Dieselgate, “excessive” banking charges for loans or bond frauds – cases from recent years where the institute of collective actions would have facilitated and reduced the cost of pursuing claims. At that time, however, collective litigation was not possible under Czech law. Now we have this option in our country too – consumers can seek compensation for damage in collective proceedings.

Since 1 July 2024, the Act on Collective Civil Judicial Proceedings has been in force, which enables similar claims of at least ten consumers against the same defendant (entrepreneur) to be heard in one civil proceeding. It improves the position of consumers who, without the possibility of a collective action, would not, for whatever reason, have pursued their claim. However, only disputes arising after 24 November 2020 can be heard.

Whereas previously it was not worthwhile for individual injured consumers to pursue their claim in court (for example, due to time or financial costs), with the new regulation some of these risks are eliminated, the impact of the decision will be more serious for the entrepreneur, and greater media attention will be devoted to it due to the publication of information in the register of collective proceedings.

Collective actions will be heard at first instance by the Municipal Court in Prague, which has subject-matter and territorial jurisdiction. The defendant will, quite logically, be an entrepreneur, but the claimant will not be the individual injured consumers, but rather a legal person (non-profit organisation) designated for that purpose, which is entered in the register of authorised persons, either the Czech register maintained by the Ministry of Industry and Trade, or the European register maintained by the European Commission. Such a legal person must always be represented by a lawyer in the proceedings. The legal person will act in the collective proceedings in its own name in the interest of the group.

Individual consumers are therefore not parties to the collective proceedings (claimants), but they are granted certain procedural rights by law, such as the right to comment on the subject-matter and course of the proceedings, the right to information about the course of the proceedings, to raise objections to a proposed settlement, a proposal to amend the collective action or its withdrawal, and the right to inspect the file.

To commence proceedings on a collective action, several conditions must be met: (i) There must be no obstacle of lis pendens or res iudicata (obstacle of proceedings already in progress and a matter already decided). (ii) There must be at least ten injured consumers, both when the action is filed and during the proceedings; if the number of consumers decreases during the proceedings, the proceedings will be stayed. Consumers must themselves register for the collective proceedings (opt-in) through a standardised form. (iii) The injured persons must be represented by a designated non-profit organisation entered in the relevant register. (iv) Such an organisation must be represented by a lawyer throughout the proceedings.

Proceedings commenced in this way must be clearly and comprehensibly announced by the court, and must also be published in the register of collective proceedings (at https://hromadnerizeni.justice.cz/); the announcement must also contain information about the possibility of joining such an action, the manner in which this may be done, and the effects arising from such registration.

The new Act therefore improves the position of consumers vis-à-vis entrepreneurs or large corporations, and gives them a greater chance of achieving their claim than if each consumer were to pursue their right individually.

Jan Příhoda and Denisa Mikulášová

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