How can a Hungarian company litigate in the Czech Republic

If your Hungarian company is facing a commercial dispute in the Czech Republic, you need clear and practical answers about the legal process. This guide provides specific information on jurisdiction, court procedures, and enforcing judgments, written by experts in cross-border litigation. ARROWS, a leading Czech law firm in Prague, EU, specializes in guiding foreign clients through these challenges, and our English-speaking lawyers are ready to protect your interests.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 are the EU rules for determining jurisdiction?

Cross-border civil and commercial litigation within the European Union is governed by a unified set of rules, primarily the Regulation (EU) No 1215/2012, commonly known as the Brussels I bis Regulation. This regulation creates a predictable legal environment for businesses operating across the single market.

The general rule is straightforward: a defendant, whether a company or an individual, should be sued in the courts of the EU member state where they are domiciled. This means if your dispute is with a company based in Prague or any other Czech city, the default location for your lawsuit will be the Czech courts.

However, the regulation provides a powerful tool for businesses to control this outcome: the choice of jurisdiction clause. By including a well-drafted clause in your commercial contracts, you and your counterparty can agree in advance which country's courts will resolve any future disagreements. This provides legal certainty and can prevent costly preliminary battles over where a case should even be heard.

For a Hungarian business, this EU-wide legal framework offers a powerful reassurance. While political headlines sometimes highlight disagreements between member states, the system of judicial cooperation in civil and commercial matters operates independently. Your commercial dispute will be handled according to a stable, predictable set of rules, ensuring a fair process within a safe European harbour.

FAQ – Legal tips about jurisdiction

• Can we agree in our contract to use Hungarian courts even if the other party is Czech?
  Yes, the Brussels I bis Regulation gives parties the freedom to choose the jurisdiction for their disputes. A properly drafted clause selecting Hungarian courts will generally be respected by Czech courts. For assistance with contract review, contact us at office@arws.cz.

• What happens if our contract has no jurisdiction clause?
  The default rule applies. You will likely have to sue the Czech company in the Czech Republic, as that is where it is domiciled. Our lawyers are ready to assist you with this process – email us at office@arws.cz.
• Does it matter where our Hungarian company is domiciled?
  Generally, the jurisdiction is determined by the defendant's domicile, not the plaintiff's. However, your domicile is relevant for other procedural matters. Get tailored legal solutions by writing to office@arws.cz.

How do you formally start a legal action from Hungary?

Once jurisdiction is established in the Czech Republic, the litigation process begins under the Czech Code of Civil Procedure (Act No. 99/1963 Coll.). The first step is to file a statement of claim with the competent Czech court. This initial filing is not a mere formality; it is a critical strategic step where precision is paramount.

The claim must contain specific information to be accepted by the court, including:

• The court to which the claim is addressed.
• Precise identification of the plaintiff and defendant.
• A clear statement of what the action concerns and the relief sought (e.g., payment of a specific amount).
• A detailed description of the relevant facts.
• Identification of the evidence you will rely on to prove your claim.

To formally notify the Czech defendant, the process is streamlined under the Regulation (EU) 2020/1784 on the service of documents. Your lawyer submits the documents to a designated agency in Hungary, which then transmits them to its counterpart in the Czech Republic for formal delivery. While simplified, this process must be executed flawlessly to be valid.

Crucially, all documents submitted to a Czech court, including the statement of claim and all supporting evidence, must be in the Czech language and accompanied by a certified translation. This is a strict and non-negotiable rule. Procedural mistakes at this early stage are common for foreign litigants and can lead to significant delays or even the dismissal of your case before its merits are ever considered.

Common Pitfalls in Commencing Litigation

Risks and Penalties	How ARROWS Helps
Claim Dismissal: Your lawsuit is rejected by the court for failing to meet the formal requirements of the Czech Code of Civil Procedure.	Drafting legally required documentation: We ensure your statement of claim is flawless from the start. Need help? Write to office@arws.cz.
Invalid Service: The defendant successfully argues they were not properly notified, causing significant delays and costs, potentially invalidating the proceedings.	Procedural Management: We manage the entire cross-border service process under EU regulations to guarantee compliance. For immediate assistance, email us at office@arws.cz.
Inadmissible Documents: Key contracts or evidence are ignored by the court because they were not submitted with a certified Czech translation.	Legal Document Management: We coordinate certified translations and ensure all submissions meet court standards. Get tailored legal solutions by writing to office@arws.cz.

 

What should a Hungarian business expect in a Czech court?

Understanding the differences between the Czech and Hungarian procedural systems is key to managing expectations and developing an effective litigation strategy. Hungary significantly modernized its civil procedure with Act CXXX of 2016, introducing a more structured, party-led system. The Czech Republic, in contrast, continues to operate under its long-standing Code of Civil Procedure (Act No. 99/1963 Coll.), which reflects a more traditional, judge-led approach.

The most significant difference is the structure of the proceedings. The new Hungarian code divides the first instance into two distinct phases: a preparatory phase where parties must present all facts and evidence, and a subsequent substantive phase for the trial. After the preparatory phase, introducing new evidence is only possible in exceptional circumstances.

Czech proceedings are more fluid and continuous. While there are preparatory stages, the process is not as rigidly divided. The Czech judge often plays a more active role in guiding the proceedings and clarifying facts, whereas the Hungarian system places a stronger emphasis on the parties to frame the dispute entirely during the preparatory stage.

These procedural philosophies directly impact litigation strategy. An approach that works well in Hungary’s front-loaded system may be ineffective in the Czech Republic. As an international law firm operating from Prague, European Union, ARROWS is perfectly positioned to bridge these procedural and cultural gaps for our Hungarian clients, recalibrating your strategy to succeed in the Czech legal environment.

How can you gather evidence and avoid having your claim dismissed?

A successful case is built on strong evidence and strict adherence to deadlines. The EU has created tools to simplify evidence gathering across borders. Under the Regulation (EU) 2020/1783 on the taking of evidence, a Czech court can formally request a Hungarian court to take evidence on its behalf, such as questioning a key witness located in Hungary.

Within the Czech proceedings, each party has the "burden of proof" for its claims, meaning you must provide sufficient evidence to substantiate your assertions. However, the court imposes strict deadlines for submitting this evidence. These deadlines can be statutory (set by law) or judicial (set by the judge). Missing a deadline can have severe consequences, as the court may refuse to consider any evidence submitted late, permanently weakening your case.

One of the greatest risks for any claimant is the statute of limitations. Czech law uses a dual system:

1. Subjective Limitation Period: This is generally 3 years. It starts to run from the moment the creditor knew, or should have known, that the right could be exercised for the first time (e.g., from the due date of an unpaid invoice).

2. Objective Limitation Period: This is a final deadline, typically 10 years, that runs from the date the right matured, regardless of the creditor's knowledge.

Crucially, a claim is time-barred as soon as the earlier of these two periods expires. The "should have known" element of the subjective period is a frequent point of dispute and a legal minefield for foreign companies, who may be unaware that the three-year clock has already started ticking.

Risks Related to Evidence and Time Limits

Risks and Penalties	How ARROWS Helps
Time-Barred Claim: Your entire claim, regardless of its merit, is dismissed because you failed to file within the complex Czech statute of limitations.	Legal Analysis: We assess the specific limitation periods for your case to ensure your rights are protected. Want to understand your options? Email us at office@arws.cz.
Evidence Excluded: The court refuses to consider your most important evidence because it was submitted after a judicial deadline had passed.	Litigation Strategy & Management: We manage all procedural deadlines meticulously to ensure your case is fully presented. Our lawyers are ready to assist you – email us at office@arws.cz.
Failure to Meet Burden of Proof: Your case fails because you did not provide sufficient evidence to support your claims as required by Czech law.	Representation in Court: We build a robust evidentiary strategy and represent you effectively in court. Need legal representation? Write to office@arws.cz.

 

FAQ – Legal tips about the statute of limitations

• Is the statute of limitations the same for all types of commercial claims?
  No. While the general subjective period is three years, specific types of claims (e.g., related to transport contracts or damages from competition law breaches) can have different limitation periods. For tailored legal solutions, write to office@arws.cz.
• Can the statute of limitations be paused or extended?
  Yes, certain actions can pause (stay) the limitation period, such as engaging in formal out-of-court dispute resolution. Acknowledging a debt in writing can restart the period entirely. Do not hesitate to contact our firm for advice – office@arws.cz.

How do you collect on a judgment obtained in one EU country in another?

Winning a lawsuit is only half the battle; the ultimate goal is recovery. This is where the Brussels I bis Regulation provides its most significant commercial benefit. The regulation abolished the old, cumbersome exequatur procedure, which required a second court case in the debtor's country just to have a foreign judgment recognized.

Today, a final judgment on a commercial matter from a Czech court is automatically recognized and directly enforceable in Hungary (and vice versa) without any special intermediate proceedings. This transforms a court victory into a tangible asset that can be collected across the EU single market.

The practical process is simple. The winning party obtains a standard "certificate of enforceability" from the court that issued the judgment. This certificate, along with a copy of the judgment and a certified translation, can be presented directly to the enforcement authorities in the country where the debtor has assets.

Navigating the local enforcement authorities still requires expertise. Through our ARROWS International network, built over 10 years of cross-border practice, we seamlessly manage the enforcement process in over 90 countries, including Hungary. We ensure your legal victory in the Czech Republic translates into a successful financial recovery.

Challenges in Cross-Border Enforcement

Risks and Penalties	How ARROWS Helps
Enforcement Delays: Procedural errors in submitting the judgment and certificate to Hungarian enforcement authorities delay your recovery.	Cross-Border Coordination: Through ARROWS International, we work with local partners to ensure a swift and correct enforcement filing. Do not hesitate to contact our firm – office@arws.cz.
Asset Tracing Difficulties: The debtor's assets in Hungary are difficult to locate, making enforcement ineffective.	Legal Consultations & Strategy: We provide strategic advice and can coordinate with local experts to identify and target assets for enforcement. For immediate assistance, write to us at office@arws.cz.
Improperly Handled Debtor Objections: The debtor raises procedural objections in Hungary, and your response is slow or ineffective, stalling the process.	International Representation: We manage the entire process, responding to any challenges to ensure the enforcement proceeds smoothly. Need legal help? Contact us at office@arws.cz.

 

What is the next step for resolving your dispute?

Successfully navigating a commercial dispute in the Czech Republic requires more than just knowledge of the law; it demands a strategic partner who understands the practical challenges facing a foreign business. ARROWS combines deep expertise in Czech and EU law with a commercial mindset focused on achieving your objectives.

ARROWS supports over 150 joint-stock companies and 250 limited liability companies, leveraging our extensive experience to deliver results with speed and high quality. We offer a full suite of services to protect your interests at every stage, including:

• Legal consultations to assess your case and develop a litigation strategy.
• Contract drafting and review to prevent future disputes.
• Full representation in court and before public authorities.
• Assistance with the cross-border enforcement of judgments.
• Professional training for employees on mitigating legal risks.

Contact our team at our law firm based in Prague, European Union, to discuss your case. Protecting your commercial interests in the Czech Republic starts with having the right legal partner. For a confidential consultation on your specific situation, contact our team of experts today. Email us directly at office@arws.cz.

FAQ – Most common legal questions about Czech-Hungarian litigation

• How long does a typical commercial lawsuit take in the Czech Republic
  The duration depends on complexity. While some simpler cases can be resolved in about a year, complex commercial disputes that go to appeal can take an average of 4.5 years to reach a final decision. Efficient legal management is key to navigating this timeline. For an assessment of your case, write to us at office@arws.cz.
• What are the estimated costs of litigating in the Czech Republic?
  Costs include court fees, which are typically 5% of the claimed amount, plus expenses for certified translations, expert witnesses, and legal representation fees. We provide transparent cost estimates to help you budget effectively. Need a cost analysis? Contact us at office@arws.cz.
• Do I absolutely need a Czech lawyer to represent my Hungarian company?
  While not always mandatory in first-instance courts, it is practically essential. The proceedings are conducted entirely in Czech, and the procedural rules are complex and unforgiving. Legal representation is mandatory for certain appeals. Our lawyers are ready to assist you – email us at office@arws.cz.
• Can I submit documents in Hungarian or English to a Czech court?
  No. This is a common and critical mistake. All official court submissions and evidence must be accompanied by a certified translation into the Czech language. Get tailored legal solutions by writing to office@arws.cz.
• If we win a case in the Czech Republic, is the judgment final?
  A judgment from a court of first instance can be appealed by the losing party. Once all appeals are exhausted or the time for appeal has passed, the judgment becomes final and can be enforced across the EU, including in Hungary, under the Brussels I bis Regulation. For immediate assistance, write to us at office@arws.cz.
• Can ARROWS help us avoid litigation in the first place?
  Absolutely. Many disputes arise from ambiguous or poorly drafted contracts. We provide comprehensive contract drafting and review services to include clear dispute resolution mechanisms, such as choice of law and jurisdiction clauses, to protect your business. Do not hesitate to contact our firm – office@arws.cz.

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