The Complexity of Asset Recovery Is Shown By Different Approaches Needed In Common And Civil Law Jurisdictions

This overview is offered to provide a structured analysis of how enforcement measures can be implemented in civil law jurisdictions such as France and common law jurisdictions such as the UK and Germany. Creditors need to adapt their approach given the options provided by local law for recovering a debt and assets.

The conditions for application of interim collection measures differs by jurisdiction. In French civil law, protective interim measures are permitted before a judgment is rendered. Creditors may apply to a specific enforcement judge and the measures depend on the assets involved. A creditor may obtain direct satisfaction by seizing a concerned tangible movable asset and then selling it to apply the proceeds to the debt. The process for requesting interim measures gives French creditors great latitude because the application must demonstrate the existence of the claim and the threat of non-recovery. If the application is successful, the creditor must ensure the bailiff serves notice of the protective measure within 3 months of the court’s order and the creditor must start proceedings to obtain an enforceable judgment on the merits within 1 month of enforcement of the protective measure.

In common law jurisdictions, creditors may also obtain interim measures. Such measures can include injunctions freezing assets and preventing a person from doing something in an attempt to avoid assets from being dissipated. Conditions for obtaining such measures also differ from one country to another. For instance, in Germany, the application for pre-judgment seizure must contain information on the claim, the emergency and the risk of frustration of enforcement, which implies providing strong evidence for the court, principally regarding the financial situation of the debtor. In England, an application must be supported by strong evidence with a claim form, a witness statement and affidavits.

Proceeding with interim collection also requires an understanding of defenses that can be deployed by the debtor. A debtor could claim the conditions for granting the measures were not satisfied from the beginning. For instance, in Germany, a debtor may lodge an appeal against the seizure or interim injunctive order. In France, a judge may discharge the measures or substitute less stringent measures. In any case, if the creditor fails to obtain an enforceable judgment following the protective measure, the creditor may be liable for any damage suffered by the debtor.

A creditor should proceed with caution, considering all of the benefits and consequences. This requires a thorough understanding of the laws of the particular jurisdiction as no single jurisdiction is the same.