How to Collect Debts in the Czech Republic for Swedish Businesses

The Czech Challenge: Why Collecting Debts Isn't Like in Sweden

The 10-Year vs. 3-Year Statute of Limitations Trap

In Sweden, you are likely accustomed to a general 10-year limitation period (known as preskription) for commercial claims. This gives you a long time to negotiate or act.

The Czech Republic is critically different. The general statute of limitations (known as promlčení) for a commercial claim here is only three years from the due date of the invoice.

This is the most dangerous trap for Swedish creditors. If you wait patiently, your claim can become promlčené (statute-barred). If the debtor raises this formal objection (námitka promlčení) in court, your claim will be dismissed, even if it is valid.

State Enforcement (Kronofogden) vs. Private Bailiffs (Exekutor)

In Sweden, debt enforcement is handled by one, predictable government agency: the Swedish Enforcement Authority (Kronofogden).

The Czech system is not state-run. Once you have a judgment, enforcement (known as exekuce) is carried out by private, court-appointed bailiffs called soudní exekutoři.

This creates a challenge foreign clients do not expect. The choice of bailiff is a strategic decision, as not all are equally effective. ARROWS manages this entire process, using our network of trusted and effective bailiffs to maximize your recovery.

Your First Move: The Amicable Phase (Up to 95% Success)

Before starting a court battle, a professional demand is essential. This amicable phase is not just a negotiation tactic; it is a critical legal prerequisite.

Up to 95% of commercial debt cases in the Czech Republic are successfully resolved at this stage. It is faster, significantly cheaper, and aims to preserve your valuable B2B relationship.

What is a předžalobní výzva (pre-litigation demand)?

This is the single most-missed step by foreign creditors. The předžalobní výzva (pre-litigation demand) is a formal legal document required by § 142a of the Czech Code of Civil Procedure.

It must be sent to the debtor's official address or, more commonly, their official data box (datová schránka) at least 7 days before filing a lawsuit. Why is this so important? If you fail to send this specific letter, the court will not grant you reimbursement for your legal fees, even if you win the case. You would win your €100,000 debt but be forced to pay your own €10,000 in legal costs.

ARROWS provides the drafting of legally required documentation to ensure this costly error is avoided.

Risks in the Amicable & Pre-Litigation Phase

When Negotiations Fail: Choosing Your Judicial Strategy

If the formal demand is ignored, you must go to court. As a Swedish company, you have two powerful, fast-track options. The choice is a key strategic decision.

Contact our experts:

Option A: The European Payment Order (EOP) – Your EU Advantage

This is a streamlined EU procedure designed for cross-border claims. We file a standard "Form A" on your behalf. The debtor is given 30 days to object.

Its main benefit: If unobjected, the EOP is automatically recognized and enforceable in the Czech Republic (and all other EU states) without any separate exequatur (recognition) process. It's a very powerful tool.

Option B: The Czech Electronic Payment Order (EPR)

This is the primary Czech fast-track procedure, the elektronický platební rozkaz (Electronic Payment Order).

It is very efficient. The court fee is lower for large claims (4% vs. 5%), and a recent change removed the monetary cap, so it works for multi-million euro claims. The debtor has only 15 days from delivery to file an objection, known as an odpor.

What is an odpor (objection) and what happens next?

This is the critical "catch." If a debtor files an odpor (objection) to the Czech EPR, they don't even need to provide a reason. The platební rozkaz (payment order) is automatically cancelled, and the case converts into a standard, slower civil lawsuit.

As an international law firm operating from Prague, European Union, ARROWS has daily experience with both. We provide the essential legal consultation to determine the best strategy for your specific case and offer full representation in court.

Need legal help in a Czech court? Contact us at consultation@arws.cz.

The Ultimate Risk: What if Your Debtor Files for Insolvency?

This is the greatest threat to your claim. If your Czech debtor enters insolvenční řízení (insolvency proceedings), all collection efforts stop immediately. Your lawsuit is frozen.

The 2-Month Deadline: A Trap That Permanently Extinguishes Your Debt

From the moment insolvency is declared, you have a strict 2-month deadline to file your claim. If you miss this window, your debt is permanently extinguished. It ceases to exist, and you get nothing.

Procedural Traps: The Wrong Form and No Translation

You cannot just email your invoices. You must file using the official Czech form, the Přihláška pohledávky.

A savvy Swedish in-house counsel might find the "Standard EU Claims Form". Do not use it. Czech administrators expect the national form, and using the wrong one invites a formal challenge (popření pohledávky), risking rejection.

Furthermore, all supporting documents (contracts, invoices) must have an officially certified translation into Czech. A simple office translation will be rejected.

The Sobering Reality of Recovery

Even if you file correctly, recovery rates for unsecured creditors (like suppliers with unpaid invoices) average just 3.2% in a liquidation bankruptcy. This shows why you must act before the debtor becomes insolvent.

Critical Risks in Czech Insolvency Proceedings

The Final Step: Enforcement (Exekuce) in the Czech Republic

You have a final judgment (an unobjected EOP or EPR). Your pohledávka (claim) is confirmed. But you still don't have your money. Now, you must "execute" the judgment.

What is Exekuce (Enforcement)?

As we've discussed, this is the forced recovery of your debt. This process is carried out by a court-appointed private bailiff (soudní exekutor) whom you authorize.

What Powers Does an Exekutor Have?

The exekutor has broad legal powers and, unlike in some systems, they (not the court) decide which assets to target. This includes:

• Freezing and seizing funds from all bank accounts (obstavit účet).
• Garnishing receivables (i.e., collecting from your debtor's customers).
• Seizing and selling movable property (vehicles, equipment) and real estate.

The Commercial Reality: Is the Debtor an "Empty Shell"?

A legal victory is worthless if the debtor is an "empty shell". This is a common frustration for creditors, as Czech enforcement can be lengthy and costly. Pursuing a debtor with no assets is "throwing good money after bad".

This is why ARROWS' most valuable service is often the Pre-Litigation Asset Investigation.

Before you spend a cent on court fees, we use tools like the Central Evidence of Executions (CEE) to see if the debtor already has multiple enforcement actions against them. This commercial-first advice saves you from a costly, pyrrhic victory.

Risks During the Enforcement (Exekuce) Phase

Why Choose ARROWS as Your Partner in Prague?

As a Swedish business, you need more than a Czech lawyer. You need a partner who understands both legal worlds. As an international law firm operating from Prague, European Union, we are your safe harbour for Czech commercial law.

Local Experts, International Reach

Our lawyers in Prague combine deep local knowledge with a global perspective. We support over 250 limited liability companies and 150 joint-stock companies.

We are part of the ARROWS International network, built over 10 years and operating in 90 countries. We handle complex cross-border matters seamlessly. We can even connect clients with mutual business or investment interests.

A Full-Service Solution for Your Business

We don't just collect debts; we protect your business. Our team is known for speed and high quality. We can provide:

• Legal consultations to assess risk and strategy.
• Drafting legally required documentation (from the předžalobní výzva to the přihlášení pohledávky).
• Proactive contract drafting and review to prevent future debts.
• Full representation in court and before public authorities.
• Managing the entire exekuce (enforcement) process.
• Professional training for employees or management on Czech compliance.

Don't let a Czech debtor jeopardize your cash flow or waste your time. Let our lawyers provide the tailored legal solutions you need.

Get tailored legal solutions by writing to our Prague office at consultation@arws.cz.

Don't want to deal with this problem yourself? More than 2,000 clients trust us, and we have been named Law Firm of the Year 2024. Take a look HERE at our references.