Czech Republic: New Amendment to the Czech Arbitration Act

Czech Republic

On 2 January 2012 the President of the Czech Republic signed a new amendment to Act. No 216/1994 Coll., Czech Arbitration Act (the “new amendment”). The new amendment will become effective in spring 2012.

As a consequence of several recent decisions of the Czech Supreme Court and the Czech Constitutional Court regarding arbitration clauses in B2C relations, most of the proposed changes aim to strengthen the position of consumers in arbitrations. The main proposed changes are as follows:

- Arbitration agreements in relationships between businesses and consumers must be explicit and must be drawn up as a separate agreement to the main contract (including any business terms and conditions);

- Arbitration agreements in relationships between businesses and consumers must include information on the arbitrator(s) or that the dispute will be resolved by a permanent arbitration court, the manner of commencement and form of conducting of the arbitration, the arbitrators’ fees and expected expenses of arbitration and the manner of their payment and adjudication, the place of arbitration, the manner and form of the delivery of the arbitral award and information that the award is enforceable;

- The business / entrepreneur will be obliged to explain in detail to the consumer what the consequences of entering into arbitration agreement may be;

- An arbitrator in consumer disputes must meet stricter requirements (an arbitrator must have a university degree and he/she must be enrolled in the public list of arbitrators for resolving consumer disputes maintained by the Ministry of Justice of the Czech Republic);

- Arbitrators in consumer disputes are obliged to inform parties whether, in the last three years, they have been involved in a dispute regarding one of the parties;  

- Arbitrators in consumer disputes cannot make decisions according to equitable principles;

- A civil court may annul the arbitral award if 
 (i) a consumer’s dispute is decided contrary to good moral principles or contrary to Czech public policy;
 (ii) an arbitration agreement does not contain all of the necessary information (mentioned above).  

- If a consumer asks to defer the enforceability of an arbitral award (while asking for the annulment of arbitral award), a civil court has seven days to make a decision (during this period the arbitral award is not enforceable).