How to Pursue Debt Collection in the Czech Republic as a Hungarian Business: Effective Recovery Strategies

If your Hungarian company is owed money by a Czech debtor and payment demands have gone unanswered, you face a complex cross-border recovery challenge. This article provides specific answers about Czech debt collection procedures, enforcement mechanisms, and strategic options available to Hungarian businesses—helping you avoid costly procedural mistakes.

Understanding the Czech debt collection framework

When a Hungarian business pursues debt collection in the Czech Republic, success depends on understanding how Czech law structures the recovery process. The Czech system, governed primarily by the Civil Code and the Code of Civil Procedure, divides debt recovery into distinct phases.

These phases include preliminary extrajudicial efforts, formal judicial proceedings, and finally enforcement of any judgment obtained. Each phase has specific procedural requirements, timelines, and strategic considerations that differ meaningfully from Hungarian law.

The Czech approach emphasizes early resolution. Before filing any lawsuit, you are expected to demonstrate good faith by sending a formal pre-action demand letter to your debtor. This letter—known as the předžalobní výzva —must be sent at least seven days before initiating court proceedings.

Before filing any lawsuit, you are expected to demonstrate good faith by sending a formal pre-action demand letter to your debtor.

This step is not optional; omitting it carries serious financial consequences. Even if you win your case on the merits, Czech courts will generally deny reimbursement of your legal costs if you skip this procedural requirement.

For international creditors unfamiliar with Czech practice, this is precisely the type of hidden procedural trap that ARROWS Law Firm handles regularly. Our lawyers specialize in cross-border debt collection and understand how to navigate these requirements correctly from the outset.

FAQ – Legal tips on pre-action procedures in Czech debt collection

1. What must the pre-action demand letter contain?
The letter must clearly identify your claim, specify the amount owed, set a concrete deadline for payment (typically 7–14 days), and explicitly warn that you intend to pursue legal action if payment is not received. It should be sent to the debtor's last known address via registered mail or data box ( datová schránka ) if applicable.

2. Will the pre-action letter help me recover costs if I win?
Yes—if you follow the procedure correctly, the court will generally award reimbursement of your reasonable legal costs to the losing party. However, this reimbursement is calculated according to statutory fee schedules ( advokátní tarif ), which may differ from your actual contractual legal fees.

3. What happens if the debtor responds with a partial payment offer?
This opens the door to negotiation. Many disputes settle at this stage without court involvement, saving time and expense. ARROWS Law Firm regularly negotiates favorable payment arrangements with Czech debtors at office@arws.cz.

The payment order procedure

For undisputed monetary claims—cases where the debtor simply refuses to pay but has no valid legal defense—Czech law offers a remarkably efficient tool called the platební rozkaz (payment order procedure).

This fast-track mechanism bypasses the need for a formal hearing. Instead, the court reviews your written application and supporting documentary evidence to determine if your claim is clearly justified. If the judge finds your evidence compelling, the court issues a binding payment order.

Once served on the debtor, the payment order grants them exactly 15 days to either pay the full amount (including costs) or file a formal objection (called an odpor). If they take no action within this period, the order automatically becomes a final, enforceable judgment—equivalent to a full court verdict.

Unlike administrative debt recovery procedures in some jurisdictions, a Czech judge must independently review the evidence and become personally satisfied that your claim is justified. A poorly prepared application—one lacking certified translations or missing key documentation—will be rejected.

You generally do not get a second chance to supplement your application in this phase. This requirement for precision at the outset is why ARROWS Law Firm recommends having experienced Czech legal counsel prepare your payment order application from the beginning.

When should you choose the payment order procedure

The payment order works best when your claim is straightforward: you have a clear contract, the goods were delivered or services rendered, the debtor acknowledges receiving them, and they simply have not paid.

The procedure works poorly if the debtor has a plausible defense: they claim the goods were defective, services were incomplete, or you failed to meet contractual obligations. In those situations, you need the ordinary court procedure.

Legislation regarding the electronic payment order (elektronický platební rozkaz - EPR) is particularly favorable for creditors. While previously capped, current legislation allows the use of the EPR for claims up to CZK 1,000,000 (and in standard payment order proceedings even higher).

Current legislation allows the use of the EPR for claims up to CZK 1,000,000, making it a powerful tool for commercial disputes.

FAQ – Legal tips on the payment order procedure

1. What documentary evidence do I need to succeed with a payment order?
You must provide signed contracts, issued invoices, confirmed delivery notes, and any correspondence where the debtor acknowledges the debt or the services rendered. Email correspondence, signed order confirmations, and payment history statements all strengthen your application significantly.

2. What happens if the debtor files an objection during the 15-day period?
If they file an odpor , the entire payment order is automatically cancelled, and the case transforms into a standard civil lawsuit with full hearings, witness testimony, and lengthier timelines. This transforms your case from an expedited procedure into a standard litigation process.

3. Can I use the payment order procedure even though I am a Hungarian company?
Yes, but you must be represented by a Czech lawyer (or have a delivery address in the Czech Republic) to ensure smooth proceedings, and documents generally must be submitted in Czech with certified translations. ARROWS Law Firm regularly handles payment order applications for foreign creditors and can manage these requirements efficiently at office@arws.cz.

The European payment order

If you operate in multiple EU member states or prefer a standardized procedure recognized across the entire European Union, the European Payment Order (EOP) offers a powerful alternative. As a Hungarian business with a Czech debtor, you qualify immediately.

The EOP procedure is remarkably streamlined. You submit a standardized application form (Form A) to the competent Czech district court. The court typically issues the EOP order within 30 days of filing a complete application.

The debtor then has 30 days to pay or file a simple statement of opposition. Critically, if the debtor does not contest the claim or provides no substantive opposition, the EOP becomes automatically enforceable across all EU member states without requiring a separate declaration of enforceability.

This automatic enforceability across EU borders represents a genuine competitive advantage. A judgment you would need to re-litigate in another jurisdiction to enforce can instead be enforced directly in any EU member state simply by presenting your EOP certificate.

However, the simplicity of the EOP procedure conceals a critical trap for unwary creditors. If the Czech debtor files even an unsubstantiated statement of opposition, the EOP procedure terminates. Your case then typically transfers automatically to ordinary Czech civil proceedings.

If the Czech debtor files even an unsubstantiated statement of opposition, the EOP procedure terminates.

Suddenly, you transition from a simple EU procedure to litigation in a foreign jurisdiction with language barriers and local procedural deadlines. This hidden complexity explains why ARROWS Law Firm strongly recommends having experienced Czech legal counsel involved from the beginning.

By engaging local counsel at the outset, you significantly reduce this procedural risk at office@arws.cz.

Enforcement

Obtaining a favorable payment order or court judgment, whether through Czech domestic procedures or the EOP mechanism, represents a major victory—but it is not the final step. You now possess a legal right to payment, but converting that right into actual cash requires navigating the Czech enforcement process, known as exekuce.

Czech enforcement law grants broad powers to court-appointed bailiffs (soudní exekutoři) to satisfy judgments. Unlike some enforcement systems that require court approval for each specific collection action, Czech bailiffs possess significant discretion to pursue multiple recovery strategies.

To initiate enforcement, you must select a bailiff and file a formal enforcement motion (návrh na nařízení exekuce). This application must include your enforceable title (judgment, payment order, or certified EOP), correctly translated and verified documentation proving you are the legitimate creditor, and clear identification of the debtor.

To initiate enforcement, you must select a bailiff and file a formal enforcement motion ( návrh na nařízení exekuce ).

Once the court authorizes the bailiff to proceed, the bailiff issues a notice to the debtor, giving them 30 days to pay voluntarily with reduced enforcement costs. If the debtor does not respond, the bailiff implements enforcement measures.

The entire enforcement timeline depends heavily on the debtor's assets and cooperation. Simple cases with clear, unencumbered assets may resolve in months. Complex situations where the debtor contests the enforcement or lacks liquidity can take significantly longer.

The entire enforcement timeline depends heavily on the debtor's assets and cooperation.

The statute of limitations

A critical procedural deadline that trips up many foreign creditors is the statute of limitations (promlčecí lhůta) under Czech law. The general subjective limitation period for commercial debt is three years from the date the creditor knew—or should reasonably have known—that the right to payment could be exercised.

Czech law employs a system that includes both subjective and objective periods. The subjective limitation period (3 years) runs from when you knew or should have known of the debt. The objective limitation period—10 years—runs from the date the right matured, regardless of your knowledge.

Once the limitation period expires, Czech courts must dismiss your claim if the debtor raises the defense of limitation. There is no judicial discretion to overlook an expired deadline. However, the limitation period can be interrupted and restarted.

Once the limitation period expires, Czech courts must dismiss your claim if the debtor raises the defense of limitation.

A written acknowledgment of the debt by the debtor generally restarts a new 10-year limitation period. This explains why experienced creditors often demand written acknowledgment from debtors as part of settlement negotiations—restarting the limitation clock provides years of additional recovery opportunity.

For international creditors unfamiliar with Czech limitation periods, this represents substantial risk. Delaying action while expecting the debtor eventually to settle can inadvertently allow your entire claim to become time-barred. ARROWS Law Firm regularly advises foreign clients on precisely when to file claims to preserve their rights at office@arws.cz.

Risks and Sanctions	How ARROWS helps (office@arws.cz)
Missed statute of limitations deadline: Your claim expires completely under Czech law, becoming unenforceable even if you win litigation.	Proactive limitation period analysis: ARROWS identifies exactly when your claim becomes time-barred and files judicial proceedings before that deadline.
Procedural errors in enforcement motion: Technical mistakes in filing the enforcement application—missing translations or incomplete documentation—delay recovery.	Expert enforcement filing: ARROWS Law Firm prepares enforcement motions with meticulous accuracy, ensuring proper documentation and selection of an effective bailiff.
Ineffective asset tracing: Pursuing enforcement against debtors with no discoverable assets wastes legal fees and bailiff costs while recovery remains unlikely.	Strategic asset investigation: ARROWS conducts pre-enforcement due diligence, investigating the debtor's financial position and identifying seizable assets.
Debtor challenges to enforcement: Debtors can file procedural objections and exclusion claims, extending collection timelines significantly.	Aggressive enforcement defense: ARROWS represents you throughout enforcement proceedings, opposing improper debtor objections and ensuring the bailiff pursues the most effective collection strategies.
Judgment recognition disputes: When enforcing a Hungarian court judgment in the Czech Republic, procedural defects can complicate enforcement.	Cross-border judgment recognition: ARROWS Law Firm manages the process of enforcing foreign Hungarian judgments in the Czech Republic under EU regulations.

Working with international procedural rules

When a Hungarian company pursues a Czech debtor, you operate within the European Union's unified civil procedure framework established by the Brussels I bis Regulation. This regulation fundamentally changed how cross-border disputes work for EU businesses by creating presumed jurisdiction rules.

Under the default rule, a defendant should be sued where they are domiciled. For a Czech company, this means the Czech Republic has automatic jurisdiction. However, the regulation provides a powerful tool: the choice of jurisdiction clause.

If your contract with the Czech debtor includes a properly drafted provision stating that disputes will be resolved in Hungarian courts, that clause will generally be respected by Czech courts. This allows you to pursue litigation in a system you understand, with procedures familiar to your legal team.

If your contract with the Czech debtor includes a properly drafted provision stating that disputes will be resolved in Hungarian courts, that clause will generally be respected.

The Brussels I bis framework also modernized judgment recognition. A judgment from a Hungarian court is now automatically recognized and directly enforceable in the Czech Republic without requiring separate proceedings to prove enforceability.

For many international creditors, these unified EU procedures make litigation in your home jurisdiction preferable to pursuing claims in foreign courts. ARROWS Law Firm, as a leading Czech law firm based in Prague operating within the European Union, regularly advises foreign clients on optimal jurisdiction strategies.

ARROWS Law Firm regularly advises foreign clients on optimal jurisdiction strategies and handles the Czech-side enforcement of foreign judgments.

FAQ – Legal tips on cross-border jurisdiction and enforcement

1. If I have a judgment from a Hungarian court, can I enforce it directly in the Czech Republic?
Yes. Under the Brussels I bis Regulation, EU member state judgments are automatically recognized without special proceedings. You must present a certified copy of your Hungarian judgment and the relevant certificate (Annex I) from the Hungarian court, then engage a Czech bailiff to pursue enforcement.

2. Should I include a jurisdiction clause in my contracts with Czech business partners?
Yes, absolutely. A properly drafted exclusive jurisdiction clause specifying Hungarian courts will generally be enforced. This allows you to pursue disputes in familiar procedures and potentially avoid Czech litigation entirely. ARROWS Law Firm recommends reviewing all international contracts at office@arws.cz.

3. What if my contract with the Czech debtor says disputes will be resolved by arbitration instead of court proceedings?
Arbitration remains an alternative dispute resolution mechanism. Arbitration awards are highly enforceable under the New York Convention, which 170+ countries (including the Czech Republic) recognize. For cross-border disputes, arbitration often provides faster resolution than litigation.

Strategic options

Not every cross-border debt collection dispute requires litigation and enforcement. In fact, ARROWS Law Firm regularly advises that pursuing resolution through negotiation and settlement often produces faster, less expensive results while preserving ongoing business relationships.

Early settlement offers several advantages. First, they eliminate uncertainty: you receive immediate cash rather than waiting years for final judgment. Second, they preserve relationships: if you eventually wish to continue business with this debtor, settlement without litigation maintains professional relationships.

When evaluating settlement offers from Czech debtors, conduct careful due diligence on their financial position. Assess their liquid assets, credit history, industry trends, and whether they operate profitably.

When evaluating settlement offers from Czech debtors, conduct careful due diligence on their financial position.

A settlement offer from a financially stressed company may prove uncollectible despite their promises. Conversely, a solvent company offering partial payment on a clear debt often represents genuine financial constraint rather than dishonesty, and structured payment arrangements may provide reliable recovery.

Alternative dispute resolution (ADR) mechanisms—primarily mediation and arbitration—offer middle-ground solutions between negotiated settlement and full litigation. Mediation engages a neutral facilitator to help both parties reach consensus.

Alternative dispute resolution (ADR) mechanisms—primarily mediation and arbitration—offer middle-ground solutions between negotiated settlement and full litigation.

For cross-border disputes, arbitration offers particular advantages. Arbitration awards are enforceable across borders under the New York Convention. By contrast, court judgments require enforcement through each country's national procedures (though EU regulations simplify this within the bloc).

FAQ – Legal tips on settlement and ADR for debt collection

1. If I negotiate a payment plan with my Czech debtor, should I require written documentation?
Absolutely. Any settlement or payment arrangement must be documented in writing, ideally in the form of a Debt Recognition with a Repayment Schedule (Uznání dluhu se splátkovým kalendářem) under the Czech Civil Code. This prevents misunderstandings, extends the statute of limitations to 10 years, and shifts the burden of proof to the debtor

2. Can mediation help resolve disputes with Czech debtors when they dispute owing the full amount?
Yes. Mediation is particularly effective when disputes involve disagreements about quality, partial performance, or calculation of amounts owed. A mediator can help both parties understand each other's positions and identify creative solutions.

3. If arbitration proceeds and I win, how do I enforce the award against Czech assets?
Arbitration awards are enforceable under the New York Convention and Czech law. You present your award to Czech enforcement authorities (bailiffs), who treat it similarly to Czech court judgments. ARROWS Law Firm can manage this process at office@arws.cz.

Pre-collection due diligence

Before committing resources to debt collection procedures, conduct thorough due diligence on your Czech debtor. This investigation—often overlooked by eager creditors—reveals critical information about whether recovery is realistic and what strategies will prove most effective.

Start by verifying basic information: Is the company legitimately registered in the Czech Commercial Register (Obchodní rejstřík)? Do they actually conduct business at the address on file? Who are the ultimate beneficial owners?

Next, investigate their financial position. Is the company profitable, or are they financially stressed? Have they published their financial statements in the Collection of Deeds (Sbírka listin) as required by law? Have they declared bankruptcy or entered restructuring proceedings?

Next, investigate their financial position.

Finally, identify attachable assets. Does the company own real estate (verifiable in the Land Registry)? Does the company generate significant receivables from major customers you could target through garnishment?

ARROWS Law Firm conducts professional asset investigations and credit analysis for international creditors pursuing Czech debtors. Our experience with the Czech business environment and registries enables efficient identification of collection prospects before litigation begins at office@arws.cz.

ARROWS Law Firm conducts professional asset investigations and credit analysis for international creditors pursuing Czech debtors.

Insolvency considerations

If your due diligence investigation reveals that your Czech debtor is insolvent—unable to meet their financial obligations—the collection landscape shifts dramatically. Czech Insolvency Act defines insolvency essentially via two tests: the illiquidity test or the over-indebtedness test.

Once insolvency proceedings are formally opened by the court, enforcement against the debtor automatically halts, and all individual creditor actions are stayed. Instead, an insolvency administrator takes control of the company's assets.

As a creditor, you must file your claim ( přihláška pohledávky ) with the insolvency court within a strict deadline—typically two months from the decision on bankruptcy. Missing this deadline usually means your claim is excluded from satisfaction entirely.

As a creditor, you must file your claim (přihláška pohledávky) with the insolvency court within a strict deadline—typically two months from the decision on bankruptcy.

Understanding these insolvency rules is critical. Continuing to pursue expensive enforcement against a debtor you know (or suspect) to be insolvent wastes resources. Conversely, monitoring the Insolvency Register (Insolvenční rejstřík) is essential to ensure you do not miss the filing deadline.

Executive summary for management

For decision-makers evaluating cross-border debt collection in the Czech Republic, the following critical points warrant immediate attention:

• Procedural complexity creates hidden costs and delays: Czech debt collection involves multiple mandatory procedural steps that appear simple in concept but contain numerous technical traps that laypeople frequently overlook.
• Statute of limitations deadlines are absolute: Commercial claims are time-barred after three years under Czech law with no judicial discretion for exceptions, and the "should have known" language creates genuine disputes.
• Early legal counsel involvement dramatically improves outcomes: Engaging experienced Czech legal representation before filing initial documents prevents procedural errors and optimizes strategy selection between payment orders and ordinary procedures.
• Cross-border enforcement requires understanding EU regulatory frameworks: The Brussels I bis Regulation and European Payment Order procedures provide significant advantages for EU creditors, but these mechanisms contain procedural traps.
• Professional investigation of debtor solvency and assets must precede enforcement: Pursuing enforcement against insolvent debtors or companies with no recoverable assets generates bailiff costs with minimal recovery probability.

Conclusion

Pursuing debt collection against a Czech debtor as a Hungarian business involves navigating two legal systems simultaneously—understanding both your home jurisdiction's rules and the foreign procedural landscape where your debtor operates. The Czech system offers efficient tools: the payment order procedure executes relatively quickly for undisputed claims.

The complexity apparent throughout this article—the mandatory pre-action letters, the distinction between payment orders and ordinary procedures, the enforcement process—illustrates why experienced legal counsel from the beginning significantly increases your recovery probability. Each step that appears straightforward contains hidden exceptions.

ARROWS Law Firm has extensive experience assisting Hungarian businesses with debt collection in the Czech Republic. Our lawyers combine deep knowledge of Czech procedure with understanding of cross-border EU mechanisms and regular contact with Czech courts, bailiffs, and debtors.

Whether you require representation through payment order procedures, enforcement coordination, or investigation of debtor financial position, ARROWS Law Firm provides comprehensive services tailored to your specific recovery situation.

We will analyze your claim, propose optimal recovery strategy, estimate realistic timelines and costs, and handle all procedural steps required to maximize your recovery probability. Contact the experienced lawyers at ARROWS Law Firm at office@arws.cz to discuss your debt collection situation.

We will analyze your claim, propose optimal recovery strategy, estimate realistic timelines and costs, and handle all procedural steps required to maximize your recovery probability.

FAQ – Frequently asked legal questions about debt collection against Czech debtors

1. How long does it typically take to collect a debt from a Czech debtor through court procedures?

The timeline depends entirely on the collection method and whether the debtor contests the claim. Payment order procedures typically result in a decision within weeks or a few months. If the debtor contests, the case transforms into ordinary civil litigation typically requiring 1–3 years for final judgment, plus additional time for enforcement. For international creditors unfamiliar with these timelines, early consultation with experienced Czech counsel at ARROWS Law Firm helps establish realistic expectations at office@arws.cz.

2. Are my Hungarian company's foreign judgment creditors' rights automatically enforced in the Czech Republic?

Hungarian court judgments are automatically recognized in the Czech Republic under EU regulations without requiring separate enforceability proceedings ( exequatur ). However, you must still initiate the enforcement process by selecting a Czech bailiff and filing the appropriate motion—recognition and enforcement are separate steps. ARROWS Law Firm manages this complete process for foreign clients at office@arws.cz.

3. What happens if the Czech debtor files bankruptcy or enters restructuring proceedings during collection?

Insolvency proceedings automatically stay all individual enforcement actions against the debtor, and your claim must be filed with the insolvency court within a strict deadline (usually 2 months from the bankruptcy decision). Recognizing insolvency early is crucial. Contact ARROWS Law Firm at office@arws.cz if your debtor appears financially distressed.

4. Can I enforce a European Payment Order (EOP) across multiple EU countries if the debtor has assets in several jurisdictions?

Yes—the EOP's primary advantage is automatic enforceability across all EU member states without requiring separate procedures in each country. Once issued by a Czech court and if the debtor does not successfully contest it, your EOP can be enforced in any EU jurisdiction where the debtor holds assets. ARROWS Law Firm can coordinate multi-jurisdiction enforcement strategies at office@arws.cz.

5. What documentary evidence do I need to succeed with a Czech payment order application?

You must provide signed contracts clearly showing the debtor's obligation, issued invoices with specified amounts and due dates, delivery confirmations or service completion documentation, and any correspondence where the debtor acknowledges receiving goods or services. Email exchanges, signed order acknowledgments, and payment history strengthens applications significantly. ARROWS Law Firm reviews your documentation and recommends any supplements needed before filing at office@arws.cz.

6. If I settle a disputed amount with my Czech debtor through partial payment, can I pursue the remainder later?

Only if the settlement agreement explicitly reserves your rights to the remaining amount. Typically, accepting partial payment and releasing the debtor from further obligation ends your claim for the remainder. However, written acknowledgment of the original debt by the debtor restarts the limitation period, potentially giving you years of additional recovery opportunity. If you are uncertain about your settlement terms, contact ARROWS Law Firm at 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.