After many years of discussion by experts and the general public and several legislative attempts, a conceptual law has finally been approved, which comprehensively regulates the issue of class actions.

On 29 May 2024, the Senate adopted the government bill on collective civil proceedings, which introduces an institution that has been an integral part of the legal systems of common law countries for centuries. By adopting this Act, the Czech Republic will fulfil its obligation under Directive (EU) 2020/1828 of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of consumers’ collective interests and repealing Directive 2009/22/EC (“the Directive”).

What is meant by class actions in general?

Class or collective actions (known as class action in English-speaking countries) are a legal institution that allows a group of entities to combine their claims into a single lawsuit. This tool is particularly useful in cases where individual litigation would be too costly for individuals and where joint enforcement would be more effective. A class action can consolidate several minor disputes, the pursuit of which through the courts would be counterproductive for individual plaintiffs – the resulting recovered claim would likely be less than the cost of its recovery. However, a joint action can pool the costs of pursuing claims against a common defendant and divide the costs among multiple plaintiffs.

What will the law mean in practice?

The Czech Civil Class Proceedings Act will only apply to consumer disputes for the time being. Consumers and micro-enterprises (an entrepreneur who employs fewer than ten persons and whose annual turnover or annual balance sheet total does not exceed CZK 50 million) will now be able to jointly enforce claims against entrepreneurs. Class actions may be filed with the Municipal Court in Prague through non-profit organizations registered in a special list; they must be represented by a lawyer. Although the original proposal required a minimum of 20 consumers to file a lawsuit, the final bill as passed reduces that number to 10. During the legislative process, the upper limit of the plaintiff’s fee from the awarded compensation was also changed – the government proposed 5%, but the final form of the law has reached more than three times this amount, i.e. 16%.

The law is based on the principle of the application procedure, i.e. the so-called opt-in principle. In practice, this means that consumers, as so-called interested class members (they are neither parties nor intervenors), have to join the class proceedings themselves.

In conclusion

The institution of class actions represents a streamlining of the process of recovery of small claims, which brings with it a number of advantages that certainly outweigh the potential risks associated with its abuse. Considering the fact that the legislator was rather restrained in drafting this legislation and included only the most necessary parameters of the Directive in the law, it is not a violent revolution in the field of procedural law, but a reasonable basis for the introduction of a much-welcomed institution, which has been known in the Anglo-Saxon legal order since the 13th century and which will hopefully be gradually followed by other legislation.