CZECH REPUBLIC Law and Practice Contributed by: Robert Němec, Michal Sylla, Viktor Glatz and Adéla Šmahelová, PRK Partners
Nonetheless, the court should generally proceed eco- nomically and avoid unnecessary delays. 3.9 Funding and Costs Funding The possibility of third-party funding for collective action proceedings is generally accepted by the Collective Proceedings Act, with certain restrictions to prevent conflicts of interest or abusive collective actions. The person providing the funds must not be depend- ent on the defendant, must not be the defendant’s competitor and must not exercise any undue influ- ence over the claimant that could harm the group’s interests. The court is also able to examine and verify the origin of funds used to finance collective action proceedings. Upon the defendant’s request, the court shall order the claimant to provide an overview of sources of funds (ie, particular account, loan or particular person/entity) used to cover the costs of initiating and conducting the collective proceedings, and review the sources. In case of doubt, the court may also review the sources on its own initiative. If the funds come from a legal entity or a trust fund, the court also examines details about the beneficial owners. Should the claimant fail to provide the overview of the sources of funds, the conditions for admissibility of collective proceedings will not be met and the court will terminate the proceedings. If the overview shows any inconsistency with the above criteria, the court will request the claimant to reject the funds or change the sources of funds within a reasonable period of time. Third-party funding for the actions to protect consum- ers’ collective interests is not regulated by the Code of Civil Procedure. The claimant must only inform the public of its general sources of funding on its website. Adverse Party Costs Under the amendment of the Court Fee Act introduced by the Ancillary Act, claimants in collective action proceedings and in proceedings for the protection of the collective interests of consumers are completely
exempted from the obligation to pay court fees, which significantly reduces their costs. Compensation of the adverse party’s costs of pro- ceedings remains governed by the standard rules of Czech civil proceedings, including in collective action proceedings. These rules are generally based on the “winner takes all” principle, which should apply to representative action proceedings as well. If a party succeeds only partially, the court may either divide the costs proportionally between the parties, decide that no party is entitled to reimbursement, or award full reimbursement to the winning party (if it was unsuc- cessful in only a minor part of the dispute). Adverse party costs are calculated in accordance with Ministry of Justice Decree No 177/1996 Coll. on attorney’s fees and generally depend on the amount in dispute and the number of acts of legal service (eg, submissions, hearings, etc) carried out by the adverse party coun- sel. In most cases, the awarded costs are nowhere near the costs actually incurred. The Collective Proceedings Act contains a few specif- ic rules providing, for example, that a group member may be ordered to pay particular costs of collective action proceedings which were caused by that group member’s fault and which would not have otherwise arisen. Claimant’s Remuneration Under the Collective Proceedings Act, the claimant and the registered group members may agree on the claimant’s remuneration to be granted in the event of success. The claimant’s remuneration must be specified in the action and the claimant may choose in which form the remuneration will be sought. The remuneration can either be a percentage up to a maxi- mum of 16% of the claimed amount, or, if the relief sought is other than a payment obligation, a flat rate not exceeding CZK2,500,000; the amount awarded by a judgment to registered group members will be reduced accordingly. However, without prejudice to the group members’ right to the awarded amount, the claimant and the defendant may agree on the claim- ant’s remuneration differently from the Collective Pro- ceedings Act.
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