Alternative resolution of consumer disputes in the Czech Republic (ADR) – part two
The novelization of the Czech Consumer Protection Act (Act No. 378/2015 Coll.), which became effective on 1st February 2016, governs also competent authorities, actual proceedings and other details of the out of court resolution of consumer disputes.
Competent Authorities:
The generally competent authority for ADR is the Czech Trade Inspection (Česká obchodní inspekce).
There are also other specialized authorities in certain fields (Financial Arbiter, Czech Telecommunication Office, Energetic Regulatory Office). In addition to it, the Ministry of Trade and Industry may also authorized other entities to handle ADR between the consumers and the trades (such as professional associations and bars).
Alternative resolution of the consumer disputes:
The new legislation gives the consumer the right to alternative resolution of consumer disputes from purchase contracts or contracts for services.
The subject of such disputes will be typically issues relating to warranty claims of the consumers, non-delivery of goods/services or failure to return money after withdrawal, etc. We cannot also exclude possible disputes arising from the sale of real estate property and lease relations, as well as disputes arising from consumer contracts for work, travel and transportation contracts. The prerequisite for using this method of resolution of the consumer dispute is, the fact that the consumer first tried to resolve the dispute directly with the seller (i.e. filed a complaint, which was rejected, exercised its right of withdrawal, etc.).
When it comes to the actual proceedings – it is initiated only on the basis of the consumer´s application, which must contain the elements specified in a respective provision of the Consumer Protection Act. The consumer is obliged to attach a proof of the fact that he failed to settle the dispute with the other party directly. The consumer is entitled to file a petition with the competent authority within 1 year from the date when he exercised his right with the seller first.
The seller will be obliged to provide his statement to the Czech Trade Inspection or other competent authority, within 15 working days from receipt of the notification. The seller must cooperate closely and provide the Czech Trade Inspection or other competent body with all cooperation needed for the efficient conduct of ADR. Failure to comply with this obligation is an administrative tort pursuant to the new Consumer Protection Act for which a financial fine up to the amount of CZK 1,000,000 may be imposed.
Outcome of the ADR
The ADR must be closed within 90 days from its initiation (in specific cases this period may be extended by maximum of additional 90 days).
The outcomes of the ADR may be following:
- Execution of written contract between the trader and the consumer,
- Unilateral notification made by the consumer to the competent authority (ADR may be voluntarily terminated only by the consumer),
- Expiration of the above mentioned period of 90 days,
- Rejection of the consumer application to initiate the ADR pursuant to Section 20r of the Consumer Protection Act,
- By death of the parties or dissolution of the legal entity without any legal successor.
Aim of the ADR is to reach conciliation between the parties. The task of the competent authority is to lead the parties in dispute to find amicable solution, being independent entity. The competent authority does not have a decisive power. The outcome should be a civil law agreement between the consumer and the trader. In the event that the trader is not willing to accept the proposed agreement, the Czech Trade Inspection or other authorized body may issue a non-binding statement opinion that the consumer may use for his possible further steps to ensure his claim (for example in subsequent legal proceedings) .
The ADR is free of charge. Costs associated with the ADR process bear the parties themselves.