How to collect outstanding payments in the Czech Republic for Latvian businesses: Essential legal steps

If your Latvian company is owed money by a Czech debtor and they refuse to pay, the clock is ticking. The Czech legal system offers efficient tools for debt recovery, but they work only if you follow strict procedural rules from day one—and even small mistakes can cost you thousands in lost legal fees. This article provides Latvian business owners with specific, practical answers to navigate Czech debt collection successfully and protect your company's cash flow.

Understanding the Czech three-year clock: Why time is your enemy

When a Czech customer stops paying, many Latvian businesses assume they have unlimited time to pursue the debt. This assumption can prove financially catastrophic. In the Czech Republic, business-to-business claims are subject to a strict three-year limitation period, known as the promlčení .

This period generally runs from the day the right could be exercised for the first time (typically the day after the invoice due date). After those three years pass, your claim transforms into what Czech law calls a "natural bond"—the debt still exists, but it becomes legally unenforceable if the debtor raises a limitation objection ( námitka promlčení ).

The critical detail that catches many foreign creditors off guard is how this clock works in practice. Sending informal payment reminders, having casual telephone conversations with the debtor, or even engaging in preliminary settlement negotiations does not stop the limitation period from running.

Only formal legal action—filing a court claim or obtaining a court-recognized acknowledgment of the debt from the debtor—interrupts the three-year countdown and creates a new protection period.

For Latvian companies operating in the Czech market, this time constraint creates an additional layer of complexity when coordinating with headquarters or waiting for payment decisions. The cost of international communication and the natural tendency to exhaust informal collection methods first can consume weeks.

Understanding this limitation period and acting decisively within it is therefore not a legal technicality—it is the foundation of any successful collection strategy.

The mandatory pre-action letter: A procedural requirement you cannot skip

Before any Latvian business can hope to recover legal costs from a Czech court, the law requires completion of a specific procedural step. Under Section 142a of the Czech Civil Procedure Code, a creditor must send a formal pre-action letter to the debtor, known as the předžalobní výzva , at least seven days before filing any court claim.

This is not a suggestion, best practice, or courtesy reminder—it is a mandatory legal requirement with severe financial consequences for non-compliance.

The Czech law on this point is strict: if you fail to send this letter, or if you send it but it does not meet strict legal requirements, the court generally refuses to award you reimbursement for legal representation and court fees. This applies even if you win the case on the merits and the debtor owes every penny.

This means your company will be forced to pay all its own attorney fees and court expenses from the recovery, which can easily eliminate 20 to 40 percent of the amount you collect.

The letter must contain specific elements: it must be addressed to the debtor, it must clearly set out the amount claimed and the legal title (e.g., specific invoice or contract), and it must warn the debtor that failure to pay may result in court proceedings. It must also allow the debtor a reasonable time to respond—statutorily at least seven days.

In Czech practice, this typically means sending it by registered mail with a return receipt to the debtor's registered seat, or through the debtor's official electronic data box ( datová schránka ).

Latvian companies often underestimate this requirement because their home jurisdictions may have different or less formal pre-litigation procedures. However, a letter that describes the claim informally or lacks a clear warning about impending litigation will be deemed deficient, leaving your company to bear all its own costs.

The fast-track payment order: Your most efficient collection tool

For undisputed commercial debts—situations where the debtor clearly owes the money and has not raised a genuine dispute about whether they owe it—Czech law provides a powerful accelerated procedure called the platební rozkaz , or payment order.

This procedure is dramatically faster than ordinary litigation and often results in an enforceable judgment within two to six months, compared to the one to three years required for contested disputes.

The payment order process works as follows. You file a formal written application with the competent district court in the Czech Republic, including your claim amount, a brief statement of the facts, and documentary evidence supporting your claim. The court does not hold a hearing and does not require the debtor to respond initially.

The judge reviews only the documentary evidence you submit and, if the judge is satisfied that your claim is well-founded, issues the payment order without the debtor ever being heard.

Once the court issues the payment order, it is officially served on the debtor by the court. The debtor then faces a critical fifteen-day deadline from the date of delivery. During this window, the debtor has two options: pay the full amount due, or file a formal objection known as an odpor .

The debtor does not need to provide any justification for filing the objection—they can simply file it, and the payment order is immediately and automatically cancelled in its entirety.

Once the objection is filed, the case is transferred to ordinary civil litigation, and all the advantages of speed disappear. Despite this vulnerability, the payment order remains the preferred first step for Latvian creditors because the time and cost involved are so much lower than full litigation.

Czech courts heavily favor hard evidence such as signed contracts, invoices clearly showing what goods or services were provided, confirmed delivery notes, and any correspondence where the debtor acknowledges the debt.

For Latvian companies, this means that meticulous record-keeping is not merely good business practice—it is essential to successful debt recovery in the Czech Republic. Every email, delivery receipt, invoice amendment, or written communication with the debtor should be preserved.

The better and more thoroughly you document the transaction, the more likely the Czech court will be satisfied that your claim justifies a payment order without requiring a contested hearing.

microFAQ – Legal tips on the payment order procedure

1. Can I file a payment order if the debtor disputes the invoice amount?
No. The payment order procedure applies only to undisputed claims. If the debtor has already stated that they dispute the amount, the quantity of goods, or the quality of services, the court may reject the payment order application or the debtor will immediately object, moving the case to ordinary litigation.

2. What happens if I file a payment order but the debtor objects?
The payment order is automatically cancelled, and the case is transferred to standard civil litigation. You lose the speed advantage, but the case continues, and you have not lost your right to recover the debt. However, you will then need to be prepared for a full contested proceeding.

3. How much will it cost to file a payment order?
The court fee is 5% of the claimed amount for a standard payment order. For an electronic payment order (only applicable for claims up to CZK 1,000,000), the fee is reduced to 4%. For a EUR 50,000 claim, you would pay approximately EUR 2,500. If you win, the debtor generally reimburses these fees.

The European payment order: When your debtor is in another EU country

If your Czech debtor is actually located in another EU member state, or if you are concerned that the debtor may move assets out of the Czech Republic, you have access to an additional tool: the European Payment Order (EOP) procedure.

This standardized EU-wide process allows you to file a single claim against a debtor in any EU member state (except Denmark) without the need for separate recognition procedures or a declaration of enforceability.

The EOP process mirrors the Czech payment order in many respects. You file a standard application form (Form A) with the competent court. The court typically issues the order within thirty days, and the debtor then has thirty days to pay or file opposition.

If the debtor does not contest the claim, the resulting order is automatically recognized and enforceable in all EU countries, including the Czech Republic, without requiring any separate enforcement proceedings.

However, the EOP procedure does have limitations. Like the Czech payment order, it is vulnerable if the debtor files an opposition. Additionally, the EOP process requires that the debtor be in a different EU member state than the court—it serves primarily cross-border claims.

Our lawyers understand the procedural differences and can advise you on which approach is most efficient for your specific situation.

Contact our experts

When the debtor fights back: Moving to full court litigation

If the debtor objects to a payment order, or if you are forced to pursue a disputed claim from the outset, you enter the world of ordinary civil litigation in the Czech Republic.

This phase is substantially more complex, expensive, and time-consuming than the accelerated payment order procedure.

In contested civil litigation, both you and the debtor submit written arguments, documentary evidence, and potentially witness testimony. The court schedules hearings to assess the evidence and clarify the issues in dispute. The judicial process then proceeds through first instance at the district court level.

If either party is dissatisfied with the district court's decision, they can file an appeal within fifteen days of judgment delivery, which goes to a regional court.

During this extended process, several procedural complexities emerge that are not immediately obvious to foreign litigants. For example, Czech courts place substantial weight on documentary evidence but treat witness testimony and affidavits with much greater caution than some other jurisdictions.

A contract or invoice signed by the debtor will be given significant evidentiary weight, while a witness statement describing an oral agreement to pay will often be treated as secondary evidence.

Additionally, all court proceedings in the Czech Republic are conducted in the Czech language. This means that any documents you submit must be accompanied by an officially certified Czech translation to be considered as evidence.

This means that any documents you submit—even if you have an English-language contract with the debtor—must be accompanied by an officially certified Czech translation to be considered as evidence.

microFAQ – Legal tips on contested Czech court litigation

1. Who pays for court translations if my contract with the debtor is in English?
You must initially pay for the certified Czech translation of any foreign-language documents you submit as evidence. If you win the case, you can generally recover the translation costs from the debtor as part of your legal costs award. However, until the case is decided, these are your own expenses.

2. Can my Latvian lawyer represent me in Czech court?
Your Latvian lawyer can participate, but under EU and Czech rules, they generally need to work in conjunction with a Czech-qualified lawyer ( advokát ) for court proceedings. For proceedings before higher courts, Czech legal representation is mandatory.

3. How long will it take to get a final judgment?
From the date you file the claim until you receive a final, unappealable judgment can take one to three years. If the debtor appeals, add another six months to two years for the regional court proceedings. Contested cases in the Czech Republic require patience.

Strategic evidence: How to build an unbeatable collection case

The foundation of any successful claim in the Czech Republic rests entirely on documentary evidence. This is not simply for your own reference; it is because Czech courts will make their decision based almost exclusively on what you submit in writing.

Before you file any claim—whether a payment order application or a full lawsuit—you must gather and organize all relevant documents that prove your claim.

Your evidentiary package should include: the original signed contract, all invoices issued, delivery notes or proof of performance (ideally signed by the debtor), and any correspondence where the debtor acknowledges the debt. Each document should be clearly labeled so the court can follow the transaction history.

In the Czech Republic, you are entitled to claim statutory default interest ( zákonný úrok z prodlení ), which is set at the Czech National Bank's repo rate plus 8 percentage points.

What you must understand is that Czech courts generally adhere strictly to written contracts and the Civil Code. If your contract is ambiguous, this ambiguity will not necessarily be resolved in your favor based on testimony of intent. The written document controls.

A creditor with perfect performance but weak documentation will often lose to a debtor with questionable conduct but clear, consistent written records.

For Latvian companies, this means that if you have any doubt about the strength of your documentation, it is better to pause and reorganize before filing.

The enforcement stage: Converting judgment into actual payment

Obtaining a judgment from a Czech court is a major achievement, but it is only half the battle. The judgment must then be enforced to result in actual payment. This final stage is called exekuce , or enforcement proceedings.

In the Czech Republic, enforcement is carried out by private bailiffs ( soudní exekutor ) whom you select.

Once you have an enforceable judgment—meaning a final court decision that has not been successfully appealed, or an uncontested payment order—you can file an enforcement proposal. The bailiff is a court-appointed officer with broad legal authority to seize the debtor's assets.

They can freeze and seize funds in the debtor's bank accounts; garnish wages; seize and sell movable property; and place liens on or sell real estate.

One detail that surprises many foreign creditors is that the debtor cannot simply ignore the bailiff. Failure to cooperate can lead to further penalties. However, the timeline for enforcement varies dramatically depending on the debtor's financial situation.

The cost of enforcement is typically borne by the debtor—the bailiff's fees are added to the total debt.

However, if the debtor has no assets, you may ultimately bear the initial costs of the bailiff. This reality creates an important strategic question. Before committing significant time and expense to litigation, it is prudent to conduct basic due diligence on the debtor's financial status.

ARROWS Law Firm regularly conducts this financial due diligence for international clients.

The cost of collection: What you should budget

Understanding the full financial picture of debt collection in the Czech Republic is essential before you commit resources. The costs operate on multiple levels.

For an amicable collection phase—meaning legal demand letters and negotiations—budget EUR 300 to EUR 800 for legal counsel to manage this professionally.

For a payment order procedure, the court fee is 5% of the claimed amount (or 4% for electronic filings up to CZK 1,000,000). Legal fees for preparing the application typically range from EUR 500 to EUR 1,500. If you win, the debtor is ordered to reimburse these costs.

Over a full litigation cycle, a commercial dispute can cost EUR 10,000 to EUR 25,000 in combined fees.

These costs create a practical threshold: for small claims under EUR 5,000, the European Small Claims Procedure is often the most cost-effective approach. However, for substantial claims, professional legal representation is justified to navigate the procedural risks.

ARROWS Law Firm specializes in cross-border collection and can manage your claim efficiently.

Special procedural issues for cross-border collection

As a Latvian business collecting from a Czech debtor, you face additional procedural challenges regarding jurisdiction and service of documents.

Under the Brussels I Recast Regulation, a defendant domiciled in the Czech Republic should generally be sued in Czech courts.

Check your contract for a choice-of-forum clause. If you agreed to Latvian courts, you must sue there, then enforce the judgment in Czechia. In Czech litigation, the court handles service of the lawsuit, often via the electronic data box system for companies.

This means if your Czech debtor moves assets to Germany or Poland, you can enforce your Czech judgment there.

ARROWS Law Firm, based in Prague, handles these cross-border complexities daily. We can advise on jurisdiction, ensure proper pre-litigation service, and coordinate enforcement across the EU.

We can advise on jurisdiction, ensure proper pre-litigation service, and coordinate enforcement across the EU.

Risks and Sanctions	How ARROWS Helps (office@arws.cz)
Lost cost recovery due to deficient pre-action letter: If your pre-action letter fails to meet Czech legal requirements, courts generally refuse to award legal fees, even if you win.	Professional pre-action letter drafting: ARROWS Law Firm drafts the mandatory předžalobní výzva to meet all legal requirements and ensures proper delivery to the debtor's registered seat or data box, protecting your right to cost recovery.
Statute of limitations expiration: If you do not initiate legal action within three years, the debtor can raise a limitation objection, making the claim unenforceable.	Timely legal action coordination: ARROWS Law Firm monitors the limitation period (typically 3 years from due date) and initiates formal proceedings before the window closes.
Payment order rejected due to insufficient evidence: Filing a payment order without organized evidence leads to rejection or automatic objection, forcing costly full litigation.	Evidence package preparation: ARROWS Law Firm reviews your documents, identifies gaps, organizes evidence chronologically, and prepares the application to maximize the chance of a swift payment order.
Uncollectible judgment against judgment-proof debtor: Obtaining a judgment against a debtor with no assets is a waste of money.	Pre-litigation financial due diligence: ARROWS Law Firm checks the Central Evidence of Executions (CEE) and insolvency register to assess the debtor's capacity to pay before you invest in litigation.
Procedural errors in cross-border service: Misunderstanding service rules can delay proceedings or invalidate judgments.	Proper procedural management: ARROWS Law Firm ensures all procedural steps comply with Czech and EU regulations, securing a valid and enforceable judgment.

Understanding the real cost of delay and inaction

Many Latvian business owners view non-payment as a problem to address "eventually." This is expensive. Every month moves you closer to the three-year limitation deadline and increases the risk that the debtor will become insolvent.

Once the debtor receives formal notice of Czech court proceedings, the dynamic changes.

Prompt professional action is a business imperative. ARROWS Law Firm handles debt collection for international clients daily, reducing coordination time and minimizing errors.

We are also insured for professional damages up to CZK 400,000,000, ensuring you work with a financially responsible firm.

Insolvency and bankruptcy: What happens if the debtor cannot pay

Sometimes the debtor genuinely cannot pay. The Czech Republic has strict insolvency laws.

A company is in bankruptcy ( úpadku ) if it has multiple creditors and monetary obligations more than 30 days overdue which it is unable to pay.

When insolvency proceedings begin, a court-appointed administrator takes control. Creditors must file claims within a strict deadline (usually two months from the insolvency decision) to participate. As an unsecured trade creditor, you will be paid strictly from the proceeds of asset liquidation.

If you miss the filing deadline, your claim is excluded from satisfaction entirely.

microFAQ – Legal tips on insolvency and weak debtor prospects

1. What is the difference between financial distress and formal insolvency?
Distress means cash flow issues; formal insolvency is a legal status declared by the court where the debtor cannot pay debts. Once declared, individual enforcement actions stop, and the collective insolvency process takes over.

2. If my debtor enters insolvency, will I lose my entire claim?
Not necessarily, but recovery is often low. You must file your application ( přihláška pohledávky ) on time. Unsecured creditors are paid pro-rata after secured and priority creditors.

3. Can I file a claim in insolvency if I already have a judgment?
Yes, and you must. A judgment does not automatically register you in insolvency proceedings. You must physically file the claim form with the insolvency court within the deadline.

Executive summary for management

This section provides decision-makers with critical information about debt collection in the Czech Republic:

• Three-year statute of limitations: Business claims generally expire three years after the invoice due date. Informal collection does not stop this clock. Formal action is required to preserve rights.
• Mandatory Pre-Action Letter: You must send a formal letter ( předžalobní výzva ) at least 7 days before suing. Failure to do so usually results in the court denying your request for legal cost reimbursement.
• Fast-track payment order: For undisputed debts with good documentation, this tool can yield a judgment in 2-6 months. Standard court fees are 5% of the claim (4% for electronic filings up to 1M CZK).
• Enforcement is separate: A judgment requires a second step—execution by a bailiff—to seize assets. This adds time but is effective against solvent debtors.
• Due diligence is mandatory: Always check the Central Evidence of Executions and Insolvency Register before suing to avoid pursuing judgment-proof debtors.

Conclusion of the article

Collecting outstanding payments from a Czech debtor requires navigating a specific legal framework with strict deadlines and procedural hurdles. The Czech system offers efficient tools like the payment order, but they require precision.

ARROWS Law Firm combines detailed knowledge of Czech law with cross-border experience to help Latvian companies recover funds efficiently.

If your Latvian company is facing non-payment, do not wait until the limitation period nears. Contact office@arws.cz for a consultation. We can assess your documentation, check the debtor's status, and provide a clear roadmap for recovery.

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

1. We have been trying to collect informally for eighteen months. Are we running out of time?
Yes. You are halfway through the three-year limitation period. Formal legal action should be considered immediately to prevent the claim from becoming unenforceable. Contact office@arws.cz.

2. Can we send the pre-action letter ourselves?
Technically yes, but it is risky. The letter must meet specific legal criteria to ensure cost recovery. ARROWS Law Firm drafts these to ensure full compliance.

3. Our contract is in English. Do we need a translation?
Yes. Czech courts require certified Czech translations of all evidence. English originals are not accepted as primary evidence without translation. This is a mandatory cost.

4. How long does the process take?
Amicable settlement: weeks. Payment order (undisputed): 2-6 months. Contested litigation: 1-3 years. Enforcement: months to years depending on assets.

5. What is the success rate?
Success depends on the debtor's assets. If the debtor is solvent, legal tools are highly effective. If the debtor is insolvent, recovery is low. Pre-litigation checks are essential to determine viability.

6. We fear the debtor will move assets. What can we do?
If you have evidence of asset dissipation, we can apply for a preliminary measure ( předběžné opatření ) to freeze assets. Immediate legal intervention is required. Contact office@arws.cz.

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.