How can an Austrian company litigate in the Czech Republic

If your Austrian company is facing a commercial dispute in the Czech Republic, you need clear, practical answers to protect your interests. This guide provides a strategic overview of the Czech litigation process, highlighting key differences from Austrian law and outlining the steps to secure a successful outcome. At ARROWS, a leading Czech law firm in Prague, European Union, our English-speaking lawyers specialize in helping foreign businesses navigate these cross-border challenges effectively.

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.

The first critical question: Where can your company file a lawsuit?

The initial decision of where to file a lawsuit is not merely a procedural formality; it is a critical strategic choice that can significantly influence the cost, duration, and ultimate outcome of your case. For disputes between Austrian and Czech companies, this decision is governed by a unified EU-wide legal framework.

Explaining the EU framework: The Brussels I bis regulation

Since both Austria and the Czech Republic are EU member states, any cross-border civil or commercial dispute is primarily governed by Regulation (EU) 1215/2012, commonly known as the Brussels I bis Regulation. This regulation establishes a uniform set of rules on jurisdiction and the enforcement of judgments, creating a predictable legal environment and ensuring that a judgment from one member state is recognized across the EU. This framework takes precedence over the national laws of either country.

The general rule: Suing in the defendant's home court

The core principle of the Brussels I bis Regulation is expressed in the legal maxim Actor sequitur forum rei—the plaintiff must follow the court of the defendant. In practical terms, this means that if your Austrian company needs to sue a Czech company, the default jurisdiction is the Czech Republic, where the defendant is domiciled. This rule is designed to protect the defendant, as it is generally considered more difficult and costly to defend a legal action in a foreign country.

Strategic exceptions for Austrian plaintiffs

The Regulation, however, provides crucial exceptions under its rules on "special jurisdiction" in Article 7, which can give your company a strategic advantage. These exceptions allow you to file a lawsuit in a different member state if there is a close connection between the dispute and that court. For an Austrian plaintiff, the most important exceptions are:

• Matters relating to a contract: A lawsuit may be filed in the courts for the "place of performance of the obligation in question". For example, if your Austrian company contracted a Czech firm to deliver goods or perform services in Vienna, a breach of that contract could potentially be litigated in an Austrian court.
• Matters relating to tort, delict, or quasi-delict: A lawsuit may be filed in the courts for the "place where the harmful event occurred or may occur". If a defective product manufactured by a Czech company caused damage at your facility in Graz, you may have the option to sue in Austria.

Choosing the correct forum is a foundational strategic decision. An incorrect choice can lead to the case being dismissed for lack of jurisdiction, resulting in wasted time and significant legal costs. A thorough analysis of the facts of your case is essential to determine the most advantageous venue for litigation. ARROWS lawyers regularly provide legal opinions on jurisdictional matters to ensure our clients start their case on the strongest possible footing.

FAQ – Legal tips about jurisdiction essentials

• Q: Our contract has a "choice of court" clause specifying Austrian courts. Does that override these rules?
  A: Yes. The Brussels I bis Regulation gives effect to such agreements (known as prorogation of jurisdiction). If validly concluded, the chosen court will generally have exclusive jurisdiction. For a review of your contract's jurisdiction clause, contact us at office@arws.cz.
• Q: What if the Czech company has a branch in Austria? Can we sue them there?
  A: Yes, in certain circumstances. The Regulation allows suing a company at the location of its branch or agency if the dispute arises out of the operations of that branch. Our lawyers can assess if this applies to your case. Email us at office@arws.cz.
• Q: The damage from a defective product occurred in Austria, but the product was made in the Czech Republic. Where do we sue?
  A: The Regulation gives you a choice. You can sue either at the place of the event giving rise to the damage (Czech Republic) or the place where the damage occurred (Austria). For strategic advice on the best option, write to us at office@arws.cz.

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Navigating the courtroom: Key differences between Czech and Austrian procedure

While the legal systems of the Czech Republic and Austria share a common heritage in the Germanic branch of continental civil law, they have evolved differently. In fact, the old Austrian General Civil Code (ABGB) was part of Czech law until 1950. This shared history can create a deceptive sense of similarity, masking critical procedural differences that can pose significant risks for an unprepared Austrian company.

The role of the judge and evidence

Both Czech and Austrian civil procedures are primarily inquisitorial, meaning the judge takes an active role in the proceedings. Neither system has the extensive pre-trial "discovery" process common in Anglo-American jurisdictions, which means you cannot launch a "fishing expedition" to find evidence. You must build your case based on the facts and evidence you already possess or can specifically request.

In the Czech Republic, the Code of Civil Procedure places a clear "burden of proof" on each party to substantiate its claims with specific evidence. In Austria, while the burden of proof also applies, the court operates under the principle of "free evaluation of evidence" (freie Beweiswürdigung), giving the judge wide discretion in assessing the weight and credibility of the five main types of evidence (documents, witnesses, experts, etc.).

A subtle but important distinction lies in the underlying legal philosophy. Czech law, particularly in areas like employment, is built on the principle of protecting the "weaker party". This protective instinct can influence a judge's perspective even in commercial disputes, especially in cases involving a large foreign corporation and a smaller local Czech business.

An Austrian company accustomed to a legal culture with a stronger emphasis on absolute contractual freedom might be surprised by a judicial interpretation that seeks to balance a perceived power inequality.

Language and formalities

A non-negotiable rule is that all civil proceedings in the Czech Republic must be conducted in the Czech language. This means all documents submitted to the court, including contracts, invoices, correspondence, and expert reports, must be accompanied by an official translation performed by a translator certified by a Czech court. This is a strict requirement, similar to Austria's own rules on certified translations for foreign documents. Managing this process correctly is vital to ensure your evidence is admissible and to avoid procedural delays.

Procedural Pitfalls for Austrian companies in Czech courts

Risks and penalties	How ARROWS helps
Assuming procedural rules are identical to Austria's, leading to missed deadlines or improper filings. Penalty: Dismissal of the claim on procedural grounds, loss of legal fees.	Representation in court by experts in Czech civil procedure. Need legal representation? Write to office@arws.cz.
Submitting evidence without a proper certified Czech translation. Penalty: Key evidence is ruled inadmissible by the court, fatally weakening your case.	Legal consultations to manage all procedural formalities and document requirements. Want to understand your legal options? Email us at office@arws.cz.
Misunderstanding the judge's active role and failing to present a complete factual case from the outset. Penalty: The court may not uncover facts favorable to you, leading to an adverse judgment.	Legal analysis to build a robust case strategy and evidence package from day one. Get tailored legal solutions by writing to office@arws.cz.
Underestimating the "weaker party" protection principle in contract interpretation. Penalty: A seemingly ironclad contract clause is deemed unfair and ruled unenforceable by the court.	Contract review to ensure your commercial agreements are fully compliant with Czech legal principles and enforceable in court. Do you need a contract reviewed? Contact us at office@arws.cz.

The Czech litigation process: A step-by-step guide for your business

Understanding the lifecycle of a lawsuit in the Czech Republic can help your business plan effectively and manage expectations. The process is structured and methodical, governed by the Czech Civil Procedure Code.

From filing to final judgment

A typical commercial lawsuit in the Czech Republic follows these key stages:

1. Filing the Action (Žaloba): The process begins when the plaintiff (your company) files a formal statement of claim with the competent court. This document must clearly state the facts of the case, the evidence you rely on, and precisely what you are demanding from the defendant (e.g., payment of a specific amount).

2. Service and Defendant's Response: The court officially serves the action on the defendant. The defendant is then given a deadline to file a written response, presenting their arguments and evidence.

3. Hearing and Taking of Evidence: The court will schedule a hearing where both parties present their case. The judge will examine the evidence, which may include reviewing documents, hearing witness testimony, and considering expert opinions. Unlike in some jurisdictions, the process is often concentrated, with the court aiming to gather all necessary facts efficiently.

4. Judgment and Appeal: After the hearing, the court issues a judgment. If either party is dissatisfied with the decision of the first-instance court (a District or Regional Court), it can file an appeal with the superior court (a Regional or High Court).

The ticking clock: The Czech statute of limitations

One of the most significant risks for any foreign company is misunderstanding the statute of limitations. Inaction can lead to the complete and irreversible loss of a valid claim. Austrian law has a very long general limitation period of 30 years , but the Czech rules are much stricter.

Czech law uses a dual system for most civil claims :

• A subjective limitation period of three years. This period begins from the moment the right could have been exercised for the first time—that is, when you knew, or should have known, about the damage and the identity of the liable party.
• An objective limitation period of ten years. This is an absolute backstop, running from the date the damage actually occurred, regardless of your knowledge.

Critically, a Czech court will not consider the statute of limitations on its own initiative. The defendant must explicitly raise the "statute of limitations defense" in the proceedings. A plaintiff could go through the entire litigation process, incurring substantial costs, only to have their claim dismissed at the final stage because it was filed too late. This makes it imperative to seek legal advice immediately when a dispute arises.

FAQ – Legal tips about deadlines and evidence

• Q: How strictly is the 3-year statute of limitations enforced?
  A: Very strictly. If the defendant raises the defense and the court finds the claim was filed after the 3-year subjective period expired, the court is legally required to dismiss the action. For an urgent assessment of your claim's deadline, email us at office@arws.cz.
• Q: Can we introduce new evidence during an appeal?
  A: Generally, new facts and evidence cannot be introduced at the appellate stage unless specific exceptions apply. It is crucial to present your entire case at the first-instance court. Need help preparing your evidence? Contact us at office@arws.cz.
• Q: What happens if the defendant simply ignores the lawsuit?
  A: If the defendant fails to respond or appear in court without a valid reason, the court can issue a default judgment in your favor based on the claims and evidence you have presented. Our lawyers are ready to assist you – email us at office@arws.cz.

Counting the costs: A financial overview of Czech litigation

A primary concern for any business entering litigation is the cost. In the Czech Republic, the costs are generally predictable and are composed of three main elements: court fees, lawyers' fees, and ancillary expenses.

A Breakdown of Czech litigation expenses

• Court Fees: For monetary claims, the court fee is calculated as a percentage of the amount in dispute. For claims exceeding CZK 20,000, the fee is 5% of the claimed amount. This fee is payable by the plaintiff upon filing the lawsuit.
• Lawyers' Fees: Legal fees can be agreed contractually (e.g., an hourly rate). However, for the purpose of cost reimbursement, the court uses the statutory Advocates' Tariff (Decree No. 177/1996 Coll.). This tariff calculates the fee based on the value of the case and the number of "legal acts" performed by the lawyer (e.g., filing the claim, attending a hearing). The successful party is entitled to have its legal costs reimbursed by the losing party, calculated according to this tariff.
• Other Costs: These can include fees for expert witnesses, costs for certified translations of documents, and, if successful, the costs of enforcement. If you use a court-appointed executor (exekutor) to enforce a judgment, their remuneration is typically 15% of the amount they successfully recover.

Comparative insight: The Austrian perspective

The cost structure in Austria is broadly similar, with court fees also tied to the value of the dispute. However, one notable feature of Austrian law is the potential for a defendant to request that a foreign plaintiff provide security for costs (Aktorenkaution). This is intended to ensure that a local defendant can recover its legal fees if the foreign plaintiff loses and has no assets in Austria.

While this requirement is generally waived between EU member states due to treaties ensuring the mutual enforcement of cost decisions, its existence in the Austrian legal code highlights a different procedural mindset. Litigating in the Czech Republic as an Austrian company avoids this potential complication entirely, streamlining the process from the start. As an international law firm operating from Prague, European Union, we leverage our deep knowledge of these cross-border nuances to our clients' advantage.

Financial and Operational Risks in Cross-Border Disputes

Risks and penalties	How ARROWS helps
Claim becomes time-barred due to misunderstanding the 3-year Czech statute of limitations. Penalty: Total and irreversible loss of the entire claim value.	Legal opinion on claim viability and all applicable deadlines. For immediate assistance, write to us at office@arws.cz.
Protracted litigation due to procedural errors freezes capital and diverts management attention from core business activities. Penalty: High legal costs, negative impact on cash flow, and lost business opportunities.	Professional training for management on key Czech legal risks to enable better strategic decision-making. Get tailored legal solutions by writing to office@arws.cz.
Winning a judgment that is later found to be unenforceable due to a procedural flaw in the original case. Penalty: All litigation costs are wasted; the original debt remains uncollected, and the entire legal effort is nullified.	Drafting legally required documentation to ensure every step of the process is procedurally sound and the final judgment is fully enforceable. Do you need documentation prepared? Contact us at office@arws.cz.

Victory in Prague: How to enforce your Czech judgment in Austria

Winning a lawsuit is only half the battle; you must also be able to enforce the judgment and collect what you are owed. Fortunately, the EU single market has made this process remarkably straightforward and efficient.

The power of the EU single market

The Brussels I bis Regulation has revolutionized cross-border enforcement by abolishing the exequatur procedure. Previously, a judgment from one country had to go through a formal recognition process in another country before it could be enforced. This is no longer necessary. A final and enforceable judgment from a Czech court is directly recognized and enforceable in Austria without any special intermediate procedure. This gives a Czech judgment the same legal force as a domestic Austrian judgment.

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The "Judgment and a certificate": The practical steps

To enforce your Czech judgment in Austria, your company simply needs to provide the competent Austrian enforcement authority with two key documents:

1. A copy of the Czech court's judgment.
2. A standard certificate issued by the Czech court pursuant to Article 53 of the Regulation. This certificate confirms that the judgment is enforceable in the Czech Republic.

This streamlined process significantly reduces the time, complexity, and cost associated with enforcing a judgment across borders. What once could be a lengthy secondary legal battle is now largely an administrative task.

ARROWS' International Reach

Even with a simplified process, enforcement in another country requires local coordination and knowledge. ARROWS, through its ARROWS International network built over 10 years and operating in 90 countries, is perfectly positioned to manage this process for you. We can handle obtaining the necessary certificate from the Czech court and coordinate seamlessly with our legal partners in Austria to oversee the entire enforcement process, from filing the application to attaching the debtor's assets.

Your strategic partner in the Czech Republic

Successfully litigating in the Czech Republic requires more than just a basic understanding of the law. It demands a strategic partner who can guide you on critical jurisdictional choices, navigate the subtle but important differences in legal procedure, manage costs proactively, and ensure your victory in court translates into a tangible financial recovery.

ARROWS provides a comprehensive suite of services to protect your interests at every stage:

• Representation in court or before public authorities to advocate for your position effectively.
• Drafting legally required documentation, from the initial statement of claim to the final appeal.
• Legal consultations to assess your case, prevent penalties, and develop a winning strategy.
• Preparation of internal company policies to minimize future legal risks.
• Professional training for your management team on the specifics of the Czech legal environment.

Do not let a legal dispute in the Czech Republic disrupt your business. Secure your position with expert guidance from a leading Czech law firm in Prague, EU. For a confidential consultation on your specific case, contact our team of English-speaking lawyers today. Our lawyers are ready to assist you – email us at office@arws.cz.

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

1. If we win our case in the Czech Republic, can we recover our legal fees from the losing party?
Yes, the Czech legal system operates on the "loser pays" principle. The successful party is entitled to reimbursement of its legal costs. However, the amount awarded is calculated based on the statutory Advocates' Tariff, which may not cover the full contractual fee agreed with your lawyer. For a detailed cost analysis of your case, please contact us at office@arws.cz.

2. How long does a typical commercial lawsuit take from start to finish in the Czech Republic?
The duration can vary significantly depending on the complexity of the case. A straightforward commercial dispute at the first-instance court can often be resolved within 12 to 24 months. This is comparable to, and sometimes faster than, the average duration for regional court proceedings in Austria, which was reported as 18 months in 2020.18 Need a timeline estimate for your specific situation? Write to us at office@arws.cz.

3. Does our Austrian in-house counsel need to be a licensed Czech lawyer to manage the case?
While your in-house counsel's input is invaluable, for most proceedings before Czech regional courts and in all appeal proceedings, parties must be represented by a lawyer admitted to the Czech Bar Association.7 ARROWS can work in close partnership with your internal legal team. Get tailored legal solutions by writing to office@arws.cz.

4. Can we settle the case out of court even after a lawsuit has been filed?
Absolutely. Settlement is encouraged and possible at any stage of the proceedings, right up until the final judgment is issued. A court-approved settlement has the same legal force as a final judgment. If you need assistance with settlement negotiations, our lawyers are ready to help – email us at office@arws.cz.

5. What are the main grounds for appealing a first-instance judgment in the Czech Republic?
An appeal can be based on errors of law (the court misinterpreted or misapplied the law) or errors of fact (the court's findings were not supported by the evidence presented). The appeal must be filed within the prescribed deadline. For immediate assistance with an appeal, write to us at office@arws.cz.

6. We have a lot of digital evidence (emails, server logs). Is this admissible in Czech courts?
Yes, digital evidence is fully admissible in Czech courts. However, it must be presented in a clear and understandable format, properly authenticated, and accompanied by certified Czech translations if the originals are in another language. Do not hesitate to contact our firm for help preparing your evidence package – office@arws.cz.

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