How can a Finnish company litigate in the Czech Republic

Facing a commercial dispute in the Czech Republic can be a daunting prospect for any Finnish company. This guide provides clear, practical answers on how to navigate the Czech legal system, enforce your rights, and protect your business interests. As a leading Czech law firm in Prague, EU, with extensive experience assisting foreign clients, our English-speaking lawyers at ARROWS are here to clarify the process. We will explain the key differences and similarities between Finnish and Czech procedures, so you know exactly what to expect.

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.

Understanding Jurisdiction: Where Your Commercial Dispute Will Be Heard

The first question in any cross-border dispute is which country's courts have the authority to hear the case. Fortunately for businesses operating within the European Union, this is not a matter of guesswork. A clear and predictable framework governs legal disputes between entities in Finland and the Czech Republic, ensuring a level playing field for all.

The EU's Unified Approach

The cornerstone of cross-border civil and commercial litigation within the EU is Regulation (EU) No 1215/2012, commonly known as the Brussels Ibis Regulation. This regulation creates a harmonized system for determining jurisdiction and ensures that judgments from one member state are recognized and enforced in others. For a Finnish company, this means the rules are consistent, transparent, and designed to prevent costly legal battles over where a lawsuit should be filed.

The General Rule: Why a Czech-Based Defendant Means a Czech Court

The primary principle of the Brussels Ibis Regulation is straightforward: a defendant, whether a person or a company, must generally be sued in the courts of the EU Member State where they are domiciled. For business purposes, a company's domicile is its statutory seat, central administration, or principal place of business.

This means if your Finnish company has a dispute with a supplier, distributor, or business partner whose registered office is in Prague or elsewhere in the Czech Republic, the Czech courts will almost certainly have jurisdiction to hear the case. This rule provides certainty and prevents a defendant from being sued in an unexpected or inconvenient location.

Exceptions for Contracts and Torts: Practical Examples for Finnish Businesses

The regulation also provides for "special jurisdiction" in certain cases, which can be a powerful strategic tool. These rules may allow you, as the claimant, to bring a lawsuit in a country other than the defendant's domicile. Two of the most relevant exceptions for commercial disputes involve contracts and torts.

In matters relating to a contract, a company can be sued in the courts for the "place of performance of the obligation in question". For example, if your Finnish company contracted with a Czech manufacturer to deliver goods to your warehouse in Helsinki, and those goods were defective, you may be able to sue the Czech company in the Finnish courts because the place of performance was Finland.

In matters relating to tort (a civil wrong causing harm), a company can be sued in the courts of the place where the "harmful event occurred or may occur". If a Czech competitor engages in unfair marketing practices that cause your Finnish company to lose sales in the Finnish market, you may have the option to sue them in Finland, where the financial damage was felt. This flexibility allows businesses to seek justice in the location most relevant to the harm they suffered.

Understanding these jurisdictional rules is more than a procedural formality; it is the first step in litigation strategy. A Finnish company is not automatically forced to litigate in a foreign court just because its counterparty is Czech. A careful analysis of the contract, the nature of the dispute, and the place where key events occurred can reveal alternative, potentially more advantageous, legal venues. An expert legal partner can perform this crucial analysis to ensure your case is initiated on the strongest possible footing.

Enforcing Judgments Across Borders: A Key EU Advantage

A common fear in international business is winning a lawsuit only to find the judgment is unenforceable in the country where the debtor's assets are located. Within the EU, this concern has been largely eliminated. A legal victory in one Member State has real, tangible power across the entire Union, ensuring that your company can effectively collect what it is owed.

From Helsinki to Prague (and Vice Versa)

The principle of mutual recognition means that a final judgment on a commercial matter from a Finnish court is treated with the same legal authority as a judgment from a Czech court, and vice versa. This seamless system is a fundamental benefit of the EU single market, providing businesses with the confidence that their legal rights are protected across borders.

The End of Exequatur: A Revolution in Enforcement

The most significant change introduced by the Brussels Ibis Regulation was the abolition of the cumbersome procedure known as exequatur. Previously, a Finnish company that won a judgment in Helsinki against a Czech debtor would have to initiate a separate, secondary court proceeding in the Czech Republic simply to have the Finnish judgment declared enforceable. This process could add months, or even years, to the timeline and generate substantial additional legal costs, often between €2,000 and €3,000, but sometimes much more.

This delay and expense created a strategic weakness for creditors. A debtor could use the threat of a long and costly enforcement battle to pressure the creditor into accepting a lower settlement amount. That leverage has now been removed.

Under the current rules, the process is radically simplified. A judgment from a Finnish court, accompanied by a standard certificate issued by that same court, is directly enforceable in the Czech Republic. The application for enforcement is submitted directly to the competent enforcement authorities, bypassing the need for any prior declaration from a Czech court. This transforms enforcement from a lengthy legal battle into a swift administrative procedure.

This streamlined process has fundamentally shifted the negotiating power in cross-border disputes. The path to seizing a debtor's assets—such as bank accounts or real estate in Prague—is now direct and efficient. A Finnish company can now credibly state that if payment is not made, it will obtain a judgment and begin enforcement actions in the Czech Republic within a matter of weeks, not years. This makes the threat of litigation far more potent and can often encourage a faster, more favorable settlement before court action is even necessary.

As an international law firm operating from Prague, European Union, ARROWS has the on-the-ground capability to manage this process seamlessly. Through our extensive ARROWS International network, built over 10 years, we can coordinate the enforcement of a Finnish judgment against assets in the Czech Republic or assist in enforcing a Czech judgment against assets in Finland or any of the 90 countries where we operate.

FAQ – Legal tips about EU Cross-Border Judgments

1. My contract says disputes must be resolved in Finland. Can I still enforce the judgment in the Czech Republic?
Yes. Thanks to the Brussels Ibis Regulation, a final judgment from a Finnish court is directly enforceable in the Czech Republic without a separate court procedure. Need help with cross-border enforcement? Contact us at office@arws.cz.

2. What documents do I need to enforce a Finnish judgment in Prague?
You will need a copy of the judgment and a standard certificate from the Finnish court that issued it, which can be found on the European e-Justice Portal. Our lawyers can manage this entire process for you. For immediate assistance, write to us at office@arws.cz.

3. How long does it take to enforce an EU judgment now?
The process is significantly faster as the lengthy exequatur stage has been eliminated. It is now primarily an administrative process, saving months of time and significant costs. Get tailored legal solutions by writing to office@arws.cz.

Inside the Czech Courtroom: What a Finnish Company Should Expect

While EU regulations harmonize rules on jurisdiction and enforcement, the actual court procedure within each country remains distinct. Understanding the key procedural differences between the Czech and Finnish legal systems is essential for managing expectations and building a successful case.

Shared Roots, Different Branches

Both the Czech and Finnish legal systems are based on the civil law tradition, meaning they rely on comprehensive legal codes enacted by parliament as the primary source of law. This provides a familiar foundation for a Finnish company, as the court's role is to apply the written law to the facts of the case. However, the specific rules of civil procedure—how a case moves through the court, how evidence is handled, and the role of the judge—can vary significantly.

The Critical Role of Evidence and Discovery

One of the most important procedural differences relates to the gathering and presentation of evidence. The Czech legal system does not have a broad, US-style pre-trial discovery process where parties are required to exchange all potentially relevant documents.

In Czech civil litigation, each party is responsible for presenting the evidence that supports its own claims. The opposing party is not generally entitled to access your internal files, and you are not entitled to theirs. While a court has the power to order a party or a third party to produce a specific, identified document that is crucial evidence (a procedure known as Actio ad exhibendum), this is a targeted measure, not a wide-ranging "fishing expedition" for information.

This procedural reality has profound strategic implications. It means that a case is often won or lost based on the preparation done before the lawsuit is ever filed. You cannot rely on the court process to uncover a critical piece of evidence from your opponent's records. The onus is on your company and its legal team to conduct a thorough internal investigation, secure all necessary documents, and build a comprehensive and well-supported case from the very beginning. This elevates the importance of pre-litigation legal analysis and evidence assessment from a preliminary step to an absolute necessity for success.

The Court Process in Brief

A typical commercial lawsuit in the Czech Republic follows a structured path:

1. Filing the Claim: The process begins when the claimant files a detailed statement of claim with the competent court.

2. Preliminary Hearing: The court may hold a preliminary hearing to clarify the issues, organize the proceedings, and encourage settlement.

3. Main Hearing: This is the core of the trial, where parties present their arguments and evidence, including witness testimony, orally before the judge or panel of judges.

4. Judgment and Appeal: After the hearing, the court issues a written judgment. The losing party generally has the right to appeal the decision to a higher court.

Navigating Czech Court Procedure

Risks and Penalties	How ARROWS Helps
Missing the 15-day appeal deadline for an administrative fine, resulting in the penalty becoming final and enforceable.	Urgent Legal Consultation: We ensure critical deadlines are met, preserving your right to appeal. For immediate assistance, write to us at office@arws.cz.
Submitting a procedurally flawed claim that is rejected by the court, causing delays and wasted costs.	Drafting Legally Required Documentation: Our experts prepare all court filings correctly from the start. Need legal help? Contact us at office@arws.cz.
Failing to present sufficient evidence upfront due to misunderstanding the lack of a broad discovery process.	Legal Analysis: We assess your case and devise a strategy for evidence gathering before filing. Want to understand your legal options? Email us at office@arws.cz.
Misinterpreting the judge's role or court etiquette, weakening your case's presentation.	Representation in Court: Our experienced litigators navigate the Czech courts effectively on your behalf. Need legal representation? Write to office@arws.cz.

Is There a Better Way? Alternatives to Litigation

Court proceedings can be lengthy, costly, and public. For many businesses, a more efficient and confidential path is preferable. The Czech Republic offers robust and well-established methods of Alternative Dispute Resolution (ADR) that can provide a faster and more commercially sensible outcome.

Why Consider Alternative Dispute Resolution (ADR)?

Choosing ADR is a strategic business decision. The primary benefits include speed, lower costs, confidentiality, and the potential to preserve valuable business relationships that might be destroyed in an adversarial court battle. Instead of a judge imposing a decision, ADR processes empower the parties to control the outcome.

Arbitration: A Private and Binding Decision

Arbitration is a formal, private process where parties agree to submit their dispute to one or more neutral arbitrators, who then issue a legally binding decision known as an arbitral award. In the Czech Republic, most commercial disputes involving property or financial claims are arbitrable.

The premier institution for commercial arbitration is the Arbitration Court attached to the Economic Chamber of the Czech Republic and the Agricultural Chamber of the Czech Republic. An arbitral award issued under its rules is final and can be enforced through the court system in the same way as a judicial judgment, both in the Czech Republic and internationally under the New York Convention.

Mediation: The Path to a Commercial Solution

Mediation is a flexible and confidential process where a neutral mediator facilitates negotiations between the parties to help them reach a mutually acceptable settlement. The mediator does not impose a decision but helps the parties find common ground and craft their own solution.

While mediation is not compulsory for commercial disputes in the Czech Republic, the legal system strongly encourages it. Czech courts have the authority to order the parties to attend at least one three-hour meeting with a registered mediator and can pause the court proceedings for up to three months to facilitate this process.

This unique procedural feature means that preparing for mediation is not an optional extra; it is a core part of an effective litigation strategy in the Czech Republic. This court-ordered meeting provides a valuable, early opportunity to resolve the dispute efficiently and on favorable terms. A company that is well-prepared by its legal counsel can use this session to its strategic advantage, while also demonstrating to the court its commitment to a reasonable and constructive resolution.

Financial and Reputation Risks in Commercial Disputes

Risks and Penalties	How ARROWS Helps
High Litigation Costs: Escalating legal fees and court costs drain company resources.	ADR Consultation: We analyze if mediation or arbitration can resolve your dispute more cost-effectively. Get tailored legal solutions by writing to office@arws.cz.
Public Disclosure of Sensitive Information: Court proceedings are generally public, exposing business strategies, financial data, or trade secrets.	Arbitration Clause Drafting: We can draft confidential arbitration clauses into your contracts to keep future disputes private. Do you need a contract prepared? Contact us at office@arws.cz.
Damaged Business Relationships: Adversarial court battles can permanently destroy valuable partnerships with suppliers or clients.	Mediation Representation: We represent you in mediation to find a mutually acceptable solution that can preserve your business relationships. Our lawyers are ready to assist you – email us at office@arws.cz.
Management Time Drain: Lengthy litigation diverts executive focus from core business operations.	Efficient Case Management: We handle the entire legal process, providing clear updates so you can focus on your business. For immediate assistance, write to us at office@arws.cz.

The Bottom Line: Costs and Timelines for Your Dispute

For any business, the decision to litigate is also a financial one. Understanding the potential costs and time commitment is essential for making an informed strategic choice. The Czech system is relatively transparent in this regard, allowing for predictable budgeting and risk assessment.

Understanding Court Fees

The court fees for filing a monetary claim in the Czech Republic are calculated based on the value of the dispute. For most commercial cases, the formula is straightforward: the fee is 5% of the claimed amount for disputes valued between CZK 20,000 and CZK 40 million.

For example, for a claim of €100,000 (approximately CZK 2.5 million), the initial court fee payable upon filing the lawsuit would be CZK 125,000 (approximately €5,000). This predictable structure allows businesses to calculate the initial cost of initiating legal action accurately.

Legal Fee Structures

Like in Finland, Czech law firms offer various fee structures. The most common is the hourly rate, which for complex international cases or services provided in English typically ranges from CZK 4,000 to CZK 5,000 per hour (approximately €160 to €200). Other arrangements, such as fixed flat fees for specific tasks, success-based fees (especially in debt collection), or blended models, can also be negotiated to align with your company's budget and risk tolerance.

It is important to note that the Czech legal system, like most in Europe, generally operates on the "loser pays" principle. This means the successful party is typically entitled to have its reasonable legal costs, including court fees and attorney's fees, reimbursed by the losing party. While this offers the potential to recover your investment in the litigation, it also doubles the financial risk if you lose, as you could be liable for both your own and your opponent's costs. This reality makes the initial case assessment the single most important investment, as it provides a clear-eyed view of the probability of success and the full financial exposure.

Realistic Timelines

The duration of a court case can vary significantly depending on its complexity. According to official statistics, the average time to obtain a final decision in a routine civil case is approximately one year and one month.

However, for more complex commercial disputes, such as those involving intellectual property, unfair competition, or intricate contractual issues, the timeline can be considerably longer. It is not uncommon for such cases to take two to three years at the first instance, and potentially up to 4.5 years or more if the decision is appealed to a higher court. An experienced legal team is crucial for navigating the process efficiently and avoiding unnecessary delays.

Your Strategic Partner in Prague: How ARROWS Protects Finnish Businesses

Navigating a commercial dispute in a foreign country requires more than just legal knowledge; it demands a partner who understands the local landscape, anticipates procedural challenges, and aligns legal strategy with your business objectives. ARROWS is uniquely positioned to be that partner for Finnish companies operating in the Czech Republic.

As an international law firm operating from Prague, European Union, we bridge the gap between different legal cultures. Our team combines deep expertise in Czech law with a sophisticated understanding of the expectations and concerns of international clients. We support over 150 joint-stock companies and 250 limited liability companies, and our experience in 90 countries gives us a truly global perspective.

We offer a comprehensive suite of services designed to protect your interests at every stage:

• Proactive Prevention: Preparation of internal company policies and expert Contract drafting or review to minimize your legal risks from the outset.
• Strategic Assessment: In-depth Legal opinions to evaluate the strengths, weaknesses, and potential costs of your case, enabling informed business decisions.
• Effective Dispute Resolution: Representation in court, before public authorities, and in arbitration and mediation proceedings.
• Procedural Excellence: Drafting all legally required documentation for court filings and other procedures to ensure compliance and avoid delays.
• Ongoing Support: Legal consultations to address emerging issues and professional training for your management team to build legal awareness.

Don't let a commercial dispute in the Czech Republic disrupt your business. Protect your investment and enforce your rights with a legal partner who understands both your world and the local landscape. For a confidential consultation on your specific situation, contact our team of experts today at office@arws.cz.

FAQ – Most common legal questions about litigating in the Czech Republic

1. Can my Finnish lawyer represent my company in a Czech court?
While EU lawyers have certain rights of audience, for formal court proceedings it is highly advisable, and practically necessary, to engage a Czech-admitted lawyer. They are experts in local civil procedure, court practices, and the Czech language, which is crucial for effective representation. Our team at ARROWS includes English-speaking Czech lawyers ready to represent you. Get the local expertise you need by emailing office@arws.cz.

2. What is the first step I should take if I receive a legal notice from a Czech company or authority?
Do not ignore it. The most critical step is to contact a Czech law firm immediately. Strict deadlines, sometimes as short as 15 days for an administrative appeal, can apply. Missing these deadlines can result in you losing your right to defend yourself and the decision becoming final. For urgent matters, contact us now at office@arws.cz.

3. Is it better to go to court or to arbitration?
This depends on your contract and your strategic goals. If your contract contains a valid arbitration clause, you will likely be required to arbitrate. Arbitration is private and often faster, while court is the default public option. We can provide a legal opinion on the best path for your specific dispute. To discuss your strategy, write to us at office@arws.cz.

4. How can I be sure my sensitive business information will be kept confidential during the dispute?
Czech court proceedings are generally public. If confidentiality is your top priority, Alternative Dispute Resolution (ADR) like arbitration is the best solution, as the proceedings are private. We can help you navigate this process from start to finish. Protect your confidential information by contacting us at office@arws.cz.

5. What happens if the other party ignores a Czech court's judgment?
A final judgment from a Czech court is a legally enforceable title. Our firm can initiate enforcement proceedings (exekuce) to seize assets, garnish bank accounts, or take other legal measures to ensure the judgment is satisfied and you receive what you are owed. Let us help you enforce your rights – email us at office@arws.cz.

6. Does ARROWS only handle litigation? What if I want to avoid a dispute in the first place?
A significant part of our work is preventative. We provide expert contract drafting and review services, help with obtaining licenses, and prepare internal company policies designed to minimize your legal risks when operating in the Czech Republic. Secure your business foundation by writing to office@arws.cz.

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