The Czech Class Actions Act: a potential game-changer for consumer claims enforcement against businesses

Who can bring a claim and what types of claims are eligible?

Class actions can only be filed by registered non-profit organisations that have been actively engaged in consumer rights protection for at least 12 months and are independent of any entities having an economic interest in the case.

The Czech procedure is based on an opt-in mechanism and the class needs to have at least ten members. This is significantly lower than the number proposed in the original draft bill, which called for at least 20 members.

Another surprising change is the shift from exclusively targeting B2C relationships. The Act now also classifies small companies employing less than ten employees and with annual turnover or annual balance sheet total not exceeding CZK 50m (approx. EUR 2m) as consumers.

Consumer claims from these relationships must follow a similar factual and legal basis and will comprise only disputes arising after 24 November 2020, i.e. from the effectiveness of the EU Directive implemented by the Act.

Risk of competitive abuse

One of the main challenges for businesses is the potential for third-party financing and the limited regulation of publicity around class actions. Although the Act includes several safeguards to prevent abuse, the risk of defamation and the misuse of class actions as a tool for unfair competition remains elevated.

Class Action across CEE

Class action is here to stay, beyond the Czech Republic: Check out schoenherr.eu/class-action to get the must-knows for your jurisdictions.

authors: Natálie Rosová, Kristýna Zmatlíková