On 1 February 2016, the second part of the amendment came into force, which incorporates into the Consumer Protection Act the requirements of European regulations concerning alternative dispute resolution (ADR) in consumer matters and unfair commercial practices towards consumers.
New opportunities for consumers and new obligations for businesses
The consumer has now the possibility of settling a dispute with an entrepreneur under a contract of sale or a contract for the provision of services out of court through an out-of-court consumer dispute resolution body. This entity will generally be Czech Trade Inspection Authority, the CTU (in the field of electronic communications and postal services), the ERO (in the field of electricity, gas and heating), the financial arbitrator (in the field of financial services) or another entity authorised by the Ministry of Industry and Trade of the Czech Republic. Businesses are obliged to provide information on the decisive entity for out-of-court settlement of consumer disputes publish on its website and, where applicable, in its terms and conditionswhere the contract concluded with the consumer refers to them.
ADR = Alternative Dispute Resolution
With this step, the Czech Republic is integrating the system of alternative dispute resolution (ADR), which has been completely neglected in the Czech Republic, into its legal system to a greater extent. Within the European Union, the Czech Republic ranks second to last above Bulgaria in terms of public sector support for ADR. Together with the average length of civil court proceedings of 390 days, any dispute has not been an easy situation for consumers to enforce their claims. Despite this, the Czech Republic still ranks at the top of European statistics in terms of length of civil court proceedings. It should be noted, however, that these statistics assess only the time until the court of first instance issues its decision, not the time until the final decision in the case, which is essential for an objective comparison.
ADR process
The consumer now has the possibility to file a complaint with the competent body an application to initiate a consumer dispute, namely up to 1 year from the date on which he first asserted the right at issue with the entrepreneur. Initiation of proceedings there is no charge and each party bears its own costs related to out-of-court dispute resolution. In the context of the proceedings, the entrepreneur is obliged to comment on the consumer's proposal within 15 working days of receipt of the notification of the initiated proceedings by the decision-making body and to provide the maximum possible cooperation to that body. The out-of-court settlement of a consumer dispute must be completed within 90 days of commencement and in particularly complex disputes, the time limit may be extended for a maximum of 90 additional days.
Is ADR really beneficial?
The critical point of the whole procedure and, consequently, of the meaningfulness of this part of the amendment is the conclusion of the procedure itself. The decision-maker is has no jurisdiction to decide the dispute in a binding manner. If no agreement is reached between the parties or if the dispute is terminated in some other ancillary manner, the on expiry of the above time limit, the proceedings shall terminate undecided and the consumer has no choice but to take his claim to the competent court.
This approach puts the adjudicating body only in the role of an advisory body that can mediate a dialogue between the parties and outline its legal view on the resolution of the dispute. It is thus a form of mediation. The question therefore remains why the consumer should not go straight to court. The advantage of the Czech concept of ADR in this respect is free of charge, fast compared to court proceedings and the relative informality of the whole procedure. However, these advantages become meaningless if either party is unable or unwilling to compromise.
An exception to the above conclusion may be disputes resolved before the CTU, the ERO or the Financial Arbitrator, where these entities are competent for the binding resolution of consumer disputes within the areas entrusted by law.
In the next section, you will learn more about the obligations of entrepreneurs arising from this amendment.
