Part 1. Introduction to the issue of collective proceedings
On 1 July 2024 the following entered into force Act No. 179/2024 Coll., on mass civil court proceedings (“theAct“), which introduces a completely new procedural institution into our legal system so-called collective proceedings . The obligation to introduce this regulation for the Czech Republic comes from Directive (EU) 2020/1828 of the European Parliament and of the Council on representative actions for the protection of consumers’ collective interests and repealing Directive 2009/22/EC of 25 November 2020, which the Act transposes, however, it should be noted that it is considerably late, as its transposition was to take place by 25 December 2022 at the latest.
The Explanatory Memorandum to the Act states that the aim of the collective proceedings is to ensure access to justice for those consumers who may not find it worthwhile to enforce their rights individually, e.g.: in the case of small claims. These consumers often do not even assert their claims and, if they do, they do not have the possibility to appeal in the case of disputes with a value of less than CZK 10,000 and in the case of disputes with a value of less than CZK 50,000. Associations of several (at least ten ) of consumers, where the financial and time requirements for individual consumers are significantly smaller, then motivates these consumers to pursue claims in class proceedings that they would not pursue individually.
According to Section 4 of the Act, only disputes arising from legal relations between consumers and businesses will be heard and decided in collective proceedings. The courts will not only decide on actions for performance in collective proceedings, but also on actions for a declaration of liability. The Act also contains its own definition of both consumer and entrepreneur and thus does not refer only to the provisions in question Act No 89/2012 Coll., the Civil Code.
According to the Act, a consumer is “anatural person who acts outside the scope of his business or profession“. However, since the Act also considers a consumer to be “an entrepreneur who employs less than 10 persons and whose annual turnover or balance sheet total does not exceed CZK 50,000,000“, the concept of consumer under the Act is significantly broader than that contained in the Civil Code. This concept thus enables a greater number of persons to assert their rights against the entrepreneur in the context of a collective procedure.
The definition of an entrepreneur under the Act, which reads “a natural or legal person who, alone or through another, acts in the course of his or her trade, business or independent exercise of his or her profession“, is more similar to the concept of an entrepreneur under the Civil Code.
The Act itself is based on the so-called opt-in principle, where the consumer must actively sign up for membership in the group. If they do not do so, they still have the right to pursue their claims in individual proceedings. On the other hand, by opting in to the class, the consumer loses his right to pursue the claims in question in an individual action.
Finally, it is also worth adding that consumers will be able to assert their rights and legitimate interests in class actions of those disputes arising after 24 November 2020 .
If you would like more information in this regard, please do not hesitate to contact us.
This article is for informational purposes only and does not constitute legal advice or guidance for any particular case.