You are a Dutch company with a claim against a debtor in Germany. Despite demand letters, the debtor still has not paid. What possibilities are there for collecting a claim in Germany?
In the Netherlands one quickly files a petition for attachment of the debtor’s property. In Germany this only works if there is an urgent serious interest, which is often not the case. An enforceable document is required in order to be able to levy attachment or enforce a claim. There are different types of document, such as judgements, payment orders (‘Vollstreckungsbescheid’) and notarial deeds. Assuming that you did not receive a notarial deed or mortgage security as security for the payment, in this article I will discuss how you can go about obtaining an enforceable document in Germany.
Payment order procedure
The payment order procedure (‘Mahnverfahren’) provides a relatively simple and inexpensive way of conducting proceedings. This procedure is advisable if it can be assumed that the debtor will not raise an objection or if there are doubts about the debtor’s financial situation and the creditor does not wish to incur significant costs.
The Mahnverfahren is a strictly formal procedure in which the creditor does not need to justify its claim. The creditor files a petition (there is a form for this) in which some information concerning the claim must be given. It is important to observe the formal aspects and submit the form to the competent court, otherwise the procedure will not be processed. The court’s receipt of the petition also interrupts the limitation period of the claim. The court does not investigate whether the claim actually exists, but serves the petition on the debtor. After receipt, the debtor can file an opposition to the claim within two weeks. If he does so, the creditor can decide to submit a normal principal procedure (see below) or take no further action. If a principal procedure is filed in response to the opposition, the court fees for the payment order procedure are deducted from the costs of the principal procedure. The creditor does not face higher costs, therefore, but does face a delay.
If the debtor has not filed an opposition within two weeks, the creditor can request a so-called Vollstreckungsbescheid. This Vollstreckungsbescheid is an enforceable document that is legally valid for 30 years. The court will also serve the Vollstreckungsbescheid on the debtor. The debtor has the possibility of filing an opposition within two weeks after receipt. If he does not do so, the creditor has obtained an enforceable document without too much effort.
To give an idea of the court fees of this procedure: if the claim is between EUR 1,200 and EUR 1,500, the court fees are EUR 32.50. For a claim of between EUR 22,000 and EUR 25,000, these fees amount to EUR 155.50 and for a claim of between EUR 110,000 and EUR 125,000 these fees amount to EUR 478.
If the creditor assumes that the debtor will oppose the claim, a payment order procedure only causes delay. In this case a principal procedure should be conducted.
For a principal procedure, a writ of summons (‘Klage’) must be filed with the court. The facts and legal situation on which the claim being demanded is based must be substantiated in this writ of summons. In principle, the writ of summons must be filed by a lawyer if the procedure involves a claim of EUR 5,000 or more. Unlike in the Netherlands, the writ of summons is served on the defendant by the court. The defendant must then notify the court, usually within a period of two weeks, as to whether he will present a defence against the writ of summons. The court then sets a second period, usually of two weeks once again, in which the debtor must file his statement of defence containing a substantive defence with the court. If the defendant does not file his statement of defence within this time period, a judgement in default of appearance can be pronounced against him. The judge will usually set a date for a personal appearance after receipt of the first round of written documents. A second round of written documents may precede the personal appearance. After the personal appearance, further evidence may be admitted or another round of written documents may follow. Or the judge may already pronounce a decision.
To give an idea of the costs of this procedure as well: if the claim is between EUR 1,200 and EUR 1,500, the court fees will be EUR 195. For a claim of between EUR 22,000 and EUR 25,000, these fees amount to EUR 933 and for a claim of between EUR 110,000 and EUR 125,000 these fees amount to EUR 2,868. The lawyer’s fees are in addition to this. The losing party must pay the lawyer’s fees of the winning party. The actual costs may not be claimed however, only the costs permitted by law. An appeal may be filed against a decision.
Just as in the Netherlands, it is advisable to get clarity on the possibility of recovering the debt from the debtor before starting the procedure. This is a good idea in order to avoid incurring costs for a procedure in Germany and later finding out that the decision cannot be enforced because the debtor being unable to pay.