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Dealing with Overseas Debtors – Advice for UK Business Owners – Part Two

Last week we had some advice for business owners here in the UK on how to deal with non-paying customers from overseas.  Whilst the internet has brought us some great opportunities to increase trade and take advantage of a global market, it also brings with it some challenges as UK businesses deal with customers and clients in different countries, all of which have different legislation governing the collection of debts. 

As promised, today we’re going to take a closer look at the four categories of overseas debt:

  • Countries in which the European Enforcement Order (EEO) Regulation applies
  • Countries which have signed the Brussels Regulation or the Lugano Convention
  • Countries with which the UK has bilateral enforcement conventions in place
  • Countries for which none of the above apply (particularly the USA, China and Japan

EEO Regulation

This is the preferred option when it comes to collecting money owed to you by an overseas customer as it allows for simple, yet rapid enforcement within the European Union.  This can be used for money judgements obtained for uncontested claims and can be used if the debtor:

  • Agreed to the debt, and this has been approved by the originating court in a consent order
  • Did not defend the claim, resulting in a default judgement
  • Did not defend the claim in court when the claim was tried

One of the main advantages of this option is that the application is made to the originating court and when the EEO certificate is issued, the judgement is treated by court in England and Wales as if it had been delivered by a British court.  This means that the usual methods of enforcement are used, such as applying for a charging order or an attachment of earnings order.

The Brussels Regulation

The Brussels Regulation also applies to all European Union (EU) countries, providing for straightforward procedures for the mutual recognition and enforcement of EU judgements.  This method should only be used within the EU if the EEO Regulation method is not possible - for instance, in cases of a judgement resulting from a contested hearing, or in cases where a non-money judgement needs to be enforced.

The Regulation applies only to court orders or judgements in commercial or civil cases.  The Regulation does not apply to the following:

  • Criminal, insolvency or bankruptcy proceedings
  • Rights in properly arising out of matrimonial relationships, wills and succession
  • Proceedings involving the status or legal capacity of natural persons
  • Arbitration awards, including court orders which give judicial force to an arbitration award

However, the application must be lodged in the enforcing country (England or Wales) and there are a range of documents to be filed, including the judgement (and a certified translation if applicable).  The process is governed by Civil Procedure Rules (these are the rules of civil procedure used by the Court of Appeal, High Court of Justice and County Courts in civil cases in England and Wales).  Provided that the required formalities are fulfilled, the enforcing court (in England or Wales) should then declare the judgement enforceable, though once the judgement is recognised, you will still need to take the usual enforcement steps. 

There are international debt collection agencies that specialise in recovering monies owed to businesses in the UK by overseas customers – this will, obviously, make the whole process a lot easier for most business owners in the UK.

Next week, we’ll be taking a look at the remaining two categories of overseas debt – don’t miss out on the final part of this three part series, follow us on Facebook or Twitter so that you’re notified when it’s published.