The two basic means of dispute resolution in the Czech Republic are judicial proceedings and alternative dispute resolution. Civil trial, as a type of judicial proceedings, is the standard dispute resolution method in the Czech Republic. Certain civil matters may also be resolved in criminal proceedings (for example, compensation for damage caused by a criminal offence). Concerning court litigation in the Czech Republic, there are four levels of state courts: District Courts, Regional Courts, two High Courts and a Supreme Court. However, Czech civil proceedings are only a two-instance procedure.
The Czech District Courts have jurisdiction over civil disputes in the first instance. More complex law suits as stipulated by the law, typically all larger commercial disputes, are addressed before the Regional Courts in the first instance. Usually, competence to hear commercial disputes is accorded to the Regional Court determined by the location of the defendant. In disputes where the District Courts are the first instance courts, appeals are made to the Regional Courts. In disputes where the Regional Courts are the first instance courts, appeals are made to the High Courts. If the necessary legal requirements are met, an extraordinary appeal to the Supreme Court is possible after the appellate proceedings. Exceptionally, in cases in which the above-mentioned appeals were unsuccessful in cases in which a party’s constitutional rights were breached, the party may file a constitutional claim with the Constitutional Court. As the Czech Republic is a member of the European Union and a signatory of the European Convention on Human Rights, proceedings may also be conducted before the Court of Justice of the European Union and the European Court of Human Rights.
The courts are comprised of a chairman, vice-chairman, presiding judge and other judges. Disputes are allocated to certain judges or panels pursuant to a work schedule.
Civil proceedings are governed by the Civil Procedure Code (Act No. 99/1963 Coll.) and commenced with the filing of a motion called an action. The action must contain certain general and specific information required by the law. Each party to a dispute has sole discretion as to whether to choose to be represented by a lawyer/attorney or by anybody else or remain unrepresented. However, before the Supreme Court and the Constitutional Court, the parties must be represented by an attorney. Court proceedings are generally public, however, the documents and information in the file are accessible only to the parties and, in certain circumstances, the public can be expelled from a hearing.
Factual findings in civil proceedings depend on the evidence submitted by the parties. The parties have the burden of proving their claim or defense, however, they have no general duty to disclose information that might help the other party. In exceptional circumstances, the court may order the disclosure of certain information, however, this option is not common in practice. The courts decide on the merits of cases by issuing a judgment and can either grant the claim fully, partially or dismiss the claim. In complicated cases, the court may also issue partial judgments. For example, in cases of complex claims for damages, the court would decide firstly on the legitimacy of the claim and subsequently on its amount.
If a liable party fails to perform what it was ordered to do by an enforceable judgment, the prevailing party can file a motion for the enforcement of such judgment. The enforcement of a judgment can be executed either in an enforcement proceeding before a court or in an execution proceeding handled by an executor’s office authorized by the court. Executors are private subjects who are officially authorized by the Execution Act (Act No. 120/2001 Coll.). Foreign judgments and awards are recognized and enforced in accordance with Czech laws, including EU regulations.
Concerning alternative dispute resolution, arbitration proceedings have become a commonly used instrument for the settlement of commercial disputes. The use of arbitration and the inclusion of arbitration agreements in contracts can be recommended since arbitration proceedings are shorter and more effective compared to judicial proceedings, especially in complicated disputes. Apart from arbitration, other methods such as mediation, court settlement or the institute of the Financial Arbitrator may also be used in the Czech Republic.
Arbitration is the most-used type of ADR in the Czech Republic. The general rules relating to arbitration proceedings and enforcement of arbitral awards are provided by Act No. 216/1994 Coll. (Arbitration Act). If parties wish to settle their dispute before arbitrators, they must enter into a valid arbitration agreement in writing. The Arbitration Act regulates arbitration agreements, the appointment and challenging of arbitrators, permanent arbitration courts (which may be established only on the basis of an act of law) and arbitration proceedings, including the decision-making and setting aside of an arbitral award by such court. Special rules apply to consumer arbitration agreements as regards their content, the qualification of the arbitrators, as well as larger access to judicial review of the arbitral awards. Enforceable arbitral awards constitute an executable title and may also be enforced by the above-mentioned means of enforcement. The Czech Republic is a signatory of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Concerning mediation, there is currently no law to govern this method of dispute resolution, however, as of March 2012, a Mediation act is awaiting approval by the Parliament. This method of alternative dispute resolution is presently based solely on the agreement of the parties.
The institute of the Financial Arbitrator is a special type of ADR. This body is appointed by the Chamber of Deputies of the Czech Parliament and settles only particular types of disputes. The Financial Arbitrator has jurisdiction to decide on disputes between institutions (such as banks or institutions issuing electronic payment instruments) and their clients regarding transfers of funds, settlement adjustments, collection forms of payment or use of electronic payment instruments.
Settlement before the court is a frequently used type of ADR within court proceedings. If the nature of the case permits, the parties can end a dispute by settlement. The court shall try to reach a settlement in all disputes and a court-approved settlement has the same effects as a final court judgment.