The validity of arbitration clauses in consumer contracts has been the topic of recent discussion, in particular with regards to the implementation of EU Directive 93/13/EEC on unfair terms in consumer contracts under Czech law. According to the Directive, such arbitration clauses are deemed completely invalid. However, owing to improper implementation and the questionable translation of the Directive into Czech, it appears that such clauses are still permitted under Czech law and they remain commonly used. It is imperative that when incorporating an arbitration clause into a consumer contract, the parties adhere to the wording of the Directive and avoid any Czech law provisions in this respect.
Furthermore, the Czech Supreme Court (earlier this year) published a landmark decision of the High Court in Prague on arbitration clauses which refer the disputes to private arbitration companies. The decision states that arbitration clauses are invalid if (i) the dispute is to be resolved by an arbiter nominated by a legal entity that is not a regular arbitration court established under the relevant laws of the Czech Republic, and (ii) the arbitration procedure is to be governed by rules set by that legal entity. The Court ruled that an arbitration role can not be performed by private companies. Despite this decision, this type of arbitration clause is still broadly used in consumer contracts in the Czech Republic.