On 1 July 2024, the long-awaited and discussed Act on Collective Civil Court Proceedings and related amendments to other regulations, in particular the Code of Civil Procedure, entered into force. The new regulation is based on the EU Directive on representative actions for the protection of the collective interests of consumers. It enables consumers and small entrepreneurs to sue the same entrepreneur jointly in one set of court proceedings. Collective actions are a fundamental novelty in the Czech legal order, and we therefore consider it appropriate to summarise in this legal circular some basic information on this issue and its potential impact on internet traders. Although the impacts of the new legislation on practice will not be immediate.

Collective proceedings can be understood as one set of court proceedings in which disputes of a group of at least 10 consumers (i.e. natural persons acting outside the scope of their business or profession) in relation to one entrepreneur are to be heard and decided. For the purposes of the new regulation, consumers are also considered to be small entrepreneurs with fewer than 10 employees and an annual turnover of up to 50 million crowns. The claims of consumers who wish to jointly commence proceedings must be based on a similar factual and legal basis. The action on behalf of consumers is filed with the Municipal Court in Prague by qualified non-profit organisations. These must be registered on a list maintained by the Ministry of Industry and Trade and meet other statutory conditions (it is anticipated that these will be organisations such as dTest or the Czech Consumers Association). They are required to be represented by a lawyer in the proceedings.

The main risk for traders lies in the fact that collective actions may make it possible to resolve even trivial disputes before a court where, under the existing regulation, it would not be worthwhile to file an action in view of the costs of the proceedings. This means that primarily these will be situations where multiple consumers have been affected by the same unlawful conduct of a trader. They may in particular seek payment of an amount, repair of goods, withdrawal from a contract or refraining from certain conduct. Consumers may participate in the proceedings free of charge and bear no financial risks in the event of failure.

The proceedings may specifically concern, for example, failure to fulfil a trader’s information obligations in relation to goods being sold. The trader’s obligations in connection with complaints may also be significant, the conditions, scope and manner of which the trader must also duly inform consumers. Consumers may also assert claims in the area of personal data protection or the sending of commercial communications, etc., by means of a collective action.

The collective claimant may further seek reimbursement of costs from the trader, including costs for publishing information about the collective proceedings and costs related to the receipt of applications. A trader who has not been successful in the dispute may also be ordered by the court to pay remuneration for representation by a lawyer, which may considerably increase the costs of the collective proceedings.

The new regulation also establishes a public register of collective proceedings available online, where collective proceedings will be recorded. In particular, identification data of the parties to the proceedings, the subject matter of the proceedings, and certain key documents, primarily judgments, are to be published therein. A filed collective action may therefore obviously also represent a reputational risk for internet traders. Statutory conditions for its admissibility are intended to protect against abuse of the collective action institute. These include in particular the obligation of the court to verify whether the claimant is not acting in a conflict of interest or with abusive intent, and is not financed by a competitor of the defendant. Only data on proceedings where the court has decided on the admissibility of the action are published in the register of collective proceedings.

In conclusion, it may be added that disputes arising after 24 November 2020 may be heard in collective proceedings.

Cecílie Sekalová Josef Aujezdský

This text was originally prepared by the law firm Mašek, Kočí, Aujezdský in cooperation with the Association for Electronic Commerce (APEK) as legal circular No. 07/2024 intended for members of this association.

This text was translated from Czech to English using an AI translator.