Enforcing claims against "dishonest" traders is currently very difficult, if not impossible, for many consumers (or small entrepreneurs). This is set to change with a new law on collective civil proceedings, which was definitively approved a few days ago.
Under the new law, it will now be possible to initiate so-called collective (class action) civil proceedings for a larger number of claims from consumers (for the purposes of this law, small entrepreneurs with fewer than 10 employees and a turnover of up to 50 million CZK are also considered consumers).
In a collective proceeding, disputes concerning rights or legitimate interests arising from the relationship between consumers and traders can be heard and decided. The individual claims must have a similar factual and legal basis. Claims arising after November 24, 2020, can be asserted.
The City Court in Prague is the court of first instance for collective proceedings. However, the claimant in a collective action can only be a legal entity registered in a list of authorized entities, which must, among other requirements, have actively worked in the field of consumer protection for at least two years and be independent and non-profit. Such a claimant must be represented by an attorney in the collective action.
The claimant acts in its own name in the collective proceeding but defends the rights of the entire group of consumers who have joined the action. These consumers are considered "interested members of the group," and in order for the collective action to be admissible, there must be at least 10 participants. However, individual consumers lose their procedural rights concerning the management of the collective action. They retain the right to information, to inspect the case files, to object to certain actions, and to express opinions.
The initiation of collective proceedings is effectively divided into two parts. In the first part, the admissibility of the collective action is assessed, and in the second, individual consumers register their claims.
Individual consumers base their participation in the collective action on a registration. The law thus provides for an "opt-in" method, where consumers must actively engage with their rights and, if necessary, join the proceedings. A register of collective actions is still to be created to ensure adequate public awareness (and potential harmed consumers).
The law now provides that the court will publish the initiation (i.e., the admission of the collective action) in the collective actions register and set a deadline (2-4 months) for individual consumers to register (via a pre-prepared form). The claimant is then required to publish information about the initiation and progress of the collective proceedings in a manner prescribed by the court, including on their website. The law also foresees the use of mass media (typically national and local media, as well as radio and TV broadcasts).
The register of collective actions will be used throughout the duration of the collective proceeding. It will contain a chronological list of individual collective actions where the admissibility of the collective action has been decided. It will also include, among other things, documents and other data significant for the proceedings. The final decision on the collective action (the judgment or other decision issued in the collective proceeding on the merits of the case, which concludes the proceedings) will also be published in the register.
The law also addresses the costs of the collective proceedings in a unique way. If the claimant is successful in the proceedings, they are entitled to reimbursement of costs from the defendant, while group members (i.e., consumers who have joined the collective action) can only be required to cover the costs of the collective proceedings in exceptional cases, and only if they caused the costs through their own actions. The court may also grant the claimant (the consumer protection organization) a reasonable fee, which the law specifies must not exceed 16% of the awarded compensation or 2.5 million CZK if a flat fee is set.
Overall, it can be said that the proposed law aims to introduce a suitable procedural tool for the collective protection of individual rights into the Czech legal system—something that is currently lacking and which both the general public and legal experts have long called for. Whether it will meet expectations will only be seen through practice and time. However, the start is very promising.
We used a publicly available AI translation tool to translate this article from Czech to English. Please contact us if any of the above information is unclear to you.
