Cost-saving solution to tackle French defaulters
- Wednesday 12 October 2016 |
Being an international oriented company, you are doing business with European companies on a regular basis; among them are French companies. Your business has delivered goods to a French customer recently and in accordance with the business deal, you have sent the 3000 euro invoice to the French company. Although your French customer is pleased with the products, he still hasn’t paid the 3000 euro bill. At a certain moment, the deadline for payment has passed and you have contacted your French debtor. The Frenchman explains that he currently does not have the ability to pay the bill and suggests to pay the bill in terms of six months. What is the best solution for your business in this situation? Do you meet the demands of the French debtor and trust him on his word?
As of March 2016, new French legislation has been enacted which allows creditors to start a procedure which doesn’t involve the court. Providing a more streamlined solution for creditors is the main objective of this regulation. The law applies on uncontested cases in which the total amount does not exceed 4000 euro. Instead of a court case, this procedure is carried out by a bailiff who is able to deliver an executable verdict. Therefore, with the help of a bailiff, the creditor can formalise his agreement with the debtor, and this provides extra certainty. If the debtor defaults again, as the bailiff has already made a an executable verdict, it avoids the need for the creditor to engage in a court procedure.
Pros and cons
According to our French attorney, Anne-Isabelle Cador, this procedure does have some shortcomings. She expects that this procedure will not be adopted frequently. “The bailiff who drafted the verdict cannot execute it. A different bailiff must proceed with enforcement, to ensure that the payment procedure is adhered to”. Another disadvantage is that this procedure cannot be used when the debtor does not respond, which happens regularly with French defaulters.
Nonetheless, French lawyer Anne-Isabelle Cador does admit that in some claims this procedure will be of added value. During uncontested cases in which the debtor cannot immediately resort to payment, a creditor can claim his credit using this procedure, which gives an added level of security. In case the debtor does not comply with the arrangement, the verdict of the bailiff can be executed immediately and there is no need to go to court. In this respect, the costs of debt collection can be reduced.
Do you have a question regarding this topic, or would you like to know what we can do for you? If so, please contact Bierens European Collection Attorneys. You are more than welcome to contact the our French attorneys at Bierens for advice on the best procedure for your dispute.