Mounting Problems for the Czech Government in Diag Human Arbitration

Hana Sediva was a little known Czech member of parliament for the Social Democratic Party (CSSD) between 2002 and 2010. Her legislative initiatives neared zero, she missed more voting than anybody else in the Chamber and she received regular bad press for her weekly flights between Prague and her home town that were paid by the Parliament.

 Caption Hana Sediva (centre) Before Her Appointment as a Judge

In 2003 she was elected as Chairwoman of the Special Parliamentary Investigative Commission to look into the notorious arbitration case between the blood plasma trading company Diag Human and the Czech Republic. In 2001 the state had to pay the first part of a damage compensation worth 327 million Czech crowns and the arbitrors worked to establish a final sum, calculated later based on 2007 Ernst & Young valuations as CZK 8.3 billion. In 2003 the new Health Minister Marie Souckova used this highly politicized case in her fight against the party leader, later European Commissioner Vladimir Spidla. The Parliamentary Investigative Commision in her eyes was a safe vehicle through which to show Spidla as a weak leader. Hana Sediva chaired this commission for fifteen months of its existence and was caught by the press and criticized in a 2008 Final Arbitration Award text for openly manipulating the evidence, paying witnesses and using unlawful means to provide evidence to one side of the arbitration.

Diag Human appealed to the Court in 2005 and filed a libel case against the Parliament for the work of this commission. But after six years there has still been no reaction from a judge. The Parliament’s lawyers objected with the spurious argument that members of the parliament represent the people and that "the people" cannot be sued for anything…

Before the elections in 2010, Hana Sediva realized that her growing unpopularity made her unelectable and organized a curious deal. In exchange for her resignation before the end of her MP term, the Justice Minister agreed with the President to appoint her as a judge, cutting many corners along the way, as Sediva did not fullfill legal education and practice requirements. She received a position of a Prague 6 district judge – and soon shocked her long term oponent – the arbitration claimant Diag Human – as a presiding judge in one of the legal disputes connected to arbitration.

Under normal circumstances, the automatic case delegation system apoints the case to the judge based on a minute by minute changing matrix according to when the case appears in the court office. However, no such protocol is to be found in this case. Furthermore, Judge Sediva, instead of declaring her personal conflict of interest in this case from a very start,  made several clerical mistakes and at the end sent the case to the wrong court. As a result the case was blocked for many months.

Even now, more than two years after losing the arbitration, the Czech state (or more accurately a group of individuals using the state as a cover for their own intiatives) is refusing to accept the verdict. With growing interest payments on the compensation it is becoming increasingly difficult. The Czech Anti-Fraud Police are in open conflict with Prague High Prosecutor’s Office after its October 2010 banning of their investigation into corruption involved in this case as "unlawful and unfounded", just before police wanted to issue official indictments against a former health minister Tomas Julinek and his deputy Marek Snajdr.

Former Health Minister Marie Souckova, who deliberately blocked the handover of the arbitration case to a newly established state financial prosecutor’s office, is facing the trial for embezzlement and misuse of power. The trial has been dragging on for more than six years. The lawyer hired by Souckova to run the case against Diag Human on behalf of the Czech republic, was sentenced in 2010 to four and a half years in jail for embezzlement of clients’ funds in 2009.