Class actions are newly available in the Czech Republic
The closely watched innovative Class Actions Act entered into force on 1 July 2024, making it possible for groups of people to combine their claims based on the same or similar grounds into a single action and save on court costs.
The Act on Collective Civil Proceedings is based on the EU Directive on Representative Actions for the Protection of Collective Interests of Consumers (the RA Directive), requiring the establishment of an effective and efficient procedural mechanism for representative (class) actions to protect the collective interests of consumers (and small businesses), strengthen their position vis-à-vis businesses, and reduce the costs of court proceedings. A summary of the basic elements is provided here:
What are collective proceedings? Collective proceedings are court proceedings in which disputes concerning the rights or legitimate interests of several persons are heard and decided upon. This term includes the procedure followed in the proceedings and the enforcement of the decision issued in the proceedings.
Who does the law apply to? The act applies to consumer groups. Under the law, the groups can include not just non-business individuals but also small entrepreneurs with up to 10 employees and an annual turnover of up to CZK 50 million.
How to become a member of a consumer group? The law is based on an opt-in model. This means that consumers must actively register their claim. A group of at least 10 consumers is required for a class action to be admissible.
What claims are covered? The act pertains to claims of the same or similar factual and legal basis, to the extent that it is efficient for the rights and legitimate interests to be heard and decided upon in class proceedings. There is no limitation as to the type and nature of the claim (it is possible to demand, e.g., a monetary compensation, repair/replacement of goods, price reductions, cease and desist orders, the determination of legal relationships). Nor is there any limitation as to the value of the individual performance. However, only disputes concerning rights and legitimate interests that arose after 24 November 2020 shall be heard and decided upon in collective proceedings.
Who is entitled to bring a class action? Only non-profit organisations registered with the Ministry of Industry and Trade acting on behalf of a group of consumers (e.g., dTest or the Association of Czech Consumers) can be plaintiffs in the proceedings, and will have to have legal representation.
How much will it cost to engage in collective proceedings? There is no charge to join the proceedings. Participating consumers will bear no financial risk should the class action be unsuccessful. However, the plaintiff (a non-profit organisation) in successful proceedings will be entitled to a reasonable fee to be determined by the court. This may not exceed 16% of the adjudicated benefit or CZK 2.5 million if set as a lump sum (especially for non-financial benefits).
Which court will decide on the class action? The competent court of the first instance shall be the Municipal Court in Prague.
How will the proceedings be conducted? The procedure can be summarised as follows: (1) a group of at least 10 members with similar claims is assembled, (2) a class action is filed with the court by a non-profit organisation as the plaintiff, (3) the court assesses the admissibility of the class action, (4) the collective proceedings commence, (5) further consumers register their claims within the set deadline, (6) the court decides on the merits.
Where can I find the current proceedings? The law assumes the establishment of a register of collective proceedings, but this has yet to be made available.