European Guide to Debt Collection
This guide provides an overview of recovering proceedings for claims across Europe.
Notwithstanding the EU initiatives to facilitate the recovery of a monetary claim in another EU Member State, experience teaches that calling upon counsel from the jurisdiction where the debtor resides is appropriate, if not required.
Local counsel shall be able to assess the creditworthiness of the debtor and are best placed to assess whether conservatory measures can be obtained to secure the recovery of the claim. Failing to do so risks to render the time, effort and money for recovering a claim a bad business decision.
After an insight into the two relevant EU Regulations, this guides offers an overview per EU Member State, on the principles of asset tracing, conservatory measures, recovery proceedings for undisputed claims and enforcement measures.
1 What kind of information on the assets is publicly available? How is it obtained?
There are no general asset registers or databases that are publicly available in Luxembourg.
However, for real estate, article 2196 of the Civil Code provides that anyone is entitled to obtain copy of the acts registered at the mortgage registry, or a certificate if there is no such registered acts.
Moreover, for limited liability companies (i.e. société à responsabilité limitée (S. à r. l.)) type companies, the registry of trade and companies mentions who the shareholders are.
A bankruptcy search can also be carried out against any Luxembourg companies through the trade and companies register.
2 What assets can be subject to a conservatory seizure? Are any assets excluded from a conservatory seizure? Does the same apply to an executory seizure?
All types of assets that are not perishable can in principle be subject to a conservatory seizure.
However, tangible assets may be subject to a conservatory seizure only if the cause of action is of a commercial nature (article 550 of the New Code of Civil Procedure).
All types of intangible assets such as bank accounts and shares that are held by third parties can be subject to a conservatory seizure according to a specific procedure (articles 693 to 718 of the New Code of Civil Procedure).
Real estate can also be subject to conservatory seizure (articles 809 to 887 of the New Code of Civil Procedure).
Executory seizure can be performed on all type of assets owned by a debtor. However, certain assets are excluded such as basic furniture owned by the debtor i.e. clothing, tables and chairs, are assets that cannot be seized.
3 What type of claims can be secured with a conservatory seizure?
In principle all type of claims that are certain, of a fixed amount and due, can be secured with a conservatory seizure.
Tangible assets may nevertheless be secured even if the claim is as of the date of the seizure, not yet of a fixed amount and if the claim “appears to be certain”.
A future claim that is not due cannot be secured with a conservatory seizure.
4 What about the urgency requirement?
Urgency is specifically required by article 550 of the New Code of Civil Procedure by any means. The claimant must also prove that without the seizure there is a risk that the tangible assets will be misappropriated by the debtor. In other words, the claimant must prove that he may lose the possibility to obtain payment (or corresponding value) for his claim.
5 What is the procedure to obtain a seizure? What is the typical time frame?
A unilateral petition, setting out the claim and including all documentary evidence, must be filed with the competent Court.
The competent Court takes an order (“ordonnance”) in the following days which will either authorize or refuse the seizure.
Such order must be notified by a bailiff to the debtor or the third party seizure (such as the bank) in order to execute the seizure.
An appeal can eventually be introduced by the debtor to oppose to the seizure order, or by the claimant if the Court refuses to order the seizure (however this is rather unusual).
The seizure must then be validated through a procedure on the merits under which the debtor will be able to bring his arguments to challenge the seizure. The frozen assets can only be sold or transferred to the claimant once there is an enforceable judgment on the merits against the debtor.
It should be noted that because of the banking secrecy, it is not possible to know the amounts seized on a bank account prior to the enforcement of the judgment on the merits, i.e. at the end of the procedure.
Furthermore, while in principle all the sums that could be held in bank accounts are seized, it is possible for the debtor to request the seizure to be limited to the claim amount.
6 Are there any language requirements?
The procedure including the petition must be in French language. However, documentary evidence can be in German, Luxembourgish, or in English language. Documentation in other languages are subject to an official translation.
7 Is it required to start proceedings on the merits?
Yes, proceedings on the merits to obtain a judgment that is enforceable must be initiated in order to be entitled to sell the assets or to request transfer of the sums seized on a bank account.
8 How is a payment order enforced?
An executory seizure requires an enforceable title, such as a judgment on the merits. Under the EU Regulation No 1215/2012, a judgment from a Member State of the EU is enforceable within the EU without any exequatur proceeding being required.
The executory seizure is performed by a bailiff. Before proceeding with the executory seizure, the bailiff will serve a final notice unto the debtor to pay within 24 or 48 hours, failing to which the bailiff will proceed with the seizure.
Recovery of uncontested claims
9 Is it possible in your jurisdiction to recover uncontested claims and to obtain an enforceable title without a court intervention?
It is possible under Luxembourg law to obtain a payment order for uncontested claims.
If the amount of the claim is 10.000 Eur or less, the claimant must address a unilateral request of payment to the competent court, with supporting evidence (invoice and formal notice). The Court will then issue a payment order. If the debtor does not pay the requested amount, nor oppose this order within 15 days, the claimant can request a title that can be enforced by a bailiff. If the debtor opposes to the payment order, the Court will schedule a Court hearing and the case will be pleaded orally. The Court will then render a decision on the merits.
There is a similar procedure for claims above 10.000 Eur which however does not allow the claimant to obtain a judgment on the merits but only an interim order.