The Czech Supreme Court Rules on Validity and Scope of Hybrid Arbitration Agreements | ZFZ Postcard Cases

The case at hand concerned a loan agreement guaranteed by a third party.

The agreement contained a clause permitting a plaintiff to pursue its claim in either arbitration or litigation. The creditor opted for litigation and obtained a payment order against both debtor and guarantor. The defendants objected, arguing that the clause was partially invalid and allowed parties to pursue claims only in arbitration.

Ultimately, the defendants appealed to the Czech Supreme Court. The appeal failed, with the court finding that non-exclusive arbitration clauses are fully valid under Czech law. The reasoning further stated that the guarantee is a mere unilateral act and the scope of the arbitration agreement concluded between creditor and debtor does not give rise to jurisdiction of arbitral tribunals in disputes with the guarantor.

Read more on this decision here (in Czech).