Maltese Company vs. Czech Debtor

Is your Maltese or EU-based company struggling with an unpaid invoice from a Czech debtor? Navigating a foreign legal system to recover your funds can be complex and filled with financial traps. This guide from a leading Czech law firm provides practical answers for cross-border recovery. Our English-speaking lawyers in Prague, European Union, are here to help. For immediate assistance, write to us at office@arws.cz.

Need advice on this topic? Contact the ARROWS law firm by email office@arws.cz or phone +420 245 007 740. Your question will be answered by "Mgr. Vojtěch Sucharda", an expert on the subject.

What Is Your First Step? (A Mistake That Costs You Money)

Before taking any court action in the Czech Republic, you must send a specific pre-action letter. Many foreign companies assume their standard demand letter is sufficient. This is a critical and costly mistake. Czech law requires a formal předžalobní výzva (pre-action letter).

This requirement is not a simple courtesy; it is a mandatory procedural step under Section 142a of the Czech Code of Civil Procedure. This letter must be sent to the debtor's last known address at least seven days before filing a lawsuit.

Here is the financial trap: the Czech Republic operates on a "loser pays" system. However, if you fail to send this specific letter, the court will not order the debtor to reimburse your legal costs, even after you win the case. You would win the debt but be forced to pay your own lawyer's fees, potentially erasing your financial victory.

ARROWS lawyers provide essential drafting of legally required documentation to ensure you comply with this rule from day one.

Pre-Action Demand Letter Risks

Risks and penalties	How ARROWS helps
Using your standard foreign demand letter. It will be deemed non-compliant by a Czech court, as it will not meet the specific requirements of local procedural law.	Drafting documentation: We draft the compliant předžalobní výzva under Czech law. Need this letter drafted? Contact us at office@arws.cz.
Forfeiting your legal fees. Failure to send this specific letter 7 days prior means you cannot recover your lawyer's fees from the debtor, even after you win the case.	Legal consultation: We secure your right to full cost reimbursement from day one. For immediate assistance, write to us at office@arws.cz.
Wasting time and resources. An incorrect letter starts the process on the wrong foot, delaying recovery and alerting the debtor to your procedural errors.	Legal analysis: We ensure your entire claim is procedurally sound before filing. Get tailored legal solutions by writing to office@arws.cz.

Should You Use an EU or Czech Court Procedure?

For uncontested monetary claims, you have two primary "fast-track" options. The choice between them is strategic and depends on the quality of your evidence and the speed you require.

Option 1: The European Payment Order (EOP)

The European Payment Order (EOP), established by EU Regulation 1896/2006, is a unified procedure for cross-border cases, such as a creditor in Malta and a debtor in the Czech Republic.

The process is streamlined. You, as the creditor, file a standard "Form A", often online via the e-Justice portal. A lawyer is not technically required, as it is a written procedure.

The key advantage is its simplicity and enforceability. If the debtor does not object, the EOP is automatically recognized and enforceable in the Czech Republic without needing a separate exequatur (a declaration of enforceability).

However, the EOP has a significant weakness. The debtor has 30 days to lodge a "statement of opposition". Critically, the debtor does not need to provide any reason for their objection; they simply state that they contest the claim. This makes it a very easy procedure for a debtor to delay.

Option 2: The Czech Payment Order (Platební Rozkaz)

The alternative is the powerful Czech national procedure, the platební rozkaz (Payment Order). This is a fast-track judicial process where a judge reviews your application and evidence, such as contracts and invoices, without holding a hearing.

If the judge finds the claim well-founded, the court issues the platební rozkaz. The debtor then has only 15 days from the date of delivery to either pay the full amount or file a formal objection (odpor). This 15-day deadline is a major tactical advantage, giving the debtor half the time to react compared to the EOP.

However, this procedure has a high barrier to entry. A Czech judge must be "personally convinced... that the creditor's claim is justified" based on the evidence provided before issuing the order. A claim that might pass an administrative filter in another EU country could be rejected in the Czech Republic if the evidence is not perfectly clear and compelling.

Your choice of procedure requires a professional legal consultation. The platební rozkaz is faster and more aggressive, but only if your evidence is strong enough to meet the high Czech standard.

As an international law firm operating from Prague, European Union, ARROWS has filed countless applications of both types. Through our ARROWS International network, we provide the legal consultation and contract review needed to select the most effective path for your specific claim.

FAQ – Legal tips about payment orders

1. What happens if the debtor objects to either order?

The fast-track procedure is immediately cancelled. The case is automatically converted into a standard, full civil lawsuit, which is much longer, more complex, and more expensive. To prepare for this eventuality, contact our litigators at office@arws.cz.

2. Do I need to translate my Maltese contracts and English invoices?

Yes. For any proceeding in a Czech court, all evidence must be accompanied by a certified translation into the Czech language. We can manage this entire process for you as part of our services. Get started by emailing office@arws.cz.

3. Can I use these for a disputed claim?

No. Both the EOP and platební rozkaz are designed exclusively for uncontested pecuniary claims. If the debtor has a valid reason to dispute the debt, you must use a standard civil lawsuit. Need your case assessed? Write to us at office@arws.cz.

How Can You Secure Assets Before the Debtor Hides Them?

A common fear for any creditor is that by the time they win in court, the debtor's bank account will be empty. The EU provides a powerful, proactive tool to prevent this.

The European Account Preservation Order (EAPO), under EU Regulation 655/2014, allows a creditor in a cross-border case (like Malta-Czechia) to freeze funds in the debtor's bank accounts.

The most powerful feature of the EAPO is that it can be used "even if a court has not yet ruled on the substance of the dispute". You can file for an EAPO before, or at the same time as, your main claim.

Critically, the procedure is ex parte. This means the debtor is not notified of your application. The court issues the order directly to the bank, which freezes the account. This "element of surprise" prevents the debtor from moving or hiding assets while you pursue your claim.

ARROWS lawyers can prepare the drafting of documentation needed to secure an EAPO, protecting your financial interests before the debtor can react. To secure your debtor's assets before they disappear, contact our cross-border legal team immediately at office@arws.cz.

What Happens if Your Claim Is Contested?

If your debtor files an objection, your claim leaves the "fast track" and enters one of two more complex legal arenas: a full civil lawsuit or an insolvency proceeding.

The "Slow" Path: Contested Civil Litigation

As soon as the debtor files an objection (odpor) to a platební rozkaz or opposes an EOP, the case becomes a standard civil lawsuit.

You must be prepared for the financial implications. A contested lawsuit in the Czech Republic can take two to three years to reach a final judgment. This requires a significant investment of time and resources.

The court fees for a standard lawsuit are 5% of the claimed amount (for claims between CZK 20,000 and CZK 40,000,000). While the "loser pays" principle means the debtor must repay your costs if you win, you must have paid the court fees upfront and, crucially, you must have sent the mandatory předžalobní výzva at the very beginning to be eligible for reimbursement.

The "Sudden Death" Path: Debtor Insolvency (Insolvenční Řízení)

The single greatest risk to a foreign creditor is insolvenční řízení (insolvency proceedings). If your Czech debtor files for insolvency, a "general moratorium" is declared.The effect is immediate and absolute: all individual collection efforts and lawsuits are immediately frozen. Your two-year lawsuit becomes worthless.

Your only option is to file a přihlášení pohledávky (proof of claim) in the insolvency proceeding. This is where the trap for foreign creditors lies.The deadline for filing this claim is extremely strict, typically just TWO MONTHS from the court's decision on bankruptcy.

If you, as a Maltese company, are not monitoring the Czech Insolvency Register and miss this 2-month deadline, the law is "uncompromising." Your claim is permanently extinguished, and you will recover zero.

As a leading Czech law firm in Prague, EU, ARROWS provides robust representation in court and active monitoring of insolvency registers. We support over 150 joint-stock companies and 250 limited liability companies, guiding them through these exact risks.

Contested Litigation & Insolvency Risks

Risks and penalties	How ARROWS helps
A 2-3 Year Court Battle. A simple objection converts your case into a standard civil lawsuit that can take years and significant legal fees to resolve.	Representation in court: Our experienced litigators handle the entire complex lawsuit. Need legal representation? Write to office@arws.cz.
Lawsuit is Frozen by Insolvency. If the debtor files for insolvenční řízení, your lawsuit is immediately halted and all collection efforts stop.	Insolvency Expertise: We stop the lawsuit and file your claim correctly in the insolvency proceeding. Do not hesitate to contact our firm – office@arws.cz.
MISSING THE 2-MONTH DEADLINE. Failure to file your claim in the insolvency proceeding within the strict 2-month deadline permanently extinguishes your debt.	Drafting & Monitoring: We monitor the register and draft the insolvency claim (přihlášení pohledávky). For immediate assistance, write to us at office@arws.cz.

You Have a Judgment. How Do You Enforce It in the Czech Republic?

Winning your case is only half the battle. A judgment is just a piece of paper; you still need to collect the money. This final step is called exekuce (enforcement).

A final, enforceable judgment, like an EOP or a platební rozkaz, is known as an exekuční titul (enforcement title). Even a judgment from another EU country is directly enforceable, but it is not self-executing.

You cannot enforce this title yourself. You must use a local lawyer to file a formal "enforcement motion" (návrh na nařízení exekuce) with the court.

The court then appoints a soudní exekutor (judicial bailiff). This is an independent officer with broad legal powers. The exekutor can freeze and seize funds from all Czech bank accounts, place liens on and force the sale of real estate, and seize company vehicles or equipment.

Most importantly for B2B debt, the exekutor can garnish receivables from your debtor's business partners. This means they can order your debtor's customers to pay you directly, a highly effective recovery tool.

Enforcement Process Risks

Risks and penalties	How ARROWS helps
"Paper Judgment, No Cash." You have a final judgment, but the debtor has no visible assets or has hidden them during the lawsuit.	Enforcement Strategy: We advise on asset-tracing and select the most effective soudní exekutor for your case. Get tailored legal solutions by writing to office@arws.cz.
Incorrect Enforcement Filing. An error in the návrh na nařízení exekuce can get your application rejected by the bailiff, wasting critical time.	Drafting documentation: We prepare and file the flawless enforcement motion to initiate exekuce without delay. Need legal help? Contact us at office@arws.cz.
Inefficient Asset Seizure. The exekutor seizes low-value assets, or the debtor's main assets are hard-to-collect receivables.	Representation: We manage the bailiff's actions and direct them to the most valuable assets, including garnishing payments from their customers. Our lawyers are ready to assist – email us at office@arws.cz.

Your Next Step to Recovering Your Funds

Recovering a debt in the Czech Republic is a process filled with local procedural traps that can cost foreign companies dearly. From the mandatory předžalobní výzva to the strategic choice between a 15-day or 30-day payment order, to the absolute 2-month deadline in an insolvency, you need expert local guidance.

As a leading law firm based in Prague, European Union, ARROWS provides this essential local expertise. Our lawyers combine deep knowledge of Czech law with a practical understanding of foreign markets. Through our ARROWS International network, built over 10 years, we handle cross-border matters daily and operate in 90 countries.

We support over 150 joint-stock companies and 250 limited liability companies. Whether you need legal consultations to assess your claim, contract review to prevent future debts, or full representation in court and enforcement, our team is ready to act with speed and high quality.

Do not let a complex foreign system prevent you from recovering what you are owed. Do not hesitate to contact our firm – office@arws.cz.

FAQ – Most common legal questions about Czech Debt Recovery

1. What is the statute of limitations for a commercial invoice in the Czech Republic?
Under the Czech Civil Code (občanský zákoník), the general subjective statute of limitations is 3 years from when the debt is due. An objective (absolute) limit of 10 years also applies. Acting quickly is critical. To check if your debt is still enforceable, email us at office@arws.cz.

2. Do I have to travel to Prague to appear in court?
No. As a foreign client, you do not need to be physically present. You can grant a Power of Attorney to our lawyers to represent you in all proceedings, from filing the initial claim to appearing in court hearings. For seamless representation, contact us at office@arws.cz.

3. What happens exactly if my debtor files for insolvency?
All your individual lawsuits and enforcement (exekuce) proceedings are immediately frozen by law. Your only path to recovery is to file a formal proof of claim in the insolvency proceeding within a strict 2-month deadline. If you miss this, your debt is voided. To protect your claim, write to our insolvency team at office@arws.cz.

4. How much are the court fees to start a claim?
For a standard lawsuit, the court fee is 5% of the claimed amount (for most commercial claims). A fast-track electronic payment order is often cheaper, at 4%. While the "loser pays" rule means the debtor should repay this, you must pay it upfront. For a full cost analysis, contact us at office@arws.cz.

5. What documents do I need to give you to start?
To build the strongest possible case for the Czech court, which has a high evidentiary standard, you must provide clear proof. This includes all signed contracts, issued invoices, confirmed proof of delivery (delivery notes), and any email correspondence where the debtor acknowledged the debt. Our lawyers are ready to review your documents – email them to office@arws.cz.

6. Can ARROWS help me with employee training to prevent this?
Yes. Many of these problems can be avoided with stronger contracts and invoicing policies. We provide professional training for employees or management (often with certificates) on Czech commercial law, compliance, and proper contract drafting to secure your position before a debt arises. To schedule training, please write to office@arws.cz.

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