Class actions in Czech Republic

  1. Do you have a specific procedure or procedures for bringing “opt-in” class actions?  If so, please outline such procedure(s) and their key features.
  2. Do you have a specific procedure or procedures for bringing “opt-out” class actions?  If so, please outline such procedure(s) and their key features.
  3. Are there specific rules on standing for bringing claims under these procedures (e.g., that claims can only be brought by consumer associations)?  If so, please summarise those rules.
  4. How frequently are class actions brought in your jurisdiction? Are there any pending changes to your class action rules that are likely to increase the number of claims filed?
  5. Are the procedures for class actions restricted only to certain causes of action/types of claim, e.g., competition claims?  If so, please describe these restrictions.
  6. What types of relief are available, i.e., damages and/or injunctive relief? 
  7. On what basis are damages calculated i.e., compensatory and/or some other basis?
  8. Are punitive or exemplary damages recoverable.
  9. Will domestic law need to be changed to comply with the Representative Action Directive?
  10. Are there special rules for settlement of class actions, e.g., requirement for court approval?
  11. Beyond the existing rules for taking jurisdiction in unitary claims, are there any additional rules on jurisdiction for your class action procedures?  Are there any territorial limitations to who may be members of the class?
  12. Please describe the “certification” requirements for each of your jurisdiction’s class action procedures, e.g., how similar must the claims be?  Are there any other criteria to be met for the court to approve use of the procedure?
  13. Do you have specialist courts for these procedures?
  14. Are there any special rules for discovery/disclosure for class action procedures that are different to the rules for unitary actions?
  15. Are there any special rules for appeals in class action procedures that are different to the rules for unitary actions?
  16. Can arbitration clauses lawfully contain class action waivers?
  17. Are contingency fee agreements permissible?
  18. What are the rules on cost shifting, i.e., does the losing party ordinarily have to pay the winning party’s costs?  Are adverse costs awards capped?  If so, at what level(s)?
  19. Is litigation funding of class actions permissible?  If so, how prevalent is litigation funding?

1. Do you have a specific procedure or procedures for bringing “opt-in” class actions?  If so, please outline such procedure(s) and their key features.

There are no specific class action procedures in the Czech legal system.

Currently, the Czech Civil Procedure Code has a mechanism, which prevents claimants from filing lawsuits in certain cases where a lawsuit had been filed by a different claimant. These cases in particular include matters related to competition law, consumers, and securities. This means that claimants may only join proceedings that have already commenced rather than file a lawsuit of their own to initiate different proceedings.

The Czech government proposed a new Bill on class actions (“Bill”) in March 2020. However, parliament has not yet adopted or debated this Bill. As there were parliamentary elections in October 2021, a new Chamber of Deputies that will be convened at the beginning of November 2021 will discuss the Bill. It is unclear what provisions the adopted act will actually contain and how precisely class actions will be regulated. Therefore, the provisions mentioned below are subject to parliamentary approval and may change before the Bill comes into force.

According to the Bill, all class action proceedings are considered opt-in, unless conditions for opt-out proceedings (discussed below) are met.

Generally, class actions are brought by the class representative claimant. The claimant represents a class, which consists of individual claimants (i.e., members of the class). Only the claimant and the defendants are parties to the proceedings.

Class actions (opt-in) may be filed if the following requirements are met:

  1. there is a group of at least 10 persons with the alleged rights or legitimate interests based on the same or a similar factual or legal basis (including the claimant);
  2. the opt-in proceedings are economically advantageous; 
  3. the claimant acts in the interest of the group: there must be no conflict of interest;
  4. the claimant seeks one of the rights applicable in class action proceedings;
  5. the class action was not brought with obvious malicious intent, and in particular was not brought with the aim of harming the class or unjustifiably harming the defendant or a competitor to the defendant; and
  6. another class action has not been filed for the same matter.

Conditions for opt-out proceedings are discussed below.

2. Do you have a specific procedure or procedures for bringing “opt-out” class actions?  If so, please outline such procedure(s) and their key features.

According to the Bill, class action proceedings may be considered opt-out if: (a) the conditions for opt-in class action proceedings are met; (b) the alleged rights or legitimate interests of the members of the class are unlikely to be enforced individually due to their low value; and (c) there are no current opt-out proceedings for the same matter.

3. Are there specific rules on standing for bringing claims under these procedures (e.g., that claims can only be brought by consumer associations)?  If so, please summarise those rules.

According to the current legislation, the claim may be brought by any claimant.

According to the Bill, lawsuits are filed by a single claimant who is either: (a) a member of the group; (b) a non-profit person who has obtained the written consent of at least ten members of the group; or (c) a consumer non-profit organisation aimed at defending the relevant rights or legitimate interests.

4. How frequently are class actions brought in your jurisdiction? Are there any pending changes to your class action rules that are likely to increase the number of claims filed?

Currently, “class actions” are rarely initiated. When and if the Bill, or any other legislation implementing class actions, is adopted, the number of class actions is expected to rise.

See our comments regarding the Bill.

5. Are the procedures for class actions restricted only to certain causes of action/types of claim, e.g., competition claims?  If so, please describe these restrictions.

According to the current legislation, “class actions” are restricted to the following types of proceedings:

  1. certain matters relating to anti-competitive behaviour;
  2. certain matters relating to consumer rights protection (this does not include all consumer disputes, such as individual monetary disputes or disputes over the return of goods);
  3. in matters related to settlements or compensation under the Takeover Bid Act and/or in matters related to the reassessment of the value of consideration when purchasing participant securities;
  4. other matters stipulated by the law (e.g., pursuant to the Act on Public Auctions).

According to the Bill, only disputes arising from relations between businesses and consumers may be subject to class actions (i.e., consumer disputes).

6. What types of relief are available, i.e., damages and/or injunctive relief? 

The current legislation does not restrict the types of relief available for “class actions” (i.e., the relief available will always depend on the nature of the dispute).

According to the Bill, a class action can be used to demand fulfilment of an obligation (e.g.,  monetary compensation) or to determine whether there is a relationship or right (e.g., existence of a certain relationship). As part of these proceedings, the claimant can seek injunctive relief (i.e,. a preliminary injunction).

7. On what basis are damages calculated i.e., compensatory and/or some other basis?

Damages are calculated on a compensatory basis.

8. Are punitive or exemplary damages recoverable.

The nature of damages is strictly compensatory under Czech law. Therefore, punitive or exemplary damages are not recognised.

9. Will domestic law need to be changed to comply with the Representative Action Directive?

Yes, the Directive must be addressed since the current legislation does not comply with the Directive. Conclusions cannot be made at this time as it is unclear whether the Bill will be adopted, and if so whether the adopted text will comply with the Directive.

10. Are there special rules for settlement of class actions, e.g., requirement for court approval?

According to current legislation, there are no special rules for settlement of “class actions” as opposed to individual lawsuits.

The Bill states the court will assess whether the proposed settlement complies with the interests of the class. All members of the class can object to the proposal. If the court ratifies the settlement, those members whose objections were not approved can exclude themselves from the settlement and have the right to pursue their claims in individual proceedings.

11. Beyond the existing rules for taking jurisdiction in unitary claims, are there any additional rules on jurisdiction for your class action procedures?  Are there any territorial limitations to who may be members of the class?

Current legislation states that there are no special rules.

According to the Bill, regional courts have jurisdiction in the first instance for class action proceedings.

In respect to territorial limitations over who may be a member of the class, there are no special rules for opt-in proceedings. In respect to opt-out proceedings, every member of the group is considered a party to the proceedings unless: (a) the member opted-out; or (b) the member’s habitual residence is located outside of the Czech Republic, unless the member has opted-in.

12. Please describe the “certification” requirements for each of your jurisdiction’s class action procedures, e.g., how similar must the claims be?  Are there any other criteria to be met for the court to approve use of the procedure?

According to current legislation, it is up to the court to assess whether particular claims fall within the category of “class actions”. The alleged claims must share the same subject-matter i.e., the claims must be based on the same facts and must be pursued against the same defendant.

According to the Bill, the merit of the claim must be based on the same or similar factual or legal basis indicating the alleged rights or legitimate interests of the class to which the members belong. Members of the class are required to prove their compliance with this requirement. The court has the power to decide whether they fulfil these requirements. The other conditions for class action proceedings specified above must also be met.

13. Do you have specialist courts for these procedures?

No. In accordance with current legislation and the Bill, all procedures related to class actions are conducted in general court. As mentioned above, the Bill states that regional courts have jurisdiction in the first instance for class action proceedings. Ordinarily, district lower courts have jurisdiction in the Czech Republic.

14. Are there any special rules for discovery/disclosure for class action procedures that are different to the rules for unitary actions?

No, there are no special rules relating to class actions, in both the current legislation and in the Bill. In addition, there is no discovery/disclosure obligation in Czech law.

15. Are there any special rules for appeals in class action procedures that are different to the rules for unitary actions?

No, current legislation states that there is no difference.

According to the Bill, an appeal may be filed by the parties to the proceedings (i.e., by the claimant and the defendant, but not by individual members of the class) and the appeal must be filed within 30 days (as opposed to 15 days for unitary actions).

16. Can arbitration clauses lawfully contain class action waivers?

According to the Bill, class actions may only be brought for consumer disputes, which are excluded from arbitration. Therefore, arbitration clauses are not permissible where class actions are applicable.

17. Are contingency fee agreements permissible?

According to current legislation, contingency fee agreements for class actions are not permissible. The Bill does not expressly forbid contingency fee agreements. Instead, the Bill introduces a statutory alternative to such agreements whereby the claimant can propose a contingency fee in the lawsuit up to a maximum of 25% of the rewarded damages.

18. What are the rules on cost shifting, i.e., does the losing party ordinarily have to pay the winning party’s costs?  Are adverse costs awards capped?  If so, at what level(s)?

According to current legislation, the losing party usually pays the costs of the winning party calculated according to provisions set out in statute.

According to the Bill, costs are paid by the losing party (i.e., either the claimant or the defendant). In addition, the court may decide that members of the class are required to pay the costs that have been incurred due to a member’s fault.

19. Is litigation funding of class actions permissible?  If so, how prevalent is litigation funding?

Yes, litigation funding is generally permissible in the Czech Republic. However, since class actions are not common, it is difficult to asses the prevalence of litigation funding.

See the Overview of the Representative Actions Directive >>

For more information on European Class Actions, please download our annual report: 

 

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Portrait ofFilip Gvozdek
Filip Gvozdek
Senior Associate
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Tomáš Matĕjovský
Partner
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