Problematic aspects of debt collection on base of decision foreign court

Again, about the legalization of a foreign court decision in Ukraine. Today – about one of the problems that are systematically faced by companies of Poland who have sold a product or provided a service to a Ukrainian company.

The information will be useful to those who have already encountered a problem and will be informatively interesting for those who are planning to cooperate with Ukrainian companies. Knowledge will help the latter not to make the mistake of many …

So, the essence of the problem is “in the details”

A Polish client signs a contract with a Ukrainian partner. The document provides for the jurisdiction of the dispute resolution in court at the location of the seller, that is, in Poland.

The counterparty violates the contract, a debt arises. The pre-trial settlement of the problem does not give a result. A Pole goes to a Polish court and receives a “zaoczny wyrok” from a court under a simplified procedure.

Then he needs to legalize this decision on the territory of Ukraine in order to submit it for compulsory execution. At this stage, the fun begins!!!

“Absentee court decisions” are accepted without notifying the defendant about the court session and without summoning him to it, and the procedure for legalizing such a “decision” in Ukraine provides for the submission to the court of a document confirming the notice of the defendant about the court hearing. This point is regulated by Art. 466 of the Code of Civil Procedure, establishing the requirements for an application for permission to enforce a court decision from another country”.

Legislative basis of the issue in detail

Article 466 of the CPCU establishes that if international treaties, the consent to which is provided by the Supreme Council, does not define the list of documentation that should be attached to the application, or there is no such agreement, the following documents should be attached to it:

• a duly certified copy of the “foreign” court decision on the enforcement of which the request is made.
• evidence on the entry into force of the decision of a foreign court, if this information is not spelled out in the decision itself.
• a document certifying that the person against whom the decision of the foreign court was made and who did not take part in the trial was duly notified of the date, time and place of the hearing.
• a document determining in what part or from what time the decision of a foreign court is subject to execution, if it has already been executed.
• a document confirming the authority of the representative, if such is involved in the case.
• translation of these documents into Ukrainian or into a language stipulated by international treaties of Ukraine.

Importantly! The court leaves the application without consideration and returns it, together with the documentation, to the person who submitted it, if:

• the documents are not completed in accordance with the requirements specified above;
• not all of the listed documents have been added to the application.

Article 51 of the Treaty between Ukraine and the Republic of Poland “On Legal Assistance and Legal Relations in Civil and Criminal Cases” establishes that an application for recognition and enforcement of a decision can be submitted directly to the appropriate court of that Contracting Party in whose territory this decision is to be recognized and enforced , or also through the court that considered the case initially.

You must attach to it:

• 1) The decision or its certified copy, together with confirmation that it has entered into legal force and is subject to execution.
• 2) A document confirming that the party in respect of which the decision was made and who did not take part in the consideration of the case received a summons to the court session in a proper and timely manner, in accordance with the legislation of the Contracting Party in whose territory the decision was made; and in the case of limited procedural ability of the party – a documentary fact of duly formalized representation.
• 3) Certified translation of the application, as well as the documents specified in subparagraphs 1-2, into the language of the Contracting Party in the territory where the decision is to be recognized and enforced.

Deadlock situation? In fact, yes!

It seems that there are legal norms regulating this problematic situation! In practice, the legalization of the decision of the Polish court in Ukraine in this situation is practically impossible, since the clients do not have in their hands evidence of notifying the defendants. This point is not spelled out by law, therefore, it is not mandatory.

It turns out that the decision of the Polish court that has entered into force is absolutely unviable for collecting debt abroad, since Polish lawyers, when drawing up contracts, do not take into account the requirements of an international agreement with the country in which the debtor is locating.

For a Ukrainian debtor, the such situation is a wonderful opportunity to legally avoid paying bills or fulfilling obligations.

Recommendations of Ukrainian lawyers

When concluding foreign economic contracts, Polish clients should engage lawyers who are competent in international debt collection before signing the contracts. Lawyers who are really experienced in this matter will immediately point out this and other weak points!

If the contract is signed and the case has gone to court, then before filing a claim, you should also talk to a lawyer practicing foreclosure, who will provide legal proceedings, taking into account the analyzed nuance.