On 1 July 2024, the Czech Republic introduced eagerly awaited class action legislation, enabling groups of individuals to consolidate their claims into a single action, potentially reducing court costs and streamlining legal processes. This new law, officially known as the Act on Collective Civil Proceedings, aligns with the EU’s Representative Actions Directive, aiming to improve legal recourse for consumers and small businesses, strengthening their position against large corporations.

Collective proceedings refer to court cases in which the rights or interests of several individuals are addressed together. These proceedings cover both the litigation process and the enforcement of any judgment that may arise.The law primarily targets “consumer groups”, which include both individual consumers and small businesses. Small businesses eligible for inclusion must have no more than 10 employees and annual revenues not exceeding CZK 50 million (2 million euros).

Under the new law, participation is governed by an opt-in model. Consumers must actively register their claims to join a class action. A minimum of 10 class members is required for a collective action to proceed.

The law applies to a wide range of claims that share similar factual or legal bases. These can include demands for financial compensation, repairs or replacements, price reductions, legal determinations, and cease-and-desist orders. There is no cap on the type or value of claims, but only those involving rights or interests arising after 24 November 2020 are eligible for collective proceedings.

Only non-profit organizations that are registered with the Ministry of Industry and Trade can initiate a class action on behalf of consumer groups. These organizations must be legally represented in court. Class actions will be heard in the Municipal Court in Prague, which will serve as the primary court of first instance.

Joining a class action involves no fees for consumers. They will not face any financial risk if the case does not succeed. However, the plaintiff (the non-profit organization) in a successful case may receive a reasonable fee, determined by the court, which cannot exceed 16% of the awarded benefit or CZK 2.5 million (if determined as a lump sum, particularly for non-financial awards).

The procedure for initiating a class action under this new law is as follows: (1) A group of at least 10 individuals with similar claims is formed; (2) A non-profit organization files the class action in court; (3) The court reviews the case’s admissibility; (4) If the action is deemed admissible, collective proceedings commence; (5) Additional consumers can join the case within a designated registration period; (6) The court then renders a decision on the case’s merits.

Although the law mandates the creation of a public register for collective proceedings, this register has not yet been made available.