How can a Portuguese company litigate in the Czech Republic

When your Portuguese company faces a commercial dispute in the Czech Republic, the path forward can seem unclear. You need to understand your rights, the local court procedures, and the potential risks involved. This guide provides specific answers to your legal concerns. As a leading Czech law firm in Prague, European Union, with extensive experience helping foreign clients, ARROWS offers the clarity and strategic guidance necessary to navigate these challenges. Our team includes English-speaking lawyers ready to protect your business interests in any Czech legal matter.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.

The First Crucial Decision: Where Should You File Your Lawsuit?

The initial choice of where to file a lawsuit is not a mere formality; it is a critical strategic decision that can profoundly impact the cost, duration, and outcome of your dispute. Many foreign companies assume they must litigate in the Czech Republic, but EU law often provides more advantageous options. An initial jurisdictional analysis is the most valuable first step you can take.

Understanding Jurisdiction Under the EU's Brussels I bis Regulation

Since both Portugal and the Czech Republic are member states of the European Union, cross-border commercial disputes are primarily governed by Regulation (EU) 1215/2012, commonly known as the Brussels I bis Regulation. This regulation creates a predictable legal framework by establishing a uniform set of rules for determining which country's courts have jurisdiction, and it ensures that a judgment from one member state is recognized across the EU.

The general rule of the Regulation is that a defendant should be sued in the courts of their home country. This principle, known as actor sequitur forum rei, means that if your Portuguese company is suing a Czech business, the default jurisdiction would be the Czech courts. This rule is designed to protect the defendant, who would otherwise face the difficulty of defending a case abroad.

Strategic Exceptions That Can Work in Your Favor

The Brussels I bis Regulation contains powerful exceptions that can allow your company to initiate legal action in a more favorable location, including Portugal. Understanding these exceptions is key to forming an effective litigation strategy. The most relevant exceptions for commercial matters include:

• Matters Relating to a Contract: You can sue in the courts for the "place of performance of the obligation in question". For example, if your contract required a Czech supplier to deliver goods to your facility in Lisbon, a breach of that delivery obligation could potentially be litigated in Portuguese courts.
• Matters Relating to Tort: In cases of non-contractual harm (a tort), you can sue in the courts for the "place where the harmful event occurred". If a defective component manufactured in the Czech Republic caused a fire at your factory in Porto, you may have the choice to sue in Portugal, where the damage occurred.
• Choice of Court Agreements: If your contract contains a clause explicitly stating that the courts of a specific country (e.g., Portugal) will have exclusive jurisdiction, EU courts will generally uphold this agreement. This is a powerful tool for managing future legal risk.

Our lawyers at ARROWS regularly provide legal opinions on jurisdictional matters, helping clients determine the most advantageous venue for their dispute before any action is filed.

FAQ – Legal tips about choosing the right court

1. Our contract is with a Czech company but doesn't specify a court. Where do we sue?

The default rule under the Brussels I bis Regulation is to sue the defendant in their home country, which would be the Czech Republic. However, exceptions may apply based on where the contract was to be performed. For a full analysis of your options, contact us at office@arws.cz.

2. Can we sue the Czech parent company's branch in Portugal?

Yes, under certain conditions. The Regulation allows you to sue a company at the location of its branch if the dispute arises directly from the operations of that branch. We can assess if this applies to your case. Need legal help? Contact us at office@arws.cz.

3. What if our contract says all disputes must be handled in German courts?

A valid "choice of court" clause is generally binding and will grant German courts exclusive jurisdiction, overriding the default rules. Our lawyers are ready to assist you with contract reviews – email us at office@arws.cz.

The Czech Litigation Process: A Step-by-Step Roadmap

If the dispute must be resolved in the Czech Republic, it is essential to understand the local court structure and procedural rules. The Czech legal system is a continental civil law system, which has important differences from other legal traditions, including some aspects of Portuguese procedure.

The Structure of Czech Commercial Courts

The Czech Republic has a four-tier system of general courts: District Courts, Regional Courts, High Courts, and the Supreme Court. For most significant commercial disputes involving foreign companies, the proceedings will begin in one of the eight Regional Courts (krajské soudy). These courts have first-instance jurisdiction over complex commercial cases, including those related to intellectual property, competition law, and disputes between corporations.

Appeals from Regional Courts are heard by one of the two High Courts (in Prague or Olomouc), and the final court of extraordinary appeal is the Supreme Court, located in Brno.

Key Stages of a Commercial Lawsuit

A commercial lawsuit in the Czech Republic is a structured process governed by the Code of Civil Procedure (Act No. 99/1963 Coll.). The process demands that your case be fully prepared from the very beginning, as opportunities to introduce new facts or evidence later are severely limited.

The key stages are:

1. Filing the Action (Žaloba): The process begins when the plaintiff files a formal written statement of claim with the competent court. This document is not a simple notice; it must be a comprehensive submission containing all the facts of the case, a reference to all supporting evidence, and a precise statement of what is being demanded from the defendant.

2. Defendant's Response: The court will officially serve the claim on the defendant, who is then given a deadline to file a detailed written response presenting their counter-arguments and evidence.

3. The Hearing and Taking of Evidence: The court schedules a hearing where the judge actively participates in the examination of evidence. This may include reviewing documents, hearing witness testimony, and considering expert opinions. Unlike some systems, the process is concentrated and aims for efficiency.

4. Judgment and Appeal: After the hearing, the court issues a first-instance judgment. A dissatisfied party can file an appeal with the competent High Court, but this must be done within a strict 15-day deadline from the delivery of the written judgment.

Understanding the Judge's Role and Evidence Rules

The Czech procedural environment presents two critical features that foreign companies must understand to avoid fatal mistakes.

First, there is no extensive pre-trial "discovery" process as seen in common law jurisdictions. You cannot file a lawsuit and then hope to find the evidence you need through a "fishing expedition" by demanding documents from the other side. You must build your case based on the evidence you already possess or can specifically identify and request.

Second, while the judge takes an active, inquisitorial role in questioning witnesses and managing the hearing, the burden of proof (důkazní břemeno) rests entirely on the party making a claim. You must proactively submit evidence to prove every assertion you make. The judge will not build your case for you.

These rules, combined with the general prohibition on introducing new facts or evidence at the appeal stage, mean that the pre-litigation phase is the most important part of the entire dispute. Your initial claim must be your complete case. Any failure to present all relevant facts and evidence at the first-instance court is likely irreversible. This makes expert legal preparation before filing not just advisable, but essential for success. 

Critical Procedural Mistakes in Czech Courts

Risks and penalties	How ARROWS helps
Filing an incomplete Žaloba (claim), leading to dismissal. The court may reject a claim that lacks the required factual and evidentiary support from the outset.	Legal analysis and case preparation. We ensure your claim is robust and fully compliant with the Code of Civil Procedure. Want to understand your legal options? Email us at office@arws.cz.
Failing to meet the strict burden of proof. The judge will not build your case for you; insufficient evidence leads to an adverse judgment.	Evidence strategy and management. We help you gather, organize, and present the necessary evidence to substantiate every element of your claim. Get tailored legal solutions by writing to office@arws.cz.
Misunderstanding the timeline for appeals (15 days). Missing the short appeal deadline results in the first-instance judgment becoming final and unchallengeable.	Representation in court. Our lawyers manage all deadlines and procedural requirements, protecting your right to appeal. Need legal representation? Write to office@arws.cz.
Attempting to introduce new evidence at the appeal stage. This is generally forbidden and can fatally weaken your appeal.	First-instance litigation strategy. We focus on presenting a complete and decisive case at the first-instance court to maximize your chances of success. For immediate assistance, write to us at office@arws.cz.

Key Legal Differences: What Every Portuguese Company Must Know

While EU membership creates a common market, it has not created a single legal system. Foreign companies often focus on the commercial merits of their dispute—whether they are "right" or "wrong"—but success in a Czech court often hinges on compliance with procedural rules that can seem unforgiving to outsiders. A perfect case can be lost on a technicality.

The Language Imperative: A Non-Negotiable Rule

All official proceedings in Czech courts must be conducted exclusively in the Czech language. This rule is absolute and extends to all documentation submitted as evidence. Any contract, invoice, email, or expert report written in Portuguese, English, or any other language must be accompanied by an official translation.

Crucially, this cannot be just any translation. It must be prepared by a translator who is officially certified by a Czech court. Submitting a key piece of evidence with an improper translation can lead to the court ruling it inadmissible, potentially destroying your case. This makes procedural compliance as important as the factual strength of your claim.

The Ticking Clock: Czech Statute of Limitations

The rules on when a legal claim expires are another area of significant risk. Czech law uses a dual system for most commercial claims, which is much stricter than the general limitation periods in some other jurisdictions.

• A three-year subjective limitation period. This period begins from the moment you knew, or reasonably should have known, about the basis for your claim (e.g., the damage and the identity of the party at fault).
• A ten-year objective limitation period. This is an absolute deadline that runs from the date the harmful event occurred, regardless of your knowledge.

A critical point to understand is that the Czech court will not consider an expired limitation period on its own initiative. The defendant must explicitly raise the statute of limitations defense (námitka promlčení) in their court filings. If they do, and the court agrees the claim was filed late, it is legally required to dismiss your case, regardless of its merits.

Ensuring Your Victory Counts: Enforcing Judgments Across Borders

Winning a judgment is only half the battle; the ultimate goal is to enforce it and recover what your company is owed. Fortunately, the EU has created a highly effective system for cross-border enforcement, making a Czech judgment a powerful tool across the Union.

The Simplified EU Enforcement Process

Thanks to the Brussels I bis Regulation, a final and enforceable judgment from a Czech court is directly enforceable in Portugal without any special proceedings. The old, cumbersome process of having a judgment recognized by a foreign court (known as exequatur) has been abolished between EU member states.

To enforce your Czech judgment in Portugal, you simply need to provide the Portuguese enforcement authority with two documents:

1. A copy of the Czech court's judgment.
2. A standard certificate issued by the Czech court under Article 53 of the Regulation, confirming the judgment is enforceable.

This streamlined process applies equally in reverse, meaning a Portuguese judgment can be enforced against a debtor's assets in the Czech Republic. ARROWS, as an international law firm operating from Prague, European Union, has extensive experience managing these cross-border enforcement actions.

Practical Steps and Potential Hurdles

While the legal framework is straightforward, practical challenges can arise. Enforcement involves costs, including court fees and fees for the executor, which in the Czech Republic can be up to 15% of the amount recovered. The timeline can also vary significantly. An unopposed enforcement might take 6-12 months, but if the debtor contests the process, it could extend to two years or more.

Successfully navigating this final stage often requires local knowledge to identify the debtor's assets and manage the process with local authorities. Through our ARROWS International network, built over 10 years and spanning 90 countries, we seamlessly coordinate with legal partners in Portugal and elsewhere to ensure your judgment is enforced efficiently, wherever the debtor's assets may be located.

Challenges in Post-Judgment Enforcement

Risks and penalties	How ARROWS helps
Debtor is insolvent or has no assets in the Czech Republic. A Czech judgment is useless if there is nothing to enforce it against locally.	Cross-border enforcement strategy. Leveraging our ARROWS International network, we can enforce your Czech judgment directly in Portugal or other EU states where the debtor has assets. Need legal help? Contact us at office@arws.cz.
Enforcement proceedings are delayed or contested by the debtor. A simple process can become complex and lengthy if the debtor raises procedural objections.	Enforcement management. We handle all communication with enforcement authorities and respond to debtor challenges to ensure the process moves efficiently. Our lawyers are ready to assist you – email us at office@arws.cz.
High costs of enforcement erode the value of the judgment. Fees for courts and executors can be significant, especially in contested cases.	Cost-benefit analysis. We provide a clear assessment of potential enforcement costs versus the likely recovery, helping you make a sound business decision. Get tailored legal solutions by writing to office@arws.cz.

Alternative Dispute Resolution (ADR): Is Court Always the Answer?

Litigation is not always the most effective way to resolve a commercial dispute. Alternative Dispute Resolution (ADR) methods like arbitration and mediation offer faster, more flexible, and confidential alternatives that can preserve business relationships.

Arbitration is a private process where a dispute is decided by one or more impartial arbitrators chosen by the parties. The resulting "arbitral award" is legally binding and enforceable in much the same way as a court judgment. In the Czech Republic, commercial arbitration is often significantly faster than court proceedings, with many cases resolved in under a year. The primary institution is the Arbitration Court attached to the Czech Chamber of Commerce and the Agricultural Chamber of the Czech Republic in Prague.

Mediation is a structured, voluntary negotiation process facilitated by a neutral third party, the mediator. The mediator does not impose a decision but helps the parties reach a mutually acceptable settlement. It is an excellent tool for preserving long-term business relationships. While mediation is voluntary, Czech courts have the power to order the parties to attend at least one initial meeting with a mediator to explore the possibility of a settlement.

FAQ – Legal tips about resolving disputes out of court

1. Is an arbitration award as enforceable as a court judgment?

Yes. The Czech Republic is a signatory to the New York Convention, meaning arbitral awards are widely enforceable both locally and internationally. For assistance with drafting an arbitration clause, write to us at office@arws.cz.

2. Can we be forced to mediate our dispute?

You cannot be forced to reach a settlement, but a Czech court can order you to attend an initial meeting with a registered mediator to consider it. To learn more about mediation, do not hesitate to contact our firm – office@arws.cz.

3. Our contract has an arbitration clause. Can we still go to court?

Generally, no. A valid arbitration clause requires the parties to resolve their dispute through arbitration, and a court will typically refuse to hear the case. For a review of your contract's dispute resolution clause, email us at office@arws.cz.

Your Strategic Partner in Prague: Why ARROWS is the Right Choice

Navigating a commercial dispute in a foreign legal system requires more than just legal knowledge; it requires a strategic partner on the ground who understands both the law and the practical realities of the local business environment.

ARROWS is a leading Czech law firm based in Prague, European Union, with a proven track record of successfully representing international clients. We support over 150 joint-stock companies and 250 limited liability companies, and our ARROWS International network operates in 90 countries worldwide. This unique combination of deep local expertise and global reach allows us to handle every aspect of your cross-border dispute.

Our services for foreign companies include:

• Legal opinions on jurisdiction and case merits.
• Drafting and review of commercial contracts to prevent future disputes.
• Full representation in Czech civil courts and administrative proceedings.
• Representation before the Czech Arbitration Court and in international arbitration.
• Coordination of cross-border judgment enforcement through our international network.
• Preparation of internal company policies to mitigate litigation and regulatory risks.

Do not navigate the complexities of a Czech legal dispute alone. Our team of English-speaking lawyers in Prague is ready to provide the clear, strategic advice your business needs. For a confidential consultation on your case, do not hesitate to contact our firm at office@arws.cz.

FAQ – Most Common Legal Questions About Litigating in the Czech Republic

1. My contract with the Czech company is in English and governed by Portuguese law. Can I still be sued in a Czech court?

Yes, potentially. Jurisdiction under the Brussels I bis Regulation is determined separately from the contract's governing law. If the Czech company is the defendant, the default jurisdiction is the Czech Republic, regardless of the contract's language or choice of law. For a detailed analysis, email us at office@arws.cz.

2. How long does a typical commercial lawsuit take in the Czech Republic?

While fast-track proceedings exist, a standard first-instance commercial lawsuit can take one to two years. An appeal can add another one to two years to the process. To discuss your case's potential timeline, contact our lawyers at office@arws.cz.

3. What are the biggest procedural risks for a foreign company in a Czech court?

The three biggest risks are: missing the short three-year statute of limitations; submitting key evidence without a certified Czech translation, rendering it inadmissible; and failing to present your entire case at the first-instance hearing, as new evidence is generally barred on appeal. Our firm can help you avoid these pitfalls. Get immediate assistance by writing to office@arws.cz.

4. Can I recover my legal fees if I win the case?

The successful party is entitled to compensation for legal costs, but the amount is calculated according to a statutory tariff set by law. This amount often does not cover the full, actual fees charged by your lawyer. Need to understand the potential costs? Contact us at office@arws.cz.

5. We received a fine from a Czech authority, not a lawsuit. Is the process different?

Yes, administrative penalty proceedings are governed by the Administrative Code and have their own strict rules and very short deadlines, often just 15 days for an appeal. It is critical to act immediately. Our lawyers regularly handle these matters and can assist you. For urgent help, email us at office@arws.cz.

6. Why should I choose a Czech law firm like ARROWS instead of using my company's lawyer in Portugal?

While your Portuguese lawyer is an expert in your home jurisdiction, success in a Czech court depends on deep, practical knowledge of local procedural law, language, and judicial practice. As a leading Czech law firm in Prague, EU, with extensive experience representing foreign clients, we provide that essential local expertise. Let's discuss how we can help – write to us at office@arws.cz.

Don't want to deal with this problem yourself? More than 2,000 clients trust us, and we have been named Law Firm of the Year 2024. Take a look HERE at our references.