How to Collect Debts in the Czech Republic for Spanish Businesses:

Is your business facing the challenge of unpaid invoices from a Czech partner? This situation can disrupt cash flow and create significant uncertainty. This guide provides a clear, actionable roadmap for Spanish businesses on how to effectively manage debt collection in the Czech Republic. We will explore both Czech domestic procedures and powerful, streamlined EU legal tools designed specifically to resolve cross-border commercial disputes.

Do you 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 First Move: Amicable Debt Collection in the Czech Republic

Before initiating formal legal action, a professional, out-of-court approach is the most strategic and cost-effective first step. This amicable phase is not a sign of weakness; it is a calculated business decision that preserves potentially valuable commercial relationships, avoids costly court fees, and is often the fastest path to payment. In fact, up to 95% of commercial debt cases can be resolved without ever entering a courtroom.

The Pre-Action Warning Letter: A Non-Negotiable Step

Under Czech Procedural Law, a creditor must send a formal warning letter to the debtor's address at least seven days before submitting a legal action. This is not merely a courtesy.

Failure to send this legally compliant notice means the court will not award you the recovery of your legal costs, even if you win the case. A standard reminder from your accounting department is likely insufficient.

Many foreign businesses fall into the financial trap of assuming their usual dunning process meets local legal standards. This can lead to a situation where you win your claim but are left with a significant, unrecoverable bill for legal fees. The lawyers at ARROWS routinely draft and dispatch these legally compliant warning letters, ensuring all procedural requirements are met to safeguard your right to cost recovery from the outset. To ensure your first step is the right one, contact us for a consultation at office@arws.cz.

FAQ – Legal Tips for Amicable Collection

• Can I send the warning letter myself via email?
  While email can be used, Czech law has specific rules for electronic communication, and proving delivery can be challenging. For undisputed proof, a formal letter sent via registered post or a data box is recommended. Our lawyers at ARROWS can manage this process to ensure it's legally irrefutable. For immediate assistance, write to us at office@arws.cz.
• What should the letter contain besides the amount owed?
  It must clearly identify the debtor and creditor, the basis of the claim (e.g., invoice number), the total amount due including any interest, a clear payment deadline (at least 7 days), and a statement that legal action will follow if payment is not made.
  Need help drafting a letter that holds up in court? Contact our team at office@arws.cz.

Escalation to the Courts: The Czech Judicial Path

When amicable efforts are unsuccessful, the next logical step is the Czech court system. For most commercial debt collection cases, the District Courts (okresní soud) are the courts of first instance where proceedings begin.

The Fast-Track Solution: The "Order for Payment" Procedure (platební rozkaz)

For undisputed monetary claims, the most effective domestic tool is the "Order for Payment Procedure" (návrh na platební rozkaz). This is an accelerated judicial process where the court reviews the creditor's application and evidence without a formal hearing. If the claim is well-founded, the court issues a binding payment order (platební rozkaz). The debtor then has 15 days to either pay the debt or file an objection (odpor).

The Power of Proof: Building an Unassailable Case

The success of a payment order application hinges entirely on the strength of your documentary evidence. Czech courts in these matters typically prefer clear documentation over witness testimony. You must provide robust proof, including signed contracts, issued invoices, confirmed delivery notes, and any correspondence where the debtor acknowledges the debt.

The legal team at ARROWS provides a crucial pre-filing review of all documentation to identify weaknesses and build a robust application, significantly increasing the likelihood of a swift payment order. Let us assess the strength of your claim before you file. Spojte se s námi na office@arws.cz a získejte právní řešení na míru.

What if the Debtor Objects?

If the debtor files an objection (odpor) within the 15-day period, the payment order is automatically cancelled. The case then transitions into standard court proceedings, which are often more complex, costly, and time-consuming. This is a critical juncture where having an experienced local litigation team becomes essential.

Risks in Czech Domestic Court Proceedings

Risks and Sanctions	How ARROWS Helps
Dismissal of Claim Due to Expired Statute of Limitations (3-year general period)	Legal Analysis of Limitation Periods – We verify the enforceability of your claim before you invest in legal action. Is your claim still valid?.
Inability to Recover Legal Fees (due to improper pre-action notice)	Preparation of Pre-Action Notice – We draft and send a legally compliant notice that secures your right to cost recovery.
Case Rejection Due to Insufficient Evidence (weak documentation)	Review and Preparation of Evidence – Our lawyers meticulously review your contracts, invoices, and delivery notes to build an unassailable case.
Lengthy and Costly Litigation (if debtor objects to payment order)	Representation in Court – Our experienced litigators represent you in standard court proceedings, navigating Czech procedural law to protect your interests.

The Cross-Border Advantage: Using the European Payment Order (EOP)

For Spanish creditors with an undisputed claim against a Czech debtor, there is a powerful and often superior alternative to purely domestic procedures: the European Payment Order (EOP). This is a uniform procedure created by EU Regulation 1896/2006, specifically designed to simplify and accelerate the recovery of uncontested cross-border monetary claims.

The EOP Process Step-by-Step

The process is designed for efficiency. The creditor files a standard "Form A" with the competent court in the Czech Republic. The court then has 30 days to review the application and issue the EOP. Once served, the Czech debtor has 30 days to either pay the full amount or file a statement of opposition. A key advantage is that you do not need to attach supporting documentary evidence to the initial application; you simply describe it on the form.

Key Benefits for Spanish Businesses

The EOP offers several compelling advantages:

• Speed: The court aims to issue the order within 30 days of the application.
• Simplicity: The entire process is based on standard forms available in all EU languages, and it is a written procedure that does not require a court appearance.
• Cost-Effectiveness: Court fees for an EOP are often lower than for standard national litigation.
• Automatic Enforceability: This is the EOP's greatest strength: an uncontested EOP is automatically recognized and enforceable in the Czech Republic without needing a separate, costly, and time-consuming declaration of enforceability (exequatur).

While the EOP application appears straightforward, its simplicity can be deceptive. The real challenge arises if your Czech debtor files an objection. At that moment, the simple European procedure terminates, and the case automatically transitions to a standard civil proceeding in the Czech Republic, governed by Czech law. A Spanish company without local representation is suddenly at a massive disadvantage.

This is where having a partner like ARROWS is a necessity. Our ability to manage cross-border cases is built on ten years of developing the ARROWS International network. We can manage the EOP filing from the start, but more importantly, our Czech litigation team is ready to seamlessly take over the case the moment an objection is filed, ensuring your claim is not derailed by procedural complexities.

 FAQ – Legal Tips for the European Payment Order

• Which court do I file the EOP application with?
  Jurisdiction is typically determined by the defendant's domicile. For a Czech debtor, you would file with the competent district court in the Czech Republic. ARROWS can identify the correct court and manage the entire filing process in an accepted language. Need help? Contact us at office@arws.cz.
• Do I need to translate all my invoices and contracts into Czech?
  Not for the initial EOP application (Form A), which can be submitted in a language accepted by the Czech court, such as English. However, if the case proceeds to litigation after an objection, certified translations will be necessary. Our team can advise on all language and documentation requirements.

Navigating End-Game Scenarios: Enforcement and Debtor Insolvency

Winning a judgment is only half the battle. The final stages—enforcement and the risk of debtor insolvency—are where expert legal guidance is most critical.

The Ultimate Risk: When Your Czech Debtor Faces Insolvency

The most significant threat to recovering your money is the debtor becoming insolvent. Czech insolvency is governed by the Insolvency Act (No. 182/2006 Coll.). The proceedings typically result in either a reorganisation (reorganizace) to save the business or a liquidation (konkurs) where assets are sold off.

For a Spanish company holding an unpaid invoice, you are an unsecured creditor. In a liquidation scenario, the average satisfaction rate for unsecured creditors in the Czech Republic is a mere 3.2% of their claim's value. This stark reality means that debt collection should be viewed as a proactive race against the debtor's potential financial collapse. Waiting is not a neutral act; every day of delay increases the risk that your 100% recoverable debt becomes nearly worthless.

Engaging ARROWS early is not just about collecting a debt; it's about protecting the asset value of your receivables. We help you take swift action to secure payment or a judgment before your debtor seeks protection under insolvency law, drastically improving your chances of a full recovery. 

From Judgment to Payment: The Enforcement Process

Once you have an enforceable title—either a domestic platební rozkaz or a certified EOP—the final step is to turn it into cash. In the Czech Republic, this process is carried out by a court bailiff (exekutor). It involves filing an enforcement motion with a chosen exekutor, who is then empowered to locate and seize the debtor's assets.

Even with a "European" title like the EOP, the actual enforcement is governed by Czech national law. This reinforces the need for local expertise to navigate the final stage effectively.

ARROWS works with a network of renowned and effective executor's offices across the Czech Republic, managing the entire enforcement process to locate assets and secure your payment. 

Risks in Enforcement and Insolvency Proceedings

Risks and Sanctions	How ARROWS Helps
Debtor Declares Insolvency (risk of near-total loss for unsecured creditors)	Filing Claims in Insolvency – We act immediately to file your claim correctly in the insolvency proceedings to maximize your potential recovery.
Ineffective Enforcement (debtor has hidden assets)	Cooperation with Court Bailiffs – We leverage our network to initiate effective enforcement, including asset tracing and seizure.
Procedural Errors in Enforcement (incorrect filing can delay or nullify the process)	Preparation of Enforcement Motion – We prepare and file all necessary documents for enforcement, ensuring compliance with Czech law.
Disputes Over Foreign Judgment Recognition (for non-EU judgments or complex cases)	Representation in Recognition Proceedings – Our experts handle the process of having your foreign judgment formally recognized and declared enforceable by Czech courts.

Your Strategic Partner for Cross-Border Success

Successfully navigating cross-border debt collection requires more than just legal knowledge; it demands strategic foresight and local expertise. At ARROWS, we provide a comprehensive solution that protects your interests at every stage.

Our experience is built on providing long-term services to a diverse portfolio of over 150 joint-stock companies, 250 LLCs, and 51 municipalities and regions. 

This deep practical knowledge, combined with our ARROWS International network built over a decade, allows us to handle cases with international elements on a daily basis. We offer a full spectrum of services, from preparing initial documentation and internal directives to protect you from sanctions, through representation in court and administrative bodies, to providing expert training for your staff.

Furthermore, we do more than provide legal advice. We actively seek to connect our clients with interesting investment and business opportunities within our extensive network. We are always ready to listen to your business ideas and help you grow.

Don't let unpaid invoices from the Czech Republic disrupt your cash flow or become a write-off. Let our team of experts manage the process for you. For a comprehensive assessment of your case and a strategic plan for recovery, contact us today at office@arws.cz.

FAQ – Most Common Legal Questions on Czech-Spanish Debt Collection

1. What is the statute of limitations for a commercial debt in the Czech Republic?
The general limitation period is three years from the invoice's due date. It is crucial to initiate legal action before this expires, as a court will dismiss a time-barred claim if the debtor objects. A written acknowledgment of the debt by the debtor can restart the period for a new 10-year term. If you are unsure whether your claim is still enforceable, contact us for a quick assessment at office@arws.cz.

2. How much does it cost to collect a debt through the Czech courts?
Costs include court fees (typically 4-5% of the claimed amount) and legal fees. Critically, if you win and have followed all procedural rules (like the pre-action letter), these costs are generally recoverable from the debtor. For a detailed cost-benefit analysis of your specific case, email our team at office@arws.cz.

3. What is the main difference between the Czech "Order for Payment" and the "European Payment Order"?
Both are fast-track procedures for undisputed claims. The Czech "Order for Payment" (platební rozkaz) is a domestic tool. The European Payment Order (EOP) is specifically for cross-border EU cases and results in a title that is automatically enforceable in other EU member states without a separate recognition process (exequatur). Our experts can advise on the most strategic option for your situation. 

4. My contract with the Czech company is in Spanish. Is that a problem?
The contract is valid, but for any Czech court proceedings, an official, certified translation into Czech will be required as evidence. This is a crucial step that should be handled by qualified professionals to ensure accuracy. ARROWS can arrange for certified translations as part of our case management services.

5. What happens if I win a court case but the Czech company has no assets?
This is a significant risk. A judgment is only valuable if it can be enforced. This is why a pre-litigation assessment of the debtor's financial health and assets is crucial. If assets cannot be located, recovery may be impossible. We can assist with preliminary asset checks and advise on the commercial viability of pursuing a claim. 

6. Can ARROWS help me enforce a judgment I already obtained in a Spanish court?
Yes. Thanks to EU regulations like the Brussels I bis Regulation, a judgment from a Spanish court is recognizable and enforceable in the Czech Republic. The process is streamlined but still requires navigating local Czech enforcement procedures. Our international team, through the ARROWS International network, specializes in enforcing foreign judgments.