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Last update: 28-02-2007
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Alternative dispute resolution - Czech Republic

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TABLE OF CONTENTS

1. Types of alternative dispute resolution in the Czech Republic 1.
1.1. Arbitration 1.1.
1.2. Financial Arbiter 1.2.
1.3. Ombudsman 1.3.
2. You can use the above forms of ADR in most situations. To obtain further information, select the type of dispute concerned from the list below. 2.
2.1. Disputes between business and consumers 2.1.
2.1.1. Arbitration 2.1.1.
2.1.2. Financial Arbiter 2.1.2.
2.2. Disputes between entrepreneurs 2.2.
2.3. Disputes between employees and employers 2.3.
2.4. Family disputes 2.4.
2.5. Disputes between individuals 2.5.
2.6. Other specific disputes 2.6.

 

1. Types of alternative dispute resolution in the Czech Republic

1.1. Arbitration

Arbitration takes place under the control of the participants on the basis of a written agreement in which the participants provide that their dispute will be resolved by a designated independent party. This could be either a freelance arbiter (any capable adult who is competent in legal matters) or a permanent arbitration body (in the Czech Republic, for example: Rozhodčí soud při Hospodářské komoře ČR a Agrární komoře ČR) (Arbitration court attached to the Economic chamber of the Czech Republic and Agricultural Chamber of the Czech Republic).

This type of alternative dispute resolution can be used for civil property disputes. It is intended mainly for cases where payment transfers a right (for example, right of ownership for a purchase agreement) or an asset. Included in this category are commercial property disputes (for example, disputes arising from leasing agreements), labour-related disputes (arising from unfair termination of working agreements or wage demands) and family disputes (involving maintenance between adults). However, arbitration may not be used to resolve disputes arising from the implementation of decisions or relating to the handling of competitions or compensation.

1.2. Financial Arbiter

This is the body which handles dispute resolution between financial service providers (banks, savings banks and other organisations which carry out or broker money transfers) and their customers, or between issuers and users of means of payment (e.g. credit cards).

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1.3. Ombudsman

This body deals with own-initiative complaints regarding disputes with government authorities.

The Ombudsman assists people whom the authorities have dealt with in a way which was contrary to the law or which did not comply with the principles of a democratic state which respects the rule of law. Though he may not change or overturn the decisions of government departments, he may recommend that they take corrective action if it establishes that they acted unfairly.

2. You can use the above forms of ADR in most situations. To obtain further information, select the type of dispute concerned from the list below.

2.1. Disputes between business and consumers

As already mentioned in the information sheet “ADR - Community law”, the Commission has published on its website an extensive list of people who deal with alternative solutions for consumer disputes in the Member States. In this information sheet you will find practical information to help you to decide which type of ADR to use. You will also find information on their structure, areas covered, procedures, expenditure and other details. This list can be found at the following internet address.

You may have to contact an ADR institution based in another Member State. To find out exactly who to contact in such cases, consult the European Extrajudicial Network site on the resolution of cross-border disputes (EEJ-Net) or the website FIN-NET  for cases relating to financial services.

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In the Czech Republic these disputes may be resolved by means of arbitration and, in certain fields, financial disputes may be decided by the Financial Arbiter.

2.1.1. Arbitration

Arbitration is possible for almost all disputes in this field, as the vast majority of them fall into the category of property disputes, as defined above. A typical dispute might arise from a sales agreement.

The rules on arbitration are set out in Law No 216/1994 Sb., No. 216/1994 Sb. on arbitration proceedings and on enforcement of arbitration awards ceština , as subsequently amended.

Arbitration is carried out on the basis of a written arbitration agreement concluded by the parties (a verbal agreement is also acceptable provided that the participants confirm it in writing when the arbitration order is handed down).

The consumer must conclude a written agreement with the entrepreneur (arbitration clause) which states that all disputes arising from a particular agreement (e.g. sales agreement, agreement on working conditions etc.) will be resolved by arbitration. If a dispute concerns a matter covered by a current arbitration clause, this matter may not be resolved by the courts. However, the applicant may take court action if the matter is discussed before the arbiter in accordance with the agreement between the participants.

Arbiters are bound by an obligation of secrecy, which ensures that information which the parties to the dispute want to keep confidential is protected.

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Arbiters may negotiate an agreement by telegram, telex or any electronic means which allows them to transmit their message and to designate people to negotiate the agreement. The proceedings themselves may also be conducted by these means if the parties agree.

In arbitration proceedings, the parties may not have a legal representative. The parties bear the cost of the proceedings.

The decision in arbitration proceedings (ruling) is final, binding and enforceable by legal means (seizure). The decision of the arbiter may only be overturned for legally defined reasons. These include technical reasons such as the arbiter not being competent to serve (i.e. an arbiter who is not an adult or who has had his or her authorisation to act as an arbiter withdrawn or restricted), the arbiter not having received prior authorisation by the parties, etc. A court order overturning a decision of the arbiter must be handed down within three months of the date on which that decision was delivered to the party seeking the nullification.

You will find a reference to the delegation of powers in the section on Recommended wording of arbitration clauses in contracts ceština on the website of the Arbitration Court attached to the Economic Chamber of the Czech Republic and Agricultural Chamber of the Czech Republic.

Other useful internet sites: Arbitration Court 

2.1.2. Financial Arbiter

Consumers can take to this body their disputes with banks and other financial institutions regarding the provision or facilitation of money transfer, the use of means of payment such as credit cards or other banking services. The services of the Financial Arbiter may also be called upon where banks do not carry out the transaction requested by the customer or carry it out with a delay or with errors. Another typical case in which this type of ADR is used is the misuse of customer’s credit cards. The Financial Arbiter is competent to rule in cases where the amount of the transfer does not exceed EUR 50 000. Since the Czech Republic’s accession to the European Union, the Czech Financial Arbiter has been responsible for resolving disputes concerning transactions in euros in the European Union and the European Economic Area.

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Proceedings before the Financial Arbiter and the powers of this office are governed by Law 229/2002 Coll. PDF File (PDF File) on the Financial Arbiter of 9 May 2002 (which came into force on 1 January 2003).

The Financial Arbiter is appointed by the Czech Parliament and must be a person of good repute with appropriate qualifications and experience. He is bound by an obligation of secrecy regarding information obtained in the course of his work. This ensures that the proceedings are conducted fairly and that confidential information is protected.

Arbitration is not compulsory. Other means of dispute resolution, including traditional court proceedings, can be used as an alternative. It is therefore not possible to initiate proceedings before the Financial Arbiter if a court has already ruled on the same matter or if court proceedings are already under way. The same applies if the dispute is or has already been brought before the Financial Arbiter or if it has been the subject of other arbitration proceedings.

A consumer who is a customer of a particular financial institution or a holder of an electronic means of payment may initiate proceedings.

Proceedings may also be initiated electronically by means of a secure electronic signature. It is also possible to initiate proceedings by telex, fax or by public data network without an advanced electronic signature, on condition that the application to initiate proceedings is signed within three days either in writing or by advanced electronic signature. The application may also be made on a form provided by the Arbiter. Click here ceština PDF File (PDF File 174 KB) PDF for the standard form or here for the electronic form.

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The proceedings themselves can be conducted remotely, either in writing or by electronic means, but the arbiter may request the participants to provide oral explanations.

The parties may not have a legal representative. Proceedings are not subject to tax. Each participant bears his or her own expenses, with the exception of interpretation, which is paid for by the financial institution. This refers to interpretation into the language in which the applicant's agreement with the institution is drawn up or into that in which he or she usually communicates with the institution in writing. The applicant is entitled to this type of interpretation.

The Arbiter hands down a ruling on each case which is delivered to the participants personally. Objections against the decision must be submitted in due legal form. The parties may submit reasoned objections within 15 days of receipt of the ruling. It is possible to waive the right to make objections. The submission of objections has a suspensory effect. The Arbiter's decision on the objections raised either maintains or changes the ruling. A written copy of the decision on objections is delivered to the participants and is deemed final. This decision is legally binding and no further objections are permitted. The decision is enforceable by the courts in accordance with the Code of Civil Procedure once the deadline for its implementation has passed. If the deadline is not explicitly stated in the decision, it is enforceable once it becomes legally binding.

If the consumer is not happy with the Financial Arbiter’s resolution of the dispute, he can take his case to court. The financial institution concerned also has the right to do so. Taking court action, bringing the dispute before an arbitration tribunal, reaching an agreement on an out‑of‑court settlement and withdrawing the application before the decision becomes legally binding all render the decision null and void.

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Other Useful Internet Sites: Financial Arbiter

2.2. Disputes between entrepreneurs

Entrepreneurs may use arbitration in particular to resolve property disputes. See above for details on this type of ADR.

If an entrepreneur has a dispute with a bank, he may also use the services of the Financial Arbiter. For details on the conditions under which this type of ADR can be effectively be used, see the section above on disputes between businesses and consumers.

2.3. Disputes between employees and employers

In this type of dispute, arbitration can be used for labour-related issues (unfair termination of employment, wage demands, etc.). Click here for details on arbitration.

2.4. Family disputes

In this field it is only possible to use arbitration as an alternative form of dispute resolution, and then only in a small number of disputes which must involve property and must fulfil the conditions set out in Law No 216/1994 Coll. on Arbitration Proceedings and Enforcement of Arbitral Awards ceština. It follows from this that arbitration may not be used, for example, in the case of divorce. In practice, arbitration seems to be most suited to disputes about maintenance between adults or settlements concerning the joint assets of spouses. Click here for details on arbitration.

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2.5. Disputes between individuals

Individuals may also use arbitration to resolve property disputes. See above for details on this type of ADR.

2.6. Other specific disputes

If the type of dispute has not been specifically mentioned so far on this information sheet, it is probably a dispute between individuals and government. In such cases, you should use the services of the Ombudsman.

The status and powers of the Ombudsman are governed by Law 349/1999 Coll. of 8 December 1999 on the Ombudsman ceština.

The Ombudsman assists people whom the authorities have dealt with in a way which was contrary to the law or which did not comply with the principles of a democratic state which respects the rule of law.

The complaint may involve government departments or other administrative authorities with responsibility for the whole country and departments reporting to them (for example, the land registry, employment agencies and finance departments), local authorities carrying out government business, police (with the exception, of course, of investigation teams), the army, the Council for Radio and Television Broadcasting, prisons and detention centres, facilities for institutional care or protective custody, sanatoriums and public health insurance bodies.

The Ombudsman has no powers to refer complaints to Parliament, the President of the Republic and the Government, the Supreme Audit Office, the Czech intelligence services, the authorities responsible for criminal proceedings, state prosecutors and the courts, with the exception of the state administration of the courts.

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The Ombudsman is selected by the Czech Parliament from applicants proposed by the President and the Senate. The function of Ombudsman is incompatible with that of the President of the Republic, Member of Parliament, senator or judge and with all public administration functions. The Ombudsman may not be a member of a political party or movement. Moreover, the Ombudsman may not engage in other paid activities, with the exception of managing his private assets or carrying out activities of a scientific, educational, publishing, literary or artistic nature, provided that these do not interfere with his ability to carry out his functions or threaten to undermine the office of Ombudsman or confidence in his independence or impartiality. The Ombudsman must also keep confidential the information to which he has had access in the course of his duties. This also applies after the end of his term of office and applies equally to employees of the Ombudsman’s Office. Government departments, including those responsible for criminal proceedings, are authorised to consult the Ombudsman’s files and may remove them with the permission of the Ombudsman and where there are legal grounds to do so. If the Ombudsman refuses permission, the approval of the Chair of the Chamber of Deputies is required. This ensures that matters dealt with by the Ombudsman’s Office are handled impartially and confidentially.

People who approach the Ombudsman on their own initiative do not need legal representation.

Click here ceština to submit a complaint to the Ombudsman electronically or send an e-mail to this address.

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There is no fee for submitting a complaint to the Ombudsman.

The Ombudsman checks independently whether a court has ruled on the matters in question or whether court proceedings are under way, but in these cases he has the right not to handle certain complaints ("postpone").

If, in the course of his investigations, the Ombudsman does not find any evidence that a breach of the law or other misdemeanour has taken place, he informs the complainant and the authority concerned accordingly.

If he does find that such irregularities have taken place, the relevant authority will be invited to submit its comments within 30 days. If, in response to this invitation, the authority concerned affirms that it has taken or is taking corrective action and if the Ombudsman considers these measures to be sufficient, the complainant and the authority concerned must be informed of this decision. In all other cases the Ombudsman must, on receipt of the comments requested or following expiry of the time limit for submission of comments, inform the complainant and the authority concerned of his final decision; part of this decision will be a proposal for corrective measures.

The main action which the Ombudsman may recommend is:

  1. initiation of proceedings to review a decision, action or government procedure, where it is possible for the Ombudsman to initiate such proceedings;
  2. initiation of measures to prevent inaction;
  3. initiation of disciplinary action or similar;
  4. prosecution for a criminal act, misdemeanour or other administrative offence;
  5. payment of damages or submission of a claim for damages.

The authority concerned must inform the Ombudsman of the corrective action taken within 30 days of receipt of the final decision. If the authority does not fulfil its obligation to take corrective action or if the Ombudsman considers that the action taken by it is insufficient, he has two possibilities:  either to inform a superior authority or, if there is no such authority, the government, or to inform the public.

An approach to the Ombudsman does not affect a complainant’s right to take legal action before the courts.

Other useful internet sites: The Ombudsman

« Alternative dispute resolution - General information | Czech Republic - General information »

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Last update: 28-02-2007

 
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