Introduction of an ADR procedure for consumers

Czech Republic: ADR procedures in consumer disputes will be heard before four different offices (or a specially authorized subject)

Notwithstanding the “databank containing information on the solvency and creditworthiness of consumers” and its questionable merits, amendment No. 378/2015 Coll. to the Consumer Protection Act nonetheless delivers something which may be considered an unambiguous victory for consumers, by introducing ADR procedures. Beginning as of 2016, the following authorities are in charge of overseeing such procedures: a “Financial Arbiter” – with extended competencies – in disputes concerning financial services; the Czech Telecommunications Office (Český telekomunikační úřad) for disputes in the area of telecommunications and postal services; the Energy Regulatory Authority (Energetický regulační úřad) for disputes in the energy area; and, for all other disputes, either the Czech Trade Inspectorate (Česká obchodní inspekce – ČOI) or another “authorized subject” – i.e., in practice, an industry association, or an individual who, upon passing a demanding examination, has been entered in a list kept by the Ministry of Industry and Trade.

Even now, all businesses must inform consumers in an intelligible and easily accessible form of the ADR procedures and of the competent bodies before which these procedures will be conducted. This information must also be posted on businesses’ websites (cf. the new Sec. 14 of the Consumer Protection Act). In the event of a dispute that cannot be settled promptly between the business and the consumer, the business must, in addition to the above, instruct the consumer of the ADR procedure and ADR bodies, either in writing or using a different data carrier. However, the amendment to the Consumer Protection Act provides no specific sanctions, other than the potential imposition of fines, if the business should fail to observe the above obligation).

The fundamental principle of these ADR procedures is that the right to initiate them lies solely with the consumer. Provided that the relevant office (or “authorized subject”) is competent to hear the dispute, it will call upon the parties to plead their case, oversee the procedure, and propose a resolution – however, Section 20n and subsequent provisions say very little about the procedural details (which will supposedly be governed by rules of procedure pursuant to Sec. 20x, at least in the case of the Czech Trade Inspectorate; further details arise from the accompanying laws, i.e., the Energy Industry Act, the Telecommunications Act, and the Financial Arbiter Act). The procedure itself is free of charge, but the parties bear their own costs (Sec. 20w).

One shortcoming of the new legislation is that it does not properly address situations in which the given office (or “authorized subject”) declines to hear the dispute because of lack of competence (Sec. 20q (2) (a)); the amendment does not stipulate any time period during which the request for a procedure should thus be dismissed, nor does it automatically and bindingly refer such matters to the proper (competent) authority.

Disputes are to be resolved in ADR procedures within 90 days. However, it is questionable whether this will at all be possible in more complex cases; an extension by another 90 days is possible in exceptional situations (Sec. 20t (2)). The consumer (but not the business) may at any time walk away from the procedure, and either of them may at any point escalate the matter to the regular courts. ADR procedures end in a written agreement brokered between the parties, or by the consumer’s declaration that they no longer seek a settlement of their dispute within an ADR procedure, or by the consumer’ death, or by lapse of the 90-day-period, or by dismissal of the request for a procedure. In other words, the new legislation does not anticipate that the ADR bodies have the authority to hand down a ruling by which they decide the dispute.

It remains to be seen whether and to what extent the other offices will issue rules of procedure. The new legislation is clearly deficient in that it provides no rules by which the ADR bodies should arrive at their decisions – the amendment itself is silent on this matter, and what little follows from special laws is as of yet fragmentary. For this reason, it appears as of yet doubtful how ADR procedures could be successfully conducted without a clear reference to suitable criteria and requirements for the to-be-proposed settlements – and this, moreover, within a time period of only 90 (and in any case no more than 180) days.

Source: Amendment No. 378/2015 to the Consumer Protection Act (Act No. 634/1992 Coll.)


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