diff --git a/java/code/src/com/suse/manager/webui/controllers/ProxyController.java b/java/code/src/com/suse/manager/webui/controllers/ProxyController.java
index efd12efc09ba..e16e43ee34e4 100644
--- a/java/code/src/com/suse/manager/webui/controllers/ProxyController.java
+++ b/java/code/src/com/suse/manager/webui/controllers/ProxyController.java
@@ -25,6 +25,7 @@
 import com.redhat.rhn.common.RhnRuntimeException;
 import com.redhat.rhn.domain.user.User;
 import com.redhat.rhn.manager.system.SystemManager;
+import com.redhat.rhn.manager.system.SystemsExistException;
 
 import com.suse.manager.reactor.utils.LocalDateTimeISOAdapter;
 import com.suse.manager.reactor.utils.OptionalTypeAdapterFactory;
@@ -128,6 +129,11 @@ public String generateContainerConfig(Request request, Response response, User u
             return json(response, HttpStatus.SC_INTERNAL_SERVER_ERROR,
                     "Failed to generate proxy container configuration");
         }
+        catch (SystemsExistException e) {
+            String msg = String.format("Cannot create proxy as an existing system has FQDN '%s'", data.getProxyFqdn());
+            LOG.error(msg);
+            return json(response, HttpStatus.SC_INTERNAL_SERVER_ERROR, msg);
+        }
         catch (RhnRuntimeException e) {
             return json(response, HttpStatus.SC_BAD_REQUEST, e.getMessage());
         }