On 1 July 2024, the new Act on Class Proceedings (the "CCP") entered the Czech legal environment, bringing a long-awaited change in domestic civil procedural law. We dare to say that this is a revolutionary change and one of the most significant in the last few years. 

What is it about?

According to the Civil Procedure Act, groups of consumers can assert their claims against a person who is an entrepreneur. Contrary to the assumptions of the professional public, however, the ZHSŘ considers not only non-business persons as consumers, but also small entrepreneurs who meet the prescribed conditions - the entrepreneur employs less than 10 persons and his annual turnover does not exceed CZK 50,000,000. 

Thus, a consumer (including a small entrepreneur) may assert his claim arising from the relationship between the consumer and the entrepreneur on the basis of a class action. The claim is not limited in the amount of the benefit or otherwise. The only condition is that all the claims in a class action have a similar factual and legal basis. 

Although the CCHR has only been in force since July this year, disputes concerning rights or legitimate interests that arose after 24 November 2020 can be heard and decided on the basis of the CCHR. Consumers can thus also assert their claims retroactively, which is a way of breaking the principle of retroactivity of the law.

The substance of the proceedings

Consumers can join a class action on the basis of the so-called opt-in principle, which relies on consumers actively opting in. Consumers must thus opt-in themselves with their claim. For the action to be admissible, at least 10 consumers must register their claims. Other consumers can join the class action by signing up, all of whom have the status of 'interested class member' in the class proceedings. Although the class members are not parties to the proceedings, they have certain rights which they can use to influence the class proceedings. A member of the group is entitled to comment on the proceedings, to inspect the file, to oppose motions, to comment on the appeal, etc. 

A class proceeding is practically divided into two parts. In the first part, the court assesses the admissibility of the class action, and in the second part, consumers file their claims. The jurisdiction of the court is also specific, as the CCP provides that the Municipal Court in Prague has jurisdiction in the first instance.

Who can be a plaintiff

Due to the nature of class proceedings, the plaintiff can only be a legal person registered in the list of persons entitled under the Consumer Protection Act, or several such persons together. Typically, these will be consumer organisations, for example the Association of Czech Consumers, dTest, the Consumer Defence Association and others. Such a plaintiff must be represented by an attorney under the CCP.  

Register of collective proceedings

An important part of the new legislation is the introduction of a register of collective proceedings maintained by the Ministry of Justice. The Municipal Court in Prague publishes in the register information about the commencement of proceedings and sets a deadline within which consumers may file their claims. During the course of the collective proceedings, all relevant information, including the decision on the action itself, will be published in the register.

What is the importance of the CPR? 

The importance of class actions can be well illustrated by the Dieselgate case. In that case, more than 7,000 owners of diesel cars in the Czech Republic sought compensation for their vehicles whose software circumvented the homologation emissions measurements. The courts dismissed this lawsuit last year precisely on the grounds of lack of standing to sue, as the action was brought by a consumer protection association. If the CPA had already been in force at that time, the courts would have been obliged to deal with the action on the merits.

According to the legislator, the introduction of the institution of class actions into Czech law is intended to balance the balance of power between consumers and entrepreneurs. The existing legislation significantly limited the ability of individual consumers to defend their rights in court proceedings. Particularly for smaller claims, the financial burden of court proceedings was disproportionate to the amount of the claim. Consumers should therefore be able to assert their rights more effectively under the new legislation. On the other hand, however, there is also a risk of abuse of this institution through vexatious actions and the danger that, particularly for smaller businesses, such proceedings may be liquidating. Only time will tell how the enforcement of consumer claims will actually work in practice. Based on the practical experience of our lawyers, we will keep you informed.