A. Availability of civil claims
1. Scope for civil claims in the Czech Republic
Stand-alone and follow-on claims are available in the Czech Republic. Civil claims may be brought against an undertaking in the Czech civil courts under Sections 2988 and 2990 of Act No. 89/2012 Coll., the Civil Code (the “Czech Civil Code”) in connection with Czech and EC competition rules (Sections 3 and 10 of Act No. 143/2001 Coll., on the Protection of Competition (the “Czech Competition Act”) and Articles 101 and 102 TFEU). A regulatory finding of infringement is not a precondition to civil action being brought in the Czech Republic. Generally, it is not possible to bring a private enforcement action against a director or an employee directly, even if such employee or director have been closely involved in the infringing conduct. However, where an infringing undertaking has suffered loss as a direct result of the director or employee’s unlawful conduct, it may bring a claim for damages against that person.
2. Applicable limitation periods
Private enforcement generally results in damages claims, which are governed by the Czech Civil Code. The limitation period for claims based on infringements of competition law runs for three years from the date on which the claimant learned or could have learned of the existence of the damage suffered and the person responsible for causing it. The applicable limitation periods are subject to a rule that no claim may be brought more than ten years after the infringement occurred (regardless of whether it has been discovered or of whether an investigating competition authority has made a finding in respect of the matter). Because an infringement of this type will most likely be a continuous or repeated series of breaches, the period will start only when the infringing conduct is finally terminated. Limitation runs even if proceedings brought by relevant competition authorities have not been completed so a claimant may be obliged to file a petition prior to a legally binding decision being made by a competition authority that an infringement has occurred. The court may stay a claim where proceedings are pending before the relevant competition authority but is not required by law to do so.
First instance judgments of the civil courts can be appealed to the competent second instance court in respect of a finding of infringement or an award of damages. The right of appeal is limited to demonstrating that the first instance court was wrong in law or in fact, or otherwise breached a procedural requirement. New facts and evidence may only be introduced for second instance consideration in limited circumstances (usually because such facts and evidence occurred after the first instance judgment was issued). In certain limited circumstances, a judgment by the appeal court can be challenged before the Czech Supreme Court by an extraordinary appeal. Such an extraordinary appeal may only be filed in limited circumstances (generally such limited circumstances include: (i) case that the appeal court departed from established decision-making practice of the Supreme Court or in case that (ii) the appeal involves an issue of substantive or procedural law, which has not previously been considered by the Supreme Court or has been decided differently by the Supreme Court; or (iii) in case that a legal issue is to be assessed differently by the Supreme Court). No new facts or evidence may be introduced in an extraordinary appeal. Proceedings may be re-opened after a final and enforceable judgment has been issued if new circumstances (facts or evidence that were previously unknown) arise that, if known at the time the judgment was rendered, could have led to a different judgment. Finally, a complaint to the Czech Constitutional Court is a remedy of last resort, which will be available to claimants in case that their rights under the Czech Constitution or the Charter of Fundamental Rights and Freedoms have been breached as a result of the judgment or a procedural error made before the judgment was issued. Only a party to the proceedings is entitled to file an appeal. The court will only allow intervention by a third party if it is able to demonstrate a sufficient interest in the dispute and its outcome.
4. Availability of class actions for infringement of competition law and/or damages in the Czech Republic
Class actions for damages are not provided for under the Czech procedural rules. However, there are ways in which groups of claimants can bring an action against an entity contravening the competition rules. The Czech civil procedural rules provide for the following:
i) “Accession to proceedings” where, on the claimant’s application, the court may join a third party to the proceedings with the claimant’s consent
ii) “Intervening participation” where a third party that demonstrates a sufficient interest in the outcome of the proceedings may join the claim as an intervening participant with the same rights and obligations as a regular participant
iii) The joining, at the court’s discretion, of two or more matters into a single set of proceedings, where the matters are related or involve the same participants
B. Conduct of proceedings and costs
5. Burden of proof
The standard of proof for showing an infringement of competition rules in the Czech Republic is the ordinary civil standard (i.e., on the balance of probabilities). The claimant must establish that there has been: (i) an infringement of either the Czech Competition Act and/or the TFEU; (ii) the existence of loss (whether actual loss or anticipated profits); and (iii) the causal link between the infringement and any loss suffered. The burden of proving that an agreement may be exempted under Article 101(3) TFEU rests on the defendant. There are no measures alleviating the burden of proof where the claimant finds difficulty in producing the requisite evidence. In the event that there is a final and binding decision of the Czech Competition Authority or the European Commission declaring that there is an infringement of competition law, the Czech court is bound to adopt the findings reached and may not come to the conclusion that competition law was not infringed. The claimant may therefore rely on Commission and Czech Competition Authority decisions as evidence establishing an infringement. The claimant must still prove that the infringement caused him to suffer damage. Czech courts may also have regard to findings reached by other national competition authorities as evidence that an infringement has occurred.
6. Joint and several liability of cartel participants
Where several persons are deemed responsible for causing the same infringement – for example by virtue of participating in a cartel – they will be held jointly and severally liable for damages resulting from that joint infringement. The claimant may accordingly sue one, several, or all members to the cartel agreement at once. The court is not entitled to apportion liability between defendants at its own discretion – it must either apportion it in accordance with individual liability of the parties as found by the court or it must declare the parties to be liable jointly and severally. The Czech Code of Civil Procedure allows third parties to be joined to proceedings, either at their own initiative or upon the application of an existing party to the proceedings (provided that such third party has sufficient legal interest in the outcome of the dispute, for example where it is bound to contribute to damages if the defendant loses). So, if not all those responsible for causing damage are sued, those that are defendants can seek to join the others to the proceedings. If the claimant objects to the third party’s joinder, the court will be obliged to determine whether joinder is appropriate. It should be noted that a third party joined to proceedings in this way can take all actions in the proceedings except for actions which would would:(a) dispose of the proceedings; or (b) affect the subject matter of the proceedings (change of grounds of claim, conclusion of settlement of entire claim, etc.). Also, the court cannot impose an obligation on any third party joined in this way to pay damages directly to the claimant. If the third party is not joined, the claimant can seek damages in separate proceedings.
7. Documents and evidence that can be used by claimants (for example, investigation evidence) and legal privilege
The claimant must produce evidence to support its assertions (whether in respect of infringement or loss) – the court cannot add to the claimant’s evidence by acting in an inquisitorial fashion or otherwise making its own enquiries. If the claimant intends to rely on a particular document in the possession of the defendant or any third party, it may apply to the court to order the disclosure of such a document. The claimant must identify the exact document or a specific category of documents that should be subject of the disclosure by either another party to the proceedings or by a third party. Courts are generally reluctant to order production of documents and applications that are broad or generalized will not be upheld. Once disclosure has been ordered, refusal to disclose may result in the court imposing a fine of up to CZK50,000 on the relevant party (and continued or repeated failure to disclose can result in the imposition of additional fines up to CZK50,000 per fine). However, the court may not draw any adverse inferences or make assumptions based on refusal to provide documents. The principal exception to disclosure is that privileged documents do not need to be produced, although privilege can be waived.
8. Pre-action disclosure
Pre-action disclosure is not available under Czech civil procedural rules. However, it is possible to obtain an interim order for access to documents prior to initiating proceedings where there is serious doubt that the evidence could not be obtained (or could be obtained, but only with great difficulty) at a later stage. The court will not make such an order if it considers that the evidence sought is unlikely to be relevant to the anticipated proceedings or if it considers that the real purpose of the petition is a fishing expedition on the part of the potential claimant.
9. Average length of time from issue of claim to judgment in the Czech Republic
A claim in the Czech civil courts typically takes between two and three years to reach a final judgment at first instance, depending on its complexity. Any subsequent appeal to the court of second instance would take a similar amount of time. Proceedings before the Czech Supreme Court might add another two years to the duration of the proceedings. Constitutional complaints can usually be concluded within one to two years. Thus, a case could last six to eight years if appealed to the highest level. Czech civil procedural rules do not provide for expedition of proceedings in competition law cases. However, judgment may be issued on the claim in parts, establishing liability at the first stage and assessing damages at the second stage.
10. Average cost from issue of claim to judgment in the Czech Republic
The cost of litigation varies widely and depends on the complexity of the case. The value of the claim forms a basis for the calculation of the court fee, which is 5% of the amount claimed in the dispute, up to CZK40,000,000. If the amount claimed exceeds CZK40,000,000, the court fee amounts to CZK2,000,000 plus 1% of the amount exceeding CZK40,000,000. The maximum court fee is capped at CZK4,100,000. Generally, the losing party will be ordered to pay the successful party’s costs including the court fee, costs reasonably incurred in connection with the proceedings and costs of legal representation. However, in practice, only part of the actual cost of litigation is likely to be recovered by the winning party.
11. Third-party/alternative funding
The claimant must bear the cost of the proceedings itself. Although there are no rules prohibiting alternative funding arrangements generally, contingency fees for legal representation are not permitted.
12. Alternative methods of dispute resolution
Parties may agree to submit their dispute to one or more arbitrators, pursuant to either Act No. 216/1994 Coll. (on Arbitration Proceedings and Enforcement of Arbitration Awards), or their chosen international arbitration rules. Mediation is governed by the Act No. 202/2012 Coll., the Act on Mediation. There are no formal rules as regard conciliation.
13. Availability of damages and quantification
Claimants may seek pecuniary damages to compensate them for actual losses and/or loss of profit, together with interest, in order to restore them to the position they would have been in “but for” the infringement. Pursuant to the provisions of the Czech civil law, the claimant can only be compensated for the damage that it has actually incurred and the damages awarded cannot exceed the amount of loss incurred. So, if passed on, no loss will in fact be recoverable by the claimant. To recover damages for actual loss, the claimant must demonstrate that its property or right to property has been diminished (i.e., that it incurred costs which would not otherwise have been incurred in its regular course of business). While no award of damages has yet been made, in theory loss would likely be assessed by reference to any overcharge imposed unlawfully on cartelized goods that the claimant would not have paid but for the operation of the cartel. To recover damages for loss of profit, the claimant must demonstrate that, in the absence of the infringement, a profit (or a greater profit) would have been made. The aggrieved party may claim profit usually achieved in ordinary course of business rather than showing profits actually lost. The claimant may ask the Czech court to assess the loss on the basis of an estimate if losses are difficult to prove on the facts. The court may also appoint an expert to advise on the calculation of damages if it considers it appropriate to do so. Although parties may propose specific experts or raise objections against those proposed by the other party, the court is not required to have regard to proposals of parties provided that the expert is unbiased and impartial. The parties to the proceedings are also free to submit expert reports on quantification, subject to the court’s discretion to require that these reports are reviewed by a court-appointed expert. Czech courts may not reduce an award of damages in order to take into account the amount of any fine imposed by the competition authority. Further, the court will not accept any argument to mitigate the amount of damages imposed.
14. Punitive or exemplary damages
Punitive or exemplary damages are not available under Czech law.
15. Availability of interim or final injunctions in respect of an alleged competition law infringement
The court may issue an interim injunction on an ex parte basis either before or after proceedings are initiated. The party requesting the interim injunction must prove that the situation of the participants urgently requires preliminary intervention (whether by ordering a party to act or to desist from acting in a particular way) or that enforcement of a judgment could be threatened if the order is not granted. The circumstances supporting the order of interim injunction must be demonstrated to a reasonable level of probability and, in addition, claimant must also show that its case is arguable. The court relies on the written submissions and documents provided by the proposing party and determines without a hearing whether the order should be granted. The other party may file an appeal against the decision on an interim injunction. Such appeal does not have a suspensory effect on the order, so the appellant must succeed in order to discharge the order. However, in principle, the court is unlikely to grant an interim injunction if the result requested by the claimant is essentially that sought in the final judgment. Interim measures remain in force until such measures expire or are cancelled by the court. Interim injunctions expire if:
i) If the applicant fails to file a petition (i.e., initiate the proceedings) within the time period specified by the court or statute
ii) If the applicant’s petition has been refused by the court
iii) If the applicant’s petition has been accepted (i.e., the court has ruled in favor of the applicant) and 15 days have lapsed since the decision became enforceable
iv) If the period for which the interim injunction was issued has lapsed
Before or on the day of filing an application for interim injunction, the applicant must pay to a court a returnable security, namely CZK50,000 (approximately EUR1,800) to cover any loss caused by the injunction. The court might cancel the interim injunction in any case if reasons for its continuance are not given or circumstances otherwise change.
D. Emerging Trends
The question of how best to encourage private parties to pursue damages actions against competition law infringers is the subject of academic debate in the Czech Republic. In November 2014 an EU Directive on competition damages actions has been adopted. As a result of the implementation of the Directive, it is expected that perceived barriers to litigation will be addressed. Only a few claims for damages have been initiated in the Czech Republic to date, however, no damages have yet been awarded by a Czech court in relation to a competition law claim. Claims have either been dismissed, are still under way, or have been settled on confidential terms. [wpdm_package id=’4322′]