How to collect debts in the Czech Republic: A legal guide for USA businesses

American businesses operating in the Czech Republic face a critical challenge when international clients fail to pay. The Czech debt collection system differs fundamentally from U.S. procedures, requiring different strategies, timelines, and legal tools. This guide explains exactly what American companies need to know to recover unpaid invoices efficiently, avoiding costly procedural mistakes.

Understanding why Czech debt collection differs from U.S. practice

When an American company pursues debt collection in the Czech Republic, success depends on understanding how the Czech legal system structures recovery. The process is not simply a matter of filing suit and waiting for judgment. Instead, Czech law requires creditors to follow specific preliminary steps, use specialized court procedures, and navigate enforcement through licensed bailiffs rather than marshals.

The Czech Code of Civil Procedure (Act No. 99/1963) creates a structured framework that differs dramatically from U.S. state court procedures. Most significantly, Czech law requires creditors to send a formal pre-action demand letter at least seven days before filing any claim. This is not optional—failing to complete this step correctly means losing the right to recover legal costs even if the court awards judgment in your favor.

The timeline difference is equally important. American businesses often assume Czech court proceedings move faster than U.S. litigation. In reality, obtaining a final judgment typically takes two to three years if the debtor contests the claim, with court backlogs creating delays that frustrate foreign creditors. However, uncontested claims move significantly faster through a simplified procedure called the platební rozkaz (payment order).

microFAQ 

1. Is my U.S. contract enforceable in Czech courts?
Yes, provided it includes proper Czech jurisdiction and choice of law clauses. However, Czech courts interpret contracts using their own Civil Code provisions, not common law principles. The court may also find implied obligations of good faith that go beyond what your contract explicitly states.

2. Do I need a Czech lawyer before filing a debt collection claim?
While not mandatory for filing, the procedural complexity is so significant that American companies without Czech legal representation make critical errors. The pre-action letter must meet specific formal requirements, evidence must be properly documented, and filing deadlines are absolute.

3. What happens if I file a claim without sending the required pre-action letter?
The court will still decide your case on the merits, but you will lose the right to recover legal fees and court costs from the debtor, even if you win. Depending on the claim size and legal representation costs, this mistake can effectively consume a significant portion of the recovered amount.

The pre-litigation phase: Why the pre-action letter matters

The preliminary stage of Czech debt collection is where American companies make their costliest mistakes. Under Czech law (Section 142a of the Code of Civil Procedure), before filing any formal legal action, a creditor must send a specific demand letter ( předžalobní výzva ) to the debtor's delivery address. This letter must be sent at least seven days before filing the lawsuit.

This requirement exists in many legal systems, but Czech law enforces it with particular strictness regarding cost reimbursement. The letter must meet formal requirements that go beyond a simple email reminder. While personal delivery is not strictly required, the letter should be sent via registered mail or data box ( datová schránka ) to create irrefutable proof of sending.

The practical reality is that this pre-litigation phase, while straightforward in concept, contains multiple hidden traps. The letter must state the precise amount due, the underlying invoice or contract, the due date, and a clear warning about legal consequences. If the letter is vague or fails to provide sufficient detail, Czech courts may later rule that the creditor did not properly warn the debtor.

Research shows that a significant percentage of commercial debt cases in the Czech Republic resolve successfully without courtroom intervention when handled through this pre-litigation phase by experienced legal counsel. This statistic reveals an important truth: the amicable settlement phase, managed professionally, recovers funds faster and more reliably than litigation.

The pre-litigation phase also offers an opportunity to negotiate structured payment plans (acknowledgment of debt agreements) or partial settlements. ARROWS Law Firm regularly manages this phase for international clients, preparing legally compliant demand letters that protect creditors' rights while creating maximum incentive for voluntary payment. The lawyers at ARROWS Law Firm understand that for American businesses unfamiliar with Czech procedure, this phase requires local expertise.

microFAQ

1. Can I send the pre-action letter myself or through my Czech business partner?
You can send it, but it must meet strict formal requirements to ensure cost recovery eligibility. The letter must contain specific elements and be sent to the correct address recorded in the Commercial Register. American companies that handle this informally often discover later that the letter does not count legally for cost reimbursement purposes.

2. What if the debtor ignores the pre-action letter?
If the debtor does not respond within the letter's deadline, you proceed to court. However, the failed response strengthens your strategic position. Furthermore, sending the letter satisfies the statutory condition for claiming reimbursement of legal costs.

3. Can I settle the debt for less than the full amount in writing?
Yes, and written settlement agreements are enforceable in Czech courts. Ideally, such agreements should take the form of a Debt Acknowledgment with a repayment schedule or a Notarial Deed with direct enforceability clause ( přímá vykonatelnost ), which allows you to bypass the lawsuit entirely if payment fails. ARROWS Law Firm can prepare these instruments to prevent future litigation.

Choosing between the fast-track payment order and full litigation

Once the pre-action letter deadline passes without payment, American businesses face a critical strategic choice: pursue a simplified payment order procedure ( platební rozkaz ) or file a full lawsuit. This decision determines whether your claim reaches enforceability in weeks or years.

The payment order procedure applies only when the debt is clear and undisputed, meaning the creditor's right to payment flows obviously from the facts presented. The debtor cannot claim the invoice was never received, that services were never performed, or that the amount is incorrect—at least not credibly. The court reviews the application and evidence without holding a hearing.

If satisfied, the court issues the payment order within weeks to a few months. The debtor then has 15 days from service to file an objection ( odpor ). If no objection arrives, the order becomes final and enforceable immediately—a powerful advantage for creditors seeking rapid collection.

What makes the payment order attractive for American businesses is its speed and cost efficiency. However, the procedure has a critical weakness: it requires the creditor's application to be perfectly prepared from the outset. Unlike U.S. discovery procedures where parties develop evidence over months, Czech payment order applications must include all supporting documentation immediately.

For undisputed claims, this straightforward approach works efficiently. For disputed claims—where the debtor has legitimate grounds to contest liability—the payment order procedure may fail. Once the debtor files an objection ( odpor ), the payment order is cancelled in full, and the case automatically transforms into ordinary civil proceedings.

American businesses unfamiliar with Czech procedure often misjudge whether their claims are "disputed" enough to require full litigation. Experienced Czech legal counsel evaluates this reality early, determining whether the payment order path is realistic or whether full litigation strategy is necessary from the outset.

The payment order procedure also comes in an electronic version ( elektronický platební rozkaz ). Following recent legislative changes effective from July 2024, the previous financial limit of CZK 1,000,000 has been removed, making this tool available for larger claims as well. This digital procedure offers reduced court fees and can be filed entirely online.

The European Payment Order: A powerful alternative

For American companies whose Czech debtors maintain assets in other European Union countries, the European Payment Order (EOP) provides a streamlined cross-border collection tool. The EOP procedure applies when the creditor and debtor are in different EU member states (all except Denmark). Note that for a U.S. entity, the cross-border element within the EU must be present.

The EOP application process is deceptively simple. The creditor completes a standard Form A, providing identification of both parties, the claim amount, and supporting documentation. Critically, if no opposition arrives, the EOP becomes automatically enforceable across all EU member states without requiring separate recognition proceedings ( exequatur ).

The practical advantage for American businesses is significant. If your Czech debtor is actually a subsidiary or branch of a larger European company, the EOP can reach assets across the EU more efficiently than separate national proceedings. However, the procedure contains a hidden procedural trap that foreign creditors frequently overlook.

If the debtor files even a simple statement of opposition, the EOP procedure terminates immediately, and the case transfers automatically to ordinary civil proceedings. This procedural pivot is why ARROWS Law Firm recommends having Czech counsel prepared from the outset if pursuing the EOP route.

For American companies with multiple Czech customers or ongoing business relationships, the EOP provides standardized tooling for consistent enforcement. However, success requires understanding when the procedure applies and preparing applications with precision. The specialists at ARROWS Law Firm combine deep knowledge of both national Czech procedures and cross-border EOP requirements.

microFAQ

1. If I obtain an EOP against my Czech debtor, can I enforce it immediately in other EU countries?
Yes—the EOP is enforceable across all EU member states except Denmark without separate recognition proceedings. However, you must request the court to declare the EOP enforceable (using Form G) after the opposition period expires.

2. What happens if my Czech debtor files opposition to the EOP?
The EOP procedure terminates, and the case automatically converts to ordinary civil proceedings under Czech law. You must then navigate full litigation, which is substantially more complex and time-consuming. This is why advance legal planning matters—counsel can assess opposition risk and prepare accordingly.

3. Can I file an EOP for a claim that is partially disputed?
No—the EOP requires an undisputed monetary claim. If the debtor has any legitimate grounds to contest liability, amount, or performance, the national Czech payment order or full litigation is more appropriate. Professional assessment of dispute risk prevents wasted effort on an unsuitable procedure.

When full litigation becomes necessary: Ordinary civil procedure

If the debtor disputes the claim or the payment order procedure is unsuitable, American businesses must pursue ordinary civil litigation in Czech courts. This is where the procedural differences from U.S. practice become most apparent, and where American companies frequently make costly errors without experienced local guidance.

The burden of proof rests on the creditor. The court does not investigate the case independently; instead, it evaluates evidence that the creditor presents, guided by principles of civil law. This means American companies must build a complete factual case before filing—all invoices, contracts, payment terms, delivery evidence, and communications demonstrating the debt.

The claim itself must be precisely drafted in Czech, identifying the parties correctly (which requires verifying the exact legal entity name and identification number - IČO - in the Commercial Register). A poorly drafted claim—one that contains errors in party identification or insufficient evidence—may be rejected or result in an unfavorable judgment.

Court fees for ordinary litigation are 5% of the claimed amount for claims up to CZK 40 million. This is similar to payment order fees but with substantially higher overall costs because the litigation will likely last one to three years. During that time, the debtor can appeal any unfavorable trial court judgment, triggering appellate proceedings that add another 6–12 months.

The requirement for official certified translations of all English-language documents adds both cost and complexity. Every invoice, contract, email, or other evidence submitted in English must be accompanied by an official Czech translation prepared by a court-appointed translator. American companies that underestimate this requirement often find themselves unable to present evidence.

Throughout ordinary litigation, the Czech court applies Czech law to contract interpretation, liability, and remedies, unless a valid choice of law clause points to U.S. law. Czech courts may find implied obligations or restrictions on creditor behavior that go well beyond what the contract's text explicitly states.

The simplified payment order procedure: Speed and efficiency

For American businesses with straightforward undisputed debts, the simplified payment order procedure ( platební rozkaz ) offers the most efficient path to an enforceable judgment. The procedure is designed specifically for claims where the creditor's right to payment flows clearly from documented facts: unpaid invoices with clear payment terms or written agreements.

The payment order application is submitted in writing and includes the creditor's identification, debtor's identification, description of the debt with supporting evidence, and the claimed amount. If satisfied that the claim is founded in fact and law, the court issues the payment order without a hearing, without the debtor being present or heard.

The payment order is then served on the debtor personally (or to their data box). The debtor receives the order and has exactly 15 days from service to either pay the claimed amount or file an objection. This 15-day window is absolute—missing it means the debtor loses the right to contest the claim.

What transforms this simple procedure is when the debtor files an objection. The moment the debtor objects (a simple "I object" is often sufficient to cancel the order), the simplified procedure ends, and the case converts to ordinary civil litigation. All the complexity, cost, and timeline uncertainty of full litigation suddenly applies.

For American businesses operating remotely from the United States, the electronic payment order is particularly attractive because it can be filed entirely online. The lawyers at ARROWS Law Firm regularly prepare payment order applications for international clients, ensuring that all required elements are present and evidence is properly organized.

microFAQ

1. What supporting documents must I include with my payment order application?
The application must include all evidence supporting the claim: the invoice, contract, proof of service or delivery, payment terms, any communication with the debtor, and evidence that payment was not received. Do not rely on the court to request missing evidence—include everything necessary to prove the debt from the outset.

2. If I include too much evidence, will the court be confused?
No—organize evidence logically with clear references in the application text. The court can review substantial documentation. However, poorly organized or confusing evidence can result in rejection.

3. Can I file a payment order if the debtor claims quality problems with delivered goods or services?
Not through the simplified payment order procedure—that claim is disputed. In this scenario, ordinary civil litigation is necessary because the quality of performance is contested. However, if you have evidence that the debtor accepted the goods or services without complaint, that strengthens the argument that the claim is undisputed.

Enforcement of judgments: Converting court decisions into actual payment

Obtaining a Czech court judgment is only half the battle. The judgment is worthless unless enforced. This is where American businesses often discover that Czech enforcement procedures differ fundamentally from U.S. practice, and where local expertise becomes essential.

Czech enforcement ( exekuce ) is carried out not by court marshals but by licensed private bailiffs called soudní exekutor . Once the creditor obtains an enforceable judgment or payment order, the creditor files an enforcement application with a chosen exekutor, who is then authorized by the court to proceed.

The exekutor, not the court, generally determines which enforcement method to use—bank account seizure, wage garnishment, asset seizure, or real estate attachment. This discretion means the exekutor's expertise and aggressiveness directly impact collection success. A passive exekutor might fail to identify available assets.

The enforcement process begins when the exekutor sends the debtor a notice demanding voluntary payment within a specified period—typically 30 days. If payment is not received, the exekutor can immediately freeze bank accounts, garnish receivables, or seize movable property. For bank accounts, the exekutor can seize funds, but Czech law protects certain minimum amounts.

The timeline for enforcement varies dramatically depending on asset location and complexity. Some enforcement cases resolve in months, while others require years. The exekutor's reward and costs are statutorily regulated and are added to the debt to be paid by the debtor.

For international creditors, enforcement presents particular challenges. The creditor must locate the debtor's assets, which is difficult without intimate knowledge of Czech banking practices. The bailiffs at ARROWS Law Firm's network have established relationships with exekutors throughout the Czech Republic and understand where Czech businesses typically hold assets.

The enforcement process also reveals debtor assets that might not have been obvious during litigation. If a debtor lacks liquid assets but owns real estate or business interests, enforcement strategy must shift to address those assets differently. This dynamic adjustment requires expertise that American businesses lack without local counsel.

Executive summary for management

Czech debt collection involves multiple mandatory procedural steps that appear simple in concept but contain numerous technical traps. Mistakes in pre-action letter requirements, payment order strategy, or evidence preparation can destroy collection probability or dramatically extend timelines. Management must understand that individual steps that seem straightforward contain procedural exceptions.

Obtaining an enforceable judgment in contested cases takes 2–3 years in the Czech system, compared to U.S. civil litigation that often resolves faster. Strategic selection between payment orders, European Payment Orders, and full litigation requires professional assessment early in the process, as choosing the wrong procedure wastes months and requires expensive refiling.

Cross-border enforcement involves complex asset recovery. Once judgment is obtained, Czech enforcement is managed through private bailiffs (exekutors) rather than court officers. Debtor asset location requires intimate knowledge of Czech banking practices and registries that American companies lack.

Commercial claims are generally time-barred after three years under the Czech Civil Code, with no judicial discretion to extend deadlines once missed. Creditors must act promptly once payment is due, as delays approaching the three-year mark create irreversible loss of collection rights.

ARROWS Law Firm handles these collection matters daily for international clients. The specialists at ARROWS Law Firm combine deep knowledge of Czech procedure with experience in cross-border disputes, reducing client time investment and minimizing procedural errors.

Conclusion

Collecting unpaid debts from Czech businesses presents American companies with both opportunities and challenges. The Czech legal system offers efficient tools—particularly the payment order procedure and the European Payment Order—that enable relatively fast recovery of undisputed claims. However, success requires understanding procedural requirements that differ fundamentally from U.S. practice.

The critical insight is that the early stages of Czech debt collection determine whether you recover funds efficiently or waste months and money on procedural mistakes. American businesses that rush to court without understanding Czech procedure often find themselves unable to recover legal costs or forced into years of litigation.

The lawyers at ARROWS Law Firm have extensive experience representing American and international businesses in Czech debt collection, from pre-litigation settlement negotiations through enforcement of final judgments. The firm combines deep knowledge of Czech procedure with practical experience identifying debtor assets.

Write to office@arws.cz and let the experienced specialists at ARROWS Law Firm assess your situation and recommend the optimal collection strategy for your specific circumstances.

FAQ – Frequently asked legal questions about debt collection in the Czech Republic

1. What is the fastest way to collect a debt from a Czech business?
If the debt is genuinely undisputed—meaning the invoice is clear, services were performed, and the debtor cannot legitimately claim the debt is invalid—the simplified payment order procedure ( platební rozkaz ) is fastest. This procedure can result in an enforceable judgment within weeks to a few months, compared to 2–3 years for contested litigation. However, the procedure requires perfect preparation and complete supporting evidence from the outset.

2. Do I have to send a demand letter before filing a lawsuit in Czech courts?
Yes. Czech law (Code of Civil Procedure) requires creditors to send a formal pre-litigation call ( předžalobní výzva ) at least seven days before filing any legal claim to be eligible for reimbursement of legal costs. While not mandatory for the validity of the lawsuit itself, skipping this step usually means you cannot recover your attorney's fees or court fees from the debtor, effectively penalizing you.

3. How long does it take to get a judgment from a Czech court?
Timeline depends on whether the claim is contested. For undisputed claims pursued through the payment order procedure, you can obtain an enforceable judgment within 2–6 months. For contested claims pursued through ordinary civil litigation, obtaining a final judgment typically takes 2–3 years, assuming appeals are pursued. The initial court decision may arrive within 12–18 months.

4. If I obtain a Czech court judgment, can it be enforced in the United States?
Czech judgments can generally be recognized and enforced in U.S. courts, but the process is not automatic. You must file a separate recognition proceeding in U.S. court to obtain an enforceability order. This process can take 12–24 months depending on the jurisdiction and whether the debtor contests it. For debts where the Czech debtor maintains Czech assets, it is typically more efficient to enforce the judgment in the Czech Republic.

5. What happens if I cannot find the debtor's registered address in the Czech Republic?
Service of process requires the debtor's valid address. However, Czech entities are legally required to maintain a registered office listed in the Commercial Register. Delivery to this address is generally considered effective even if the debtor does not physically collect the mail (fiction of delivery). ARROWS Law Firm checks the official Commercial Register and other databases.

6. What fees will I have to pay to enforce a judgment through a Czech bailiff?
Court fees typically run 5% of the claimed amount for obtaining the initial judgment (4% for electronic payment orders). In the enforcement phase, the bailiff's ( exekutor ) fees are set by a statutory tariff (sliding scale starting at 15% of the recovered amount) plus overheads and VAT. These enforcement costs are added to the debt and collected from 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, legal regulations 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.