Questions and answers concerning the cross-border collection of debts in Portugal
by Jalles Advogados, Lissabon, Portugal
1."Does your country recognize judgments rendered by foreign courts, and does it permit the enforcement of such judgments?"
Our legal system foresees in its Civil Procedure Code that no foreign judgment can obtain its effectiveness without beeing before reviewed and recognized by a Portuguese Court.
This proceeding ends normally permitting the enforcement of the foreign decision. One of the inconvenients of this proceeding is the debtors' notification of the decision which makes him aware that one of his debtors is trying to collect the debt, and because of the time needed by the Portuguese courts to take decisions, this notification permitts him to alienate his assets.
Another possibility is to try the enforcement through the proceeding foreseen at the Brusseler Convention from 27 September 1968 concerning the enforcement of decisions in civil and commercial matters. In this case it is necessary to lodge a request to obtain the enforcement from this decision, the so called "exequatur", by the relevant Court of First Instance. With the "exequatur", it is then possible to introduce the enforcement with the debtor beeing not notified of this procedure.
2. "How does the creditor in portugal have to pursue the exequatur proceedings? Which documents does the creditor have to submit?"
Our Civil Procedure Code foresees two different proceedings:
The first one is a declarative action. Through this action the creditor aims to obtain from the court a decision ensuring that the debtor owns him a certain amount of money. The creditor has to proove himself, using for example invoices, that he has sold the goods to the debtor. The debtor is afterwards notified of this decision, and it is possible for him to appeal under certain circumstances. If the debtor does not appeal, it is possible to request immediately the enforcement of this decision.
The second proceeding is the enforcement itself. Our legal system recognizes four types of documents which can be used as enforcement documents, namely the decision from the previous proceeding, public documents, which must be seeled by a notary, private documents which consist in a monetary obligation signed by the debtor and other documents which are recognized by law as documents allowing the enforcement.
Foreign documents can be enforced if they have the Apostille of the Hague Convention.
3. "How high are court costs and attorney's fees for principal proceedings and enforcement proceedings in your country."
As far as attorney's fees are concerned the Portugueses Bar does not allow neither the rule "no cuore no pay" nor the "quote litis" system. For principal proceedings it depends on the necessity to bring the case to Court or not. In respect to the court' fees and without taking into consideration any incident in the proceeding, it depends just from the amount envolved.
Regarding the enforcement proceeding and in respect with attorney's fees, it also depends on the complexity of the case.
4. "Who is charged with the attorney's fees and court costs in principal proceedings? Is the party that loses oblieged to pay the costs?"
The plaintiff is always obliged to pay the initial court costs. If the defendant is condemned in the proceeding he will be charged with the final costs and the plaintiff is reimbursed of the initial costs paid. If there is no winner both will be charged in the proportion. The loosing party can see his assets enforced if the costs are not paid.
5. "Who is charged with the enforcement costs?"
It is more or less the same as the a.m. procedure concerning the principal one.
6. "How long do the principal proceedings take?"
This kind of proceedings take from six months to one year to be decided.
7. "Is there any possibility for summary proceedings to collect debts?"
There is since 1998 a summary proceeding to collect debts, the so called "Injuncao" (Injunction). This proceeding starts with a request to the Court's Registrar requiring the debtor to pay. In the majority of cases the creditor has to submit documents, such as invoices. If the debtor does not contest this request, the Court's Secretary himself allows the immediat enforcement. That takes about two to three months. On the contrary, in the case the debtor does contest the request it must be submitted for the apreciation of the judge and it can take about one year to be judged. The amount that can be involved, shall be always equal or below PTE 750.000,- (= EUROS 3.740,90).
8. "How long do recognition/exequatur proceedings take?"
It depends always from the relevant Court. If the recognition/exequatur has to be lodges in Lisbon it will take certainly more time then in other Courts of the country. In general it takes about one year, perhaps a few months less. If the Brusseler Convention cannot be applied to the case and the request must be lodged au the Court of Appeal the prodeeding can take about one year.
9. "Which kind of enforcement methods exist? Which kind of enforcement procedure should be given preference?"
The enforcement can be requested to achieve one of three results: the payement of certain pecunary obligation, the delievery of a certain asset, or the rendering of a certain fact. In respect to the methods there are no more as the described above. We can use the proceeding as foreseen in the Civil Procedure Code, or the so called injunction, but, this last one only for debts under the amount of PTE 750.000,- (=EUROS 3.740,90).
It is always possible to lodge one request with just one invoice, which means if the debt has the amount of PTE 7.500.000,- (=EUROS 37.409,-) we can introduce 10 requests for injunction.
10."How long do the enforcement proceedings take?"
The enforcement proceedings can also take some time. In Portugal there is a problem regarding the registration of firms. As a matter of fact, although they are obliged to have a registered office firms do not have normally their situation up to dated, which means that they may have a certain registered office and not performing any activity there. In this case it does occur the dificulty to notify the firm's legal representative. But there are other methods, such as the notification of the firms legal representative at his private home. Also the assets seizured must be done by a court's representative, that can also take several months. Afterwards assets shall be sold in a public auction. In reference to the attachment of bank accounts we still have a very stricted secrecy refering to banks although it is always possible to request to the Court through the Bank of Portugal the attachment of all bank acounts of the debtor in all banks.
11. "What can the creditor do if enforcement remains fruitless?"
If the debtor is a company it can try to attach the assets of the firm's legal representative, but this method can also remain fruitless. If the debtor is a private person he can try for example to attach a part of it's salary, but in general there is nothing special he can do.
12. "What is to do in case of the debtor's bankrupty?"
In case of the debor's bankrupty the creditor shall claim his credits. There are two distinct proceedings concerning bankrupty.
Through the first one the creditors try to arrange through court the recovery of the undertaking. Normally this is the first step to be taken. If the recovery is the measure to be taken, all enforcements stop at once. It is geven to the company a certain period of time to try to recover ist finantial situation. Normally creditors agree on a plan of payment of the debt in installments, with the forgiveness of the interests and part of the principal debt. If during this period of time the company so not pay according to this plan, creditors can claim the company's bancrupty.
The other proceeding is to go immediately for claiming bancrupty if the requirements are there.
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