Cross-border debt recovery: the European order for payment and the alternatives

Your customer is based in Rotterdam, Paris or Madrid and is not paying. Do you then have to litigate in their country, in their language and with a local lawyer? Usually not: with the European order for payment and a few related instruments, you can often act from Belgium.

For cross-border debt recovery, EU law provides instruments that allow you to obtain a title enforceable in virtually the entire Union, and even to have funds frozen in another Member State. This article sets out the options and helps you choose the right route.

Which court has jurisdiction in cross-border debt recovery?

Within the European Union, jurisdiction in civil and commercial matters is determined by the Brussels Ibis Regulation (Regulation No 1215/2012). The basic rule is that you sue the defendant before the courts of the Member State where they are domiciled. In contractual matters, you may also choose the court for the place of performance.

For the sale of goods, this is as a rule the place where the goods were or should have been delivered; for services, the place where they were or should have been provided. If delivery or performance took place in Belgium, you can therefore often bring proceedings in Belgium, even against a foreign customer.

A valid jurisdiction clause in your contract or general terms and conditions can settle this question in advance. Have that clause reviewed: it often determines whether you must litigate in Brussels or abroad. Protective rules do apply to consumers, however: as a rule, a consumer can only be sued in the Member State where they are domiciled.

Enforcing a Belgian judgment in another Member State

A judgment given in Belgium in a civil or commercial matter is enforceable in the other Member States without any prior declaration of enforceability (exequatur). This applies to proceedings instituted on or after 10 January 2015. You do need a certificate from the Belgian court, which must be served on the debtor before the first enforcement measure.

Enforcement itself follows the rules of the Member State where the assets are located, through a local bailiff (huissier de justice / gerechtsdeurwaarder) or enforcement authority. The debtor can only apply for refusal of enforcement on a few limited grounds. More on attachment and enforcing a judgment in Belgium.

The European order for payment

For monetary claims in cross-border cases, there is the European order for payment procedure (Regulation No 1896/2006). It applies in all Member States except Denmark, and there is no upper limit on the amount. A case is cross-border where at least one of the parties is domiciled or habitually resident in a Member State other than that of the court seised.

The claim must be for a specific amount that has fallen due at the time the application is submitted. You file the application with the court that has jurisdiction under the rules of the Brussels Ibis Regulation. If the debtor is a consumer, only the courts of the Member State where they are domiciled have jurisdiction.

The European order for payment is particularly suitable for claims that are not disputed, such as unpaid invoices to which the customer never responded.

How does the procedure work?

The procedure relies on standard forms. You submit your application using Form A, describing the claim and the evidence; as a rule, you do not need to attach the documents themselves.

Once the order has been served, the debtor has 30 days to lodge a statement of opposition using Form F. If they do nothing, the court declares the order enforceable. It is then recognised and enforceable in the other Member States without exequatur.

If the debtor lodges a statement of opposition, the case continues before the competent court in the same Member State, under the European Small Claims Procedure where applicable, or under ordinary national procedure. You may also ask in your application for the proceedings to be terminated in that event.

The European Small Claims Procedure

If your claim does not exceed 5,000 euros, excluding interest and costs, the European Small Claims Procedure (Regulation No 861/2007) is often the fastest route, even where the customer disputes the claim. This procedure is also, as a rule, conducted in writing using forms. A hearing is the exception rather than the rule.

Legal representation is not mandatory, and this procedure does not apply in Denmark either. It results in a judgment that is enforceable in the other Member States without exequatur.

The European Enforcement Order

If you already have a Belgian judgment, a court settlement or an authentic instrument concerning an uncontested claim, you can have it certified as a European Enforcement Order (Regulation No 805/2004). The title can then be enforced directly in the other Member States, except Denmark. Certification is, however, subject to strict conditions.

Since the Brussels Ibis Regulation also makes ordinary judgments enforceable without exequatur, this instrument has lost some of its importance, although it remains useful in certain cases.

Freezing funds in another Member State

If you fear that your debtor will empty their accounts, there is the European Account Preservation Order (Regulation No 655/2014). It allows funds held in a bank account in another Member State to be frozen, even before you have a title. The debtor is not informed in advance, so the element of surprise is preserved.

You must show that there is a real risk that, without this measure, recovery of your claim will be impeded or made substantially more difficult. If you do not yet have a title, you must also satisfy the court that your claim is likely to succeed, and the court will in principle require you to provide security.

This scheme does not apply to Denmark either. More on conservatory attachment in Belgium.

Which route should you choose?

The choice depends on three questions:

1. Is the claim disputed? If not, the European order for payment is often the fastest route.
2. How large is the amount? Up to 5,000 euros, the small claims procedure is an option.
3. Where does the debtor have assets? A title is only worth something if there is something to enforce against.

We assess that solvency before starting proceedings, so that you do not incur costs for an unrecoverable claim. If your debtor is in Belgium and the debt between businesses is undisputed, the IOS procedure for uncontested debts is often the fastest.

Prevention is better than cure: tips for your contracts with foreign customers

• include a clear jurisdiction clause and a choice-of-law clause in your contracts and general terms and conditions, and make sure the customer accepts them;
• state your payment term and the late-payment interest that applies;
• ask new customers for an advance payment or a bank guarantee for larger orders;
• check the identity and registration number of the company in its home country;
• keep proof of delivery and of the acceptance of your invoices;
• do not wait too long: the sooner you act, the greater the chance that assets are still available.

Outside the European Union

Outside the Union, these regulations do not apply. Since Brexit, that is also the case for the United Kingdom. Jurisdiction and the enforcement of judgments then depend on national law and on any international conventions.

For Switzerland, Norway and Iceland, however, the Lugano Convention (2007) provides comparable rules, although a declaration of enforceability is still required there. For other countries, including the United Kingdom, Hague Conventions may play a role. This calls for a separate analysis for each country.

Frequently asked questions

Do I need to instruct a lawyer in my debtor’s country?

For the European procedures, usually not: legal representation is not mandatory and the procedure can often be conducted from Belgium. For actual enforcement abroad, however, a local bailiff or enforcement authority is needed.

In which language is the procedure conducted?

The application is filed in the language of the court seised. The standard forms are available in all official languages of the Union, which keeps translation costs down.

My foreign customer is only now disputing the invoice. What now?

Contested proceedings are then required, possibly the European Small Claims Procedure. See also our article on disputed invoices.

Which limitation period applies to a foreign invoice?

That depends on the law applicable to the contract; within the Union, that law is determined by the Rome I Regulation (Regulation No 593/2008). If Belgian law applies, see our article on the limitation period for invoices.

How Novex Advocaten can help

A foreign debtor who will not pay? We assess which procedure will lead to payment fastest in your case, in English, Dutch, French or Arabic. See also our overview on recovering unpaid invoices.

Call 0484 99 22 72 or email asfour@novexadvocaten.be.