As set out in more detail in other sections, Czech legislators are currently discussing introducing the concept of collective redress into the Czech legal system following, and on the basis of, European Directive (EU) 2020/1828 of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers (the RAD). There is currently no uniform and comprehensive regulation of collective redress in the Czech Republic.

There have been some legislative attempts to introduce complex regulation of collective redress in the Czech Republic since 2017, leading to the draft Act on Collective Redress that was presented to Parliament by the Ministry of Justice in 2020. As a consequence of the parliamentary elections in 2021 and the subsequent change in the government, this draft was withdrawn and the current government has presented a new regulation of collective redress – Act on Mass Civil Court Proceeding together with amendments to the Code of Civil Procedure (the “Draft Legislation”). The Draft Legislation takes a slightly more conservative and limited approach to the introduction of this concept into the Czech legal system as opposed to the previously proposed text. According to the Draft Legislation, mass claims will be limited to consumer disputes only and the opt-out system will not be included. However, the proposal has only recently been submitted to the Parliament, and may therefore be subject to numerous amendments during the legislative process.

The general policy driver presented to justify the introduction of collective redress into the Czech legal system is to create a better balance between large corporations on the one hand and consumers on the other in matters where pursuing their rights individually would create a disproportionate burden on the consumers, often causing so-called rational apathy on the consumers’ side. Cases of large-scale corporate fraud that went unpunished on the civil law front were often referred to as well.

Another driver behind the proposed introduction of mass claim proceedings in the Czech Republic is the more frequent discussion of the issue on the European level, which ultimately concluded with the adoption of the RAD.

The Czech Republic currently does not have comprehensive regulation of collective redress; the current regulation consists of fragments of collective action principles dispersed throughout the legal system and is largely based on EU law. Certain elements of collective redress can be seen in the areas of insolvency, unfair competition and copyright law.

The specific manner of implementation of the EU collective redress regime is currently under discussion by Czech legislators and the final decision on the specific approach has not yet been adopted. However, based on the Draft Legislation, it seems that the Czech Republic will opt for a relatively minimalistic approach to collective redress regulation.

As is apparent from the Draft Legislation, the legislators will adopt a separate new act regulating collective redress and also an amendment to the existing procedural rules. However, it is anticipated that Czech law will primarily incorporate only those provisions from the RAD that are obligatory for implementation. The scope of collective redress regulation is therefore likely to be relatively limited in the Czech Republic.

As already stated above, collective redress shall be limited to disputes between businesses and consumers. With respect to eligible claimants, this will mean that the group seeking collective redress may only consist of consumers. Such claimants (consumers) should only be allowed to be represented by a vetted non-profit organisation, which will be required to demonstrate certain public activity in the area of consumers’ protection for at least one year. The source of the funds used to finance mass claim proceedings may be subject to verification by the court. The aim of these restrictions is to prevent speculative and abusive mass claims from being filed.

The Draft Legislation is yet to be discussed by both chambers of the Czech Parliament and may still undergo significant changes before adoption. Since the deadline for implementing the RAD expired on 25 June 2023, it is anticipated that the new act should be adopted no later than the end of 2023. If adopted, the Draft Legislation shall enter into force on the first day of the calendar month following the day of its publication in the Collection of Laws of the Czech Republic.

As already mentioned, the Czech Republic currently does not have a comprehensive legal framework that would regulate collective redress or class action proceedings as such. Elements and instruments that at least remotely resemble the concept of representative or class action proceedings can, however, be found in Czech law. These include, for example, the possibility of having multiple parties on either side of a dispute (see 4.1 Mechanisms for Bringing Collective Redress/Class Actions) or in proceedings concerning copyright or protection against unfair competition, consumer protection claims or claims for damages or for adequate consideration arising in connection with mandatory takeover bids or squeeze-outs.

In the event of unfair competition practices, the Czech Civil Code allows for organisations authorised to defend the interests of competitors or customers to apply to the court for an infringer to be ordered to refrain from behaviour constituting unfair competition or to remedy the defective condition. To note, under Czech law, the term customer includes not only consumers but also entities or individuals who have purchased goods from competitors in connection with their business activities. Such claims (applications) are filed on behalf of all the competitors or customers affected by the infringer’s actions; however, they are themselves not parties to the proceedings. Most importantly, this type of representative action cannot be used to claim damages or unjust enrichment. This principle also applies to claims filed by consumer protection organisations under the Czech Consumer Protection Act where the only remedy available is for the court to order the infringer to refrain from illegal activities.

The Czech Copyright Act allows collective administrators of authors’ rights (private entities with relatively significant powers resembling those of public authorities) to seek collective redress against copyright infringers. While the scope of relief sought is not limited like in the above case of unfair competition, the range of persons protected by this regulation is relatively narrow. 

The initiation of proceedings in relation to claims for compensation of damage or for adequate consideration in connection with takeover bids or squeeze-outs establishes a lis pendens obstacle with respect to claims brought by other claimants against the same defendant concerning the same matter – multiple proceedings initiated by multiple claimants in relation to the same matter cannot run simultaneously. The final decision in the matter is therefore binding on the defendant (the majority shareholder) with respect to all other persons or entities involved (former minority shareholders). Consequently, if, for example, the defendant in such claim is ordered to pay a higher price to the claimant for their shares transferred during a takeover bid or squeeze-out, that defendant will be obliged to pay the same price to every other shareholder that transferred their shares to the defendant.

After the implementation of the RAD, collective redress shall be comprehensively regulated by the Act on Mass Civil Court Proceedings, in conjunction with the existing procedural rules set out in the Code of Civil Procedure. Additional instruments of collective redress shall also be incorporated in the amendment to the Code of Civil Procedure, introducing the mechanism of actions to protect consumers’ collective interests. Such instruments will include an action for injunctive relief or declaration of infringement of a legal obligation, and an application for interim measures.

Currently there is no comprehensive regulation of collective redress or class action proceedings in the Czech Republic.

The limited areas where quasi-collective redress is available under Czech law have been described in other sections and include certain aspects of unfair competition, copyright law or disputes arising in connection with takeover bids or squeeze-outs.

After the RAD is implemented into the Czech legal system, it appears likely that collective redress will be available to consumer claims only.

There is currently no specific legal regulation of mass claims proceedings or collective redress in the Czech Republic which would provide a definition of the concept under Czech law.

The Draft Legislation defines the mass claim proceedings as civil proceedings concerning the rights or legitimate interests of multiple persons, arising from legal relations between natural persons who act outside the scope of their business or profession, and a natural person or legal entity that either directly or indirectly acts within the scope of their commercial activity, business, or independent exercise of their profession.

Mass claim proceedings envisaged by the Draft Legislation diverge in many respects from class actions familiar to common law jurisdictions. For example, the group of consumers whose rights will be exercised in mass claim proceedings shall be represented by a third party (a certified non-profit organisation) rather than by one of its members.

Since there is currently no comprehensive regulation of collective redress or class actions in the Czech Republic, it is necessary to proceed through ordinary civil proceedings even in cases where there are multiple claimants. In such proceedings, each of the claimants has the status of a party to the proceedings and has all associated rights and obligations; most importantly, they have the right to make their own decision on each procedural step and the obligations to pay the court fee and to pay the defendant’s costs of proceedings should the lawsuit fail. It is, of course, also possible for the group of claimants to appoint a joint legal representative.

A possible alternative to the standard approach to collective redress is for persons who have identical (or very similar) claims against the same defendant to assign their claims to one individual or (the more likely option) to one entity that will then collectively enforce all the assigned claims in court. Such person or entity would pay claimants an agreed portion of the amount awarded (and actually paid) by the defendant in the event of a successful claim. All procedural rights and obligations lie with the single person or entity that files the claim with the court.

The enforcement of assigned claims may, however, be relatively challenging and uncertain as the validity of the assignment may be contested on various grounds, including the failure to sufficiently and appropriately specify the claims being assigned in the assignment agreement, which may ultimately result in the dismissal of the entire claim by the court. Moreover, not all types of claims may be enforced this way because not all types of rights are assignable (eg, personality rights).

Should the RAD be implemented in line with the Draft Legislation, it will only be possible to seek collective redress through authorised non-profit organisations represented by legal counsel.

As there is no special regulation under Czech law, it is generally necessary to follow standard civil procedure where either each claimant has the status of an individual party to the proceedings or, if the claimants decide to assign their receivables, the assignee acts as the sole claimant in the proceedings.

In the first case (ie, when all claimants are parties to the proceedings) the action may either be brought jointly, with the possibility of appointing a joint legal representative for all the claimants, or, if there are multiple individual proceedings pending regarding identical or similar claims against the same defendant, the court may, if deemed appropriate, decide to consolidate the multiple proceedings into one.

After the implementation of the RAD, it is expected that the procedure will consist of two phases. In the first phase, the court will assess the admissibility of the mass claim. If the mass claim is found to be admissible, the proceedings will continue into the second phase where the merits of the case will be assessed and ruled upon. If the mass claim is found to be inadmissible (in the first phase of the proceedings), the consumers concerned will retain the right to exercise their claims in court individually.

As the concept of collective redress or class actions is still not generally recognised under Czech law, the standing to bring such actions is very limited.

As regards the concepts remotely resembling class action proceedings mentioned in 2.1 Collective Redress and Class Action Legislation, the following persons or entities may have standing to bring a claim:

• organisations authorised to defend the rights of customers or competitors in unfair competition claims;
• collective administrators of authors’ rights in copyright claims; and
• the assignee of any number of individual claims against the same defendant with the same factual and legal basis.

As part of the implementation of the RAD into Czech law, only independent non-profit organisations shall be able to file mass claims on behalf of consumers.

According to the Draft Legislation, only the opt-in mechanism shall be included. Each individual consumer wanting to participate in the proceedings would therefore have to proactively join the claimant group. This has been negatively received by consumer protection organisations who generally have a preference for the opt-out mechanism and will likely try to persuade the legislators to consider and ultimately include this option in the relevant regulation as well.

The Draft Legislation currently requires the group of customers represented by the claimant to have at least 20 members.

Under currently applicable law, joinder of proceedings pending before the same court is possible if the proceedings concern the same factual basis or the same parties and consent of both claimants. Otherwise, additional claimants may only join proceedings upon the request of the original claimant; this may be granted or rejected by the court depending on the specific circumstances of the case.

In cases where the rights of a group are exercised in court by one person (eg, the assignee of the individual claims), it is possible to extend the claimant pool by adding more individual assigned claims until the end of the first hearing – ie, until the point in the proceedings after which claimants are generally (with certain exceptions) not allowed to submit new facts or evidence. The claimant also needs to make sure that the claims added during the course of the proceedings are not time-barred as the limitation period for each individual claim is suspended only once that particular claim is exercised in court. In other words, filing an action regarding certain identical or similar claims has no effect on the running of the limitation period of other identical or similar claims that may exist that have not yet been filed with the court.

According to the Draft Legislation, joining further group members will only be possible within a period determined by the court. If multiple mass claim proceedings are conducted against the same defendant, the court may potentially consolidate the proceedings.

The other sections have discussed the option, under currently applicable legislation, to have multiple claims heard individually by a court or together with other identical or similar claims. The determination of whether to allow the consolidation of similar claims or to decide that each (or any) individual claim should be heard and decided in separate proceedings (even though they were originally brought together) is ultimately at the court’s discretion. The court’s decision on this aspect of the proceedings will usually depend on the similarity of the factual and legal bases of the individual claims – ie, on the likelihood that the same decision on the merits can be reached with respect to all (or most) of the claims. Depending on the outcome of such assessment, the court may also decide to isolate specific claims for separate proceedings while continuing to hear the remaining ones in a single consolidated proceeding.

The Draft Legislation envisages certain elements not typically found in Czech civil proceedings. These include assessments by the court of the admissibility of mass claim proceedings, the preparation by the court of plans for such proceedings, the possibility of excluding registered group members upon the claimant’s request as well as the possibility of rejecting certain procedural steps made by the claimant (eg, change or withdrawal of the claim) or rejecting a settlement proposal if it is not considered fair to the group’s interests. Otherwise, the court’s case management powers should not significantly differ from those already recognised by the Code of Civil Procedure.

It is impossible to provide a meaningful estimate of the length or a standard timetable of court proceedings as these can vary greatly depending on the specific circumstances of the case. Generally, the average length of proceedings in the Czech Republic is around one year for a case to reach a first instance decision, though this also includes simple cases or cases where the defendant does not actively participate in the proceedings. However, considering the possibility of appeals in a generally three-instance court system, some cases can take more than ten years to reach final judgment.

At this stage, it is not possible to provide even an educated guess as to the expected length of mass claim proceedings once the RAD is implemented into Czech law. According to the Draft Legislation, a decision on admissibility shall be issued within two months from the initiation of the proceedings and the deadline for opt-in shall not be longer than four months. This means that six months may pass before the court proceeds to assess the merits of a mass claim.

Considering that the Draft Legislation envisages exclusive jurisdiction of a single court (the Municipal Court in Prague), the actual length of mass claim proceedings may also largely depend on the number of pending proceedings and the workload of judges assigned to decide on mass claims. It was established that only two judges at this particular court would be assigned to conduct mass claim proceedings.

At the moment, no legal framework governing any procedural mechanisms allowing for changes to the length, timetabling or disposal of proceedings is available for collective redress proceedings or mass claim proceedings.

The Draft Legislation requires the court to prepare a plan of mass claim proceedings, which will contain times of the upcoming court hearings and may also provide for a basic timeframe of the proceedings. However, the plan should not in any way limit the length of the proceedings and may be changed by the court if the circumstances so require.

The possibility of external funding for mass claim proceedings is generally accepted by the Draft Legislation with certain restrictions to prevent conflicts of interest. The court should also be able to examine and verify the origin of funds used to finance mass claim proceedings.

Under the Draft Legislation, the claimants shall be completely exempted from the obligation to pay court fees which will significantly reduce costs required to bring a mass claim. As regards the compensation of the costs of proceedings, the current rules set out in the Code of Civil Procedure – generally based on the “winner takes all” principle – should also apply to mass claim proceedings.

Generally, with certain limited exceptions, Czech law does not recognise or apply the concept of discovery or compulsory disclosure in civil proceedings as it is against the general principle that no one can be “forced” to incriminate themselves.

However, the relatively recently adopted Act on Compensation of Damage in the Area of Competition, which implemented Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the member states and of the European Union, has introduced the concept of pre-trial discovery into Czech law, though again in limited circumstances. Prior to the commencement of proceedings concerning damage caused by the restriction of competition, the court will, upon the claimant’s request, impose an obligation on the defendant (or a third party) to make documents which may help ascertain the true state of affairs available to the claimant, provided the claimant has established with certainty, on the basis of available facts and information, the plausibility of the existence of a right to compensation of loss caused by the restriction of competition.

The Code of Civil Procedure also sets out an exception to the general rule in situations where the claimant is not in possession of evidence supporting their claim but they are able to specifically identify such evidence and demonstrate that such evidence is under the defendant’s control. Upon the claimant’s justified request, the court may order the defendant to present such evidence to the court. If the defendant refuses to do so or fails to prove to the court that such evidence is in fact not in their possession, the contested facts shall be assessed to the defendant’s detriment – ie, the facts alleged by the claimant will thereby be considered proven for the purposes of the proceedings. This can, of course, also work the other way around, though such cases are less common.

The procedure of evidence disclosure in mass claim proceedings shall essentially be governed by the abovementioned procedural rules.

As mentioned in 2.1 Collective Redress and Class Action Legislation, the current legislation regulating the limited instances of collective redress under Czech law only provides for limited remedies, including injunctive relief in unfair competition or consumer protection actions. However, the Draft Legislation shall bring new remedies, most importantly damages claims.

Every judge should, at least formally, attempt to assist and encourage the parties to reach a settlement. Where the judges see fit, they may even order the parties to attend a mediation session. These general rules shall also apply to mass proceedings under the Draft Legislation if adopted.

Under the currently applicable legislation, any dispute may be resolved by an out-of-court settlement resulting in a withdrawal of the claim by the claimant and the acceptance thereof by the defendant, without the option of the court to intervene in any way. However, this option may be limited in respect of collective redress in order to protect members of the claimant group. The Draft Legislation envisages that any settlement reached after the initiation of mass claim proceedings will need to be approved by the court, and that the court will not admit the withdrawal of the mass claim if it is unfair to the interests of the registered group members.

The nature of judgments to be issued in the envisaged collective redress legislation should be the same as for any other judgment issued in regular civil proceedings; in most cases, this will be a judgment imposing a payment obligation on one of the parties and having a binding effect on the parties to the dispute only. Considering the current proposal to only adopt the opt-in regime, judgments are not expected to be binding on parties who did not join the claimant group. At the same time, a judgment issued in mass claim proceedings may be of relevance for the assessment of similar claims raised individually.

Similarly, standard means of post-trial enforcement should be available against parties who fail to comply with the obligations imposed on them by a final and enforceable judgment. The Draft Legislation also envisages fines that may be imposed on a defendant who fails to comply with the verdict of a judgment issued in mass claim proceedings (ie, if a non-financial obligation is imposed by the judgment).

Judgments issued in cases of collective protection against unfair competition (see 2.1 Collective Redress and Class Action Legislation) are binding only on the defendant, with respect to all customers and/or competitors. Judgments concerning claims for damages or adequate consideration in takeover bids or squeeze-outs are binding on the defendant with respect to all the minority shareholders who were involved in the transaction, despite not being parties to the proceedings in question.

Currently, the legislative process leading up to the implementation of the RAD and the introduction of collective redress into the Czech legal system is edging closer to its final stages as it should be discussed and approved by the Parliament during Q4 2023.

The reform currently being considered consists of a separate act and additional amendments to the current procedural rules that will implement the RAD and consequently introduce comprehensive regulation of collective redress in consumer disputes in the Czech Republic.

Brexit has had no impact on collective redress or on the implementation of the RAD into Czech legislation.

ESG-related issues have had no impact on the regulation of collective redress in the Czech Republic.