In civil proceedings, a simple rule applies – the plaintiff files a lawsuit, pays court fees, and must bear the burden of proof. However, the defendant has a powerful tool at their disposal: set-off defense. If successful, it can significantly reduce the plaintiff's success without the need to file their own lawsuit. This institution has fundamental impacts on the equality of parties in proceedings.

What is Set-off Defense

Set-off defense (also compensatory defense) occurs when the defendant claims to have their own claim against the plaintiff and requests that their debt be reduced by exactly this amount.

  • If it's only about defense up to the amount claimed, we speak of set-off defense.
  • If the defendant wanted the "exceeding part" to be awarded to them as well, it would already be a counterclaim.

The advantage for the defendant is obvious: they don't have to pay court fees, draft a lawsuit, or send a pre-litigation notice. It's sufficient to raise set-off during the proceedings and provide evidence.

Concentration of Proceedings and Set-off

The plaintiff is limited by the so-called concentration of proceedings (§ 118b of the Civil Procedure Code), meaning they must state all claims and evidence in time. This doesn't apply to set-off defense.

The Supreme Court in judgment 32 Cdo 4182/2016 (August 28, 2018) stated that even if the defendant raised set-off after concentration, the court can consider it. And not only claims about the extinction of the claim itself, but also about the existence of the claim to be set off – even if it arose earlier.

This places the defendant in a significantly more advantageous procedural position.

Limitation and Set-off

A specific question arises with time-barred claims. Generally, the plaintiff must avoid limitation – otherwise they risk failure.

For the defendant, the situation is different. According to § 617 para. 2 of the Civil Code, the defendant can set off even a time-barred claim, if set-off could have occurred before the limitation period expired.

This means:

  • the defendant can use even a time-barred claim as defense,
  • but the plaintiff will not succeed with their time-barred claim "for set-off" against the defendant's set-off.

The result is further inequality.

Case Law on Unclear Claims

The judgment of the Municipal Court in Prague 20 Co 326/2018-70 (December 6, 2018) emphasized that only a certain and undisputed claim can be set off. Purposeful defense through uncertain or fictitious claims is excluded (§ 1987 para. 2 of the Civil Code).

If the defendant is unable to clearly prove the claim, the court will reject the set-off defense and refer them to seek their rights through a separate lawsuit.

Practical Impacts

  • The defendant has an advantage – they don't have to pay court fees or file a lawsuit, yet can significantly influence the outcome.
  • A time-barred claim can be set off by the defendant, but not by the plaintiff.
  • Set-off defense is not limited by concentration of proceedings – it can be raised even later.
  • But courts require a certain and proven claim – unclear or purposeful defense won't stand.

Summary

Set-off defense is a powerful defensive tool for the defendant, which in many respects disrupts the balance of parties. The plaintiff bears costs, must act in time and precisely. The defendant, on the other hand, can effectively challenge the claim without formal burdens – even through a time-barred claim.

This situation raises doubts about the constitutional equality of proceedings participants. Although case law partially moderates abuse (e.g., by excluding unclear claims), the imbalance persists.

👉 In practice, therefore, the plaintiff must count on the fact that even a carefully prepared lawsuit can be weakened by set-off defense, while the defendant gains a very effective procedural weapon.