Recognition and enforcement of foreign and Ukrainian court decisions on debt collection

If the debtor refuses to voluntarily repay the debt, the only way to get your money back is to make a court claim for money.

Within the framework of international commercial relations, this means that the creditor must apply to court at the location of the debtor (i.e., another country with its own legal system).

However, the parties often agree on special jurisdiction for settling possible future disputes in another country where the amount of court fees is less and the legal system is clearer.

In this publication we will talk about how a creditor can recover a debt in such situations.

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What significance does the jurisdiction of debt collection judgements have?

As a general rule, a court decision has legal force only within the state of the decision-making court. Therefore, if the debtor has no tangible assets in this jurisdiction, a positive decision will not give the expected result, because there will be nothing to pay the debt.

In order to eliminate such situations, the international community has created the procedure of legalization of foreign court judgments on the territory of another state (in this case we are talking about Ukraine).

Such rules are established both by international treaties (e.g. 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, bilateral treaties on legal assistance) and by domestic legislation (e.g. in Ukraine these are the provisions of the Civil Procedure Code).

This means that in case of an existing international agreement, states mutually recognize (i.e., extend the legal force of a foreign judgment to their territory) and enforce court judgments (use enforcement means similar to the implementation of decisions of national courts). It should be said that Ukraine has such agreements with most states of the world, regulated by the relevant treaties between them on legal assistance.

So, in plain language, when concluding an agreement with an international contractor and agreeing on the resolution of controversial points under the agreement by the court of another country, make sure that Ukraine has agreements with this country on mutual recognition of court judgments.

During preliminary consultation, our lawyers will assess your chances not only to collect the debt from the debtor, but also the procedural peculiarities of the execution of the court judgment.

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What is the procedure for  legalizing a debt collection judgment?

If to simplify the procedure of legalization of the court judgments as much as possible, it comes down to the fact that the creditor sends a claim to a foreign counterpart in its state, and after a positive decision is made, sends it to the court of a foreign state at the debtor’s location.

In addition to the court judgment, the creditor must also send the supporting documents:

  • a motion to enforce this judgment;
  • documents confirming the debtor’s proper notification of the summons, etc.

In addition, the creditor must pay a mandatory fee for the consideration of his/her motion to the local court.

However, we described the procedure only in a few words. In practice, the legalization process can be long and burdensome, both in terms of time and money, in case of errors in the preparation of documents.

This is due to the fact that the procedure involves knowledge and understanding of the laws of the two countries governing the procedure of recognition of foreign court judgments. In addition, the procedure of recognition of the judgment is not automatic, each court examines in detail the judgment of its foreign colleagues for defects.

Pravova Dopomoga Law Firm has extensive experience in supporting debt collection from foreign contractors. We cooperate with foreign law companies and have lawyers who are not only focused on the litigation within Ukraine, but also on the nuances of further legalization of the Ukrainian court judgment on the territory of the debtor.

Do you need assistance in the process of international debt collection and protection of your rights? Don’t hesitate to contact us! We can prepare the right basis for further legalization, which will allow you to really collect the debt in the shortest possible time.

Find more information about the process and the price of international debt collection here.

 


Publication date: 02/10/2020

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