The Supreme Court of the Czech Republic (Nejvyšší soud – NS) recently addressed the legal mechanism of notarial deeds with consent to direct enforceability, specifically regarding contractual penalties and default interest. While existing market practice frequently utilized this instrument as a means of securing debt, the Supreme Court has further defined the boundaries of its application in line with its established case law—a move that could have significant operational implications for both banking and non-banking institutions.
Direct Enforceability as an Execution Title
A notarial deed containing consent to direct enforceability can serve as an execution title provided the debtor consents. In the event of default, the creditor can initiate direct enforcement proceedings solely on the basis of the notarial deed. At the same time, the Supreme Court has long emphasized that such a notarial deed lacks substantive legal nature —it does not, in and of itself, constitute a legal ground for an obligation.
Future Claims Cannot Be Acknowledged
Building upon these principles in recent rulings[1], the Supreme Court addressed whether future claims for contractual penalties and default interest can be validly acknowledged via a notarial deed. The Court concluded that:
Core Principle: Only a debt that already exists at the exact moment of acknowledgment can be legally recognized. It is therefore impossible to validly acknowledge a claim that may arise only in the future.
In the cases under review:
- The underlying claim for loan repayment already existed.
- However, claims for contractual penalties and default interest were contingent upon a future event—the debtor's potential default.
Because the debtor was not yet in default at the time the notarial deed was executed, these secondary claims had not yet arisen. The Supreme Court therefore concluded that they could not be validly acknowledged nor included within the scope of direct enforceability under the notarial deed.
Implications for Loan Operations and Market Practice
This means that if a directly enforceable notarial deed is executed prior to the drawdown of a loan or the disbursement of a credit facility, it actually lacks legal relevance regarding the principal amount, let alone secondary claims such as accrued interest and contractual penalties.
These Supreme Court rulings represent a significant refinement of existing practice. They confirm that a notarial deed with consent to direct enforceability can only be used to enforce obligations that already exist at the time of its execution. Conversely, future claims whose creation depends on a potential subsequent breach of duty by the debtor cannot be secured in advance or rendered directly enforceable through this mechanism.
[1] See Supreme Court Resolution dated April 29, 2026, Case No. 20 Cdo 2841/2025, and Supreme Court Resolution dated April 29, 2026, Case No. 20 Cdo 2680/2025.
This text was translated by AI.
