes, where regional courts often uphold the unlawful conduct of tax authorities (e.g., when taking evidence). The SAC then challenges this, stating that the facts of the case were ascertained unlawfully, and returns the case to the regional court (or directly to the tax authority) for further proceedings, where the opinion of the SAC is binding. Under the amendment, this would no longer be possible, as the SAC would not be able to review the regional courts’ judgments in terms of facts of the case and would have to look for errors solely in the legal assessment of the case. The grounds for the inadmissibility of a cassation complaint are also to be extended.

Electronisation of justice

Proceedings before an administrative court are typically initiated by an action filed by a party to the proceedings. Under the current legislation, this must be done in paper or electronic form with an electronic signature. If the participant makes a submission lacking their electronic signature, they must also deliver it to the court in documentary form, otherwise it will be disregarded. This is now to change - the amendment proposes that both forms of making a submission should be treated equally. Thus, if a party makes a submission, e.g., by email and does not attach an electronic signature, the court shall ask them to provide it. Also, persons who have a data mailbox will be obliged to act through that data mailbox in court proceedings.

What next?

The legislator's aim is to shorten and streamline court proceedings. As proposed, the amendment may indeed strengthen the position of the administrative authorities to the detriment of natural and legal persons. This would, among other things, have a serious impact on tax disputes in which the taxpayers (natural or legal persons) often find justice only in proceedings before the Supreme Administrative Court. The amendment is still at the very beginning of the legislative process and the proposed regulation may yet undergo substantial changes. Given its major impact, we will keep you informed about its developments.