Transparency of the Regulatory System
Slovakia lacks full transparency in its regulatory system, and the long-term predictability of regulation affecting the business and legal environment is weak.
The Legislative and Information Portal of the Ministry of Justice Slov-Lex is a publicly accessible centralized online portal for laws and regulations, including information about inter-agency and public review processes. Draft bills proposed by ministries through a standard legislative procedure are available for public comment through the portal; however, the public is often granted little time to comment on draft legislature, and there is no obligation to react to comments prior to final submission to the cabinet. Additionally, MPs or parliamentary groups propose draft bills outside the standard participatory legislative procedure, which has no strict rules guaranteeing opportunities for public comment, thus rendering the legislative process less predictable and less transparent. In January 2018, the Cabinet approved a document proposed by the Economy Ministry called the Better Regulation Strategy – Regulatory Impact Assessment 2020 (RIA) which aims to further improve the business environment and reduce bureaucratic burden. The goal of RIA 2020 is to have better quality laws and regulations by providing a more transparent and open legislative process, including expert and public consultations, conducting systematic impact assessments of both proposed and existing regulations.
Regulations are not reviewed on the basis of scientific data assessments. Analytical institutes at some ministries (mostly under the value- for- money umbrella) produce data-driven assessments of state policies or big investment projects at their discretion. However, projects for assessment are selected by the institutes or by the ministries and they are not publicly available for comment. Assessments are often published once completed.
Slovakia still struggles with a lack of transparency in the regulatory processes in several industries. The business community has registered concerns that a number of regulatory bodies are not fully impartial and their decisions are unpredictable. A frequently changing and complex legislative environment is often cited as a business obstacle for both local and global companies.
The European Commission (EC) has criticized burdensome regulation in the energy sector, with its 2018 Slovakia Country Report saying the regulatory framework governing the energy sector “still has deficiencies”, pointing to the fact that “all household consumers and SMEs are considered as vulnerable consumers and therefore are supplied electricity and gas at regulated prices, which hampers market development.” Slovakia leads the EU in terms of share of regulated fees in the final price of electricity, supporting generous subsidies for both renewable energy and domestic lignite mining at the same time.
In early 2017, the Regulatory Office for Network Industries (URSO) played a central role in political turbulence caused by regulatory changes that caused dramatic price hikes for some customers. Quick cancellation of the changes and replacement of the Head of URSO damped the loudest complaints, although the election of the new URSO Head was criticized for being political and not producing a more independent regulator. In 2017 and early 2018, Slovak courts ruled against a controversial URSO regulation on the so-called G-component, which was forcing electricity producers to pay distribution companies for access to their distribution networks. The courts decided that the distribution companies must return those payments to producers, contributing to the perception of an uncertain and unpredictable regulatory framework.
The latest available OECD sectorial indicators on product market regulation show that Slovakia performs close to the OECD average in terms of regulatory burdens in electricity, gas, telecom, post, rail and road transport. The OECD praised Slovakia for having some of the largest improvements in sectoral indicators.
The Commercial Code (98/1991 Coll.) and the Act on Protection of Economic Competition (136/2001 Coll.) govern competition policy in Slovakia. The Protection of Competition Act prohibits bid rigging, and contains a leniency provision which allows the Anti-Monopoly Office to impose or reduce fines for entrepreneurs’ participation in a cartel. The reward for providing evidence of a cartel agreement is fixed at one percent of the total amount of fines imposed on cartel participants capped at EUR 100,000. Slovakia also transposed into its domestic legislation Directive 2014/104/EU of the European Parliament and of the Council on Certain Rules Governing Actions for Damages under National Law for Infringements of the Competition Law Provisions of the Member States and of the European Union Text with EEA relevance.
The Anti-Monopoly Office, a part of the EU’s European Competition Network (ECN), is an independent state administration body responsible for ensuring competition, including in state aid. It investigates cartel cases, monopolies, the abuse of vertical agreements, and the interactions between state and local governments. It also serves to enhance competition by representing Slovakia during international negotiations or fora on competition, supporting competition principles, and implementing other protection measures.
The Office for Public Procurement supervises and administers public procurement. Public procurement legislation is being reformed but challenges remain to fair competition and eradicating corruption. According to Transparency International Slovakia findings, more than 50 percent of public tenders in 2016 from all levels of government were either sole-sourced or had only two bidders. The Public Procurement Act (343/2015) implements three European directives and mandates a more centralized approach towards general government purchases, which are currently administered by the Interior Ministry. The Act also aims to increase the efficiency of public procurement through e-commerce and simplified access for SMEs. A September 2017 amendment to the Act should help streamline and further simplify procedures.
All state institutions, municipalities, districts and other entities managed by these institutions (such as hospitals and schools) must procure through an online platform. However, services and goods are capped that public institutions can purchase via this “e-market”; larger procurements are still managed through the traditional process. The Interior Ministry credits the platform with saving an average of 16 percent on purchases. The Ministry of Health has introduced price benchmarking and quality criteria for certain hospital equipment purchases, which reduces the risk of corruption and manipulation of procurement value. Despite these positive steps, aggregated procurement still appears to be under-utilized. New leadership selected for the Public Procurement Office in September 2017 concluded an agreement with the National Audit Office, Anti-Monopoly Office, and the Prosecutor’s General Office in order to be more effective in managing public spending and responding when fraudulent activities are identified.
There is no regulation on lobbying in Slovakia.
Please consult the following websites for more information:
Legislative and Information Portal Slov-Lex:
(Note: all legal acts and regulations mentioned throughout this report can be found on this portal).
Anti-Monopoly Office of the Slovak Republic:
Office for Public Procurement:
Electronic Auctions Portal:
International Regulatory Considerations
Slovakia is an EU Member State, thus, EU legislation and standards fully apply in Slovakia. The national regulatory system is enforced in areas not governed by EU regulatory mechanisms. Slovakia is a WTO member and the government’s latest notification to the WTO Committee on Technical Barriers to Trade occurred in April 2010. A Trade Facilitation Agreement (TFA) is an EU competence; the EU approved in 2015 a Protocol of Amendment to insert the WTO TFA into Annex 1A of the WTO Agreement. The EC notified the WTO about implementation of individual articles of the agreement throughout 2017 and 2018.
Legal System and Judicial Independence
Slovakia is a civil law country. The Slovak judicial system is comprised of general courts, the Supreme Court, and the Constitutional Court. General courts decide civil and criminal matters and also review the legality of decisions by administrative bodies. The 54 district courts are the courts of first instance. The eight regional courts hear appeals. The Supreme Court of the Slovak Republic is the court of final review in selected cases. The Specialized Criminal Court focuses on cases involving corruption, organized crime, serious crimes like premeditated murder, crimes committed by senior public officials, and crimes related to extremism, such as hate crimes. Enforcement actions are appealable; they are adjudicated in the national court system.
The Constitutional Court of the Slovak Republic is an independent judicial body that determines the conformity of legal norms, adjudicates conflicts of authority between government agencies, and hears complaints – including individuals’ and legal entities’ complaints regarding constitutional rights violations, e.g. human rights violations – and interprets the Constitution or constitutional statutes. The President appoints Constitutional Court Judges from a list of candidates elected by Parliament. Judges are appointed to 12-year terms.
The Judicial Council – the highest self-governing judicial body – nominates general court judges. Judges receive lifetime appointments from the President of the Slovak Republic and may only be removed for cause. The President can remove a judge upon reaching the age of 65 based on a proposal submitted by the Judicial Council. The judicial system remains independent of the executive branch, with the Justice Ministry exercising control of the judiciary’s budget and initiating legislation concerning the judiciary.
In practice, public confidence in the judicial system is among the lowest in the EU. Despite recent improvements, the justice system remains relatively slow and inefficient, and judges remain divided on the need for reform. Some judges have been suspected of manipulating the case assignment system, and critics suggest verdicts lack predictability and are often poorly justified. As a result, investors generally prefer international arbitration to resolution in the national court system. U.S. companies have complained of a leaked court decision before it was officially announced, and biased procedural decisions violating the principle of equal treatment.
Recent judicial reforms includes new rules for selection of judges, a new specialized court to deal with the enforcement agenda, and legislation on personal bankruptcy.
Property rights are guaranteed by the Slovak Constitution and the European Convention of Human Rights. The country has a written Commercial Code including contract law in the civil and commercial sectors. The basic framework for investment protection and dispute resolution between Slovakia and the U.S. is outlined in the 1992 U.S.-Slovakia Bilateral Investment Treaty.
Court judgments by EU member states are recognized and enforced in compliance with existing EU Regulations. Third country judgments are governed by bilateral treaties or by the Act on International Private Law.
Please consult the following website for more information:
U.S.- Slovakia Bilateral Investment Treaty:
Laws and Regulations on Foreign Direct Investment
Several government entities are involved in building an investment-friendly environment, including the Economy Ministry, the Finance Ministry, the Deputy Prime Minister’s Office for Investments and Digitalization, and the Justice Ministry.
The Deputy Prime Minister’s Office for Investments and Digitalization is currently drafting a National Investment Plan for 2018-2030, which will focus on investment programs in the green economy, including transport, ICT, energy, green infrastructure, waste management, climate change mitigation, R&D and innovations, healthcare, and education.
A whole range of Slovak laws and regulations affect the business climate and foreign direct investment. In 2017, the Slovak government approved several measures designed to improve the investment climate. In the area of tax collection, the Cabinet approved the Action Plan to Combat Tax Fraud 2017 – 2018, which includes 21 measures aiming at fighting tax evasion. The plan covers company mergers, registering sales from cash registers, excessive deductions, and indexing the reliability of taxpayers. As part of the plan, the Act on Tax Administration (563/2009 Coll.) was amended to include a “tax reliability index” starting in 2018 that will classify taxpayers as reliable, less reliable, or unreliable. The ranking aims to encourage and reward transparent tax behavior. The law also transposes an EU directive on access of tax authorities to information used to combat money laundering, and should improve efforts to fight tax fraud and increase transparency.
The 2017 amendment to the Commercial Code (513/1991 Coll.) addresses fraudulent company mergers and bankruptcies, and introduces greater responsibilities and liabilities for statutory bodies in order to tackle “straw man transactions.”
The cabinet approved the new “Act Against Bureaucracy” in February 2018. The goal is to reduce the bureaucratic burden for companies and private individuals as a part of continuing e-Government efforts. The act is based on the “once is enough” philosophy, obliging state agencies to share information and use digital communication rather than requiring multiple files of the same information with different government entities. The act is now awaiting Parliament’s approval.
In January 2018, the Cabinet approved a document proposed by the Economy Ministry called the Better Regulation Strategy – Regulatory Impact Assessment 2020 (RIA) which aims to further improve the business environment and reduce bureaucratic burdens. The goal of RIA 2020 is to have better quality laws and regulations thanks to a more transparent and open legislative process, expert and public consultations, systematic impact assessments of proposed regulations, including ex-ante approach, and ex-post evaluation.
In terms of international rankings, Slovakia ranked 39th out of 190 countries in the World Bank’s Doing Business 2018 ranking (down from 33rd), and 59th out of 137 in the 2017-2018 World Economic Forum’s Global Competitiveness Index (up from 65th in previous ranking). With the aim to further improve the business climate and reduce the regulatory burden, the Economy Ministry has proposed, and the Cabinet approved, a set of 35 measures divided into five priority areas: employment, public service, competitiveness, taxes, and business support. A second package of pro-business measures is currently being drafted by the Ministry.
The American Chamber of Commerce in Slovakia regularly issues valuable Legislative and Policy updates, covering a wide range of issues: http://www.amcham.sk/policy-advocacy/legislative-updates .
Competition and Anti-Trust Laws
The Anti-Monopoly Office of the Slovak Republic is an independent body charged with the protection of economic competition. The Office intervenes in cases of cartels, abuse of a dominant position, vertical agreements, and it also controls compliance of mergers with antitrust law. The key antitrust legislation regarding fair competition is the Competition Law (136/2001 Coll.). Slovakia complies with the EU competition policy.
All of the competition cases (abuse of dominant position and other competitive cases) are published online at the Anti-Monopoly Office’s website, see link below.
Please consult the following website for more information:
The Anti-Monopoly Office:
Expropriation and Compensation
The Slovak legislation related to expropriation has been criticized for being split among many different regulations and for favoring state and private investors’ interests. For example, the Constitution of Slovakia and the Commercial and Civil Codes permit expropriation only in the case of public interest, with a requirement to provide compensation. The law also provides for an appeal process. At the same time, the Act on Expropriation of Land and Buildings (282/2015 Coll.) sets legal conditions for expropriation, including that it must only occur to the extent necessary; be in the public interest; provide appropriate compensation; and the goal of expropriation cannot be reached through any other means.
In the past, significant expropriation efforts included the government’s plan to revert to a single-payer healthcare system and to expropriate two private health insurance companies (currently on hold). Expropriation most often occurs in the construction of road or industrial infrastructure.
ICSID Convention and New York Convention
Slovakia is a contracting state to the International Centre for Settling International Disputes (ICSID) and the World Bank’s Commercial Arbitration Tribunal (established under the 1966 Washington Convention). Slovakia is also a member of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitrage Awards, which obligates Slovakia to accept binding international arbitration. The Finance Ministry leads on bilateral investment treaty matters, and also manages and represents Slovakia in international arbitration. Investment contracts with foreign investors in Slovakia are covered by respective ministries depending on the sector, in most cases by the Ministry of Economy.
Investor-State Dispute Settlement
The basic framework for investment protection and dispute resolution between Slovakia and the U.S. is governed by our 1992 Slovakia Bilateral Investment Treaty.
To date, ten known cases of international arbitration have concluded. There is currently one ongoing international arbitration case.
An important milestone was reached in an arbitration case involving private health insurance company Achmea, which claimed it had suffered damages based on a 2008 law that banned private health insurance companies from paying dividends to their shareholders, severely limited allowable overhead costs, and required companies to direct their profits from public health insurance back into the healthcare system. In March 2018, the European Court of Justice (CJEU) issued a decision on a preliminary ruling from Germany’s Federal Court of Justice. The CJEU concluded that the arbitration clause in the Slovakia-Netherlands BIT applicable to the arbitration between Achmea and Slovakia had an adverse effect on the autonomy of EU law and declared that the 2008 Slovak law was incompatible with EU law. This CJEU decision is seen as a precedent affecting investment agreements between EU members, as it underscores the Commission’s long-standing position that investor-State dispute settlement is not viable between members. The ruling has no implications for commercial arbitration.
The legal system generally enforces property and contractual rights, but decisions may take years, thus limiting the courts’ relevance in dispute resolution. According to the World Bank Doing Business 2018 report, Slovakia ranked 84th out of 190 countries in the “enforcing contracts” indicator, with a 775 day average for enforcing contracts (up from 538 days in 2016). Slovak courts recognize and enforce foreign judgments, subject to the same delays. Although the commercial code generally appears to be applied consistently, the business community continues to cite a lack of legislation protecting creditor rights, corruption, political influence, lengthy procedures, and weak enforcement of court rulings as significant problems. U.S. and other investors privately describe instances of multi-million dollar losses that were settled out of court because of doubts about the court system’s ability to offer a credible legal remedy.
International Commercial Arbitration and Foreign Courts
There are two acts applicable to alternative dispute resolution in Slovakia – the Act on Mediation (420/2004 Coll.) and the Act on Arbitration (244/2002 Coll.). In addition, the Slovak Chamber of Commerce and Industry (SOPK) has a court of arbitration for alternative dispute resolution, and has a number of bilateral cooperation agreements with Chambers of Commerce or similar institutions abroad. Nearly all cases involve disputes between Slovak and foreign parties.
Local courts in Slovakia recognize and enforce foreign arbitral awards, subject to delays, thus limiting the courts’ relevance in dispute resolution.
A recent arbitration involving an SOE was the case when electric utility Slovenske Elektrarne (34 percent state-owned) sued fully state-owned Vodohospodarska Vystavba (VV) over a cancellation of a contract for operations of a major hydropower plant in Gabcikovo, signed between the two companies, and later cancelled by VV. In July 2017, the Vienna International Arbitration Center rejected SE’s EUR 600 million claim against the Economy Ministry (which owns VV).
Please consult the following websites for more information:
U.S.- Slovakia Bilateral Investment Treaty:
Belmont Resources claim:
The Law on Bankruptcy and Restructuring (377/206 Coll.) governs bankruptcy issues. The law allows companies to undergo court-protected restructuring and both individuals and companies to discharge their debts through bankruptcy. The International Monetary Fund credited the Act for speeding up processing, strengthening creditor rights, reducing discretion by bankruptcy judges, and randomizing the allocation of cases to judges to reduce potential corruption. Extensive amendments to the Act have been in effect since 2016 to prevent preferential treatment for creditors over company shareholders. Further measures limiting space for arbitrariness in bankruptcy administrators’ conduct and stricter liability rules for those responsible to initiate bankruptcy proceedings entered into force in January 2018.
Slovakia ranked 42nd out of 190 in the World Bank’s Doing Business 2018 ranking of the ease of resolving insolvency, with an average of four years for resolving insolvency.
Please consult the following websites for more information:
Slovak Banking Credit Bureau:
Non-Banking Credit Bureau: