From 1st July 2024, a new institute called 'representative actions' was introduced into the Czech legal system based on an EU directive, with the aim to strengthen the protection of consumer rights. With the enactment of the new Act and the amendment to the Civil Procedure Code, class actions in consumer cases can now be filed with the Municipal Court in Prague.
A representative action may take the form of a class action, which is the subject of a separate Act or an action for the protection of collective consumer rights, regulated by the amended Civil Procedure Code.
The primary advantage of class actions is to improve the position of consumers in the event of a dispute since it will now allow individual consumer claims against the same trader to be a single procedure resulting in efficiency and a lower cost. Until now, consumers have often not pursued their claims in court at all, given the low sums involved, or have opted for an out-of-court dispute resolution. For example, opting through the Czech Trade Inspection Authority, whose decision is neither binding nor enforceable, is more a matter of seeking a compromise solution between the parties. Even if a collective action is initiated, the consumer can still pursue their claim against the same trader in a separate procedure.
It is important to mention, however, that only a registered non-profit consumer protection organization can be a claimant in these actions. The list of authorized organizations from the Czech Republic that can act in the interests of consumers is maintained by the Ministry of Industry and Trade and, within the European Union, by the European Commission. Aggrieved consumers and small traders would only have to opt in. For this purpose, the Ministry of Justice has set up a website with a list of pending proceedings and information on how to apply and the status of the proceedings.
In addition to consumers, small traders will also be able to opt-in to class actions. While a consumer is defined as any natural person acting outside their business or profession, a small trader can also be a legal entity if it has less than 10 employees, and if its annual turnover or annual balance sheet total does not exceed CZK 50 million.
Both types of actions may also be initiated for claims that are not based on a previous contractual relationship between the trader and the consumer or the small trader. In these cases, the claims typically arise from a breach of the law.
While in the Czech Republic class actions are currently limited to consumer disputes, in some other European countries they can also be brought in employment disputes or in claims arising from infringements of the right to a sustainable and healthy environment.
In conclusion, it is important to note that a class action can only be filed for disputes arising after the effective date of the Act, i.e. after 1st of July 2024, and therefore not for older disputes.
