4.1. General information
If the amicable phase fails to bring results, we will send a letter advising the debtor of our decision to start legal proceedings. Our legal team will decide the best procedure to be undertaken, depending on the documents available for the case and the position of the debtor (e.g. acknowledgements of debt, disputes, litigation).
4.2. Legal systems
For disputes between traders or businesses, the commercial court (“Tribunal de Commerce”) is used. The judges are business people elected by their peers, and evidence may be adduced by any appropriate means. For claim amounts greater than EUR 4,000, it’s possible to appeal the decision of the court of first instance.
4.3. Required documents
In order to apply a legal dunning procedure, we need copies of the contracts, invoices, and a clear statement of account indicating the payments and credit notes that have been made for the outstanding invoices.
In the case of a regular lawsuit procedure, copies of the complete contractual documentation should be available, starting with the contracts, orders, confirmations, delivery notes, and invoices. Every part of the trading relationship between you and your debtor should be provable by documentation.
4.4. Legal dunning procedures
This type of procedure is used when the debt amount is fairly modest and not disputed. It allows us to obtain an injunction against the debtor (“injonction de payer”) without the presence of the debtor before the court. It’s a very simple, quick, and inexpensive procedure that doesn't require a lawyer, unless the debtor disputes the debt after the bailiff’s notification.
It also allows us to obtain an interim order (“référé provision”) with or without the presence of the debtor before the court. If the debtor is present and disputes the case, the judge may decide to close the case and ask you to start a common procedure (“assignation au fond”). It’s a very quick procedure but does require a lawyer to represent you in court.
A regular lawsuit procedure is initiated directly after the amicable collections has failed due to dispute by the debtor, or because the debtor has ignored the payment demands.
The main goals of legal action (“assignation au fond”) are to determine the existence and the amount of the debt, and to define the relationship between you and your debtor. It will also decide whether the outstanding amount is owed, and whether the debtor must pay it immediately or with a payment plan. It’s usual practice to issue a pre-procedure notice.
Both the plaintiff and defendant exchange opinions and proof by letter until the judge is happy that all the relevant information needed to come to a decision has been received. A hearing will then be scheduled and both parties must be present. Postponing hearings is a common habit when the defendant’s lawyer asks for it. After multiple hearings (with no time limits), the judge sets a date to publish the final judgment. Both parties will be informed about the outcome in writing by the relevant court.
The plaintiff or defendant can appeal the judgment if they’re unhappy with it. A party can appeal a judgment within one month from the notification of the original judgment. The judges at the court of appeal will then re-hear the case within two years.
4.7. Expected time frame
A simple commercial case will take approximately eight to 10 months to be heard, which can be doubled for complex commercial cases, technical disputes, or in the case of appeals.
Some jurisdictions, where the judicial systems have been rated below the average performance in France, may take longer to judge cases.
The expected time frame for an appeal is almost two years.
4.8. Costs and interest in the legal phase
Costs of civil law procedures are determined by court fees and lawyers’ fees, which are fixed by each lawyer. As the costs don’t depend on the outstanding principal amount but on the complexity of the case, we have negotiated preferential tariffs with our lawyer network.
Cost estimations will be provided on a case-by-case basis should legal action become necessary. The cost of a legal dunning procedure is only 30% of a full court procedure. Next to that, there are two kinds of collections costs in legal cases. The first kind is the charged-back costs that the debtor has to pay, which are often liquidated by the judge, and, in most cases, the costs derive from the judicial procedure and the notifications’ costs. The second kind is the costs that can’t be charged back to the debtor, such as lawyers’ fees.
Each party has to bear their own lawyers’ fees, but the winning party could ask the judge to obtain an indemnity to compensate for their expenses. In practice, the amount approved by the court constitutes only a minor share of the expenses, and this indemnity is charged to the debtor. In addition, costs of experts might also arise.
(End of chapter 4 - Legal collections)