Any creditor of an obligation whose debtor resides abroad has various means of recovering the debt.
Several possible scenarios exist:
- for disputes of less than EUR 5.000, creditors may use the European small claims procedure for the settlement of small cross-border disputes. This procedure applies to civil and commercial matters;
- for the settlement of more important cross-border disputes, the creditor may resort to the European order for payment procedure;
- in the event that the debtor has moved to another European Union Member State after the beginning of the debt recovery procedure, the creditor can ask the judge for a European Enforcement Order certificate that enforces the decision on all European territory (except Denmark);
- in the event of a cross-border claim in Germany or in France, creditors can resort to simplified debt recovery procedures;
- in Belgium, only a lawyer can sign and submit an application for an order for payment. Creditors therefore rather resort to an adversarial trial;
- in the Netherlands, the creditor must initiate an adversarial trial.
Who is concerned
Any Luxembourg creditor, natural or legal person, who has legal claim over a debt from a person or company (called debtor) residing abroad and whose debt remains unpaid, may initiate recovery proceedings before the Luxembourg courts even if the debtor's place of residence is located on the territory of another EU Member State.
Any foreign creditor, natural or legal person, who has legal claim over a debt from a debtor residing in Luxembourg and whose debt is unpaid, may initiate recovery proceedings against the debtor.
Given that the creditor and the debtor reside in 2 different Member States, it is called a cross-border dispute.
How to proceed
If the debtor refuses to comply and settle the debt in spite of the creditor's reminders through visits, phone calls, letters or dunning letters, the creditor can send a formal demand to the debtor as a last resort before initiating legal proceedings.
The formal demand is a written letter by which the creditor expresses his intention to demand the payment of the service fees due and, in case of default, to draw the legal consequences. Noting the delay in payment, the formal demand requires the debtor to settle the debt with or without delay on pain of sanctions (initiation of judicial proceedings for the recovery of debt).
The formal demand is made by a bailiff or through registered letter with acknowledgement of receipt, and is notified to the debtor directly.
If the debt is guaranteed by a surety, the formal demand also has to be addressed to the person (natural or legal) who acts as surety.
If the formal demand has no effect and the debtor still refuses to settle the debt, the creditor can initiate legal proceedings to recover the debt.
Cross-border small claims procedure
Any creditor seeking to recover a debt of less than EUR 5.000 (before expenses and interest at the moment of the claim) from a debtor residing abroad (European Union except Denmark) must submit a duly completed small claims procedure (form A) to the competent court with jurisdiction.
If the Luxembourg creditor is confronted with a foreign debtor, the claim should be submitted to the court magistrate (juge de paix).
The claim must be accompanied by all supporting documents. It must include the following information:
- names and addresses of the court, the creditor and the debtor;
- nature of the dispute and amount claimed (including expenses and interest);
- indication of the cross-border nature.
If the claim is incomplete, the court will ask the creditor to complete/rectify it (form B).
If the claim is complete, the court will forward the following documents to the debtor within 14 days:
- an answer form (form C);
- a copy of the claim;
- the supporting documents where applicable.
The debtor has 30 days from the date of notification of the form to comment.
Within 14 days of receipt of the debtor's reply, the competent court transmits a copy of the reply to the creditor.
The court ruling must be issued within 30 days. This period can be longer if the court requests additional evidence or information, or summons the parties to a hearing, or if the debtor files a counterclaim against the creditor.
In this case, the court must render its decision within 30 days from the receipt of the additional information or from the hearing.
If the parties have not responded within the prescribed time, the court will proceed and render a decision.
At the creditor's request, the court may issue a certificate with the court decision, which can be used as a European enforcement order (form D).
The decision is recognised and enforced in the Member State of the debtor and cannot be reconsidered in its substance in the Member State where it is enforced or where the debtor resides respectively. It will be enforced even if the defendant lodges an appeal.
The creditor enforces the decision through a bailiff by presenting him with a certified true copy of the decision or of the certificate with the court decision.
Where necessary, the creditor must have the certificate translated by a certified translator into the official language of the Member State in which the decision is enforced.
This procedure does not apply to fiscal, customs or administrative matters, nor to the liability of the State.
Also excluded are:
- the status and capacity of natural persons;
- matrimonial regimes, maintenance payments, wills and inheritance matters;
- bankruptcies, legal settlements and similar procedures;
- social security;
- labour law;
- the lease of buildings (except procedures concerning monetary claims);
- the invasion of privacy and violations of the rights inherent to the human being, including libel.
The European Consumer Centre Luxembourg can be contacted in case of questions about the European small claims procedure.
Other cross-border claims exceeding EUR 5.000
Any creditor seeking to recover a debt of more than EUR 5.000 (before expenses and interest at the moment of the claim) from a debtor residing abroad (European Union except Denmark) must submit an application for a European order for payment (form A) to the competent courts with jurisdiction (it generally depends on the Member State in which the defendant resides, on the place of the dispute, or on possible contractual provisions, cf. form).
In Luxembourg, the court magistrate (juge de paix) is competent for disputes of less than EUR 10,000 (excluding expenses and interests).
For an amount higher than EUR 10,000, the creditor must turn to the president of the district court (président du Tribunal d'arrondissement).
The application must be accompanied by all supporting documents. It must include the following information:
- name and address of the concerned parties;
- name and address of the court with jurisdiction the matter has been referred to;
- value of the dispute (including costs, interest and possible penalties);
- cause of the legal action and description of the circumstances put forward to establish the debt, as well as the items of proof;
- indication of the cross-border nature of the dispute.
The court seised will examine the claim and:
- if part of the information is missing, it will ask for the claim to be completed or rectified (form B);
- if part of the required conditions are not fulfilled, it will propose to modify the claim (form C). In this case, the creditor may accept or refuse this proposal and submit his decision by returning the form C within the deadline set by the competent court;
- if the claim appears to be unfounded or inadmissible, the court will inform the creditor of the reasons for the dismissal (form D).
If the conditions for the submission of the order for payment are met, the court issues the European order for payment promptly (generally within 30 days from the date the claim was submitted). It is issued based solely on the information provided by the creditor and not verified by the court.
The debtor has 30 days to file an objection with the court that issued the order for payment (form F). In the event of opposition by the debtor, the procedure is continued by the courts with jurisdiction in the Member State of origin according to national proceedings, unless the creditor decides to abandon the procedure.
If no objection is filed, the order for payment is enforced in the Member State of the debtor without the need for an enforcement order. It is recognised legally and enforced under the procedural law of the executing Member State.
The creditor must then turn to a bailiff to enforce the order by presenting him with a certified copy of the decision (translated, where necessary, into the official language(s) of the executing Member State by a certified translator).
This procedure does not apply to fiscal, customs or administrative matters, nor to the liability of the State for acts or omissions committed in the exercise of public power.
Also excluded are:
- matrimonial regimes;
- bankruptcies, legal settlements and similar procedures;
- social security;
- debts generated by non-contractual obligations, unless they were agreed upon or acknowledged by the parties or they concern liquid debt stemming from the joint property of an asset.
Enforcing an order for payment issued in Luxembourg in another Member State
If the debtor moves to another EU Member State (except Denmark), the procedure initiated in Luxembourg does not have to be started again under a new court with jurisdiction.
The creditor can request a European enforcement order certificate from the judge who issued the original order for payment.
Similarly, a creditor who knows that the debtor resides in another Member State at the time the claim is submitted may immediately request to have the order issued as a European enforcement order.
The decision is then enforceable in every EU Member State (except Denmark).
The procedure of the European enforcement order can only be applied if the debtor's domicile or address of residence are known.
Recovering debt in Germany
In Germany, the Mahnverfahren procedure is not free of charge, and the costs depend on the amount concerned.
This procedure does not require the intervention of a lawyer.
The Luxembourg creditor must submit an apply for an order for payment (Antrag auf Erlass eines Mahnbescheids) to the Court of First Instance (Amtsgericht) in Berlin-Wedding.
The applicant must specify whether he intends to take the claim to court in case the debtor should dispute the claim.
If the application seems well-founded, the court addresses a payment order (Mahnbescheid) to the debtor who has 15 days to:
- either settle the debt in its totality and the case is closed;
- or not pay anything or only part of the debt and make an objection (Widerspruch) in order for the German tribunal to examine the case.
The Court of First Instance informs the creditor about the debtor's decision.
If the debtor fails to come forward or only pays part of the amount without disputing the claim within 2 weeks following the notification, the creditor may request the court, within 6 months of the notification (following the 2 week deadline), to enforce the order (Antrag auf Erlass des Vollstreckungsbescheids).
The creditor can immediately request the court to issue a warrant of execution (Vollstreckungsbescheid) to the competent court bailiff (Gerichtsvollzieher - in Germany, the Court bailiff has the statute of a civil servant).
The clerk notifies the warrant of execution to the debtor who can file an appeal (Einspruch) against the warrant with the competent Court of First Instance (Amtsgericht) who has jurisdiction.
The court informs the creditor in the event of an appeal filed by the debtor.
The judge will then decide on the merits. If he recognizes the debt, the order is enforced and the creditor can request the court to issue the warrant of execution to the court bailiff.
Recovering debt in France
In case of a cross-border dispute with a debtor who resides in France, the creditor can resort to the order for payment procedure if:
- the debt owed is the result of a contract or a legal obligation and its amount is determined;
- the debt is established by an invoice, a bill, a promissory note or an IOU (recognition of debt).
This procedure does not require the intervention of a lawyer.
The competent court is generally that of the debtor's domicile. These include:
- the local court (tribunal de proximité) for civil disputes (personal or movable action / action personnelle ou immobilière) over less than EUR 10.000;
- the court of first instance (tribunal de grande instance) for civil claims exceeding EUR 10,000;
- the trial court (tribunal de commerce) for commercial disputes, whatever the amount involved. In this case the procedure is subject to a fee. Court fees are fixed at EUR 37,07.
The creditor can submit a request for an order for payment to the competent court. This claim may be submitted on plain paper, but it is strongly recommended to use the following pre-established forms:
- a declaration to the clerk (déclaration au greffe) of the district court for civil disputes of less than or equal to EUR 10,000;
- a declaration to the clerk of court of first instance for civil disputes over EUR 10,000;
- a declaration to the clerk of the trial court for commercial disputes.
The claim must contain the contact details of the debtor and the creditor, as well as information on the amount and the reason of the dispute. It must be completed by supporting documents like invoices, sales contracts and detailed accounts, etc.
If the claim appears to be justified, the tribunal issues an order for payment.
The creditor must turn to a bailiff who notifies the order and a certified copy of the claim to the debtor within 6 months.
The debtor must, within one month following the notification of the order:
- either pay the entire amount of the debt to close the case;
- or lodge an objection by submitting a simple declaration to the clerk against receipt or by registered letter, in order to have the French courts with jurisdiction examine the case (in this case, the debtor does not pay or only pays a part).
If the debtor has not filed an objection within a month following the notification, the creditor has one month after the expiry of the objection period to request an enforceable order for payment from the tribunal.
Once the order is enforceable, it has all the effects of an adversarial trial and cannot be disputed.
The creditor must turn to a bailiff to enforce the order.
Specific procedure for claims of less than EUR 4,000
For receivables lower than EUR 4,000 (including interest) there is a simplified recovery procedure by bailiff.
This procedure, which is subject to a fee, can be initiated directly via the small claims processing platform.
The bailiff sends the debtor a registered letter with acknowledgement of receipt inviting him to participate in the procedure. The debtor has one month to respond.
The bailiff then determines the outcome of the procedure:
- either because of the debtor's refusal to participate, or;
- after expiry of the one month period, or;
- or by the conclusion of an agreement between the debtor and the creditor on the amount payable and terms of payment.
In case of agreement, the bailiff issues a writ of execution and payments can take place.
In case of refusal of the procedure by the debtor (either trough explicit refusal or after a month without response) the creditor must seize the judge via the order for payment procedure.
The costs of this procedure are all borne by the creditor.