Practice-Oriented Reflections on International Collection of Debts and the Prospects for Eurojuris

Eurojuris is an organisation which acts Europe-wide. It would appear that this organisational advantage should be used in order to make transborder debt collection and recovery more efficient.

Although being continously reformed and harmonised the legal requirements for the  international collection of debts are still a great challenge for lawyers. It requires knowledge of both the conditions and circumstances in the country of the claimant and of the national law of the country where the debtor is domiciled.

Given the diversity of national legal systems and linguistic differences, the individual lawyer is usually or often not in the position to assess the legal requirements of the international collection of debts, to weigh up the manifold possibilities and to put these considerations into actual practice.

I. Preliminary considerations

Preliminary considerations include selecting the appropriate court, determining the applicable substantive law, weighing-up the collection costs at home and abroad as well as correctly estimating the time needed and the risks of enforcement involved.

1. Any lawyer accepting an international case encounters particular problems. The special subject matter for such would be enough reason to reject an international case. However if a lawyer does accept such a task, he exposes himself to specific risks. To be precise, he will have to assume liability not only for properly processing the case in accordance with domestic law but also for accurately applying foreign law, as far as it is relevant. Sometimes he even assumes the liability for the fees of lawyers abroad. Therefore preliminary considerations are of particular importance when handling international cases.

2. Requesting the domestic court nearby to start an overdue claim legally enforceable seems not always to be the correct way. It is true that this would provide the chance to apply domestic law as extensively as possible, but this is often not the crucial factor. For example, a lawyer wishing to enforce a claim by execution in Liechtenstein will have to bring an action before a court in that country, as in Liechtenstein, as a rule, foreign judgments are not recognised and enforced. Anyone considering the costs involved in the international collection of debts will often take legal action abroad. Nevertheless, domestic courts frequently pass more favourable decisions regarding, for instance, the reimbursement of costs.

Examples: 

France: no statutory scale of fees.

Belgium: no statutory scale of fees.

Therefore the amount of the lawyer fees is unfortunately not precisly forseeable, which as a risk to describe for a lawyer is a duty.

Examples: 

France: Lawyer’s fees and translation costs are “frais frustatoires”, meaning that they are not reimbursable as a matter of principle, unless a court decides, in exceptional cases, that having one party bear the costs alone appears inequitable.

3. Applicable law regarding the international collection of debts comprises not only the domestic provisions of private international law but also frequently foreign substantial legal provisions as well as the existing bilateral and multilateral conventions, particularly as regards questions of venue and execution. Therefore, access to the large specialist libraries is an important and essential asset for the practitioner. The various compilations concerning the collection of debts, and particularly those dealing with recognition and enforcement law, are very helpful.

4. More and more alternative dispute resolution features become in use. Some industrial banches already prefer to appoint Dispute Review Boards or Dispute Adjudication Boards and arbitral panels instead to refer their disputes to state courts. Lawyers must adopt those new features and learn to handle them.

5. Close co-operation between the law offices united in Eurojuris means that it is possible to collect ready and relevant criteria for a decision as early as during the preliminary consideration phase. EUROJURIS will therefore work for an exchange of a package of questions and answers between the national law firms, which will enable foreign lawyers to supply quick and correct answers to the following questions:

	Does your country recognise foreign court decisions and does it permit the enforcement of such decisions?
	How much are the court and lawyer’s fees payable in your country for the principal and enforcement proceedings?
	Who has to bear the court and lawyer’s fees payable for the principal proceedings? Is there an obligation for the losing party to bear the costs?
	Who has to bear the costs of judicial execution?
	How long will the principal proceedings take?
	Are there any summary proceedings for the collection of debts?
	How long will the recognition proceedings take?
	How long will the enforcement proceedings take?
	What enforcement measures are possible? Which enforcement measures should be preferred?

International litigation as such is a  challenge because the rules concerning substantiation of a claim, obtaining evidence and court hearings differ considerably. Communication and exchange of information is thus a inevitable requirement.

II. 

Once the preliminary considerations have been completed, the lawyer will face the problem of how to handle the collection of debts in practice. To simplify things, I will assume that an enforceable title has already been obtained in the form of either a judicial order or a notarial instrument or perhaps also in the form of an administrative order. The following description of procedure to be followed takes the situation in Germany only as an example:

1. Enforcement by way of mutual judicial assistance

Mutual judicial assistance via official channels is of hardly any practical relevance for the purposes of enforcement.

a. The provisions of Article 791 German Code of Civil Procedure are virtually irrelevant. No country executes judgments passed by a foreign court without first reviewing them.

b. Nevertheless, the conventions on mutual judicial assistance regarding maintenance law may be taken into consideration. An alternative mode of enforcement is provided by the New York UN Convention on the Assertion of Maintenance Claims Abroad, dated June 20, 1956 (Federal Law Gazette 1959 II, p. 150).

Contracting States: 

e.g.: Federal Republic of Germany, France, Belgium, Austria, Switzerland.

	The application is to be filed with the transmitting agency in the country where the entitled party is domiciled; the application should contain the following:
	particulars of the entitled party (name, address, date of birth, age, nationality, profession, particulars of the legal representative, if any)
	particulars of the debtor
	particulars concerning the claim (grounds, amount, financial situation and family circumstances of the entitled party)
	a declaration stating whether a request for voluntary payment should be submitted or coercive measures should be used
	the name of the payee should be indicated.

Enclosures required: 

	documents supporting or substantiating the claim
	birth certificates
	marriage certificates
	divorce documentation
	documentation relating to the determination of paternity
	titles of execution
	power of attorney – including authorisation of the recipient authority to act on behalf of the entitled party
	a photograph of the entitled party and one of the debtor, a statement on the personal and financial circumstances of the entitled party
	translations into the official language of the requested state

Jurisdiction lies with the bodies determined by the ministries of justice of the individual states: in Germany, the Amtsgerichte at the domicile of the entitled party (Publication of the state administrations of justice relating to the convention of June 13, 1983).
The court or national authority will pursue the request of their own motion upon application on the basis of mutual judicial assistance.

	within the authority granted by the entitled party, the recipient authority will take all appropriate steps to bring about payment of maintenance, including the execution of any existing titles
	no fee is payable for the activities performed by the transmitting agencies in proceedings under the convention.

2. Execution procedure in accordance with EuGVÜ (Brussels Convention) as amended by the 2nd Access Convention (Federal Law Gazette 1988 II, p. 453) / Lugano Convention replaced by the Brussels Regulation n° 44/2001, which entered into force on March 1st,  2002.

Within the scope of the former Brussels or Lugano Convention as regards subject matter, time and space, the following enforcement procedure is to be observed:

	The Brussels or Lugano Convention is materially applicable to civil and commercial matters
	not to divorce decrees
	not to claims under public law

(a particular problem in Anglo-American countries)

a. Decision authorising enforcement

The former Brussels or Lugano Convention required no formal enforcement and recognition proceedings. Only the proceedings to obtain a decision authorising enforcement are necessary.

aa. Enforceable German title of execution

Pursuant to the EuGVÜ/LGVÜ, titles of execution enforceable abroad include the following:

	judgment
	writ of execution
	instrument enforceable by execution
	order setting costs

b. Decision authorising enforcement

The EuGVÜ/LGVÜ provides two ways to obtain a decision authorising debt enforcement abroad:

	registration in Great Britain and Ireland
	in all other countries: application for an execution clause

The following documentation must be submitted in both cases:

	the official copy of the decision certified for execution
	if a default judgment or a writ of execution has been granted: evidence of service of the document instituting the proceedings
	execution clause
	if an order for payment of a debt has been granted, an execution clause will be awarded upon request, Article 33 AVAG
	evidence of service, by means of a certificate recording the service in accordance with Article 6 of the Hague Service Convention, if necessary
	evidence of legal aid granted at home, if applicable
	translations of the documents into the official language of the court responsible for enforcement, upon the court’s request

“Legalisation” of the documents to be submitted is unnecessary under Article 49 Brussels or Lugano Convention.

Further requirements for being granted a decision authorising enforcement:

Establishment of a domicile of choice/person authorized to accept service in the debtor’s country, Article 33 para. 2 Brussels or Lugano Convention (as a rule, by commisioning a lawyer in that country)

c. The court resorted to will examine whether the requirements for granting a decision authorising enforcement have been met:

aa. Formal requirements

The laws of the debtor’s country are authoritative for filing the application. In particular, the following will be examined:

	jurisdiction and jurisdiction as regards subject matter on the part of the court responsible for enforcement but not that of the original court
	the official language used before the court of jurisdiction
	whether representation by a lawyer is mandatory (capacity to conduct a case in court)

e.g.: France: in reality, this applies under Article 111 CPC

Belgium: yes (Moons, AnwBl 1984, p.191)

Jurisdiction as regards subject matter as provided for in Brussels or Lugano Convention:

France:	President du Tribunal de Grande Instance (Landgericht)
Belgium:	Tribunal de premiere instance oder rechtbank van eerste aanleg
Danmark:	byret
Germany:	Landgericht
Greece:	Landgericht
Spane:	Juzgado de primera Instancia
Ireland:	High Court
Island:	Landgericht
Italy:	Corte d´Appello
Netherlands:	Präsidenten der Arrondissemetsrechtsbank
Luxemburg:	Präsident des tribunal d´arrondissement
Norway:	herredsrett oder das byrett als namsrett
Austria:	Landgericht oder Kreisgericht
Portugal:	Tribumal Judicial de Circulo
Switzerland:	kantonaler Rechtsöffnungsrichter/kantonales Vollstreckungsgericht
Finnland:	Landgericht
Sweden:	Svea hofrätt
Great Britain:	High court of Justice/Court of Session/Sheriff Court/Magistrates Court

bb. Examination of the subject matter, Article 27 Brussels or Lugano Convention

The courts examine whether the following applies:

	a violation of public order (of national law, no verification of jursidiction under public order)
	regarding default judgments or writs of execution, whether the document instituting the proceedings has been served in time
	litispendence of the claim
	the preliminary question under private international law as to the civil status, legal capacity and capacity to act, matrimonial property regime, right to succeed
	the existence of a previous decision granted in another country, which is recognised in the debtor’s country

cc. Opportunity of being heard (fair heraring)

The opposing party will not be granted the opportunity of being heard in the proceedings to obtain a decision authorising enforcement (Article 34 para. 1 EuGVÜ/LGVÜ), in order to maintain the element of surprise.

3. In addition to the above, I would like to refer to the large number of bilateral conventions relating to recognition and enforcement law, which have in several cases a greater scope than the EuGVÜ/LGVÜ.

For example: 

Bilateral convention between Germany und Austria, which includes for example dvivorce judgments (Those bilateral conventions have been largely replaced by European Regulations).

4. (Brussels) Regulation n° 44/2001 (Council Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters)

Subject to the Regulation n° 44/2001 the procedure aimed to obtain registration or enforcement of a foreign decision or judgment has been simplified. The creditor must simply produce the judgment and a special certificate which will be issued by the court having decided on the matter. In particular:

According to art. 38 of the Regulation a judgment given in a member state of the EU and enforceable in that state shall be enforced in another member state when, on the application of any interested party, it has been declared enforceable there.

A party seeking recognition or applying for a declaration of enforceability shall produce a copy of the judgment which satisfies the conditions necessary to establish its authenticity and it shall also produce the certificate referred to in Article 54, without prejudice to Article 55. Subject to art. 54 the certificate shall be issued to the interested party by the court or competent authority of a member State where the judgment was given.

5. Enforcement by execution at the debtor’s domicile

Once the local requirements for enforcement by execution have been fulfilled, the correct steps for execution have to be initiated. In any case the law of the debtor´s domicile is exclusively applicable. Given the diversity of national execution law it would be necessary to introduce here into the several European national execution laws which is not possible in the given time. Eurojuris´Commission of International Litigation has thoroughly verified and examined the laws of all participating lawyers, in particular the laws of England, France, Greece, Germany and Spain. The Commission is continuing working on this matter and to give the Eurojuris law firms short informations about national caracteristics.

III. 

In the majority of the cases commissioning a colleague lawyer at the debtor’s domicile will be inevitable. In this respect, Eurojuris provides reliability and safety as compared to the usual international co-operation between lawyers. Nevertheless, it will be necessary, in the interest of the client, to sustain the commission by sending a written request to the foreign lawyer. What is important in this respect is that, as a rule, the commissioning of a lawyer is, for lack of any adverse or anticipating choice of law, judged by the law applicable at the domicile of the lawyer. The following individual problems should be taken into consideration:

1. The admissibility of contingency fees is governed by the regulations of the lawyer’s contract. Agreements on the sharing of fees which are based on contingency fees may, however, be ineffective under the law applicable at the domicile of the commissioning lawyer.

2. The law applicable at the domicile of the court resorted to is authoritative regarding any decision as to whether a foreign client will be reimbursed the fees payable to the domestic lawyer or not, in the event that the latter consults a colleague abroad at the request of the client. What this specifically means for foreign lawyers consulting a German lawyer is that any fees may be reimbursable. As a rule, German courts consider the fees payable for commissioning a consultant lawyer to be reimbursable if the German lawyer would not have obtained appropriate information if he had not been provided with competent counselling by the foreign lawyer. Reimbursability, however, is difficult as the fees payable to foreign lawyers are not calculated on the basis of RVG, which means the German Law ruling the lawyer´s fees which in the eyes of some foreign lawyers might be a cartel law. Usually the national law applicable to the contract (lex contractus) rules the fees. The German tradition of reimbursability however is based on German RVG-rules. The fees of foreign lawyers especially in cases of lower value in dispute are ofently higher than provided by German RVG rules. These risks not provided for in the German law regulating the reimbursement of costs may lead to reductions in the fees charged by the foreign lawyer.

3. Any lawyer who accepts an international case must acquire knowledge of the relevant foreign law. If the lawyer is completely unfamiliar with the foreign law to be applied, he fulfils his obligation to examine by co-operating with a lawyer in the country concerned. The relevant regulations provided in the binding international agreements, such as the European Brussels Convention on Venues and Execution, the CMR (Convention on the contract for the International Carriage of goods by road) or the UN Convention on contracts for the International Sale of Goods, are, however, not deemed foreign law. The lawyer will be fully liable for knowing the provisions of these and of the national private international law in question.

4. The collection of a lawyer’s fees payable for international cases is not a specific problem. It is subject to the general laws. It must be taken into consideration that rule 5.7 of the European Canons of Professional Ethics provides that a lawyer is liable to pay the fees charged by the foreign lawyer commissioned by him for consultation or processing purposes. Clauses limiting liability are permitted.

IV. 

At the end of this short article I will first of all summarize that debt collection abroad is a very interesting and multiple matter. The European Union and our national states have given us in the last 25 years a legal background for this work. Foreign money collection is no more an affair of international comity but a high quality service. We are able to handle the special risks and preliminary considerations. Our advantage is Eurojuris. Our Europe-wide organisation is the best insurance we can find in our special legal practise.