How Portuguese companies can recover debts in Czechia: Comprehensive legal guide

A Portuguese company that does not receive money from a Czech debtor does not have to give up on this debt. The Czech Republic is a member state of the European Union, and there are specific procedures that enable effective debt collection. This article explains how debt collection works in Czechia, what your rights are, and what you need to know to avoid unnecessary costs.

Why debt collection abroad is different and what this means for your company

When a debtor in the Czech Republic does not pay your invoice, it is not the same situation as if you had a dispute with an entity in Portugal. Thousands of companies experience this reality every year, and without the right legal plan, they can lose not only money, but also time and incur additional costs. The key factor is that the enforcement of decisions beyond the borders of a nation state is governed by specific European Union regulations and international conventions.

For your Portuguese company, this means that you cannot approach the matter solely from the perspective of domestic law. You need to understand the structure of the European legal system for debt collection and choose the most effective tools for your specific situation. The experts at ARROWS Law Firm have many years of experience in cross-border debt collection and will help you understand which approach will be most effective for you.

Would you like to know how we can help you in this area? Take a look at our service [LINK _SERVICE: "Debt collection"].

Legal basis for debt collection from one EU country to another

When it comes to debt recovery from Portugal in the Czech Republic, there is a comprehensive legal framework that makes this possible. It starts with the fact that both countries are members of the European Union and are subject to the same principles of judicial cooperation. The cornerstone of this system is Regulation (EU) No 1215/2012 of the European Parliament and of the Council, known as the Brussels I bis Regulation.

This regulation abolished the so-called "exequatur" process, which previously meant that a creditor had to initiate interim legal proceedings in the debtor's country just to have a foreign judgment recognised. Today, it is simpler. A final judgment issued by a court in Portugal in civil and commercial matters is directly enforceable in the Czech Republic without further lengthy recognition proceedings.

MicroFAQ - Legal tips for cross-border debt recovery

1. Am I correct in understanding that a judgment issued in Portugal will also be valid in Czechia?

Yes, if the judgment was issued by a court of an EU Member State in civil and commercial matters and is enforceable, it is automatically valid in the Czech Republic without further approval. It is sufficient to obtain a certificate of enforceability in accordance with Article 53 of the Brussels I bis Regulation, which is issued by the original court.

2. Does this mean that, as a Portuguese company, I can enforce my claim directly in a Czech court?

That depends on how your case is structured. In many cases, yes – you can file a lawsuit directly with a Czech court, especially if the debtor is based in the Czech Republic. Lawyers from ARROWS Law Firm will help you determine whether this is more advantageous for you in terms of procedure than suing in Portugal.

3. How long will it take to enforce the decision in the Czech Republic?

Thanks to the Brussels I bis Regulation, the recognition phase is eliminated, which speeds up the process by months. The actual enforcement of the decision (execution) then depends on locating the debtor's assets, which is usually a process that takes months.

Choice of competent court and applicable law

When enforcing a claim in a cross-border context, it is absolutely critical to realise that there is a difference between which country you choose for the proceedings (jurisdiction) and which law will govern the case (applicable law). The choice of court and law can mean the difference between a quick win and a years-long dispute.

The general rules under the Brussels I bis Regulation stipulate that an action may be brought where the debtor is domiciled. If your debtor is a Czech company, then the competent court is a Czech court. This rule is based on the fundamental principle of protecting the defendant, but there are exceptions; for example, in the case of contractual performance, it is often possible to sue in the place where the goods were to be delivered.

If you have agreed on a choice of law and jurisdiction clause (prorogation clause) in the original contract with your Czech debtor, this agreement is usually respected. This means that you could have agreed that the dispute will be resolved by a court in Lisbon under Portuguese law. Such an agreement greatly simplifies the situation for you.

If the dispute is decided by a Czech court under Czech law, this is not automatically a bad thing – Czech courts are functional and their decisions are normally enforceable. However, this means that you will need a Czech legal representative. The lawyers at ARROWS Law Firm will help you assess what is best for you in your situation.

Professional legal agreement from the outset

Most often, things get complicated because entrepreneurs enter into contracts without adequate protective clauses. In practice, we have seen dozens of cases where Czech and Portuguese companies agree on a deal verbally or by email, without clear terms for dispute resolution. Specialists at ARROWS Law Firm routinely prepare and review international contracts that eliminate the risk of uncertainty. We also describe our practical experience in this area in one of our references [LINK _REFERENCE: "References for international clients"].

European payment order as a quick way to enforce a claim

If you have an undisputed claim (i.e. one where the debtor does not dispute the debt, but simply does not pay) and it is a civil or commercial matter, the European Union offers you an effective tool: the European Payment Order (EPO) under Regulation (EC) No 1896/2006 of the European Parliament and of the Council.

What is a European Payment Order? It is a simplified procedure for monetary claims. Once you have completed the relevant form and sent it to the competent court, the court should issue an order within 30 days of receiving a valid application. The process is form-based and takes place in writing – you do not need to travel to the Czech Republic in person.

The debtor then receives this order and has 30 days to file an objection. If they do not file an objection, the European Payment Order automatically becomes enforceable throughout the European Union. With this title, you can immediately proceed with enforcement.

The conditions for an EPO are that the claim must be due and payable, and you must specify the exact amount of the principal and interest. If the debtor files an objection, the proceedings do not end, but are transferred to standard court proceedings.

What is the real benefit for your company? While traditional litigation can take longer, a European payment order can get you an enforceable claim within months.

European Small Claims Procedure for lower amounts

If the amount of your claim (excluding interest) does not exceed EUR 5,000, you have another tool at your disposal – the European Small Claims Procedure governed by Regulation (EC) No 861/2007 of the European Parliament and of the Council. This mechanism was created so that the costs of enforcement do not exceed the debt itself.

The advantages are similar to those of the EPR – proceedings are mainly in writing and the decision is recognised throughout the EU. The court conducts the proceedings in such a way as to ensure that they are swift; the judgment should be issued within a few months of the completion of the documentation. The difference is that these proceedings are also designed for disputed cases.

If your claim is worth, for example, EUR 3,000 and the debtor claims that they were promised a discount, the European Small Claims Procedure is the ideal tool. It allows the substantive aspects of the dispute to be resolved without the need for complex oral proceedings (video conferencing can often be used).

European Account Preservation Order and asset protection

There is another very effective tool: the European Account Preservation Order (EAPO) introduced by Regulation (EU) No 655/2014 of the European Parliament and of the Council. This tool is useful in situations where you have reasonable grounds to believe that the debtor will hide their assets to avoid enforcement.

The key advantage is the "element of surprise", as the debtor is not informed of the proposal in advance. If the court issues the order, the bank will freeze the funds in the debtor's account before the debtor finds out. This prevents the money from being diverted.

The condition is that you must at least have filed a lawsuit on the merits of the case or already have an enforceable title, and you must prove to the court that there is a real risk of frustration of enforcement. The EAPO cannot be used independently without a link to the main proceedings on the claim.

Judicial enforcement in the Czech Republic

If the simplified European forms cannot be used, traditional court proceedings in the Czech Republic come into play. This applies in particular to cases that are disputed or factually complex.

How does it work? First, we strongly recommend sending a pre-action letter. Under Czech law, sending this letter to the debtor's last known address is a condition for the court to award you costs. Often, this formal letter from a solicitor's office motivates the debtor to pay.

If the out-of-court route fails, a lawsuit is filed and the court usually first issues a so-called payment order (in Czech domestic law, not to be confused with European law). If the debtor files an objection to it, an oral hearing is ordered.

The length of the proceedings varies from court to court, but in contentious commercial matters, you can expect a timeframe of approximately 1-2 years if the debtor actively defends themselves. After a successful conclusion, you will receive a judgment with a clause of legal force and enforceability.

MicroFAQ - Legal tips for court proceedings

1. How much does it cost to initiate legal proceedings in the Czech Republic?

The court fee is typically 5% of the amount claimed (minimum CZK 1,000) according to Act No. 549/1991 Coll. on court fees. For electronic payment orders, it is 4%. In addition, you must add the costs of legal representation according to the lawyer's tariff or contractual remuneration.

2. Do I have to hire a Czech solicitor?

It is not mandatory for proceedings before a district court, but it is highly recommended. Czech procedural law is formal and complex. Without knowledge of the language and procedures, the risk of procedural errors is enormous.

3. How long will the court proceedings take?

Issuing a payment order can take several weeks to months. If an objection is filed, the dispute proceedings take an average of 1 to 2 years, or even longer in the case of an appeal.

Enforcement as a last resort

Having a judgment (or payment order) in hand is only half the battle. If the debtor does not pay voluntarily, enforcement proceedings begin.

In the Czech Republic, it is standard practice to use court bailiffs, who are private individuals authorised by the state to enforce the law in accordance with Act No. 120/2001 Coll., the Enforcement Code. Bailiffs have powerful powers: they can block and withdraw money from bank accounts, order deductions from wages, and sell movable and immovable property.

The costs of enforcement are primarily borne by the debtor, but the creditor often has to pay an advance on the costs of enforcement. The creditor is free to choose the bailiff, which allows them to select an office with a high enforcement efficiency.

Enforcement of Portuguese judgments in the Czech Republic

If you already have a judgment from Portugal, the situation is favourable thanks to EU legislation. As mentioned, there is no need for complicated recognition proceedings.

The procedure is as follows:

1. In Portugal, you request a certificate of enforceability from the court in accordance with .
2. You will arrange for an official translation of this certificate and the judgment itself into Czech.
3. Submit a direct application for enforcement to a Czech court enforcement officer.

The bailiff will take action on the basis of these documents. The debtor may defend themselves by filing a motion to stay enforcement (e.g. if the commencement of proceedings in Portugal was not delivered), but the burden of proof lies with them.

1. Will the Czech bailiff act on the basis of the Portuguese judgment?

Yes, if it is certified in accordance with the Brussels I bis Regulation. From the bailiff's point of view, it is equivalent to a Czech judgment.

2. How long does translation and preparation take?

An official translation usually takes a few days. The commencement of enforcement after the filing of the application is a matter of weeks.

Practical aspects and what to watch out for

The Czech judiciary communicates exclusively in Czech. All evidence in Portuguese or English must be officially translated for court proceedings, which increases the initial costs.

The courts also require precision in submissions. Czech courts strictly adhere to formal correctness, so an error in the identification of the debtor (ID number, registered office) or an unclear statement of claim will lead to rejection.

In the Czech Republic, you may encounter companies that have no assets and serve only as intermediaries (so-called front companies). Enforcement against such companies is usually unsuccessful, so prevention and verification of partners in the commercial register before concluding a transaction is crucial.

Contractual prevention and contract preparation

The cheapest dispute is one that never arises. We recommend several preventive steps for international trade.

• Choice of law and court: Specify that disputes will be resolved by a court of your choice (e.g. in Portugal) or a court in the Czech Republic, if you prefer.
• Contractual penalty and interest: You can agree on contractual interest or a penalty that will be motivational, but it must be reasonable so that the court does not cancel it. The Czech statutory interest on late payments is linked to the CNB repo rate according to .
• Arbitration clause: Consider arbitration. Arbitration awards are often faster than court rulings and, thanks to the New York Convention, are enforceable worldwide.

Useful tools for creditors

To check your Czech partner, you can use publicly available registers:

• Commercial Register (Justice.cz): Find out the structure of the company, its statutory bodies and whether it is in liquidation. Available on the portal.
• Insolvency Register (ISIR): An essential database where you can find out whether the debtor is subject to insolvency proceedings. If so, you may not file a lawsuit, but must register your claim within strict deadlines. Available at .

ARROWS lawyers automatically check these registers when taking on a case.

Conclusion

Recovering a debt from the Czech Republic is a manageable process for a Portuguese company if you know the right tools. The European Payment Order, account blocking and direct enforceability of judgments make the EU a safer place to do business.

The key to success is speed and expertise, because the sooner you start dealing with the debt, the higher the chance of recovery. Lawyers at ARROWS Law Firm deal with this issue on a daily basis and, thanks to their knowledge of the Czech environment and international law, they can save you both worry and money. Write tooffice@arws.cz for a non-binding consultation on your case.

Remember that ARROWS Law Firm is insured for damages up to CZK 500,000,000, which guarantees you maximum security. You can read about why we handle this area differently than other law firms in the Why ARROWS section [LINK _PROC _ARROWS].

FAQ – Frequently asked questions

1. Can I file a lawsuit directly with a Czech court?

Yes, if the debtor is based in the Czech Republic, the Czech court has jurisdiction. This is often the fastest way to enforce a judgment against assets located in the Czech Republic.

2. What is the difference between a European Payment Order (EPO) and a national payment order?

The EPO is universal for the EU and is also delivered abroad. The Czech payment order is governed by national law and is suitable if you are suing directly in a Czech court under Czech procedural rules.

3. How long does it take to recover a debt?

For undisputed cases with an EPO, it takes around 3-6 months to obtain an enforcement order. For disputed cases, it takes 1-2 years. The enforcement itself depends on the debtor's assets.

4. Can I prevent the debtor from transferring assets?

Yes, by means of a preliminary injunction or a European Account Preservation Order. However, you must act quickly and provide evidence of your concern that the assets will be transferred.

5. What are the costs?

Expect court fees (approx. 4–5% of the amount owed), translation costs and legal representation. If successful, the costs of the proceedings are usually borne by the losing party (the debtor).

Disclaimer: The information contained in this article is for general informational purposes only and serves as a basic guide to the issue. Although we strive for maximum accuracy in the content, laws and their interpretation evolve over time. To verify the current wording of the regulations and their application to your specific situation, it is therefore necessary to contact ARROWS Law Firm directly (office@arws.cz). We accept no responsibility for any damage or complications arising from the independent use of the information in this article without our prior individual legal consultation and expert assessment. Each case requires a tailor-made solution, so please do not hesitate to contact us.