Judicial Debt Recovery in the Czech Republic

When does it make sense to go to court?

Business owners often ask whether it is worth going to court at all. The answer is not straightforward. It depends on several factors that you should honestly assess before taking formal steps.

First: what is the amount of the receivable? If it is a few hundred Czech crowns and the legal fees would be in the thousands, the conclusion is clear – it is hardly worth it. But if we are talking about tens or hundreds of thousands of Czech crowns, court recovery makes sense. The attorneys at ARROWS can, as a first step, assess whether recovery is worthwhile in your specific case.

Second: does the debtor have the means to pay? The worst situation is when you win the dispute, but the debtor has no assets or income. Enforcement then collapses in the face of reality. It is therefore sensible to check the debtor even before initiating court proceedings.

Some companies check prospective counterparties in the Insolvency Register or obtain basic information about their solvency. The ARROWS team can help you navigate the available public sources at this stage.

Third: do you have sufficient evidence? If it is only a verbal agreement with no paperwork, expect problems in court. By contrast, if you have a contract, invoice, order, delivery notes and email correspondence, you are in a much stronger position. If a dispute already arises at this stage regarding performance of the obligation or the interpretation of contractual terms, it may be appropriate to contact the commercial and litigation disputes team.

The legal route: three steps from a receivable to enforcement

The Czech legal system clearly defines the procedure to follow if you want to recover a debt through the courts in the Czech Republic. It is not a direct path, but a sequence of steps, each with its purpose and procedural consequences.

Pre-action demand letter – the last chance to reach an agreement

Before filing a claim, you should send the debtor a pre-action demand letter (sometimes also referred to as a pre-action reminder). This is an important procedural step with significant implications for reimbursement of legal costs.

A pre-action demand letter serves several purposes: it alerts the debtor that the situation is serious, that the matter will proceed to court, and it also enables you later to claim reimbursement of legal costs. Without sending the pre-action demand letter in time (at least 7 days before filing the claim), you may not be entitled to reimbursement of legal costs if the debtor gave cause for the claim to be filed without having been called upon to perform beforehand.

What should the letter include? We also summarise the practical impact on costs and the tax assessment of losses from unpaid invoices in the article Unpaid B2B receivables: When can an invoice loss be claimed as a tax-deductible expense and meet the strict requirements of the tax authority. In particular, a description of how the receivable arose (the basic legal basis – contract, order), the exact amount including any interest and costs, a specific payment deadline (at least 7 days; in practice, 10–14 days is often given), and payment details for settlement.

You should also clearly state what legal consequences may follow in the event of non-payment – court proceedings and subsequent enforcement, with impacts on the debtor’s assets and creditworthiness.

Send the letter by registered mail with return receipt, via a data box, or by email where you can evidence delivery (e.g., a read receipt). The ARROWS team can draft and send such a letter for you; in practice, it often happens that the mere sending of a demand letter on a law firm letterhead prompts the debtor to respond and pay the debt.

Filing a claim or an application for a payment order

If the debtor does not pay even after the pre-action demand letter, the court route remains. You face a key choice: will you file a standard claim or an application for an electronic payment order (EPO)?

An electronic payment order is a modern tool that works well in practice. The court issues it without a hearing if your application shows that you are entitled to claim the money. The advantages are faster proceedings (in many cases, the order is dealt with within a few weeks, not months) and a simpler procedure.

The court fee is the same as for a standard claim. The condition is that the application must be filed electronically (with a qualified electronic signature or via a data box). Since 2021, there has been no upper limit on the amount claimed.

If the debtor receives a payment order, they have 15 days to pay it or file an objection. If no objection is filed, the order becomes final and enforceable – and you hold a document as strong as a judgment.

A standard claim is the traditional route. You file it with the court at the debtor’s place of residence or registered office (the debtor’s “general court”). You must attach all relevant documents (contract, invoices, correspondence) and clearly formulate what you are asking the court to order (the statement of claim).

The proceedings are usually longer, but in some cases they make sense – for example, if you expect the debtor to argue that they did not receive performance, or that they have a counterclaim against you, and more extensive evidence will therefore be required. To reduce similar disputes in the future, more consistent structuring of contractual relationships may also help, as we describe in the update Dispute prevention in a holding: Setting contractual relationships between affiliated companies.

The court fee depends on the amount in dispute. For monetary claims up to CZK 20,000, it is a flat CZK 1,000. For amounts above CZK 20,000, 5% of the claimed amount is payable (with a maximum fee of CZK 2,000,000 for amounts up to CZK 40,000,000, and higher, more complex rates for very high-value disputes). You pay this fee when you file the application; there is no way around it.

Enforcement after obtaining a judgment – enforcement proceedings

If you win the dispute in court and the debtor still does not pay within the time limit set in the judgment, the final step remains: enforcement. This is handled by a court enforcement officer (bailiff), not the court itself.

You initiate enforcement proceedings by submitting an enforcement application to a court enforcement officer. The court then authorises the enforcement officer to conduct the enforcement. The enforcement officer subsequently identifies the debtor’s assets (bank accounts, wages, real estate, vehicles, etc.) and decides how to carry out the enforcement. Most commonly, this involves attachment of funds in a bank account or wage garnishment.

This raises a logical question: does the debtor have income that can be garnished, or any assets at all? If the debtor is practically without assets and without income, enforcement may be pointless. That is why, before initiating enforcement proceedings, it is worth obtaining information about the debtor—at least to make it clear that enforcement has a realistic chance of success.

Costs and ancillary claims

Before we discuss the pure costs of court proceedings, you should know what you can claim as part of your receivable. In legal terminology, this is referred to as ancillary claims.

Default interest

If the debtor does not pay on time, default interest accrues automatically. It is calculated under Czech law and its amount is based on the repo rate announced by the Czech National Bank, increased by 8 percentage points. The repo rate changes, and therefore the amount of interest changes as well.

Practical example: if the debtor owes CZK 200,000 and is 60 days past due, default interest may amount to several thousand Czech crowns depending on the current rate. You can claim this interest in court, and the debtor cannot dispute it—it is a statutory obligation.

Contractual penalty

If you agreed a contractual penalty for late payment in the contract, you are entitled to it. However, its amount is assessed to ensure it is not disproportionate. The court may reduce the contractual penalty if it is manifestly excessive. The rule is: it is always better to have a contractual penalty agreed—often it has a stronger motivational effect than default interest alone.

Lump-sum reimbursement of recovery costs

Czech law allows the creditor to claim a lump-sum reimbursement of recovery costs in the amount of CZK 1,200—regardless of the actual costs incurred. However, this applies only where the debtor is also a business. You cannot claim this reimbursement from a consumer.

Costs of court proceedings

If you win the dispute, you have the right to request that the debtor pays the court fee and, where applicable, the costs of your legal representation. You naturally pay the court fee yourself, but you can then claim it back from the debtor in the judgment. The costs of legal representation are a matter of individual agreement—the amount of the fee is usually agreed with your lawyer.

Evidence – what do you need for court?

The legal framework is clear: if you have a claim, you must prove it. The burden of proof lies with you. The court may take into account multiple types of evidence, but they differ in credibility and weight.

Written evidence is the strongest. This includes the contract, invoices, orders, delivery notes, and confirmations of receipt of goods or services. If you have a contract signed by both parties, you are in the best position.

An invoice on its own is not evidence that a contractual relationship was formed—it is only an accounting document for a due receivable. But in combination with the contract and other documents, it forms a persuasive whole.

Email communication is also legally relevant, but it is easier to challenge. The other party may claim that the email was altered, that it is incomplete, or that it was not intended for the court. In legal practice, it is therefore recommended that email communication is also supported by documentary evidence or that it clearly shows an agreement.

SMS messages, chats and screenshots—everything can be used, but the quality of their evidentiary value is lower. The court will take it into account, but with caution. Ideally, you should keep such communications with metadata (i.e., information about time, who sent it, etc.).

Witnesses—if you have a witness on your side who confirms that something was agreed between you and the debtor, that is also evidence. But witnesses can sometimes be unpredictable in court, and it is not clear how they will testify.

Practical advice: protect all communication. If you know that disputes are arising with a business partner, archive emails, print them, and take screenshots from communication platforms. ARROWS lawyers can help ensure that your evidence is organised in a way the court will respect.

Practical risks and mistakes to avoid

ARROWS attorneys in Prague see cases every day where creditors have unnecessarily made their situation more difficult by making mistakes that would have been easy to avoid. Here is a list of the most common ones:

Mistake 1: Failure to send a pre-action demand letter
As we said, it is not an absolute obstacle to the proceedings, but you may lose your entitlement to reimbursement of costs. Always send the demand letter. It will cost a few tens to hundreds of Czech crowns for postage and the time to write an email, but it can ultimately save you thousands of Czech crowns.

Mistake 2: Incorrect determination of court jurisdiction
The claim is filed with the court in the place of residence (or registered office) of the debtor, not the creditor. If you file the claim with the wrong court, the court will return it and you must start again. Check it. The debtor’s address should be in a register or in their billing details.

Mistake 3: Unclear wording of the statement of claim (relief sought)
If you do not clearly define what you want from the court, the court may agree with you but not award performance. It should be specific: “The court shall decide that the defendant is obliged to pay CZK 150,000 plus default interest in the amount of ... from 1 March 2025 until payment.” Never be vague.

Mistake 4: Underestimating the time factor
Court proceedings take time. If you want to resolve the receivable quickly, do not pursue it through a standard claim. Try to use an electronic payment order (EPR) if possible, or agree an instalment schedule with the debtor. Enforcement after the decision then takes additional months or years.

Mistake 5: Failure to examine the debtor’s assets
Winning in court is worth nothing if the debtor has nothing to pay with. Before you start recovery, find out more about the debtor. Check the Insolvency Register, look at their website and social media—sometimes you can see that the company is not stable. ARROWS attorneys in Prague can help you with this due diligence.

Mistake 6: Missing the deadline to pay the court fee
When the court calls on you to pay the fee, you usually have 15 days. If you miss it, the court will discontinue the proceedings and you must initiate them again. Keep track of documents served by the court.

Electronic payment order: the fastest route

If you want to recover a receivable as quickly as possible, you should choose an electronic payment order. In recent years, this procedure has been significantly simplified, especially after the 2021 amendments.

Key advantages:

• The court usually issues the order within a few weeks, not months.
• Simpler procedure: You fill in an online form that is largely automated and submit it.
• No upper limit: Since 2021, there has been no limit on the amount of the receivable you can claim via an EPR.
• Reliable service: The current rules have enabled so-called substitute service to a data box, so it is less likely that the order will not be delivered.

The condition is that you must have a qualified electronic signature or use a data box. If you do not have one and do not want to obtain it, a lawyer can help you file the EPR—ARROWS attorneys in Prague usually have all the digital tools available.

After an electronic payment order is issued, the debtor has 15 days to pay it or file an opposition. If they do not file an opposition, the order becomes final and is immediately enforceable. If they do file an opposition, the matter goes to standard court proceedings, which may then take longer.

In practice, it turns out that many debtors respond to an EPR—either they pay or agree an instalment schedule, just to avoid enforcement.

Enforcement after obtaining a decision

If the court has upheld your claim and the debtor has not paid even after the deadline has expired, you are left with enforcement. This is the final stage, where it is no longer a legal dispute but the practical recovery of money from the debtor.

Enforcement proceedings have their own rules and procedures. The court enforcement officer (bailiff) to whom the enforcement is assigned is not the creditor’s lawyer – they are a private individual authorised by the state to carry out enforcement activities and bound by applicable legislation in the Czech Republic. The bailiff independently searches for the debtor’s assets (bank accounts, wages, real estate, vehicles, etc.) and decides which method to use to enforce the claim.

Most commonly, this involves:

• Attachment of a claim from a bank account – the bailiff orders the bank to freeze funds in the debtor’s account and transfer them to the creditor. If there are sufficient funds, this is the fastest solution.
• Wage garnishment – if the debtor is employed, the bailiff orders the employer to deduct part of the wages and send it to the creditor. However, there are protective limits – the debtor must be left with a certain minimum amount to live on.
• Sale of movable assets – if the debtor has a vehicle, machinery, or other assets, the bailiff may seize them and sell them at auction.
• Sale of real estate – in extreme cases, real estate is sold, but this is a lengthy process that can take months or years.

The bailiff is obliged to choose a method that is not manifestly inappropriate. This means that if the debtor only has an old, low-value appliance at home but has a stable income, the bailiff will naturally opt for wage garnishment.

Time limit: After the notice of commencement of enforcement is served, the debtor has 30 days to pay the claim voluntarily. If they do so, enforcement costs are reduced by 50%. After 30 days, the enforcement becomes final and the bailiff proceeds with compulsory measures.

When is it worth reaching an agreement and when to go to court?

Every case is unique, but in general the following logic should apply: an agreement is cheaper and faster, but court proceedings are more certain.

An agreement is worth it when:

• you want to resolve the debt as quickly as possible and do not want to wait years
• you have a relationship with the debtor that you want to preserve (a business partner)
• you are concerned that the court might reduce the amount or that your evidence is weaker
• the debtor signals a willingness to negotiate and look for a solution

Going to court is worth it when:

• the debtor completely refuses to communicate
• you have strong evidence and a clear legal basis
• the debtor has sufficient assets and income to pay
• it is a larger amount that is worth pursuing

ARROWS attorneys in Prague can help you assess both options. Sometimes it pays to first try negotiations supported by a legal demand letter (which indicates the possibility of court proceedings), and only if that does not work, then go to court. Sometimes it is immediately clear that it cannot be done without court action.

Final summary

Debt recovery through the courts is neither simple nor fast, but it is a lawful and effective route when out-of-court negotiations fail. Success depends on the following points:

• The most important thing is to have good documentation – a contract, invoices, orders, proof of performance. Without it, you have no chance in court.
• Then you need to act promptly – do not wait three years for limitation. File the claim in time. The sooner, the better.
• Set up the formal steps correctly – a pre-action demand, the correct court, a clear statement of claim. Procedural mistakes cost you thousands of Czech crowns and months of time.
• Consider the type of proceedings – if speed matters, choose an EPR; if you have a more complicated relationship with the debtor, standard proceedings may be necessary.
• Get help from an expert – ARROWS attorneys will not only draft and file the claim, but will also help you assess whether recovery is worthwhile at all, and will guide you all the way through to enforcement.

Call ARROWS attorneys in Prague when you find yourself in a situation where someone has not paid you. They will provide an initial consultation and an expert assessment of your situation without unnecessary formalities. Contact them at consultation@arws.cz.

Read also:

• American Companies with Czech Debtors: How to Enforce Claims in the Czech Republic
• Canadian Businesses in the Czech Market: Debt Collection and Legal Enforcement Explained
• Mexican Businesses Recovering Debts in the Czech Republic: Court and Enforcement Procedures
• Accounting vs Tax Write-Offs of Unpaid Invoices Under Czech Law
• Supply chain disputes in Czech law: How to win or settle smart