International Debt Recovery and Legal Enforcement Abroad
- International Debt Recovery and Legal Enforcement in European Foreign Countries
- What is meant by the term ‘legal enforcement’ in general, and how does it work?
- International Legal Enforcement
- Legal Enforcement in Austria
- Legal Enforcement in or from Liechtenstein
- Legal Enforcement in Switzerland
- Legal Enforcement in Italy
- Summary and Contact
1. International Debt Recovery and Legal Enforcement in European Foreign Countries
For the legal team at Viehbacher, the term ‘international’ is of great significance, in particular when it comes to debt recovery and legal debt enforcement. National borders are no obstacle for us. We help our clients enforce claims against their debtors throughout Europe, in particular within the German-speaking countries of Liechtenstein, Austria, Switzerland and Germany itself, in all of which we retain offices. Should you ever have difficulties in motivating your European business partners to pay outstanding invoices in a timely manner, simply get in touch with us. We have many years experience and understand the obstacles and challenges that international levies of execution can pose. It is our job to take care of the professional, cross-border enforcement of debts and claims owed to you.
2. What is meant by the term ‘legal enforcement’ in general, and how does it work?
Legal enforcement is an official procedure for the compulsory collection and/ or upholding of a creditor’s claims against one or more debtor(s) under civil law upon the grounds of an enforceable title (usually a court order).
European Order for Payment Procedure – Prompt and Cost-Efficient International Debt Collection
In order to keep the cost to our clients as low as possible in cases when the disputed sum is low, our first step in effecting debt recovery is to initiate the European Order for Payment Procedure as opposed to initiating court proceedings. Generally speaking, the European Order for Payment Procedure is faster than conventional cross-border lawsuits. In contrast to conventional lawsuits, which entail two separate steps (issue of a court order and the subsequent issue of an enforcement order), the European Order for Payment Procedure is comprised of only one step. What does that mean for you? By administering the European Order for Payment Procedure, we are able to recover international debts owed to you not only faster, but also at a lower cost. Once the motion has been properly filed, and following expiration of the respite for appeal, the Court then declares the European Payment Order (EPO) for legally enforceable. This title, granted by the EPO, is recognised in 27 member states of the European Union. The enforceable title then makes it possible to enforce claims against the debtor in cooperation with the appropriate bailiffs and courts in their respective countries, including both the movable and immovable assets of the debtor.
One obstacle of the European Order for Payment Procedure lies in the extensive formal requirements it demands. The European Order for Payment Procedure is initiated with an application for grant of a European Order for Payment. Without professional legal assistance, however, the applications are very often filled out incorrectly. They must then be revised and presented to the Court within a specific time period. In order to prevent the Court from having to demur any erroneous or incomplete information on your part, we are here to support you by ensuring that the applications are both correct, complete, and filed on time. Once the application has been filled out completely and correctly, the Court issues an EOP within 30 days.
3. International Legal Enforcement
The legal enforcement process becomes international in cases where the legal offices of the creditor and debtor are registered/ domiciled in different countries.
The prosecution of cross-border debtors in the EU has been simplified with relatively new directives and laws, such as the revised AVAG (Anerkennungs- und Vollstreckungsführungsgesetz – English: Recognition and Enforcement Implementation Law) which came into effect on 19th February 2001, and the announcement of the regulation to introduce a European Order for Payment Procedure on 30th December 2006, which allows creditors to legally enforce titles under the uniform European Order for Payment Procedure (EOP).
The European Order for Payment Procedure presents an alternative option, as the process of obtaining a foreign payment order procedure in accordance with § 688 III ZPO (Code of Civil Procedure) and in conjunction with § 32 1 AVAG remains possible. Initiating purely national court proceedings with an ensuing confirmation of a European enforcement order is yet another option for the enforcement of debt collection in foreign countries.
The introduction of EC directive No. 805/2004 has simplified the enforcement of court judgements abroad significantly. Directive EC No. 805/2004 of the European Parliament and the European Council on the introduction of a European Enforcement Order (EEO) for uncontested claims came into effect on 21st January, 2005. The goal of this procedure is to simplify and accelerate access to the legal enforcement of a court judgement in countries outside of the country in which the sentence has been declared. Orders that conform to the directive, according to Art. 3, p.1 EEO, are confirmable enforcement orders: Verdicts, legal settlements and official documents are classed as EEO confirmable instruments.
Should the debtor move abroad before the enforceable title is granted, then it is mandatory for the relevant writ to be served by the appropriate authorities in the foreign country before the enforcement is carried out. A document cannot be considered legally served by simply delivering the document to the debtor’s letterbox or sending it by fax or e-mail.
No one involved in legal proceedings will be able to avoid providing specific documents to the opposing party in the dispute. This is an important prerequisite for legal enforcement – both inland and abroad. For debt enforcement, a number of extra-judicial documents, e.g. notarised documents must also be served.
Effective 1st July 2002, the new directive for serving such documents has considerably simplified the process of serving them abroad. When the European directive on serving court orders – (EU) 1393/2007 and §§ 1067 ff. CCP came into force on 13th November, 2007, it further simplified the serving of court orders and extra-judicial documents. In such cases, the document to be served is sent to the central forwarding agency in the member country along with the appropriate form (the use of a form document is mandatory). If a translation is required, which is the case in the European Order of Payment Procedure, we work in close cooperation with reputed translators, as the recipient is also granted the opportunity to refuse acceptance of the document. In order to avoid having ‘language difficulties’ being misused as an obstruction, we have documents translated into the relevant national language in advance and as required.
The process of serving the document itself is free of charge, i.e. no additional legal costs or expenses are incurred.
4. Legal Enforcement in Austria
Legal enforcement in Austria is a complex topic. In order to fulfil your invoked claims satisfactorily, we are here to support you with their enforcement abroad. Debt collection/debt enforcement in Austria is one of our specialisations within the field of European debt enforcement law. This includes both Austrian titles and titles from member states that have been deemed enforceable.
In Austria, legal enforcement (referred to as ‘Exekution’) is implemented in accordance with the state’s Act on the Enforcement of Judgements (abbr. ‘EO’). In accordance with the basic principles of the declaration of enforceability (EuGVVO I), approval of the execution of foreign judgements is subject to their being declared enforceable for Austria.
It goes without saying that we handle the process of having a title declared enforceable in Austria on behalf of our clients. In Austria, most courts only accept the transmission of enforcement orders in the form of an electronic execution of legal documents (German abbr. ‘ERV’). We have the necessary specialty software to do this. It is especially important to point out that executing legal documents by virtual means is enormously time saving. It can be done at any and all times and makes taking advantage of respites and deadlines much easier.
The most common type of debt enforcement in Austria is the so-called ‘Fahrnisexekution’, or levy of execution against goods and chattels, which can be compared to the German debt enforcement on movable assets, e.g. financial claims. The grant of enforcement lies with the appropriate court. In practice this is always the county court.
In addition to the levy of execution against goods and chattels, another common form of recovery is the levy of execution against receivables, which makes it possible to seize, e.g. bank assets, unpaid call shares, building savings accounts, and life assurance etc. If a third party has seized a claim from the obligator (debtor), then the obligated party is no longer entitled to the claim. The garnishee then can and may pay these claims out to the lienor, as the lien on outstanding accounts is granted with the sanction of the levy of execution. Bank transfer and confiscation of the seized claim up to the amount stated on the title effect the recovery.
5. Legal Enforcement in or from Liechtenstein
The Principality of Liechtenstein has an enforcement agreement with Austria and Switzerland, however not with Germany. Although Liechtenstein is a member of the European Economic Area, the simplification measures that apply within the EU do not apply to Liechtenstein. It is therefore necessary to consider alternative actions for each individual case carefully: Is it more advantageous to enforce a claim (which does not originate from Austria or Switzerland) against a debtor who resides in Liechtenstein from another country and then strive to have the title that was granted in said foreign country declared enforceable - via the so called judicial dismissal of objection - in Liechtenstein? Or is it better to initiate the enforcement process in Liechtenstein directly?
6. Legal Enforcement in Switzerland
We assist you with legal enforcement in foreign countries as well as with cross-border international legal enforcement. Our services are not limited to just EU countries. We also offer you professional assistance in recovering your claims in other European countries, such as Switzerland.
The legal basis for enforced debt collection in Switzerland is the Swiss Federal Law on Debt Collection and Bankruptcy (ArSchKG).
Enforcement or collection in Switzerland differs greatly from the enforcement laws that apply in most other countries. For example, the most fundamental precondition – the enforceable title – is not required for the enforcement of a claim, since a ruling regarding the title itself is made only after the fact, during the so-called judicial dismissal of objection.
The collection itself is enforced by government collection officials, i.e. the central authority in the Swiss debt enforcement legal system. It can be compared to the municipal action that follows the submission of a so-called collection request to the pertinent collection bureau. After that, an order for payment is issued, and the debtor is served in person.
The debtor is then given the opportunity to pay the debt, which puts a stop to further proceedings. If the debtor either fails to comply with the collection order or doesn’t contest the claim, his assets are seized. It is also possible that the court will decide to assess the claim. However, this only happens if the debtor contests the claim (by means of a so-called legislative proposal) and if the creditor subsequently demands judicial dismissal of objection.
This legislative proposal would then require the creditor to convince the court that the claim is justified, which in turn makes the process significantly more expensive, particularly in regard to the costs of legal proceedings.
7. Legal Enforcement in Italy
In Italy, legal enforcement is achieved by dunning proceedings, due process of law and enforcement. With dunning proceedings and due process of law for the collection of more than € 1100.00, legal representation is mandatory. This also holds true for the actual enforcement.
It is also possible to apply for exemption from payment summons (ricorso per decreto ingiuntivo) as long as the debt to be collected can be proven with documentation. The application is submitted to the appropriate judge. The debtor is served with the application along with the payment summons (decreto ingiuntivo). The debtor then has 40 days to appeal the payment summons. The appeal encompasses filing a petition, which opens legal proceedings with the judge who issued the payment summons. If the payment summons is not appealed, it is then legal and can be enforced.
Due process of law with the aim of ascertaining the claim and sentencing the debtor to payment is opened by serving the debtor with a lawsuit and filing the served lawsuit with the appropriate judge, along with all supporting documents. It is possible that a payment summons can be issued even before the court has issued a sentence.
Enforcement is opened with the service of a dunning brief (atto di precetto) along with the title of execution (titolo esecutivo). After being served, the debtor has 10 days to voluntarily fulfil the order. If the debtor has not taken advantage of the respite, the creditor can begin legal enforcement of the debtor’s assets within 90 days.
8. Legal Enforcement in Germany
Alongside international legal enforcement, we, of course, also conduct legal enforcement for you in Germany: German titles, titles from Austria, Switzerland, Liechtenstein or Italy. We are well versed in the national individualities of enforcement titles in EU countries.
We also take care of the proceedings for a declaration of enforceability or a renewed entitlement process in the country of origin for you: We have an excellent command of all German legal enforcement methods. It doesn’t matter whether it is a title that we have obtained for you or titles that you have obtained with the assistance of other lawyers or on your own.
9. Summary and Contact
It should also be noted that enforcement titles obtained abroad or those that have been ‘converted’ into foreign titles are not to be compared to titles with the 30 years enforceability, which are common in Germany. In a number of countries, an enforceable title is valid for, e.g. a period of only six years.
For preliminary information about the collection or enforcement of your claim, Ms. Wiebke Scharf and Ms. Olga Lechzer will be happy to assist you. We thank you for understanding that we are unable to provide information on the telephone or in writing before we have been formally retained.