Towards the end of 2022, the Ministry of Justice submitted a draft law on collective proceedings (“the Act”) together with adjustment of related regulations for inter-ministerial proceedings. This is the second attempt to transpose 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”), which, however, remained literally parked in the first reading in the last term of the Chamber of Deputies.

The aim of the draft bill is, of course, to fulfil the obligation of the Czech Republic to adopt secondary European regulations. However, the general objective of both the Directive and the Act is to solve or at least minimize the problem of so-called rational apathy of consumers. This is the logical behaviour of injured consumers, where they give up pursuing their claim in court, whether for time, economic or other reasons.[1] The current legislation significantly complicates cases of “multiplicity” of claims, i.e. situations, where a group of injured persons have similar claims. There are also specific problems on the part of the courts, which, as a result of the proliferation of claims, are burdened with a multitude of them, which reduces the efficiency of the entire process and, consequently, confidence in the judicial system.

Instead of each person filing his or her claim separately or being represented in court by the same person, the European legislation introduces the aforementioned institution of collective proceedings. This is a new tool or method of filing and adjudicating lawsuit in civil court proceedings. This procedure has the potential to speed up court proceedings and unify decision-making practice, as well as to make it easier for potential plaintiffs to pursue their claims.[2]

In its current wording, the Act applies only to proceedings concerning disputes between consumers and businesses. However, it is possible that this range of cases may expand in the future.[3] Under the Act, a class action (i.e., an action in collective proceedings) may seek either the performance of an obligation by an entrepreneur (e.g., to compensate for an injury) or a determination of whether or not a specific right or legal relationship exists (e.g., whether or not there is a right to compensation for an injury). In the case of actions seeking to restrain an entrepreneur’s conduct (e.g. removal of misleading advertising from a public space), a similar, albeit simplified, regulation is included in the Consumer Protection Act.

A key role in the entire procedure is played by the plaintiff, who is not an injured party in the true sense of the word, but rather their representative. The plaintiff in a class action may only be a non-profit entity, whose primary objective is the protection of consumer rights and which is accredited by the Ministry of Industry and Trade or a similar body in another Member State.[4] Its duty is to properly and efficiently represent in the proceedings all affected consumers, who have expressed their will and joined the proceedings (the so-called opt-in option) and whom the Act calls “class members”. The current draft of the Act abandons the previous version, which envisaged cases, where all affected consumers were “referred” to the proceedings and it was then up to them whether to remain in the proceedings or whether to opt out (the so-called opt-out option).

While in standard civil proceedings, the injured person as a party has a range of actions that it can take, in collective proceedings only the plaintiff has these powers. However, group members are not left to their own devices and doomed to only remotely observe what goes on in the proceedings. These members have a form of “control” over the plaintiff, which is the right to object to the plaintiff’s actions in settling, amending or withdrawing the action, as well as the right to inspect the file and to be heard in the proceedings. As such, however, they do not “dispose” of the proceedings, i.e. they cannot, for example, withdraw the action, etc., only the plaintiff can do so, which will significantly speed up the proceedings, but significantly limit the rights of the injured in the proceedings.

A model example discussed in the context of a class action may be a situation, where an entrepreneur’s conduct, for example the use of misleading advertising, harms a broad group of consumers who have “fallen for” the advertising, as a result of which they have suffered harm. Instead of each consumer suing the business individually, a non-profit person[5] can initiate such a lawsuit seeking damages on behalf of all consumers who join the class action.

While it might seem at first glance that class proceedings are a tool for consumers that will be abused to the detriment of businesses, the opposite is true. The law creates specific mechanisms to prevent and avoid victimizing lawsuits that aim to harm (in any way) the business concerned. The second safeguard is mechanisms to prevent an entrepreneur from being obliged in unjustified cases to disclose information that he does not want to disclose for legitimate reasons.

Conclusion

The draft bill provides for a new means of protection in private law, but at the moment it focuses only on consumer protection in B2C relationships. The purpose of the Act is primarily to strengthen the position of consumers in certain disputes, but also to balance their protection with the protection of the privacy and reputation of potentially sued businesses. However, the proposal itself is only at the beginning. There may be further more or less substantial changes in its specific wording both during the inter-ministerial procedure and especially during the discussion in the Chamber of Deputies and the Senate (if the draft gets there).

[1] Explanatory Memorandum to the Act, p. 2-5

[2] Ibid.

[3] Ibid., p. 14

[4] In addition to his status of an authorized person, it is a condition for a plaintiff in a class action that he be represented by an attorney.

[5] In the Czech environment, e.g. dTest or the Association of Czech Consumers.

Author: Veronika Odrobinová, Jan Nešpor