Czech Republic
Implementation of the European Directive on representative actions
Which national regulations transpose the Directive into national law?
The European Union’s Directive on representative actions for the protection of the collective interests of consumers (Directive (EU) 2020/1828) is transposed into Czech law primarily through the new Act on Class Action[1] (zákon o hromadném občanském řízení soudním) which was adopted in June 2024 and most likely will be in force starting from 1 July 2024.
Also some aspects are transposed via Act on Consumer Protection (Act No. 634/1992 Coll., zákon o ochraně spotřebitele) and related amendments to other relevant legislation such as the Civil Code (Občanský zákoník) and the Civil Procedure Code (Občanský soudní řád).
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[1] At the time of writing, the Act has not been published yet and thus has not been assigned a number.
Who is entitled to bring a representative action?
Under the new act, representative actions can be brought by qualified entities, which are typically consumer protection organizations. These entities must meet specific criteria set out by the national regulations, including demonstrating that they have been actively involved in the protection of consumer rights for at least 12 months and that they are non-profit in nature. The Ministry of Industry and Trade maintains a list of these qualified entities.
What can be the subject matter of a representative action?
The subject matter of a representative action can include any violation of the rights of consumers under EU and national consumer protection laws. This may involve cases related to unfair commercial practices, product safety, digital services, financial services, data protection, and more. Essentially, it encompasses any infringement that affects the collective interests of consumers.
Which individual consumers are represented in a representative action?
Individual consumers represented in a representative action are those who are affected by the same or similar infringements of their consumer rights. Also small business with fewer than ten employees and with annual turnover or annual balance sheet sum not exceeding CZK 50m (approx. EUR 2m) can participate in the class action as members of the class. Therefore, also small businesses will be able to jointly bring their claims against corporations.
When filing the action, only ten class members need to be identified. The others can then join. The proceedings is based on opt-in principle – the final decision will be binding only for those who expressly joined the proceedings.
What will be the outcome of a representative action?
The outcome of a representative action can vary, but it typically includes remedies such as compensation for damages, orders to cease the infringing activity, and measures to ensure future compliance.
Are there particular rules for the disclosure of evidence?
Yes, there are particular rules for the disclosure of evidence in representative actions. These rules aim to balance the need for effective redress with the protection of sensitive information. The Czech Civil Procedure Code includes provisions for the disclosure of evidence, requiring parties to provide relevant information while also considering confidentiality and the proportionality of the request.
Courts can order the disclosure of evidence necessary for substantiating the claims. If the party does not comply with disclosure order, the court might consider the statement of other party related to the disclosure as proven.
Also, it is possible to fine the non-complying party up to CZK 5m (approx. EUR 200,000).
Is third party funding possible?
Third party funding is possible under Czech law. This means that entities unrelated to the dispute, such as specialized litigation funding firms, can finance the litigation in return for a share of the proceeds if the action is successful. This helps alleviate the financial burden on consumer organizations and enhances access to justice for consumers.
There is also a safeguard against funding by the entity connected to the defendant – the court checks the source of funding and if it is from the entity connected to the defendant, the court can order claimant to reject such funding.
Conclusion
The EU Directive on representative actions for consumer protection (Directive (EU) 2020/1828) is implemented in Czech law primarily through the brand new Act on Class Action, most likely effective from July 2024.
Under this Act, only qualified entities, non-profit consumer protection organizations active for at least 12 months, can bring representative actions. These actions can address various consumer rights violations and represent both consumers and small businesses. Outcomes include compensation and injunctive relief. Evidence disclosure rules ensure balance and compliance, with fines for non-compliance. Third-party funding is allowed, with safeguards against conflicts of interest.
Contact
Stanislav Dvořák
T: +420 255 706 515 E: stanislav.dvorak@eversheds-sutherland.cz
Eliška Miklíková
T: +420 255 706 516 E: eliska.miklikova@eversheds-sutherland.cz
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