The endeavour to resolve a dispute amicably without the need to initiate court proceedings is
a natural – and, above all, desirable – part of private law relationships. The Civil Code accommodates this approach through Section 647 of Act No. 89/2012 Coll., the Civil Code (hereinafter the “Civil Code”), according to which the limitation period for a creditor to assert a claim does not run whilst out-of-court negotiations with the debtor are ongoing. The purpose of this institute is to protect a bona fide creditor from the risk that, during constructive negotiations with the debtor, their claim may lapse or be weakened by an objection to the statute of limitations.
In legal practice, however, a long-standing question has arisen as to what specific conditions must be met during out-of-court negotiations for the limitation period to be lawfully suspended, or, conversely, for the limitation period to start running again. Although the text of the law appears straightforward at first glance, in practice one often encounters subtle nuances which the courts must then address. It was precisely these ambiguities that the Supreme Court addressed in its judgment File No. 23 Cdo 431/2024 of late May 2025, in which it analyses in detail the conditions for the application of the aforementioned Section 647 of the Civil Code and sets clearer boundaries for assessing the passivity of the parties or implied expressions of intent.
Current provision on the statute of limitations and the running of the limitation period
As the statute of limitations and the conditions governing the running of the limitation period are fundamental aspects of private law relationships, this provision is systematically included in the general part of the Civil Code. The institute of the statute of limitations is, as such, of fundamental importance, particularly in court proceedings, as a creditor can only safely assert their claim against a debtor in court if that claim has not become time-barred, or, in other words, if the limitation period has not yet expired. Once this period has elapsed, the creditor’s claim may be undermined by an objection to the statute of limitations, and the creditor may therefore fail to succeed in court proceedings despite the justifiability of their claim.
So-called out-of-court settlement is undoubtedly a desirable phenomenon in society; for this reason, the legislator, in the current provision, seeks to encourage the parties to settle matters out of court and, in particular, to protect bona fide creditors from obstruction or delaying tactics on the part of the debtor. The key provision of Section 647 of the Civil Code, which we shall examine in this article, therefore sets out specific conditions for the running of the limitation period in the case of out-of-court settlement, whereby the creditor is protected during out-of-court negotiations by a suspension of the limitation period; or, to put it another way, the limitation period does not run for the duration of out-of-court negotiations between the creditor and the debtor concerning the right or the circumstances giving rise to that right. However, in this provision, the legislator lays down not only the conditions for the suspension of the limitation period but also the conditions for the resumption of its running, namely in the event that one of the parties, whether the creditor or the debtor, expressly refuses to continue such negotiations. At first glance, however, the problem with this wording is already apparent, and this was analysed in detail by the Supreme Court in its judgment File No. 23 Cdo 431/2024 of 27 May 2025.
Factual circumstances of the case
To properly analyse the various aspects of the Supreme Court’s reasoning, it is necessary to set out the most important facts of the case in question. At the heart of this dispute was a complaint regarding defects in the work lodged by the claimant (the client), who, in February 2016, notified the defendant (the contractor) of the existence of defects in the work. Under the contract, the contractor was required to remedy the defect within 21 days, which she failed to do; consequently, the three-year limitation period for bringing a claim for the remedy of the defect began to run at the start of March 2016. The claimant did not seek the relevant remedy by bringing an action until October 2019, i.e. after the expiry of the three-year period. However, in 2016 and 2017, the parties engaged in a series of discussions, the subject of which included proposals for resolving the situation. The key question therefore became whether, during the period of communication between the parties, the limitation period had been suspended in accordance with the provision of Section 647 of the Civil Code, as the claimant argued in response to the defence’s objection to the statute of limitations.
Following the notification of the defect, there was extensive communication between the parties, during which the defendant proposed commissioning expert opinions, submitted an alternative repair method using different materials, and took part in an on-site inspection. However, the defendant consistently denied liability for the alleged defects, arguing that she had complied with the project documentation submitted by the claimant, even though the documentation proved to be flawed. Due to the faulty technical procedure set out in the project documentation submitted by the claimant, the defendant insisted on rejecting the complaint, as she could not have detected this error even had she made every effort to do so, and therefore bears no responsibility for it. The claimant did not respond to the changes to the technical procedure offered by the defendant and insisted on the repair being carried out in accordance with the original design, even though it had been established that such a procedure was technically unfeasible.
In resolving this dispute, the lower courts reached differing conclusions regarding the existence of out-of-court negotiations. The District Court in Litoměřice concluded that a total of three implied agreements on out-of-court proceedings had arisen between the parties (defined by specific responses, an on-site investigation and requests for expert opinions), during which time the limitation period did not run. However, even after adding these periods of time, the claimant had filed the amended claim out of time; the court of first instance therefore dismissed the claim on the grounds of the statute of limitations.
The Regional Court in Ústí nad Labem, as the appeal court, upheld the judgment, although on different grounds. It concluded that no agreement on out-of-court settlement within the meaning of Section 647 of the Civil Code had been reached at all. The defendant never acknowledged her liability, and where she offered to enter into settlement negotiations regarding the defect claim, she made this conditional upon the use of different technology or materials, which the claimant ignored. There was therefore no mutual willingness to conduct meaningful negotiations on a specific claim; rather, it was a matter of both parties asserting their unilateral positions and rejecting the other party’s proposals.
The claimant lodged an appeal against the decision of the appeal court. In doing so, he argued for a broad interpretation of Section 647 of the Civil Code, contending that the term “out-of-court proceedings” also encompasses, in his view, the exchange of expert opinions or participation in on-site investigations. In the claimant’s view, the mere denial of liability by the debtor does not result in the suspension of the limitation period, provided that the parties actively continue their communications and do not definitively and unequivocally terminate the proceedings.
Key findings of the Supreme Court
The Supreme Court disagreed with the views of the lower courts, set aside the contested judgment of the appeal court, and referred the case back for further proceedings. In its reasoning, the Court undertook a detailed analysis of the provision of Section 647 of the Civil Code, pointing out, first and foremost, the specific features of Czech legislation in comparison with its foreign models, namely the German Civil Code (BGB) and the European reference framework (DCFR). While both foreign legal frameworks link the suspension of the limitation period to the mere factual conduct of negotiations (negotiations or Verhandlungen), the Czech legislator opted for a stricter approach requiring the express conclusion of an agreement on out-of-court negotiations. Consequently, a unilateral attempt by the creditor to establish contact is not sufficient to postpone the start of the limitation period or to suspend it; rather, a mutual willingness on the part of both parties to engage in out-of-court negotiations is essential.
The law does not prescribe any specific form or detailed content requirements for an agreement on out-of-court negotiations; it may therefore be concluded either expressly or impliedly through the factual conduct of the parties. The essence of an agreement within the meaning of Section 647 of the Civil Code is a mutual expression of intent by the creditor and the debtor to resolve the situation by means other than bringing an action before a court, whilst it must be clear from the conduct of both parties that they have agreed that the subject matter of the negotiations will be a specific right or a specific circumstance giving rise to it. The decisive moment from which the limitation period does not run is the day on which these expressions of intent to negotiate converged.
The Supreme Court identified a fundamental flaw in the appeal court’s reasoning in its rejection of the existence of an agreement on the grounds that the defendant had never acknowledged liability for the defects and had insisted on their dismissal. The Supreme Court therefore emphasised that the debtor’s acknowledgement of a claim or liability is not a condition for concluding an out-of-court settlement, and that in practice it is entirely common for a debtor to deny liability whilst at the same time being willing to negotiate alternative means of resolution or redress. For the purposes of Section 647 of the Civil Code, this stance is entirely legitimate, and the mere persistence in a position of rejection of the claim raised cannot, in itself, preclude the existence of out-of-court settlement proceedings. However, as the Supreme Court pointed out, a distinction must be drawn between this case and a situation where the debtor categorically and definitively rejects the claim, and this statement by the debtor thus unequivocally precludes any further scope for an amicable resolution of the dispute.
The second key issue addressed by the Supreme Court was the point at which the obstacle to the running of the limitation period ceases to apply, and the interpretation of the statutory requirement for an express rejection of out-of-court settlement. The Supreme Court first explained that the legal term ‘expressly’ must be interpreted in a teleological context as “unequivocally”; a rejection therefore need not consist exclusively of a direct verbal statement but may also take the form of any non-verbal expression of intent from which the intention not to continue the proceedings is beyond doubt. At the same time, the Supreme Court noted that the meaning and purpose of the provision of Section 647 is to protect the legitimate expectations of a creditor who relies in good faith on ongoing conciliatory proceedings.
Furthermore, the Supreme Court acknowledged that, in specific circumstances, the termination of negotiations may also be inferred from the passivity (inaction) of one of the parties, provided that such passivity, having regard to the principle of good faith, constitutes a genuine expression of will and not merely an omission. However, particularly in the case of the debtor’s inaction, the requirement for unambiguity must be interpreted strictly so as not to undermine the creditor’s good faith. At the same time, a unilateral refusal must be distinguished from an agreement between the parties to terminate the negotiations, as the latter may arise informally simply by both parties allowing the negotiations to peter out without further action. The termination of out-of-court negotiations restarts the running of the limitation period; however, this does not prevent the parties from concluding a new agreement in the future, which will cause the limitation period to be suspended once again.
Conclusion and recommendations for legal practice
In its judgment File No. 23 Cdo 431/2024, the Supreme Court provides further necessary clarification on the issue of the running of the limitation period; for practical purposes, the key conclusion is that the mere denial of liability or non-recognition of a claim by the debtor does not preclude the existence of out-of-court negotiations that suspend the running of the limitation period. It also analysed in equal detail the problematic moment when such conduct ceases to exist as a result of a unilateral declaration, an agreement or the inaction of one or both parties.
Although the Supreme Court case law analysed above confirmed the possibility of both the creation and termination of an agreement on out-of-court proceedings in an implied form, relying solely on the actual conduct of the other party poses a considerable risk at the procedural level and leads to complications in proving the case. In the interests of enhancing legal certainty, creditors should therefore seek an express written declaration on the commencement of out-of-court negotiations within the meaning of Section 647 of the Civil Code, in which the subject matter of the dispute and the anticipated timeframe are precisely defined. From the perspective of a debtor who has no interest in an amicable settlement, it is, on the other hand, essential to formulate their response as a categorical and definitive rejection of the claim, so as to avoid any doubt that might lead to an inference of implied consent to out-of-court negotiations.
Mgr. Ondřej Růžička, attorney – ruzicka@plegal.cz
Rozálie Polášková, legal assistant – polaskova@plegal.cz
27. 8. 2026