The Government of the Czech Republic approved on 16 March 2015 a draft amendment to the Act amending the Act on Consumer Protection and certain other acts. The objective of the planned amendment is, inter alia, to ensure correct and complete transposition of directives and regulations of the European Union.

As is indicated by the title of the EU legislation, in addition to increasing consumer protection, the use of out-of-court resolution of disputes arising from consumer contracts is also to be expanded. At present, there are several options for resolving disputes between traders and consumers outside the court system. In addition to arbitration proceedings and mediation, which may be relatively costly, there is the Financial Arbiter (Finanční arbitr) for resolving disputes in the area of financial services, the Energy Regulatory Office (Energetický regulační úřad) for the energy sector, and the Czech Telecommunication Office (Český telekomunikační úřad) for the area of electronic communications and postal services (hereinafter also referred to as “specialised entities”). Consumer disputes can be resolved out of court before specialised entities (often at lower costs); however, each of the specialised entities has a narrowly defined subject-matter jurisdiction. In accordance with the requirement to adopt the amendment in question, which would be in compliance with EU legislation, it was necessary to seek an entity which would decide other (most numerous) disputes arising from consumer contracts, so that these disputes would not have to be resolved primarily through court proceedings. In this respect, EU legislation leaves it to Member States to choose the manner and form of resolution of consumer disputes outside their court system. The Government ultimately approved a version of the Act in which the Czech Trade Inspection Authority (Česká obchodní inspekce) assumes the role of “resolver”.

The amendment to the Act on Consumer Protection defines the scope of resolution such that the Czech Trade Inspection Authority will resolve consumer disputes arising from purchase contracts or contracts for the provision of services, with certain exceptions. The jurisdiction of the Czech Trade Inspection Authority would thus focus primarily on disputes concerning sales in shops, manufacture of goods, repair and modification of goods, purchase contracts and disputes related thereto, disputes arising from contracts for work and disputes arising from loans where one of the parties is a consumer.

Unlike decisions of specialised entities, the outcome of out-of-court dispute resolution would not be enforceable and it would not be possible to conduct enforcement directly on the basis thereof. The objective of this new regulation is also to lead traders and consumers to an agreement which would ultimately be concluded in writing. If the parties failed to comply with this agreement, it would be necessary to turn to a court, which would directly impose an obligation on the party to the agreement to perform under that agreement to which it committed itself. Similarly to the Civil Code (občanský zákoník), the seller (trader) will have an obligation to inform the consumer clearly and comprehensibly and in an easily accessible manner about the body for out-of-court dispute resolution, according to which body a potential dispute may fall under. For example, a trader offering loans concluded by means of distance communication should inform the consumer of the possibility of resolving a potential dispute before the Financial Arbiter (if the dispute concerns, for example, the return of an incorrectly charged fee for concluding a loan agreement) or before the Czech Telecommunication Office (if the dispute concerns the use of a means of distance communication).

Out-of-court resolution of a consumer dispute would be initiated only upon application by the consumer. As outlined above, this is not court or administrative proceedings; therefore, the Act uses the term “resolution” (řešení). Within this resolution, the Czech Trade Inspection Authority acts as a so-called conciliator and attempts to lead both parties within so-called conciliation (konciliace) to conclude an agreement. Resolution can only be initiated if the matter has not already been resolved otherwise. The consumer must initiate resolution no later than one year from the date on which he or she first asserted the right which is the subject of the dispute with the seller. The initiation of resolution suspends the limitation period for asserting this right through court proceedings. However, the initiation of proceedings does not prevent both parties from asserting their rights through court proceedings. Resolution of the dispute must be concluded no later than 90 days from its initiation; only in the case of particularly complex disputes may the period be extended, but by a maximum of a further 90 days. Out-of-court resolution of a consumer dispute ends with the aforementioned agreement of the parties or by other expressly stipulated means. Resolution of the dispute is not subject to a fee and each party bears its own costs associated with this resolution.

The positive aspect of this new concept is intended to be the speed of dispute resolution and the effort to reach an agreement between the trader and the consumer. It is also assumed that there will be an overall reduction in costs associated with consumer disputes and a reduction in the incidence of consumer disputes at general courts, without disrupting relations between traders and consumers. However, it can be assumed that, given its activities to date, the Czech Trade Inspection Authority may favour consumers when resolving disputes and thereby place the seller in situations in which he or she will not be willing to agree to an agreement. Traders may also legitimately fear that information from resolved disputes may be used for the potential initiation of administrative proceedings against the trader for breach of the Act. However, only after the possible introduction of this system will it become apparent whether this method of out-of-court dispute resolution will be practical and whether consumers will utilise it. At present, the amendment to the Act on Consumer Protection in question is in the process of being approved by the Chamber of Deputies of the Czech Republic (Poslanecká sněmovna České republiky) after the first reading. Given the nature of this amendment and the ever-increasing effort to strengthen consumer protection (including reducing their costs in disputes), it can rather be assumed that this amendment will be approved.

Alžbeta Hudáková

Law Firm Mašek, Kočí, Aujezdský www.e-Advokacie.cz – on-line legal advice

This text was originally prepared by the law firm Mašek, Kočí, Aujezdský in cooperation with the Association for Electronic Commerce (APEK) as legal bulletin No. 5/2015 intended for members of this association.

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