International debt collection or enforced debt collection in other countries in Europe
The word “international” is of pivotal importance to the Viehbacher law firm, also in terms of debt collection or foreclosure. National boundaries pose no problems for us. We manage claims for our clients across Europe, our focus remaining on German-speaking countries in which we hold our own chambers, i.e., in Liechtenstein, Germany, Austria and Switzerland .
What is the fundamental meaning of the term “enforced debt collection” and how is it implemented?
Enforced debt collection is a governmental procedure that forcibly implements and/or upholds civil claims asserted by a creditor vis-à-vis a debtor or multiple debtors on the basis of an enforceable title (usually a judgment).
In order to keep our clients’ expenses to an absolute minimum, if claim amounts are relatively low, we opt to manage debt collection by issuing a warning instead of initiating proceedings in order to obtain an enforceable title. An enforceable title allows us to implement debt collection in conjunction with the respective Public Prosecutor’s Office and the enforcing court in question vis-à-vis the debtor and to carry out enforcement imperatives specific to the debtor’s movable and immovable assets.
International enforced debt collection
Enforced debt collection is classed as being international in nature when the debtor and the creditor are ordinarily resident in different countries.
New statutes and laws that have come into force relatively recently have simplified the pursuit of debtors across national boundaries within the EU. Such legal imperatives include the Recognition and Enforcement Implementation Law (AVAG), which was redrafted by means of an Act adopted on 19.02.2001), and the Regulation creating a European Order for Payment procedure (EuMVVO), announced on 30.12.2006, according to which – effective from 12.12.2008 – creditors are able to judicially implement their claims within the parameters of a uniform European Order for Payment procedure.
The European Order for Payment procedure provides an alternative, as the threat of an overseas Order for Payment procedure, as defined in § 688 III of the German Code of Civil Procedure (ZPO) conjoined with § 32 1 of the AVAG, persists. Of course, aside from these, it remains possible to implement legal proceedings on a purely domestic basis; such legal proceedings must then be supplemented by a validation of their congruence with European enforcement orders.
Similarly, in consequence of the introduction of Regulation (EG) No. 805/2004, it has become significantly simpler to enforce a judgment abroad. Regulation (EG) No. 805/2004 of the European Parliament and of the Council (EuVTVO) pertaining to the introduction of a European enforcement order for uncontested claims came into force as long ago as on 21.01.2005. This procedure purports to simplify and hasten access to the mechanism that permits enforcement of a judgment in a different EU member state from the one in which the judgment was promulgated. Orders congruent with this are, according to Art. 3, P. 1 of the EuVTVO, validated enforcement orders. Judgments, judicial settlements and official documents are deemed EuVT-validated instruments.
Small Claims Regulation – small claims procedure
Since 01.01.2009, the Regulation (EG) Nr. 861/2007 of the European Parliament and of the Council, adopted on 11.07.2007, has been applicable in EU member states, with the exception of Denmark (Art. 2 Paragraph 3 of the Regulation); the Regulation pertains to the introduction of a European small claims procedure (Small Claims Regulation).
This enables cross-border litigation involving small disputed amounts (claims being limited to EUR 2,000.00) to be resolved in a simpler and speedier manner and allows costs to be accordingly reduced. For litigants, the procedure provides an alternative to the procedures prevailing within the national boundaries of member states. The introduction of the European Small Claims procedure also precludes the necessity for interim proceedings facilitating the recognition and enforcement of judgments promulgated in other member states in the course of small claims proceedings.
Such proceedings require that prescribed forms be completed, and – as a general rule – are conducted by written procedure.
If the debtor moves abroad prior to enforcement being effected,..
…the requisite service of a judicial document must be carried out by individuals authorised thereto prior to introducing enforcement measures. When serving a judicial document, it is not sufficient that it simply be placed in the debtor’s letterbox or that it be sent via fax or e-mail.
A participant in judicial proceedings cannot forbear from submitting specific documents to the party with whom s/he is engaged in dispute. This is an important prerequisite for enforced debt collection – both within national boundaries and abroad. Several extra-judicial documents, too, such as notarised deeds, may need to be served.
The service amendment, adopted on 01.07.2002, has made it significantly easier to serve documents abroad. The enforcement of the European Regulation on the Service of Documents – EuZVO – Regulation (EU) 1393/2007 and §§ 1067 ff. of the German Code of Civil Procedure (ZPO) on 13.11.2008 further simplified the service of extra-judicial and judicial documents. This involves serving the document in question – along with the relevant form (forms are a necessary part of the procedure) – to the central transmitting agency of the receiving member state. In the event that translations are required – also within the parameters of the European Order for Payment – we work closely with our translation partner, since the recipient is also offered the opportunity to decline acceptance of the document. In order to pre-empt and discourage the language conundrum, we arrange for translation into the respective language in advance and wherever necessary.
The service procedure itself is free of charge, i.e., no court costs or expenses are involved.
Enforced debt collection in Austria
Enforced debt collection in Austria (where this procedure is termed “Exekution”) is congruent with the Act on the Enforcement of Judgments (EO). According to the fundamental principles of the declaration of enforceability – EuGVVO I – the approval of enforced debt collection based upon judgments promulgated abroad is contingent upon declared specificity for Austria.
Naturally, we take care of this phase of the declaration of enforceability procedure specific to orders to effect an “Exekution” in Austria on behalf of our clients. In Austria, most courts accept only electronic transmission of “Exekution” petitions (requests for enforcement). This necessitates the use of specific software, which we, of course, have at our disposal. It must be emphasised that proceedings based upon electronic submissions have an enormous temporal advantage, since this service is available around the clock; electronic transmission thus enables judicial timelines to be better observed and utilised.
The most frequent type of enforced debt collection in Austria is the so-called chattel execution method, comparable with enforced debt collection in Germany that is specific to movable assets, such as monetary claims. Approval for “Exekution” is principally granted by the court appointed to implement “Exekution”. Strictly speaking, this is always the district court.
Enforced debt collection negotiations themselves are the responsibility of the enforcement officer (Public Prosecutor). After obtaining approval for “Exekution”, the procedure can take three or four months to complete. Thereafter, a public prosecutor’s report is compiled.
Enforced debt collection in or from Liechtenstein
The principality of Liechtenstein has enforced debt collection conventions that subsist only with Austria and Switzerland – not with Germany. Although Liechtenstein is a member of the European Economic Area (EEA), the facilitations that prevail within the EU do not hold much sway here. Therefore, cases must be assessed individually as to whether it might not be more advantageous to effect collection of a debt that does not originate in Austria or in Switzerland from abroad vis-à-vis a debtor domiciled in Liechtenstein, and, drawing upon so-called disposal litigation in Liechtenstein, to enforce collection by means of a title obtained abroad, or – conversely – whether it may be preferable at the very outset to opt for recognition proceedings in Liechtenstein’s courts.
The reverse applies to the recovery of debts effected by a creditor domiciled in Liechtenstein from a foreign debtor who is not domiciled in Switzerland or Austria; it must be assessed whether this claim should be enforced as recognition proceedings before the Princely Court of Liechtenstein in Vaduz and, subsequently, using a truncated procedural route, enforced abroad, or whether it is better to immediately decide upon taking recourse to the respective foreign court.
Enforced debt collection in 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 that governed by enforcement laws that subsist in most other countries. For example, the most fundamental prerequisite – the enforceable title – is not required for the implementation of a claim, since a ruling regarding the title itself is made only later during the so-called disposal litigation process.
Collection proper is carried out by government collection officials, who – in Switzerland – are the central authorities in the Swiss collection judiciary. This is broadly equivalent to municipality action subsequent to a so-called collection request being submitted to the relevant collection office. Thereafter, an Order for Payment is issued; this is personally delivered to the debtor.
The debtor now has the opportunity to pay the debt(s); this would halt further proceedings. Should s/he fail to comply with the collection request and also fail to contest the claim, his/her assets will be attached. It is also possible that the court will choose to assess the claim. However, this will happen only if the debtor contests the claim (by means of a so-called legislative proposal) and the creditor then demands summary disposal.
A legislative proposal would then necessitate that the creditor satisfy the court as to why s/he deems the claim to be justified, once again making the process significantly more expensive, particularly with regard to the costs of legal proceedings.
Concluding remarks/point of contact
Another point to be noted is that enforcement titles obtained abroad or those “converted” into foreign titles are not to be compared with the 30-year enforcement norms that predominantly subsist in Germany. In several countries, for instance, an enforceable title is valid for a period of only six years.
To facilitate collection or enforcement of your claim – whether from or in Liechtenstein, Germany, Austria or Switzerland – please contact our dedicated office in Regensburg, where Ms. Wiebke Scharf will be happy to assist you. We ask for your understanding should we decline to provide information on the telephone or in writing prior to a formal briefing and planning session:
Ms. Wiebke Scharf
Viehbacher Lawyers Office
Bischof-von-Henle-Str. 2a
D-93051 Regensburg
Tel.: +49 (0)941 640 90 880
Fax: +49 (0)941 640 90 881
E-mail: office@viehbacher.com
Munich
