All businesses know the importance of prompt payment of invoices within your trading terms. Taking swift action against a debtor is essential to limit the damage unauthorised credit may do to your business. Following Brexit cross-border debt, where the debtor is in a European Union member state, may be more challenging but it is not impossible to collect outstanding debt in Europe. Creditors are strongly advised to be assisted by multi-jurisdictional lawyers to ensure that a claim is brought in the correct jurisdiction and that a judgment can be enforced.
Initially, you will have to establish which jurisdiction has the capacity to deal with your case. Cross-border disputes that result in litigation are governed by EU Council Regulation (EC) No. 1215/2012 in relation both civil and commercial issues, also known as the Brussels Regulation.
As a general rule the country of the defendant's place of residence is the country and jurisdiction where the matter should be pursued, regardless of the defendant's nationality should that be different from their country of domicile. Is where you can sue your debtor. There are some exceptions which debt collection lawyers will be able to outline.
Gonzalo Butori, partner, commented, "late payment can compromise your business, taking swift action as soon as you realise there is a default will limit potential detriment." Gonzalo further commented, "Our expert lawyers in our European offices can act immediately using a range of strategies to compel your debtor to pay an outstanding invoice, from initially negotiating directly to court action and enforcement of a judgment".
European Order for Payment
An undisputed debt could be dealt with using a European Order for Payment (EOP) if one party does not live in the EU Member State in which the case is to take place and the matter is uncontested. The procedure does not require a lawyer but legal advice is always advisable to ensure that all requirements are met to avoid the possibility of the case failing. The court fees for an EOP are defined in proportion to the amount of the debt. The court will serve the EOP on your debtor who must respond within 30 days.
The court can reject an application under an EOP if a claimant does not meet the conditions set out in the application, such as failure to return an application within the time limits for an amended application, the debt is not owed or the claimant rejects the court's proposed amendment.
On receipt of a EOP the debtor can pay the amount due, object to the order returning a statement of opposition or not responding at all. If the debtor does not respond the EOP will be enforceable without further action required. The rules for enforcement are not the same in every Member State. There are limited opportunities for the debtor to prevent enforcement, such as requesting a review of the EOP, apply to have the enforcement declined or have the enforcement stopped.
European Small Claims Procedure
If your outstanding invoice is for €5,000 or under, you can attempt to recover your outstanding debt by making a claim using the European Small Claims Procedure.
The court fees are recoverable if you are successful but you will have to pay the costs of translating the documents into the language of the jurisdiction. A small claim form must be completed and sent to the court. You may be asked to complete another form is the Court requires further information.
The Court will then send the claim form and an answer form to the debtor within 14 days of receipt of your form. Your debtor has 30 days to respond and the Court must send you your debtor's response to you within 14 days of your debtor's response. Once the debtor has replied the Court can then either summon the parties to an oral hearing without lawyers, issue a judgment or request further details from one or both parties.
If the debtor disputes the claim or makes a counter claim, the judge will consider the response. You may be asked for more evidence or be summons to an oral hearing which may be conducted by telephone or video conference. Once the judge has obtained sufficient information the judge will make a decision within 30 days.
The unsuccessful party will be liable for the costs but if the court feels that the successful party incurred unnecessary costs the court can elect not to award costs to the successful party. The judgment will automatically be recognised and enforced by any other Member State and there is no possibility of opposition to its recognition. As with other procedures there are some claims that cannot use this procedure, mainly relating to claims involving personal aspects of relationships.
Giambrone & Partners' debt collection teams in each of its European offices have an enviable success rate in assisting businesses to recover their outstanding debt across Europe. Our lawyers' exceptional legal expertise together with local cultural knowledge has proved to be a successful combination.
Gonzalo Butori has acted in a wide range of international and domestic commercial disputes. He has experience dealing with complex, high-value cross-border litigation.
He has particular proficiency with regard to dispute resolution and represents claimants and defendants in all jurisdictions on civil and commercial matters and regularly appears at mediation and arbitration hearings. He has acted as co-advocate in international commercial disputes under ICC rules as well as in other Alternative Dispute Resolution (ADR) proceedings.
Gonzalo is recognised for his pragmatic approach and solution-based strategies as well as his robust capacity when pursuing his clients' best interests. When heavy disclosure in foreign languages is required, he develops and delivers technical solutions to ease the cost burden for clients.
He has assisted in a number of cross-border transactions involving various EU jurisdictions and achieved successful results. He also specialises in the conflict of laws and jurisdiction.
Gonzalo regularly advises international clients in connection with family and inheritance-related cross-border matters. Throughout his experience, he has dealt with high-value and complex matters both contested and non-contested which have given him valuable exposure and experience.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
