On 1 April 2012, an amendment to Act No. 216/1994 Coll., on Arbitration Proceedings and the Enforcement of Arbitration Awards, as amended (hereinafter referred to as the “Act on Arbitration Proceedings”), published under No. 19/2012 Coll. (hereinafter referred to as the “Amendment”), entered into force. The Amendment to the Act on Arbitration Proceedings strengthens the position of the consumer and aims to prevent arbitration proceedings from being abused to the detriment of the consumer. In this respect, the provision of Section 3 of the Act on Arbitration Proceedings has been significantly amended. From 1 April 2012, it is no longer sufficient for agreements between the contracting parties that potential disputes arising from consumer contracts will be resolved in arbitration proceedings for such an agreement in the form of an arbitration clause to be part of the terms and conditions governing the main contract. Under the sanction of invalidity, the conclusion of an arbitration agreement as a separate contract is now required. The Amendment further stipulates what essential information the arbitration agreement must contain. This concerns the obligation to include in the arbitration agreement precise, truthful and complete information about the arbitrator or that a permanent arbitration court is deciding, about the manner of commencing and the form of conducting the arbitration proceedings, about the arbitrator’s remuneration and the anticipated types of costs that may arise for the consumer in the arbitration proceedings and about the rules for their award, about the place of the arbitration proceedings, about the manner of delivery of the arbitration award to the consumer and about the fact that a final arbitration award is enforceable. If the power to decide disputes arising from consumer contracts is entrusted to a permanent arbitration court, this requirement is also satisfied by reference to the statutes and rules of permanent arbitration courts.

The position of the consumer is also strengthened by the fact that the trader has an obligation to provide the consumer with adequate explanation sufficiently in advance of concluding the arbitration agreement so that the consumer is able to assess what consequences the conclusion of an arbitration clause may have for him. Adequate explanation means explanation of all the consequences of the arbitration agreement.

Another significant change in favour of the consumer is the addition to Section 25 of the Act on Arbitration Proceedings of the sentence “In disputes arising from consumer contracts, arbitrators shall always be governed by legal regulations established for the protection of consumers.” This sentence means, compared to the previous legal regulation, that after the Amendment enters into force, the arbitrator will be bound in his decision-making by legal regulations for the protection of consumers and will no longer be able to depart from these regulations, even in the event that he is authorised by the parties to decide according to the principles of justice.

The Amendment also extends the grounds for setting aside an arbitration award by a court. This is again a regulation intended to prevent the consumer from being deprived of the increased protection afforded to him by legal regulations. If the arbitrator decided a dispute arising from a consumer contract in breach of legal regulations established for the protection of consumers or in manifest breach of good morals or public policy, the court will be able to set aside the arbitration award. On these grounds, the consumer may also submit a motion to stay the ordered enforcement of the arbitration award.

A further change introduced by this Amendment is the increase in the qualification requirement for the person of the arbitrator who will be appointed to decide disputes arising from consumer contracts. An arbitrator authorised to decide disputes arising from consumer contracts will now be required to have university education in the field of law. The Ministry of Justice will maintain a list of arbitrators who may be appointed by arbitration agreement for deciding consumer disputes.

In conclusion, we state that the changes which the Amendment brings to the Act on Arbitration Proceedings aim, in addition to strengthening the position of the consumer, also to familiarise the ordinary consumer more closely with arbitration proceedings and thereby also to increase consumers’ confidence in this method of dispute resolution. However, it is necessary to draw attention to the fact that when preparing an arbitration agreement, increased attention must be paid to the formulation of its substantive aspect, as the Amendment places relatively high demands in this respect. If the arbitration agreement did not contain regulation of all the statutory requirements, this would be a reason for the court to set aside any arbitration award issued on the basis of this agreement.

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