Debt recovery in the Czech Republic:

Is your Swiss company facing unpaid invoices from a Czech business partner? This situation can be frustrating, but you have effective legal pathways to recover your funds. This guide provides clear, practical steps for debt recovery in the Czech Republic, explaining the crucial legal differences you need to know. As a leading Czech law firm based in Prague, European Union, ARROWS has extensive experience helping Swiss and other foreign clients navigate these challenges with our team of English-speaking lawyers.

Need advice on this topic? Contact the ARROWS law firm by email office@arws.cz or phone +420 245 007 740. Your question will be answered by "Mgr. Vojtěch Sucharda", an expert on the subject.

Unpaid Czech invoices? The first step you cannot afford to skip

When a Czech debtor fails to pay, your first instinct might be to consider immediate court action. However, the most strategic and financially sound approach begins long before a courtroom is involved. A structured, pre-litigation process is not only more efficient but is also a legal necessity in the Czech Republic.

The strategic value of amicable collection

Before initiating any formal legal proceedings, a professional, out-of-court approach is the most effective first step. This amicable phase is a calculated business decision that preserves potentially valuable commercial relationships, avoids costly court fees, and is often the fastest path to payment. In fact, experienced legal specialists find that up to 95% of commercial debt cases in the Czech Republic can be successfully resolved without ever entering a courtroom.

This phase involves skilled negotiation and can result in a binding settlement agreement or a structured instalment plan. ARROWS lawyers regularly handle these negotiations, ensuring any agreement is legally sound and includes robust enforcement clauses to protect your interests. For immediate assistance with amicable negotiations, write to us at office@arws.cz.

The mandatory pre-action letter (předžalobní výzva): A critical requirement for cost recovery

A key difference in Czech pre-litigation practice is the mandatory formal warning letter, known as the předžalobní výzva. Under the Czech Code of Civil Procedure, a creditor is legally required to send this specific letter to the debtor's last known address at least seven days before filing a claim in court.

This is not a simple reminder; it is a strict procedural rule directly linked to the recovery of your legal costs. If you win your case but failed to send this legally compliant notice, a Czech court will likely refuse to award you your legal fees. This procedural misstep could force you to pay for your own lawyers, negating the financial benefit of a successful claim. This single rule highlights how effective cross-border debt collection requires deep local knowledge.

The pre-action letter functions as a powerful instrument of financial leverage. Legal costs in the Czech Republic are calculated based on the value of the dispute, and the prospect of having to pay these substantial fees is a strong incentive for the debtor to settle immediately. The letter activates this financial threat, transforming a legal formality into a strategic tool that makes an amicable settlement a far more prudent option for the debtor.

FAQ – Legal tips about the pre-action letter

1. What information must the letter contain?
It must clearly identify the debtor and creditor, the legal basis of the claim (e.g., invoice number), the total amount due including interest, a clear payment deadline of at least seven days, and a statement that legal action will follow if payment is not made. Our lawyers are ready to assist you in drafting a compliant letter – email us at office@arws.cz.

2. How should the letter be delivered for proof?
While email can be used, proving delivery can be challenging. For undisputed proof, a formal letter sent via registered post or through a Czech "data box" (datová schránka) is highly recommended to ensure the notice is legally irrefutable. Need legal help with formal delivery? Contact us at office@arws.cz.

3. Is this letter different from a standard dunning letter?
Yes, absolutely. Unlike a standard reminder, the předžalobní výzva has a specific legal status under the Code of Civil Procedure and is a prerequisite for recovering your legal costs in any subsequent court proceedings. Get tailored legal solutions by writing to office@arws.cz.

How can you secure a fast-track court decision in the Czech Republic?

When amicable efforts fail, the Czech legal system offers an accelerated judicial process for undisputed monetary claims. This procedure is designed to be faster and more cost-effective than a full lawsuit, making it an invaluable tool for foreign creditors.

Understanding the payment order (platební rozkaz) procedure

For undisputed commercial debts, the most powerful domestic tool is the "Order for Payment Procedure," which results in a platební rozkaz. This is a fast-track judicial process where the court reviews the creditor's application and evidence without holding a formal hearing. If the judge finds the claim is well-founded, the court issues a binding payment order.

The process begins by filing a formal application, known as a návrh na platební rozkaz, with the competent district court. There is no upper monetary limit for this procedure, making it suitable for claims of all sizes. A related, fully electronic version of this procedure exists for claims up to CZK 1 million, which offers a lower court fee.

Building your case: The essential documents you need

The success of a platební rozkaz application hinges entirely on the strength and clarity of your documentary evidence. Czech courts in these matters heavily favor clear documentation over witness testimony. You must provide robust proof that substantiates your claim.

Essential documents include:

• Signed contracts and agreements.
• Issued invoices.
• Confirmed delivery notes or proof of services rendered.
• Order confirmations and general terms and conditions.
• Any correspondence where the debtor acknowledges the debt (e.g., emails promising payment).

ARROWS provides professional services to review your existing evidence package, ensuring it is structured persuasively for a Czech judge. Get your evidence package reviewed by writing to office@arws.cz.

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What happens if the debtor objects (odpor)?

After the payment order is served, the debtor has 15 days to either pay the full amount or file a formal objection, known as an odpor. This is a simple procedural step for the debtor, but it has an immediate and significant legal effect: the platební rozkaz is automatically cancelled in its entirety.

The case is then automatically transformed into a standard civil lawsuit. This marks a critical turning point where the costs, complexity, and timeline of the case increase substantially. The court will schedule hearings where both parties present arguments, submit further evidence, and potentially call witnesses. At this stage, having an experienced local litigation team becomes essential.

Risks and penalties	How ARROWS helps
Incomplete or weak evidence (e.g., unsigned contracts, missing delivery notes), leading to the application's rejection and loss of time and court fees.	Evidence package review and structuring – Need your documents checked? Email us at office@arws.cz.
Procedural errors in the application form, causing delays or dismissal of the claim.	Drafting legally required documentation – Get your application filed correctly by writing to office@arws.cz.
Debtor files an objection (odpor), transforming the case into a full, costly lawsuit.	Representation in court – For immediate legal representation, contact us at office@arws.cz.
Failure to serve the order correctly on the debtor, which can render the payment order unenforceable.	Legal consultations on procedural compliance – Do not hesitate to contact our firm at office@arws.cz.

Key legal differences: A swiss company's guide to Czech debt collection

Swiss companies are accustomed to a legal framework that differs significantly from that of the Czech Republic. Understanding these distinctions is crucial for developing an effective cross-border recovery strategy. Assuming that similar concepts operate identically can be a costly mistake.

The most fundamental difference lies in the initiation of legal proceedings. Under Swiss law, forced execution can often be initiated based on the creditor's claim alone, without the immediate need to present comprehensive documentary evidence. The burden is then on the debtor to raise an objection.

In stark contrast, the Czech system is evidence-centric from the very beginning. As outlined above, a successful claim, even in the fast-track procedure, requires a robust package of supporting documents like contracts and invoices. This means a Swiss company's typical domestic strategy is unworkable in the Czech Republic. Effective debt recovery here begins long before a debt becomes overdue—it starts with diligent record-keeping and solid contract management from the outset of the commercial relationship.

As an international law firm operating from Prague, European Union, ARROWS combines deep knowledge of the local Czech legal environment with an understanding of foreign clients' expectations. Through our ARROWS International network, built over 10 years, we are perfectly positioned to bridge these jurisdictional gaps and protect your interests.

You already have a swiss judgment. How do you enforce it in Prague?

If your company has already secured a favorable judgment from a Swiss court, you do not need to start a new lawsuit in the Czech Republic to re-litigate the merits of your claim. A streamlined process exists for recognizing and enforcing that judgment directly.

The lugano convention: Your bridge for cross-border enforcement

The key international treaty governing this process is the Lugano Convention of 2007. This agreement establishes a common framework for jurisdiction and the enforcement of judgments in civil and commercial matters between the European Union (including the Czech Republic) and EFTA states like Switzerland.

Under the Lugano Convention, a final judgment from a Swiss court is eligible for recognition and enforcement in the Czech Republic. This provides a clear and predictable path for creditors, saving significant time and resources compared to initiating a new case from scratch.

Practical steps for recognizing a Swiss judgment in the Czech Republic

To enforce your Swiss judgment, you must apply to the competent Czech court for a declaration of enforceability. The process, while streamlined, requires careful adherence to procedural rules.

You will need to submit specific documents, including:

• A complete and certified copy of the Swiss judgment.
• A certificate of enforceability issued by the Swiss court, often using the standard form found in Annex V of the Lugano Convention.
• Official, certified translations of all documents into the Czech language.

The timeline for this process can vary. If the debtor does not oppose the application, a declaration of enforceability can often be obtained in approximately 6 months. However, if the debtor raises objections—for example, on grounds of public policy or improper service in the original Swiss proceedings—the process can become adversarial and may take 1 to 2 years to resolve.

Risks and penalties	How ARROWS helps
Judgment is challenged on grounds of public policy or because the debtor was not properly served in the original Swiss proceeding.	Legal opinion on enforceability – Want to understand your legal options? Email us at office@arws.cz.
Incorrect or incomplete documentation (e.g., missing certificate of enforceability, uncertified translation) leads to refusal of recognition and wasted costs.	Drafting legally required documentation – Get tailored legal solutions by writing to office@arws.cz.
Significant delays (1-2 years) and increased legal costs if the debtor opposes the enforcement application.	Representation before public authorities – For immediate assistance, write to us at office@arws.cz.
Choosing the wrong Czech court or enforcement method, leading to procedural dismissal and further delays.	Legal consultations on enforcement strategy – Our lawyers are ready to assist you – email us at office@arws.cz.

What is the final step to recover your money? The enforcement (exekuce) process

Obtaining a court judgment or payment order is a critical victory, but it is not the final step. To turn that legal document into actual payment, you must initiate the enforcement process, known in Czech as exekuce.

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The role and powers of the Czech bailiff (exekutor)

Once you have an "enforceable title"—such as an uncontested platební rozkaz or a recognized Swiss judgment—you can file an enforcement proposal. The process is then managed by a private bailiff (exekutor), a legal professional authorized by the court to execute the judgment.

Czech bailiffs have broad powers to identify and seize a debtor's assets to satisfy the claim. They actively search for property, bank accounts, and other sources of value, making this a powerful and effective final stage of recovery.

Common enforcement methods against a debtor's assets

A bailiff can use a wide range of methods to enforce a judgment. The choice of method depends on the nature and location of the debtor's assets. Common enforcement actions include:

• Freezing and seizing funds from bank accounts.
• Placing liens on and forcing the sale of real estate.
• Seizing and selling vehicles and other movable property.
• Garnishing wages and other income.
• Seizing shares in other companies.
• Suspending the debtor's driving license.

FAQ – Legal tips about the enforcement process

1. Who pays for the enforcement?
A significant advantage of enforcement through a bailiff is that the costs are typically recovered directly from the debtor as part of the total debt. This makes it a financially low-risk step for the creditor. For a detailed cost assessment, contact our lawyers at office@arws.cz.

2. Can enforcement be started without a court judgment?
In most commercial cases, a court-issued enforceable title is required. Direct enforcement is possible only in very limited circumstances, such as when you hold a notarial deed where the debtor has explicitly consented to direct enforceability. Need to verify your document? Email us at office@arws.cz.

3. How long does enforcement take?
The timeline varies greatly, from several weeks to several years. It depends entirely on the complexity of the debtor's assets, their willingness to cooperate, and the specific enforcement methods used by the bailiff. For a realistic timeline assessment, write to office@arws.cz.

What are the critical deadlines and financial risks?

Timing is critical in debt recovery. Delaying action not only reduces the likelihood of a successful collection but also exposes your company to significant legal and financial risks, including the expiration of your claim or the debtor's insolvency.

The Czech statute of limitations (promlčení): Don't let your claim expire

In the Czech Republic, the general statute of limitations (promlčení) for commercial debts is three years, starting from the invoice's due date. If you fail to initiate legal action within this period, your claim is not extinguished, but it becomes legally unenforceable. If the debtor raises the objection of promlčení in court, the judge will dismiss your claim.

However, there is a powerful tool to manage this risk. If the debtor acknowledges the debt in writing, this action interrupts the existing limitation period and starts a new, 10-year period from the date of acknowledgment. Securing such an acknowledgment can be a key strategic goal during amicable negotiations.

What if your Czech debtor becomes insolvent?

Another major risk of delay is that your debtor may become insolvent. The moment insolvency proceedings are officially opened, all individual enforcement actions against the debtor are automatically stayed. You can no longer pursue your claim through a standard lawsuit or exekuce.

Instead, all creditors must register their claims within a strict deadline in the official insolvency register. The debtor's assets are then liquidated or restructured under the supervision of an insolvency trustee. Creditors are divided into classes (e.g., secured and unsecured), and recovery rates for unsecured creditors are often very low, sometimes only a few percent of the original claim. It is also important to note that a company's management can be held personally liable for damages caused to creditors if they fail to file for insolvency in a timely manner.

Risks and penalties	How ARROWS helps
Claim becomes unenforceable due to the 3-year statute of limitations (promlčení) expiring.	Legal consultations to assess claim validity – Is your claim still valid? Write to office@arws.cz.
Debtor declares insolvency, freezing all individual enforcement actions and drastically reducing recovery chances.	Representation in insolvency proceedings – Need to file a creditor claim? Contact us at office@arws.cz.
Debtor fraudulently transfers assets to hide them before you can secure a judgment or begin enforcement.	Help with obtaining interim measures to freeze assets – Protect your claim by emailing us at office@arws.cz.
Debtor provides an incorrectly worded acknowledgment of debt, failing to properly restart the 10-year limitation period.	Contract drafting for debt acknowledgment – Secure your claim by writing to office@arws.cz.

Your next step to recovering your assets

Navigating the Czech debt recovery process requires a clear understanding of local laws, strict adherence to procedural deadlines, and a strategy tailored to the unique challenges of cross-border collection. From the mandatory předžalobní výzva to the final exekuce, each step presents opportunities for success and risks of failure.

As a leading Czech law firm in Prague, EU, ARROWS provides comprehensive legal support to Swiss and other international clients at every stage of this process. Our services include:

• Drafting legally compliant pre-action letters to secure your right to cost recovery.
• Preparing and structuring evidence for a fast-track platební rozkaz.
• Full representation in Czech court proceedings if a claim is disputed.
• Managing the recognition and enforcement of Swiss judgments under the Lugano Convention.
• Overseeing the final exekuce process to ensure maximum recovery.

Do not let unpaid invoices harm your business. Take the first step towards recovering your funds today. For a professional assessment of your case and to discuss your legal options, contact our team of experienced lawyers.

Get tailored legal solutions by writing to office@arws.cz.

FAQ – Most common legal questions about Czech debt recovery for Swiss companies

1. What is the general statute of limitations for a commercial debt in the Czech Republic?
The general limitation period is three years from the invoice's due date. However, a written acknowledgment of the debt by the debtor can restart the clock and create a new 10-year limitation period. To verify if your claim is still enforceable, contact our lawyers at office@arws.cz.

2. How much does it cost to collect a debt through the Czech courts?
Costs consist of court fees (typically 5% of the claimed amount for a standard lawsuit) and legal fees, which vary with the case's complexity. Crucially, if you win and have followed all procedural rules (like sending the pre-action letter), these costs are generally recoverable from the debtor. For a detailed cost assessment of your case, email us at office@arws.cz.

3. Can ARROWS help even if the debt is small?
Yes. While cost-effectiveness must always be considered, streamlined procedures like the platební rozkaz are designed to handle claims of all sizes efficiently. We provide honest, practical advice on whether pursuing a smaller debt is financially viable for your business. Do not hesitate to contact our firm for an assessment – office@arws.cz.

4. Do I need to provide original documents to the court?
For the initial filing of a platební rozkaz, certified copies of key documents are usually sufficient. However, you must retain all original documents, as the court may require them later, especially if the debtor objects and the case proceeds to a full hearing. Need legal help organizing your documentation? Contact us at office@arws.cz.

5. How long does the entire debt recovery process take?
An amicable settlement can be reached in a matter of weeks. A fast-track payment order can result in an enforceable title in a few months. However, a contested case or the enforcement of a foreign judgment can take 1 to 2 years if opposed. For a timeline specific to your case, get in touch at office@arws.cz.

6. What is the main difference I should be aware of compared to collecting a debt in Switzerland?
The most critical difference is the emphasis on evidence. The Czech system requires you to present strong documentary proof of your claim from the very beginning, even for fast-track procedures. This is unlike the Swiss process, where a creditor's claim alone can initiate proceedings. Proper evidence preparation is key to success in the Czech Republic. Get expert help by writing to office@arws.cz.

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