CZECH REPUBLIC Law and Practice Contributed by: Robert Němec, Michal Sylla, Viktor Glatz and Adéla Šmahelová, PRK Partners
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 introduction of collective action proceedings in the Czech Republic was the more frequent discussion of the issue at the Euro- pean level, which resulted in the adoption of the RAD requiring member states to introduce laws allowing individual rights to be exercised collectively. 1.2 Basis for the Legislative Regime, Including Analogous International Laws The current Czech regulation of collective redress was adopted on the basis of the RAD. 1.3 Implementation of the EU Collective Redress Regime As already outlined in the previous sections, the RAD was implemented by both the Collective Proceedings Act and the Ancillary Act. The Czech legislature took a relatively minimalistic approach and mostly followed the essential require- ments set out by the RAD. The scope of collective redress regulation is therefore relatively limited in the Czech Republic. However, there are certain aspects where the Czech legislature went beyond the RAD requirements, such as extending the definition of consumers who can become group members also to small businesses with less than ten employees and annual turnover not exceeding CZK50,000,000 (EUR2,000,000). The application scope of the Collective Proceedings Act is also not limited to claims from infringements of the Union law provisions referred to in Annex I of the RAD, as it applies to claims from infringements of any con- sumer-related laws. 2. Legal Framework 2.1 Collective Redress and Class Action Legislation Collective redress under the new legislation imple- menting the RAD can be divided into two main types of proceedings – collective action proceedings regu-
lated by the Collective Proceedings Act and proceed- ings on the protection of consumers’ collective inter- ests regulated by the Code of Civil Procedure. 2.2 Scope of Areas of Law to Which the Legislation Applies Collective redress in the Czech Republic is only availa- ble to consumer claims and claims of small business- es under the Collective Proceedings Act. However, the scope of applicable areas of law is relatively broad. Collective actions under the Collective Proceedings Act may be brought under a breach of any consumer- related laws concerning various types of relationships, including contractual and quasi-contractual relation- ships, and relationships based purely on delicts. The new legislation is applicable to claims that have arisen after 24 November 2020. However, the provi- sions of the Collective Proceedings Act and amend- ments to the Code of Civil Procedure only apply to newly filed actions, and ongoing individual proceed- ings initiated after 25 June 2023 will be completed under the existing laws and regulations. 2.3 Definition of Collective Redress/Class Actions The Collective Proceedings Act defines collective action 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 pro- fession or small businesses, 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. Collective action proceedings under the Czech leg- islation diverge in many respects from class actions familiar to common law jurisdictions. For example, the group of consumers whose rights will be exercised in collective action proceedings shall be represented by a third party (a certified non-profit organisation – quali- fied entity) rather than by one of its members. Given the distinct characteristics of a “class action” in common law jurisdictions, such as a group of claim- ants being represented by one of its members rather than a qualified entity, the term “class action” is not
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