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New option for resolution of consumer disputes in the Czech Republic (ADR) – part  one

New option for resolution of consumer disputes in the Czech Republic (ADR) – part one

By this article we bring insight to the new consumer protection law concerning the new possibility for alternative out of court resolution of consumer disputes, which follows from the novelization of the Czech Consumer Protection Act (Act No. 378/2015 Coll.) and which became effective on 1st February 2016.

It is the implementation of the EU Directive 2013/11/EU of 21st May 2013 on alternative dispute resolution for consumer disputes (the “Directive on consumer ADR”), and the adaptation of the Regulation (EU) No 524/2013 of 21st May 2013 on online dispute resolution for consumer disputes (the “Directive on consumer ODR”).

This legislation does not apply to any disputes between the traders (seller or service provider) and the entities accepting such sale/services – legal entity or physical entity when also acting within the scope of business activities.

The new legislation introduces a new option for resolution of consumer disputes, which should be faster and less financially demanding for both parties.

Effects of the new legislation on traders:

Section 14 of the Consumer Protection Act seems to be quite important as it imposes the information duty of the traders (sellers) about the possibility of alternative dispute resolution process.

The sellers are newly obliged to inform the consumers about the possibility of alternative dispute resolution process and about the competent authority. The information must contain a link to the website of the competent authority.

If the seller also uses its own website, it must also have such link on that website.

If the consumer contract also includes reference to general terms and conditions of sales or service contracts between the trader and a consumer, such information must be also included in the general terms and conditions. There is a three months transition period till 28.03.2016 for the trades to update their documentation and comply with the information duty.

In case of a consumer–trader dispute, which could not be settled further to a complaint submitted directly by the consumer to the trader, the trader provides the consumer with the relevant information specifying whether he will make use of the relevant ADR entities to settle the dispute. That information shall be provided on paper or on another durable medium. In other words, the traders must inform the consumers not only by the general information which must be provided upfront, but also directly if the consumer–trader dispute cannot be settled further to a complaint submitted directly by the consumer to the trader.

If the trader is engaging in online sales or service contracts, and has online market places established, it must also provide on its websites an electronic link to the ADR platform. That link shall be easily accessible for consumers. The traders engaging in online sales or service contracts shall also provide an electronic link to the ADR platform on their websites and, if the offer is made by e-mail, in that e-mail. The information shall also be provided, where applicable, in the general terms and conditions applicable to online sales and service contracts.

Breach of the information duty constitutes 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.

Conclusion

As the result of the novelization, the traders must amend their websites as well as their current contractual documentation and must inform the consumers about the possibility of alternative dispute resolution and the competent authority to handle the dispute.

By Michaela Fuchsová & Magda Stárková

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