Irish Company and Czech Partner: What to Do When Payments Stop

Is your Irish company facing unpaid invoices from a Czech partner? When payments stop, navigating debt recovery in the Czech Republic becomes urgent. This article explains your immediate options, clarifies which court has jurisdiction under EU rules like Brussels I bis, and outlines the strategy to recover your funds.

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.

Where Do I Sue? The 'Jurisdiction' Question

When your business partner is based in Prague, Brno, or elsewhere in the Czech Republic, your first question is one of location: must you sue in the Czech Republic, or can you use the Irish courts?

The answer is governed by EU law, specifically Regulation (EU) No 1215/2012, or 'Brussels I bis'. This regulation creates a uniform set of rules for all member states and takes precedence over national laws in cross-border cases.

The general rule of the Regulation is simple: a defendant must be sued in the courts of the EU member state where they are domiciled. For your Czech partner, this means the default venue for a lawsuit is the Czech courts.

However, Brussels I bis provides powerful exceptions. If your contract contains a well-drafted choice of court clause (also known as a jurisdiction clause) that explicitly names the courts of Ireland, this agreement will almost certainly be upheld.

A second key exception exists for contractual disputes. You may have the option to sue in the courts for the "place of performance". If your Czech partner was obligated to deliver goods or perform a service in Ireland, you may have a strong strategic right to bring the case before an Irish court.

This initial decision on jurisdiction is a critical strategic move that dictates the entire dispute. The expert lawyers at ARROWS can immediately provide a legal analysis of your contract and commercial correspondence to determine the most advantageous venue for your claim. For an expert assessment, contact us at office@arws.cz.

Contractual & Jurisdictional Pitfalls

Risk and Sanctions	How ARROWS Helps
Suing in the wrong court (e.g., Ireland, when jurisdiction is only in CZ) leads to dismissal, wasted time, and thousands in lost legal fees.	Legal Analysis: We analyse your case under Brussels I bis to confirm the correct jurisdiction before you file. – Want to know your legal options? Write to office@arws.cz.
An improperly drafted or "asymmetric" jurisdiction clause in your contract is ruled invalid, forcing you into a court you never intended.	Contract Review & Drafting: We draft and review contracts to ensure your choice of court is robust and enforceable. – Need to prepare a contract? Contact us at office@arws.cz.
Losing a strategic advantage by not identifying an exception (like "place of performance") that would have allowed you to sue in Ireland.	Strategic Legal Opinions: We identify all procedural options to ensure you litigate from the strongest possible position. – Need strategic legal advice?

Whose Law Applies? The 'Governing Law' Question

A common mistake is to confuse jurisdiction (where you sue) with governing law (which country's law the court applies). They are two separate questions, and a Czech court can, in many cases, apply Irish law.

This issue is decided by another key EU law, Regulation (EC) No 593/2008, or 'Rome I'.

Like Brussels I bis, the Rome I regulation prioritises party freedom. If your contract clearly states it is "governed by the laws of Ireland," a Czech court must honour that choice and apply Irish law to your dispute.

What if your contract is silent, or you don't have a formal written contract? In that case, default rules apply. For a sale of goods, the law of the seller's residence usually applies. For the provision of services, it is the law of the service provider's habitual residence.

This has huge implications. If you hired a Czech company to provide a service, and you have no governing law clause, your dispute will almost certainly be governed by Czech law.

FAQ – Legal Tips on Cross-Border Contracts

1. What if we only have emails and invoices, no formal contract?

In Czech law, a contract can often be formed through a series of emails, purchase orders, and the conduct of the parties (like delivering goods or paying an invoice). The absence of a single signed document does not mean you have no rights, but it makes proving the terms, jurisdiction, and governing law more complex. For an urgent review of your commercial correspondence, contact us at office@arws.cz.

2. Our Czech partner provided services to us. Which law applies if we didn't specify?

Under the EU's Rome I Regulation, the default law for a service contract is the law of the service provider's habitual residence. This means a Czech court will almost certainly apply Czech law to your dispute. Our lawyers are experts in Czech commercial law. For a consultation, write to office@arws.cz.

The Most Dangerous Mistake: The Statute of Limitations

Time is not on your side. One of the biggest shocks for Irish companies is the dramatic difference in the time limits to make a claim.

In Ireland, the Statute of Limitations Act provides that for a simple contract debt (like an unpaid invoice), you have six years to initiate legal proceedings.

In the Czech Republic, the general limitation period for a commercial claim is only three years.

If your dispute is governed by Czech law and you wait longer than three years from the date the invoice was due, your claim will be "statute-barred". This means that even if the debt is valid, a court can no longer enforce it. You will lose your money permanently.

Do not wait. The team at ARROWS can provide an immediate legal opinion on your limitation period to ensure your rights are protected. For an urgent analysis, write to office@arws.cz.

Is There a Fast-Track for Uncontested Debts?

Yes. If your Czech partner is not disputing the invoice but has simply stopped communicating and paying, you may not need a full, lengthy lawsuit. The EU provides two highly effective fast-track tools.

1. European Payment Order (EPO): This is designed specifically for uncontested monetary claims in cross-border cases. You file a standard form, and no court hearing is required. If the debtor does not formally object within 30 days, the EPO becomes automatically enforceable and can be sent directly to a Czech enforcement agent.

2. European Small Claims Procedure (ESCP): This can be used for any claim (even disputed) with a value up to €5,000. It is a simplified, faster process, often handled in writing, designed to be cheaper and quicker than a full trial.

While designed to be simpler, these forms require legal and procedural precision. ARROWS can prepare and file these EU documents on your behalf to secure your payment with maximum speed.

Suing in the Czech Republic: Key Differences from Irish Courts

If the debt is contested and you must litigate in the Czech Republic, you cannot assume the process is the same as in Dublin. The Czech system is based on "Civil Law," which is procedurally very different from Ireland's "Common Law" system.

The single biggest difference is the lack of a "discovery" phase. In the Irish High Court, parties engage in an extensive discovery process where they are obligated to disclose all relevant documents to each other.

The Czech legal system has no equivalent to discovery. You cannot file a claim and hope to find the evidence you need from the other side later. This "fishing expedition" is not permitted.

The plaintiff (you) has the full "burden of proof" from the very beginning. You must gather and submit all of your evidence—contracts, emails, delivery notes, and correspondence—at the start of the lawsuit.

Our litigators specialize in representing foreign clients before Czech courts. We build your case before filing to meet this high burden of proof and ensure your claim is robust from day one. For representation in court, write to office@arws.cz.

The €10,000 Mistake: The 7-Day Pre-Action Letter

This is a critical, costly procedural trap unique to Czech law that can wipe out your financial victory.

Before filing a lawsuit for payment, Czech law requires you to send a specific statutory pre-action demand letter to the debtor. This letter must give them a final chance to pay, at least 7 days before the lawsuit is filed with the court.

Here is the financial trap: If you fail to send this specific letter (or, crucially, if you cannot prove to the court that you sent it), you will still win your case for the debt, but the court will not order the debtor to reimburse your legal costs. You could win a €100,000 judgment but be forced to pay €10,000 in your own lawyer's fees—a 10% loss caused by a simple procedural error.

ARROWS ensures all statutory documentation is perfectly prepared, sent, and documented, protecting your right to full reimbursement. Don't risk your legal costs. 

Procedural & Financial Risks in Czech Litigation

Risk and Sanctions	How ARROWS Helps
Missing the 3-year Czech statute of limitations, making your entire debt legally unrecoverable forever.	Urgent Legal Analysis: We immediately determine your limitation deadline to take swift action.
Failing to send the 7-day pre-action letter, forcing you to pay your own legal fees even after winning the case.	Preparation of Statutory Documents: We draft and dispatch all required legal notices to protect your claim for costs. –
The Czech debtor declares insolvency, and you fail to register your claim in time (often within 2 months), losing your entire debt.	Insolvency Representation: We monitor the insolvency register and represent you as a creditor to recover maximum value. –
Filing a claim with improper evidence, which is then dismissed by the Czech court for failure to meet the high burden of proof (no discovery).	Litigation & Court Representation: We prepare a "front-loaded" case with all evidence to meet Czech procedural standards.

I Have a Judgment. How Do I Get Paid?

This is where the EU system provides the best news. Thanks to the Brussels I bis Regulation, the "free movement of judgments" is now a reality.

The old, cumbersome procedure known as exequatur—which required a creditor to essentially "sue" on their foreign judgment in a local court to have it recognized—has been completely abolished within the EU.

A judgment obtained from a Czech court is automatically recognized and directly enforceable in Ireland, and a judgment from an Irish court is directly enforceable in the Czech Republic.

To begin enforcement (e.g., seizing bank accounts or assets), you simply need to provide the enforcement authorities with two documents:

1. A copy of the judgment.

2. A standard EU certificate (known as the "Annex I certificate").

This certificate is issued by the original court (e.g., in Prague) and confirms the judgment is enforceable. ARROWS handles the entire process, from winning the judgment to obtaining this certificate and coordinating with local enforcement agents.

ARROWS: Your International Partner in the Czech Republic

A cross-border dispute is not just a legal problem; it's a business problem. You need a partner in the Czech Republic who understands both and can act with the speed your business demands.

ARROWS solves complex international and commercial issues daily. We are not just a local firm; we are a key part of the ARROWS International network, built over ten years, connecting us with trusted legal partners across Europe, including Ireland. This allows us to coordinate seamlessly on matters requiring action in both jurisdictions.

We have deep experience supporting corporate clients. Our portfolio includes over 150 joint-stock companies, 250 limited liability (s.r.o.) companies, and 51 municipalities and regions who trust us with their legal work.

We also believe in connecting our clients. We actively look for business and investment opportunities between our partners, and we are always happy to hear your business ideas.

Stop letting unpaid Czech invoices disrupt your Irish business. Let our experts take over.

FAQ – Most Common Legal Questions on Irish-Czech Debt Recovery

1. What is the very first step if a Czech partner stops paying?

The first step is a formal, written demand for payment. If this fails, the next step is an immediate legal analysis to determine jurisdiction (Brussels I bis), governing law (Rome I), and the correct procedural step, such as sending the 7-day statutory pre-action letter required by Czech law. 

2. We don't have a formal signed contract, just emails. Can we still sue?

Yes. In the Czech legal system, a binding contract can be established through a clear record of emails, purchase orders, invoices, and the parties' conduct (e.g., delivering or accepting goods). While this makes the case more complex, you still have rights. We specialize in building cases based on commercial correspondence. 

3. What happens if the Czech company threatens insolvency?

This is an emergency. If a company enters insolvency proceedings, you must formally register your claim with the insolvency court within a very short deadline (often just 2 months). If you miss this deadline, your claim is extinguished, and you will recover nothing. We provide urgent monitoring and representation in insolvency proceedings. 

4. What is the "Statute of Limitations" difference?

It is a critical deadline that can terminate your claim. Ireland generally allows 6 years for a contract claim. The Czech Republic's general limit is only 3 years. If Czech law applies to your dispute and you wait too long, your debt becomes legally uncollectable.

5. How long does it take to enforce a Czech judgment in Ireland?

The process is now very fast. The old exequatur process (requiring court permission) is gone. Once the Czech court issues the judgment and the standard "Annex I certificate", it is directly enforceable in Ireland, just like a local Irish judgment. The same applies in reverse. 

6. Is litigation the only option? What about mediation?

No, litigation is a last resort. We are experienced negotiators and often recommend mediation or arbitration (if agreed in your contract). These methods can be faster, cheaper, and are more likely to preserve a future business relationship.