Jak vymáhat nezaplacené faktury v zahraničí

Legal foundations of cross-border recovery in the EU

The basic rule is that a lawsuit is filed in the country where the debtor has their registered office or residence. However, there are important exceptions that allow a creditor to sue in a Czech court, for example, if it concerns the place of performance of a contractual obligation. Our Prague-based attorneys at ARROWS perform an analysis at this stage to determine whether it is more advantageous to conduct the dispute in the Czech Republic or to approach a court in the debtor's country directly to avoid unnecessary procedural delays. In this area, ARROWS provides comprehensive services for commercial and litigation disputes with an international reach.

Another pillar is the Rome I Regulation, which determines the applicable law for contractual obligations. If the parties have not explicitly chosen Czech law in the contract, the applicable law is determined by the nature of the contract – for example, for a purchase agreement, the law of the seller's country usually applies. This is where the expertise of our Prague-based law firm ARROWS comes in, ensuring during the review of contracts and directives that the choice of law and jurisdiction is strategically advantageous and predictable for the client.

Legal terms you should know

In international law, several terms commonly define the stability of your legal position. The first is prorogation, which is an agreement between parties on which specific court will resolve their potential future disputes. This clause in a contract provides the creditor with certainty and prevents the debtor from using tactical maneuvers. Our experts in contracts and negotiations can assist you with preparing these clauses. The second term is lis pendens, or the obstacle of pending proceedings, which prevents two different courts in different countries from deciding on the same matter simultaneously.

The third important term is exequatur. This is a procedural proceeding in which a court of one state recognizes the enforceability of a decision issued in another state. While this process has been eliminated for many types of decisions within the EU thanks to modern regulations, for enforcement outside the EU (e.g., in Asian countries or the USA), exequatur remains a necessary and often costly step requiring precise documentation. Details on specific procedures abroad can be found in the article how companies from the Czech Republic assert claims in Romania: effective methods of debt recovery.

Questions and answers regarding legal jurisdiction

1. Can we sue a debtor from Slovakia in a Prague court? Yes, if the jurisdiction of Czech courts is agreed upon in the terms and conditions or the contract, or if the place of delivery of goods was in the Czech Republic. This strategy is more convenient for Czech companies but requires subsequent enforcement of the decision in Slovakia, which ARROWS law firm facilitates through its local partners.
2. What if we didn't agree on the applicable law in the contract? In such a case, the EU rules of the Rome I Regulation apply. For the sale of goods, the law of the country where the seller is based is usually applied. However, if the debtor argues defects in performance, the process can be more complex. The reality in these cases is often more complicated, and without a professional assessment, there is a risk of misinterpreting international standards. You might be interested in the tax and legal traps for foreign investors in cross-border transactions.

Out-of-court recovery: Psychology and local pressure

Before filing a lawsuit, it is standard practice to attempt an out-of-court settlement. In an international context, the pre-litigation phase carries specific weight, as debtors often rely on the assumption that a creditor will not want to engage in expensive cross-border litigation. This is where a formal pre-action demand letter sent by our Prague-based law firm plays a crucial role, making it clear that the creditor is prepared to defend their rights in Czech courts or abroad.

In countries like Germany, a necessary step is the so-called Mahnung (reminder), which must meet formal requirements for the creditor to later claim default interest and legal representation costs. In France, emphasis is placed on the Mise en demeure. The attorneys at ARROWS law firm draft these documents to respect local legal customs and exert the necessary pressure on the debtor to pay without the need for court proceedings.

An important element of the out-of-court phase is also verifying the debtor's creditworthiness. It makes little sense to invest in court fees if the debtor is in insolvency or has no seizable assets. Through the ARROWS International network, our Prague-based law firm checks foreign registries and screens entities, saving clients the costs of futile recovery efforts. This service is particularly vital for higher claims where the risk of financial loss is enormous.

European Payment Order (EPO) in Detail

The European Payment Order, introduced by Regulation No. 1896/2006, is the most widely used tool for recovering uncontested monetary claims within the EU. Its main advantage is that the entire procedure is based on standardized forms. The creditor does not need to attach evidence to the application (Form A); a description of the evidence is sufficient. This significantly speeds up the filing and reduces the administrative burden at the start of the proceedings.

Upon receiving the application, the court examines only the formal requirements and, if met, usually issues the payment order within 30 days. This is then served to the debtor, who has 30 days to file an opposition (Form F). If the debtor does not file an opposition, the order becomes enforceable and serves as an enforcement order throughout the EU. In reality, however, debtors often file an opposition just to gain time, which shifts the proceedings into a standard legal dispute.

Our Prague-based attorneys have extensive experience with this process and can effectively respond to any opposition from the debtor. If an opposition is filed, ARROWS law firm seamlessly takes over representation in the subsequent proceedings, which are then governed by the national law of the respective state. It is at this stage that the support of the ARROWS International network is essential, ensuring local legal representation directly in the country of the court.

Questions and Answers on the European Payment Order

1. Can an EPO be used in Denmark? No, Denmark has negotiated an opt-out from EU cooperation in these matters, and the EPO Regulation does not apply there. In Denmark, it is necessary to proceed either under their national law or through standard litigation. In such cases, ARROWS law firm collaborates with Danish partners to provide an effective alternative.
2. What are the court fees for an EPO? Fees vary depending on the country where you file the application. If you file the application with a Czech court, the fee is based on the amount being recovered. Importantly, in the event of success, the debtor is obliged to reimburse the creditor for these costs. ARROWS law firm will prepare a cost-benefit analysis for you before any steps are taken.
3. What if the debtor claims they never received the invoice? This is a common procedural objection during the opposition phase. In such a case, the creditor must provide evidence of the delivery of the invoice and the actual delivery of the goods or services in the subsequent proceedings. Therefore, it is crucial to have all documentation in order, such as confirmed delivery notes or email communication. ARROWS law firm systematizes this evidence right from the filing of the application.

European Small Claims Procedure (up to EUR 5,000)

For smaller cross-border disputes involving amounts not exceeding EUR 5,000 (excluding interest and costs), there is the European Small Claims Procedure (Regulation No. 861/2007). This procedure is designed to be as simple and inexpensive as possible. It is conducted primarily in writing, and the court only orders an oral hearing in exceptional cases, for example, if a party requests it and the court deems it necessary.

The creditor completes Form A and attaches relevant documents (e.g., copies of contracts, invoices). The court has 14 days to send a copy to the debtor, who then has 30 days to respond. A decision issued in this procedure is again directly enforceable in other EU states. Although this procedure theoretically does not require an attorney, in practice, we often see procedural errors that lead to the dismissal of the application; therefore, it is safer to have the filing handled by ARROWS law firm.

A fundamental benefit of this procedure is that the debtor cannot block the process with a mere opposition without justification, as is the case with the EPO. The court assesses the merits of the case based on the submitted documents. If the debtor does not communicate, the court issues a judgment that becomes a title for enforcement. ARROWS law firm utilizes this procedure especially for companies with a high volume of smaller claims where procedural economy is key.

Debt Recovery in Neighboring Countries: Slovakia and Germany

Slovakia and Germany are key markets for businesses operating in the Czech Republic. Each of these countries has its own specifics that either facilitate or complicate recovery. Slovakia has introduced the so-called upomínacie konanie (reminder proceedings), which take place exclusively electronically via a specialized court in Banská Bystrica. This procedure is very efficient for creditors, as court fees are half of those for a standard lawsuit.

In Germany, the system is built on strict formality. If a debtor does not respond to out-of-court demands, the German national payment order (Mahnverfahren) can be used. The advantage is that if the debtor does not file an opposition, you obtain an enforcement title very cheaply and quickly. However, if the debtor defends themselves, the dispute moves to the relevant Amtsgericht (District Court). ARROWS law firm has a network of proven partners in Germany who ensure representation directly in German.

Attorneys at ARROWS law firm in Prague routinely handle these matters and can significantly reduce the time required to recover funds thanks to their deep knowledge of local digital platforms and procedural deadlines. For instance, in Slovakia, we can file motions within hours due to electronic signatures and direct integration with the Slovak judicial system. This speed is often decisive in situations where a debtor begins to face financial difficulties and the risk of insolvency looms.

Strategies for markets outside the European Union

Debt recovery in countries such as the USA, China, the UK, or Switzerland requires a completely different approach. The principle of automatic recognition of judgments does not apply here. If you obtain a judgment from a Czech court, you must undergo proceedings for the recognition and enforcement of a foreign decision in the target country. This can be very time-consuming and costly. Therefore, in these cases, ARROWS law firm in Prague recommends prevention in the form of international arbitration.

International arbitration is based on the New York Convention of 1958, signed by over 160 states. As a result, an arbitral award issued, for example, in Prague is easily enforceable in both New York and Shanghai. Our Czech legal team helps clients draft contracts to include correctly formulated arbitration clauses, which saves millions in procedural costs in the future.

If the contract does not contain an arbitration clause, the only option is to undergo the exequatur process. In this proceeding, a foreign court must confirm that the Czech judgment does not contradict local public policy and that the debtor was given the opportunity to defend themselves. ARROWS law firm, through ARROWS International, provides complete management of these proceedings, from obtaining apostilles to representation before the local court.

Legal tips for overseas business

1. Always insist on an arbitration clause: For partners outside the EU, arbitration is almost always strategically more advantageous due to the global enforceability of the award. We can help you choose a suitable arbitration institution (e.g., the ICC in Paris or the Arbitration Court attached to the Czech Chamber of Commerce).
2. Pay attention to the form of documents: Documents for overseas often require superlegalization or an apostille, which are higher levels of verification for stamps and signatures. ARROWS law firm handles these formalities for you to avoid formal rejection of a lawsuit.
3. Check statutes of limitations in the target country: In the United States, for example, statutes of limitations vary from state to state and can be very specific for different types of goods. Reality overseas is often more complex, and without the local expertise of ARROWS International, there is a risk of irreversible errors.

Statutes of Limitation: A critical factor in international law

One of the most common reasons for failure in international debt recovery is the expiration of the claim. While the general limitation period in the Czech Republic is three years, in international trade, rules are governed by the applicable law. In Germany, the three-year period begins at the end of the year in which the claim arose, while in France, the period for commercial relations is five years.

Switzerland is particularly tricky, where standard contractual claims expire after ten years, but specific supplies of goods after only five. Furthermore, Switzerland has the concept of a "loss certificate" (Verlustschein), issued if the debtor has no assets, which extends the limitation period up to 20 years. Our Prague-based attorneys perform a limitation analysis for every case to ensure the debtor cannot raise a valid statute of limitations defense.

It is important to know that a mere demand for payment does not interrupt the limitation period in most countries. It is essential to initiate court or arbitration proceedings. ARROWS law firm recommends not waiting until the last minute and initiating legal action at least several months before the deadline to allow sufficient time for translations and service of the lawsuit.

Enforcement abroad: How to get funds into your account

Obtaining a judgment or a payment order is only half the battle. If the debtor does not pay even after a court decision, enforcement (execution) must follow. This is always governed by the law of the state where the debtor's assets are located. The system works differently in every country – in some, there are private bailiffs, in others, court executors or Ministry of Justice officials.

In Austria, for example, the creditor files a motion for enforcement at the district court (Bezirksgericht). If the creditor wishes to garnish the debtor's wages and does not know their employer, the court can query social security institutions. In Germany, the court bailiff (Gerichtsvollzieher) plays a key role and can demand a list of assets from the debtor. ARROWS law firm manages these local processes and communicates directly with enforcement authorities.

ARROWS law firm is insured for up to CZK 400,000,000, providing clients with a high degree of security even in complex enforcement cases with high values in dispute. Our Prague-based attorneys not only file motions but actively search for debtor assets through international databases and registries to ensure enforcement is effective and to prevent the siphoning of assets by the debtor.

Table of risks and sanctions in international debt recovery

Recovery Costs and Fixed Compensation

A frequent question from companies is whether international debt recovery is worth it. Thanks to the European Late Payment Directive (2011/7/EU), a creditor in commercial transactions is entitled to a fixed minimum compensation of EUR 40 for recovery costs for every overdue invoice. This claim arises automatically by law (ex lege) the moment the debtor is in default, even without the need for a prior reminder.

In addition to this flat rate, the creditor is entitled to statutory default interest, which is unified across the EU (usually 8% above the central bank's base rate). In the event of success in court, the court usually awards reimbursement of legal representation costs. ARROWS law firm in Prague systematically applies these claims for clients, often reducing the real costs of legal services for the client to zero.

Why choose ARROWS law firm?

International debt recovery is not just about filling out a form; it is about strategic thinking, knowledge of local processes, and the ability to communicate effectively across borders. Our attorneys in Prague routinely handle these matters for hundreds of clients and can shorten the time needed to recover funds while reducing the risk of errors that could lead to losing a dispute. Our advantage lies in the unique combination of local expertise and global reach.

Thanks to the ARROWS International network, which operates in Europe, Asia, Africa, and the Americas, clients have a single point of contact in the Czech Republic but access to top lawyers in 70 countries worldwide. We offer comprehensive services ranging from the review of contracts and directives to out-of-court collection, representation in disputes, negotiations with regulators, licensing proceedings, or certified training for your sales teams. Your international receivables thus have the highest possible chance of successful recovery.

Successful recovery of unpaid invoices abroad requires more than just patience. It requires a proactive approach, knowledge of European regulations, and the ability to apply relevant legal pressure on the debtor. Whether it involves using a European Payment Order, small claims proceedings, or complex international arbitration, the correct choice of procedural tool is decisive for the outcome.

Remember that the reality of cross-border disputes is often complex, and procedural details, such as deadlines for service or formal requirements for powers of attorney, can jeopardize the entire process. Therefore, it is safer to entrust these cases to experts from ARROWS law firm in Prague, who have extensive experience with international elements and can minimize risks associated with foreign legal environments. Do not wait for your claims to become time-barred; start acting in time.

Disclaimer

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