Bill on so-called class actions

The Act on Class Proceedings should enrich the Czech legal system with a new legal institution, which is generally called a class action. Although class actions are typical of Anglo-American legal systems, due to their indisputable advantages it was only a matter of time before they started to appear in continental legal systems as well.


Among the most important advantages is the provision of legal protection even to persons who would not bring a lawsuit on their own, mainly for fear of the cost of litigation. Additionally, it is not possible to file an appeal in the Czech Republic in the case of a dispute over a monetary benefit not exceeding CZK 10,000. Furthermore, class actions can have a positive impact on court congestion and ensure the consistent decision-making in certain cases. Perhaps most importantly, however, is the possible deterrent effect on persons who would like to benefit from their collective dishonest conduct. 


Although the proposed Class Proceedings Bill is undoubtedly a step in a good direction, the Bill envisages class actions essentially only in the breadth defined by the EU Directive on representative actions for the protection of consumers' collective interests. Thus, in the Czech legal system, it should only be possible to use class actions in disputes between consumers and entrepreneurs, and the plaintiff should be a designated non-profit entity accredited by the Ministry of Industry and Trade and listed by the European Commission. This should probably be, for example, dTest or the Association of Czech Consumers.


As regards the costs of the litigation, these should be financed by the plaintiff, who will bear all the risk of failure in the case and who should be entitled to an award of a maximum of 5% of the damages awarded in the event of success. In order to be able to bring a class action, the Bill requires a group of at least 20 consumers to be represented by an active opt-in group. Initially, even the so-called opt-out principle was considered for certain disputes, where consumers could become parties to the action in the case of small claims up to CZK 3,000 without even knowing it. Given that active registration will eventually be required, the draft law provides for the establishment of a Register of Class Proceedings to inform consumers of the possibility to register in a class proceeding. 


Considering that the Czech Republic's transposition deadline for the Directive is 25 December 2022, it is very likely that the law should enter into force at the beginning of 2024 at the latest.