How can an Estonian company litigate in the Czech Republic

Estonian companies operating within the Central European market frequently encounter a legal paradox: while the Czech Republic and Estonia share the harmonized regulatory framework of the European Union, the procedural realities of enforcing rights in Prague differ radically from those in Tallinn. This report provides an exhaustive, expert-level analysis of the litigation landscape in the Czech Republic, specifically tailored for Estonian investors, exporters, and corporate entities. We provide specific answers to your legal concerns regarding jurisdiction, the mandatory digitization of justice, cost structures, and the hidden procedural traps that can invalidate legitimate claims.

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 Strategic Legal Environment

For an Estonian entity—whether a tech startup, a manufacturing exporter, or a financial holding—the Czech Republic represents a robust, mature market anchored firmly in the European legal tradition. However, the assumption that EU membership implies identical legal procedures is a dangerous fallacy that often leads to preventable losses.

ARROWS Law Firm, based in Prague, European Union, operates at the intersection of these two worlds. We serve as a safe European harbour for foreign clients, bridging the gap between the agile, highly digitized business culture of Estonia and the formalistic, procedure-heavy legal environment of Central Europe. Our lawyers combine deep knowledge of both local and foreign markets and the legal differences between the Czech Republic and other jurisdictions.

While the substantive laws (contract law, commercial codes) are largely harmonized via EU Directives, the procedural law—the rules of the game inside the courtroom—remains distinctly Czech. These rules are rigid. A missed deadline by one day, a failure to send a specific pre-litigation letter, or a signature that lacks the correct electronic certification can result in the immediate dismissal of a million-euro claim.

Even simple-looking steps often contain legal traps and hidden risks for laypeople. ARROWS handles this agenda daily and can significantly reduce the client's risk and save time. For immediate assistance, write to us at office@arws.cz.

Jurisdiction: The Battlefield of Brussels I bis

The primary question for any Estonian General Counsel or CFO facing a dispute in Czechia is strictly jurisdictional: Can we sue in Prague? Should we?

The legal foundation for this decision is Regulation (EU) No 1215/2012 (Brussels I bis). This regulation dictates that, as a general rule, persons domiciled in a Member State shall be sued in the courts of that Member State.

• General Jurisdiction (Article 4): If your debtor is a Czech company (s.r.o. or a.s.) with its registered seat in Brno, Ostrava, or Prague, the Czech courts have mandatory jurisdiction. You must take the fight to them.
• Special Jurisdiction (Article 7): In matters relating to a contract, you may also sue in the courts for the place of performance of the obligation in question.

For the sale of goods, this is the place where the goods were delivered or should have been delivered. For the provision of services, this is the place where the services were provided.

If an Estonian software house delivers a custom ERP system to a client in Prague, the "place of performance" is Prague. This gives the Estonian plaintiff a choice. However, choosing the Czech forum is often strategically superior. Why? Because the assets are in the Czech Republic. Obtaining a judgment in Tallinn is merely the first step; you would still need to enforce it in Czechia. Litigating directly in Prague removes the intermediate step of cross-border recognition and places immediate pressure on the debtor's local assets.

Our lawyers are ready to assist you – email us at office@arws.cz to determine the optimal jurisdiction for your specific commercial dispute.

The Hidden Complexity of "Simple" Disputes

It is a common misconception among foreign investors that "clear-cut" cases—such as unpaid invoices for delivered goods—do not require specialized legal counsel. In the Czech Republic, the clarity of the debt is irrelevant if the procedural formalities are not respected.

The Czech legal system is characterized by a high degree of formalism. Unlike the Estonian system, which prioritizes speed and digital seamlessness, the Czech system prioritizes strict adherence to the Civil Procedure Code (Občanský soudní řád).

• Burden of Allegation vs. Burden of Proof: It is not enough to present the invoice. You must explicitly allege every fact linking the order, the delivery, and the default, and then match each allegation with specific evidence.
• The Language Barrier: The language of the proceedings is strictly Czech. An Estonian manager cannot testify in English without a court-appointed interpreter, and submitting documents in English without certified translation is a procedural error that can stall proceedings for months.

Remind yourself that ARROWS is insured for damages up to CZK 500 million. We provide the security and expertise necessary to navigate these formalistic minefields.

The Digital Gatekeepers – Data Boxes and Service

Estonia is a world leader in digital governance, so the concept of electronic communication with the state is familiar. However, the Czech implementation—the Data Box system—has unique features that can be perilous for the uninitiated.

A Data Box is a secure, state-guaranteed electronic storage site used for delivery of official documents. Since 2023, the obligation to hold a Data Box has been massively expanded to include all legal entities and self-employed individuals.

As of January 1, 2025, a significant amendment to the VAT Act imposes new requirements on foreign entities. Foreign taxable persons (i.e., Estonian companies registered for VAT in Czechia) who do not have a registered office in the Czech Republic must appoint a representative for the delivery of documents or operate their own Data Box.

• The Trap: If an Estonian company fails to comply by the transitional deadline (February 28, 2025), they face penalties. More importantly, they risk missing critical correspondence from tax authorities or courts.
• The Solution: ARROWS can act as your delivery representative, ensuring no document goes unnoticed.

The "Fiction of Delivery" (Fikce doručení)

The most dangerous aspect of the Data Box system for a foreign litigant is the legal concept known as the Fiction of Delivery.

Under Czech law, a document sent to a Data Box is considered legally delivered at the moment the authorized person logs into the Data Box. However, if the user does not log in, the document is deemed delivered on the 10th day following its arrival in the box.

If a court sends a "Payment Order" (Platební rozkaz) to your Data Box, and you do not check the box for 15 days, the Fiction of Delivery applies on day 10. The 15-day appeal period starts running immediately. By the time you finally log in on day 20, the judgment may already be final and enforceable. You have lost the case without ever knowing it started.

When you engage ARROWS, we assume procedural representation. All court correspondence is routed to our Data Box, which is monitored daily by legal professionals. This eliminates the risk of the "Fiction of Delivery" causing a default judgment against your company.

Need legal help? Contact us at office@arws.cz. 

Service of Documents Across Borders

If litigation is initiated against an Estonian entity that does not have a Czech Data Box, service must follow Regulation (EU) 2020/1784 (the recast Service Regulation, replacing 1393/2007).

• Transmitting and Receiving Agencies: Documents are transmitted from the Czech court (Transmitting Agency) to the Estonian district court (Receiving Agency), which then serves the document on the Estonian entity.
• Right of Refusal: A critical protection for Estonian defendants is the right to refuse to accept a document if it is not written in, or accompanied by a translation into, a language they understand or the official language of the Member State addressed (Estonian).
• Strategic Implication: If a Czech plaintiff serves you with a lawsuit in Czech only, you may have the right to refuse it. However, this requires immediate legal action to formally assert the refusal. Ignoring the document is risky.

Pre-Litigation Protocols – The Zone of Highest Risk

In many jurisdictions, sending a warning letter before suing is a matter of professional courtesy. In the Czech Republic, it is a mandatory statutory requirement with severe financial implications.

Under Section 142a of the Code of Civil Procedure, a plaintiff who intends to claim reimbursement of legal costs must send a pre-litigation call for payment (předžalobní výzva) to the defendant's last known address or registered seat at least 7 days before filing the lawsuit.

The Czech system operates on the "Loser Pays" principle. If you win the case, the defendant pays your legal fees. However, if you fail to send the Section 142a letter—or if you send it but file the lawsuit on the 6th day instead of the 8th—the court may deny your right to cost reimbursement.

• Scenario: You sue for €100,000. You win. Your legal costs are €15,000. Because you missed the Section 142a protocol, the court orders the debtor to pay you €100,000, but you must pay the €15,000 legal bill yourself.

ARROWS ensures full compliance. We draft the předžalobní výzva to meet all statutory requirements and serve it via verifiable means (Data Box or registered post with delivery receipt) to preserve your right to full cost recovery.

Negotiating from Strength

Before engaging the court system, we strongly advocate for a robust amicable recovery phase.

• Psychological Impact: A demand letter from a leading Czech law firm in Prague, EU carries significantly more weight than a direct email from an Estonian vendor. It signals that the creditor has retained local counsel and is prepared to escalate to enforcement.
• Success Rate: Up to 95% of commercial debt cases can be resolved at this stage if the pressure is applied correctly.

Pre-Litigation Errors

Risks and Penalties	How ARROWS Helps
Failure to comply with § 142a (Pre-action Call) - Risk of complete loss of entitlement to reimbursement of court fees and attorney fees, even if the lawsuit is successful.	Drafting & Service: We draft the compliant předžalobní výzva and ensure service via Data Box to preserve your cost claims. Contact us at office@arws.cz.
Incorrect Interest Calculation - Risk of claiming interest based on Estonian rates instead of the Czech Repo Rate + 8% can lead to partial dismissal.	Precise Calculation: Our experts calculate the exact statutory interest applicable under Czech Civil Code regulations. Get tailored legal solutions by writing to office@arws.cz.
Premature Filing - Filing the lawsuit before the 7-day waiting period expires constitutes a procedural error affecting cost awards.	Timeline Management: We rigorously track all statutory deadlines to ensure the file is "court-ready." Email us at office@arws.cz.
Prescription (Statute of Limitations) - Missing the 3-year subjective or 10-year objective limitation period bars the claim forever.	Audit & Strategy: We review your portfolio to identify at-risk claims immediately. Do not hesitate to contact our firm – office@arws.cz.

Initiating the Lawsuit – Choosing the Right Weapon

For cross-border undisputed claims, the European Payment Order is a streamlined tool established by Regulation (EC) No 1896/2006.

• Mechanism: The creditor fills out standard Form A. The court issues the order (Form E) within 30 days.
• Enforceability: If the defendant does not lodge a statement of opposition (Form F) within 30 days of service, the order becomes automatically enforceable (Form G). No exequatur is needed.
• Pros: It is fast, standardized, and requires no court hearings.
• Cons: If the Czech debtor files a simple opposition (no reasons needed), the EOP is annulled, and the case transfers to standard civil litigation.
• Strategic Advice: Use this only when you believe the debtor is passive or illiquid, not when there is a genuine dispute over the quality of goods or services.

Our specialists are here for you

The Electronic Payment Order (EPR - Elektronický platební rozkaz)

This is the domestic Czech equivalent, highly effective for claims under CZK 1,000,000.

• Speed: Czech courts issue EPRs very quickly, often within weeks.
• Requirement: Must be filed electronically using a specialized form and signed with a recognized electronic signature.
• Effect: Like the EOP, it acts as a "conditional judgment." If the debtor does not object (Odpor) within 15 days, it becomes a final judgment enforceable by a bailiff.

Standard Civil Litigation

For complex commercial disputes, claims over CZK 1 million, or contested matters, a standard lawsuit (Žaloba) is necessary.

• Timeline: Commercial litigation in the Czech Republic has improved in speed but remains slower than in Northern Europe. A first-instance decision typically takes 12 to 18 months, depending on the caseload of the specific court (Prague courts tend to be slower than regional ones).
• Appeals: An appeal to the Regional or High Court can add another 12 months.

ARROWS handles this agenda daily, managing the procedural flow to prevent unnecessary delays.

The Cost of Justice – Court Fees and Security

Litigation in the Czech Republic is not free, and fees must be paid upfront. The fees are regulated by Act No. 549/1991 Coll. and are strictly proportional to the value of the claim.

Fee Structure for Commercial Disputes:

1. Claims up to CZK 20,000: A flat fee of CZK 1,000.
2. Claims between CZK 20,000 and CZK 40,000,000: The fee is 5% of the claimed amount.
3. Claims over CZK 40,000,000: A base fee of CZK 2,000,000 plus 1% of the amount exceeding CZK 40 million.

The 5% upfront fee is a significant cash-flow consideration for Estonian SMEs. However, this fee is fully recoverable from the defendant if you win.

Security for Costs (Cautio Judicatum Solvi)

Historically, foreign plaintiffs were required to post a security bond to cover the defendant's potential legal costs.

However, for Estonian companies, this is not applicable. Under Article 17 of the Hague Convention and EU non-discrimination principles, plaintiffs domiciled in another EU Member State are exempt from providing security for costs solely on the grounds of their foreign status.

Our lawyers are ready to assist you – email us at office@arws.cz for a precise calculation of your litigation budget.

Representation and the "Loser Pays" Principle

While representation by a lawyer is not strictly mandatory for first-instance proceedings at District Courts, it is practically essential due to the procedural complexity.

• Mandatory Representation: You must be represented by an attorney (Advokát) for proceedings before the Supreme Court (Nejvyšší soud) and the Constitutional Court.
• Foreign Lawyers: An Estonian lawyer cannot represent you directly in Czech courts unless they are registered with the Czech Bar Association as a visiting European lawyer. It is far more cost-effective and efficient to utilize a leading Czech law firm in Prague, EU like ARROWS.

The "Loser Pays" Principle and the Advocate's Tariff

The Czech system follows the principle that the unsuccessful party must reimburse the successful party's costs. However, a critical nuance exists regarding how much is reimbursed.

The reimbursement is not based on the hourly rate you actually pay your lawyer. Instead, it is calculated based on the Advocate's Tariff (Decree No. 177/1996 Coll.), which sets a "flat rate" for each legal act (e.g., taking over the case, filing a suit, attending a hearing) based on the value of the dispute.

• The Gap: If you hire a global firm charging €500/hour, and the statutory tariff allows for only €200 per act, you will not recover the difference.
• ARROWS Approach: We structure our fee arrangements to be transparent and competitive, aiming to minimize the gap between your actual spend and the recoverable amount.

Costs and Representation

Risks and Penalties	How ARROWS Helps
Non-Recoverable Legal Fees - Relying on expensive hourly billing that far exceeds the statutory reimbursement rates, leaving the winner with a net loss.	Fee Transparency: We provide a detailed analysis of recoverable costs vs. actual costs before engagement. For immediate assistance, write to us at office@arws.cz.
Fee Calculation Errors - Miscalculating the 5% court fee leads to the court stopping the proceedings for non-payment.	Budgeting: We manage all court payments and ensure compliance with Act No. 549/1991 Coll. Contact us at office@arws.cz.
Procedural Default - Risk of failing to attend a hearing because notice was served via Data Box to an unmonitored account.	Representation: We accept all service of process, ensuring no deadline is ever missed. Email us at office@arws.cz.

Evidence, Translations, and Burden of Proof

Czech civil procedure is inquisitorial in theory but adversarial in practice regarding commercial disputes. The burden of proof lies strictly with the plaintiff.

• Strictness: You must prove not only the existence of the contract but the exact fulfillment of obligations. Czech judges are less likely to accept "implied terms" or "course of dealing" arguments than their Baltic counterparts might be.
• Documentary Evidence: Written contracts, signed delivery notes, and confirmed purchase orders are paramount.

The Language Barrier and Translations

The language of the court is Czech. All evidence submitted in a foreign language (Estonian, English, Russian) must be translated.

• Standard Rule: You must provide the original document and a certified translation (soudně ověřený překlad) prepared by a court-appointed interpreter.
• The EU Exemption (Regulation 2016/1191): There is a significant efficiency for Estonian companies regarding public documents (e.g., extracts from the Estonian Business Register). Under Regulation (EU) 2016/1191, these documents are exempt from legalization (Apostille) and can be accompanied by a multilingual standard form instead of a full certified translation. This saves time and money when proving your company's legal existence.

 Video Conferencing: Testifying from Tallinn

If an Estonian director needs to testify, travel to Prague is not always necessary.

Section 102a of the Code of Civil Procedure explicitly allows for the taking of evidence via videoconference.

• Admissibility: The court must verify the identity of the witness (often requiring assistance from an Estonian court or embassy) and ensure secure transmission.
• Interpretation: Even via video, an interpreter must be present in the courtroom if the witness does not speak Czech.

Get tailored legal solutions by writing to office@arws.cz. 

Enforcement – The Private Bailiff System

Winning the judgment is only the first half of the battle. The second half is Enforcement (Exekuce). If the debtor does not pay voluntarily, you must initiate execution proceedings.

The Private Bailiff (Soudní exekutor)

Unlike in some jurisdictions where enforcement is a state function, the Czech Republic utilizes a system of private bailiffs.

• Choice: The creditor (you) chooses the bailiff. You are not tied to the bailiff in the debtor's district.
• Incentive: Bailiffs are paid primarily from the proceeds of the recovery. This makes them aggressive and efficient in locating assets.
• Powers: Bailiffs have sweeping powers to freeze bank accounts, seize real estate, deduct wages, seize business shares, and even suspend driver's licenses to compel payment.

The "Nuclear Option": Insolvency

If the bailiff cannot recover assets because the debtor has too many liabilities, the debtor is effectively insolvent.

• Insolvency Proceedings: You may file an insolvency petition. This stops individual enforcement actions.
• Risk: Recovery rates in insolvency are generally lower (often 5-10%). It is strategically better to be the first creditor to seize assets via a bailiff than to be one of many unsecured creditors in an insolvency proceeding.

ARROWS handles this agenda daily. We work with the most effective bailiff offices in the country to ensure our clients are prioritized in the race for assets.

Preventive Law – The "Secret Weapon"

The most powerful tool for avoiding litigation entirely is the Notarial Deed with Direct Enforceability, regulated under Section 71b of the Notarial Code.

If you are restructuring a debt, granting a loan, or entering a high-risk contract with a Czech partner, you should demand that they sign this specific deed before a Czech notary.

• The Mechanism: In the deed, the debtor formally acknowledges the debt and gives consent to direct enforceability.
• The Result: If the debtor defaults, you do not need to file a lawsuit. You do not need to pay the 5% court fee. You do not need to wait 18 months for a judgment. You take the Notarial Deed directly to a bailiff and begin seizing assets immediately.
• Efficiency: This cuts the timeline from years to days.

Contract drafting – do you need a contract prepared? Contact us at office@arws.cz. 

Statute of Limitations (Promlčecí lhůta)

Time is of the essence. Under the Czech Civil Code (No. 89/2012 Coll.), rights can expire if not exercised.

• Subjective Period: 3 years from the moment you learned of the debt/damage and the identity of the debtor.
• Objective Period: 10 years from the moment the debt arose or damage occurred.
• Trap: For commercial relationships, parties can agree to shorten or extend these periods (up to 15 years), but the default 3-year rule catches many foreign creditors off guard.

Do not hesitate to contact our firm – office@arws.cz. 

FAQ and Key Takeaways

1. How long does it take to get a judgment in the Czech Republic?

A standard commercial lawsuit at the first instance typically takes 12 to 18 months. Complex cases in Prague may take longer. Electronic Payment Orders can be issued in 2-4 weeks if unopposed. Need a timeline assessment? Contact us at office@arws.cz.

2. Can I just use my Estonian lawyer?

No. While your Estonian counsel can advise you on strategy, they cannot represent you in Czech courts unless registered. You need a local specialist. ARROWS functions as your local extension, coordinating with your home counsel if needed. Our lawyers are ready to assist you – email us at office@arws.cz.

3. What if the Czech company disappears?

We can conduct asset traces using the Bailiff's database and public registers. If the company has been stripped of assets illegally, we can explore criminal complaints or liability claims against the directors (statutory body) for breach of due care. Get tailored legal solutions by writing to office@arws.cz.

4. Is the "Data Box" really mandatory for me?

As of January 2025, if you are a foreign entity registered for VAT in Czechia, yes. Failure to set one up or appoint a representative exposes you to delivery risks and potential penalties. Need help setting up a Data Box? Contact us at office@arws.cz.

5. Can I get my legal fees back?

Yes, under the "Loser Pays" principle, but only up to the limits of the statutory Advocate's Tariff. You will likely recoup a significant portion, but rarely 100% of the actual spend if using premium counsel. For immediate assistance, write to us at office@arws.cz. 

MicroFAQ – Legal Tips about Evidence

1. Do I need to apostille my Estonian company extract?

 No. Under Regulation (EU) 2016/1191, public documents like commercial register extracts are exempt from legalization between EU states. A multilingual standard form is sufficient.

2. Can I use emails as evidence?

Yes, but their evidentiary weight can be challenged. Digital signatures enhance their reliability. Printed emails should be supported by witness testimony or server logs if authenticity is disputed. Contact us at office@arws.cz. 

Conclusion

For an Estonian company, the Czech Republic offers a lucrative market and a stable, enforceable legal environment—provided you respect its rules. The system rewards those who are procedurally precise and punishes those who rely on informalities.

The risks are clear: missing the Section 142a pre-action call can cost you your legal fees; ignoring the Data Box can cost you the entire case via default judgment; and failing to secure a Notarial Deed can cost you years of time.

This is not a guide, but the professional insight of an experienced lawyer. Individual steps that seem simple often have hidden exceptions, procedural details, links to other regulations, and risks that laypeople often do not see in the real world. It is safer for the client to have the matter handled professionally.

Remind yourself that ARROWS is insured for damages up to CZK 500 million. We are an international law firm operating from Prague, European Union, ready to act as your shield and sword in Central Europe.

If you do not want to risk errors, damages, or fines, you can safely leave the whole matter to ARROWS – just contact the office at office@arws.cz. 

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