Czech Public Auction Regulation 2025: Impact on Online Auctions and Auction Platforms
On 1 January 2025, Act No. 250/2023 Coll., on Public Auctions (hereinafter "ZVD") entered into force, fundamentally reshaping Czech public auction regulation. The new framework responds to the growth of electronic auction systems and significantly broadens the range of activities that may qualify as a public auction.
The practical impact of this Czech public auction regulation extends beyond traditional real estate or movable property auctions. It may also affect operators of online auction platforms based on electronic bidding — including B2B platforms that previously operated outside the scope of auction law.
Unification of Auctions — End of the Previous Dual System
The previous legal order distinguished between a public auction under Act No. 26/2000 Coll. and an auction as a special method of concluding a contract under § 1771 of Act No. 89/2012 Coll., the Civil Code. This split had significant consequences: while public auctions faced strict regulation, auctions held under the Civil Code were effectively free from those obligations. Legal doctrine also concluded that Act No. 26/2000 Coll. did not apply to internet auctions, as the definition at that time required simultaneous physical presence of participants at a predetermined venue.
The ZVD eliminates this dual system. Any activity meeting the characteristics of a public auction under § 1 para. 2 ZVD now falls within its scope — regardless of whether it is labelled an "auction," "sale," "bidding," "tender," or anything else. The label is irrelevant; what matters is the functional nature of the activity.
Definition of a Public Auction
Under § 1 para. 2 ZVD, a public auction is "an auction in which the auctioneer addresses an indeterminate group of persons at a predetermined location, inviting them to submit bids for the purpose of concluding a purchase agreement or a future purchase agreement with the person who submits the best offer under specified conditions."
For the Act to apply, all of the following elements must be met:
- the activity is carried out by an auctioneer as a business,
- the offer is directed at an indeterminate group of persons,
- the auction takes place at a predetermined location,
- the purpose is to conclude a purchase agreement or a future purchase agreement,
- the agreement is to be concluded with the participant making the best offer.
The term "indeterminate group of persons" is interpreted broadly in practice. If an auctioneer or platform operator addresses an open group through a website or public invitation — even where registration requires proof of business status — this condition will typically be met. Closed auctions limited to a few specifically pre-selected parties, by contrast, fall outside the ZVD regime.
Impact on Online Auction Platforms
The most significant change for the digital economy is the explicit coverage of electronic auctions. Under § 29 para. 3 of the Act, the "venue" of an electronic auction is the internet address of the electronic system through which the auction takes place. This removes the previous interpretive problem tied to the physical presence requirement and confirms that online auctions meeting the other characteristics of a public auction fall within the ZVD.
The Act is neutral regarding the nature of the participants — it does not distinguish between B2C and B2B relationships. Any auction directed at an open group of registered commercial partners and aimed at concluding a purchase agreement between businesses is, in principle, subject to the full ZVD regime.
Mandatory Nature of the New Legal Framework
A key feature of the new Czech public auction regulation is its mandatory character. Certain provisions cannot be contractually excluded or modified through terms and conditions.
Particularly important is § 4 of the Act: "In a public auction, the contract is concluded by the fall of the hammer. Any deviating arrangement shall be disregarded."
The explanatory memorandum to the ZVD underlines the mandatory nature of this rule: "It is proposed to mandatorily stipulate that in a public auction, the contract is always concluded by the fall of the hammer. The reason... is primarily to increase legal certainty for auction participants. This rule is intended to prevent auctions where the contract would only be concluded after the auction, leaving it unclear whether and what effect the fall of the hammer has." The aim is to ensure that the highest bidder can rely on the contract being concluded at the moment the hammer falls.
In practice, this means that terms and conditions cannot provide for a "non-binding reservation," a subsequent confirmation step, or a right for the organiser to refuse to conclude the contract after the auction. Such arrangements will be ineffective.
Application of Czech Law under Foreign Law Regimes
In cross-border transactions, it is common for terms and conditions to specify foreign law — such as German or English law. This alone, however, may not be sufficient to exclude Czech public auction regulation.
Under Art. 9 para. 1 of the Rome I Regulation (EC) No. 593/2008, overriding mandatory provisions of a state — whose observance is regarded as crucial for safeguarding that state's public interests — apply regardless of the chosen governing law.
The public law provisions of the ZVD pursue market transparency, legal certainty for participants, and financial stability of auctioneers (mandatory insurance, separate accounts, registration in the central register, and penalty provisions). They meet these criteria. Czech public auction regulation therefore applies to any activity falling within its scope that takes place in the Czech Republic, regardless of the governing law chosen in the general terms and conditions.
Requirements for Operating as an Auctioneer
A business entity intending to organise (voluntary) public auctions must satisfy the following key requirements.
Trade Licence
Following Act No. 251/2023 Coll., the previous regulated trade "Conducting voluntary auctions of movable property under the Public Auctions Act" was replaced by a new regulated trade: "Conducting public auctions with the exception of forced auctions." Voluntary public auctions of both movable and immovable property are now governed under this regulated trade. Forced auctions remain subject to the stricter concession regime, now titled "Conducting forced auctions."
Professional Qualifications
The auctioneer (or their responsible representative) must demonstrate one of the following qualification paths:
- a university degree and at least one year of experience in auction or real estate activities,
- higher vocational education and three years of experience in auction or real estate activities,
- secondary school education and five years of experience in auction or real estate activities,
- a certificate of professional qualification from an accredited institution and nine years of experience in auction or real estate activities,
- or equivalent experience gained in another EU member state.
Public Auction Agreement
A public auction may only be conducted under a written agreement between the auctioneer and the person authorised to transfer ownership of the auction subject (typically the owner). For real estate auctions, signatures must be officially certified under § 11 para. 5 ZVD. Mandatory content requirements include a description of the auction subject, the bidding method, the starting price, payment terms, the auctioneer's fee, and any intention to conclude a future purchase agreement.
Liability Insurance
Under § 5 ZVD, the auctioneer must hold insurance against liability for damage caused in connection with conducting public auctions. The minimum coverage is CZK 500,000 per insured event, and at least CZK 1,000,000 in the event of multiple claims in one year; the excess must not exceed CZK 5,000 per individual event. For forced auctions, § 34 ZVD sets stricter limits (CZK 5 million / CZK 10 million). Real estate agents who organise public auctions must hold this insurance in addition to that required under the Real Estate Mediation Act.
Separate Bank Account
With the exception of the auctioneer's fee and auction costs, all funds related to a public auction must be held in a dedicated bank account. This account is protected by law against the auctioneer's insolvency and against enforcement proceedings against the auctioneer's assets. This segregation protects the auction proposer, the highest bidder, and other persons with a claim to the auction proceeds.
Publication in the Central Register of Public Auctions
Under § 13 ZVD, the auctioneer must publish the auction notice in the Central Register of Public Auctions (CEVD), administered by the Ministry of Regional Development, at least 15 days before the auction. Since 2025, the CEVD serves as the single register where all public auctions in the Czech Republic can be found.
Penalties for Non-Compliance
Supervision over compliance with the ZVD and administration of the CEVD have been entrusted to the Ministry of Regional Development. Under § 59 ZVD, the Ministry supervises compliance with auction rules; under § 60 ZVD, it may order an auctioneer to remedy an unlawful state.
A completely new element compared to Act No. 26/2000 Coll. is the comprehensive catalogue of offences in § 61 ZVD. Its absence in the old legislation long allowed some auctioneers to circumvent their obligations without real consequence. Offences under § 61 para. 1 ZVD include, among others:
- absence of insurance under § 5 ZVD,
- failure to include required information in the auction notice under § 13 para. 1 ZVD,
- failure to ensure publication of the auction notice,
- subsequent amendment of the auction notice in breach of the Act,
- failure to issue a confirmation of contract conclusion by the fall of the hammer with all required particulars,
- failure to transmit the electronic auction record to the central register,
- errors in the distribution of claims.
Fines under § 61 ZVD are structured into three tiers based on severity: CZK 250,000, CZK 500,000, and CZK 1,000,000. The highest rate (up to CZK 1,000,000) applies, for example, to the absence of mandatory insurance. The CZK 500,000 rate typically applies to failures relating to the auction notice or the confirmation of contract conclusion. Beyond administrative sanctions, private law disputes over the validity of concluded contracts or claims by auction participants cannot be excluded.
Conclusion
The new Czech public auction regulation significantly expands the regulatory framework applicable to electronic auction systems. Online platforms operating on the principle of competing for the highest offer should carefully assess whether their business model meets the characteristics of a public auction under Czech law.
Particular attention should be paid to:
- the structure of terms and conditions,
- the moment of contract conclusion,
- electronic bidding rules,
- regulatory requirements for the activity of an auctioneer,
- questions of private international law.
Incorrect legal arrangements may lead not only to regulatory sanctions but also to disputes over the validity and enforceability of individual transactions.
For more information, please do not hesitate to contact us at:
ECOVIS ježek, advokátní kancelář s.r.o.
Betlémské nám. 6
110 00 Praha 1
e-mail: mojmir.jezek@ecovislegal.cz
www.ecovislegal.cz
ECOVIS ježek, advokátní kancelář s.r.o.
The Czech law firm ECOVIS ježek focuses its practice primarily on commercial law, real estate law, litigation, but also finance and banking law and provides full-service advice in all areas. This creates an alternative for clients of international law firms. The international dimension of the services provided is ensured through experience and cooperation with leading law firms in most European countries, the USA, and other jurisdictions. This cooperation occurs within the network ECOVIS, which operates in 75 countries worldwide. ECOVIS ježek team members have many years of experience from leading international law and tax firms. They provide legal advice to multinational corporations, large Czech companies, medium-sized companies, and individual clients. For more information please visit www.ecovislegal.cz.
