Musulin & Associates

Debt Collection Lawyers Croatia

It can often be heard that non-payment is one of the main business risks because it affects the liquidity of a creditor and impairs his ability to pay others. This means that fast and efficient collection of overdue debt is necessary for business of an individual company and economic system as a whole.

If you have cooperated with a company from Croatia and that cooperation (e.g. provision of services, sale of goods) resulted in an unpaid invoice, overdue debt or claim, such a due invoice, debt, claim can be collected, i.e. enforced in Croatia.

First, from a legal point of view, it is important to know whether you/your company comes / are based/domiciled in the European Union or outside the European Union.

A) European payment order

If your company comes from the European Union, at your disposal with regard to civil and commercial matters is the institute of European payment order, if the debt exceeds a certain amount.

The basic purpose of European payment order is to simplify, speed up costs in cross-border cases. It is important to note that Regulation 1896/2006 (which regulates European payment order) does not replace or harmonize the existing mechanisms for the collection of uncontested claims in accordance with national law, but only emphasizes the additional, effective possibility for the creditor to collect unpaid debt.

The European payment order procedure itself is based on the use of standard forms in communication between the court and the parties. The form in this regard should contain as detailed a list of evidence as possible. In practice the list of evidences are: unpaid invoice, written agreement, bill of lading, etc.

Based on the information provided in the application form, the competent Commercial Court in Zagreb should examine the application, including the issue of jurisdiction and a description of the evidence. In this way, the prima facie court may examine the merits of the claim or reject manifestly unfounded claims or inadmissible claims. If the request is inadmissible or the claim is obviously unfounded, the court will invite the plaintiff to supplement or correct the request within the appropriate circumstances, while the court reserves the discretion to extend the deadline.

When all the conditions are met, the Commercial court in Zagreb will issue a European payment order on the standard form, as soon as possible (usually within 30 days of the request).

The European order for payment may be challenged by submitting an objection. The deadline for the objection is 30 days from the delivery of the European payment order to the debtor.

The objection submitted shall suspend the European payment order procedure and the proceedings shall continue before the competent court as litigation.

The court of origin declares without delay the enforceability of the European payment order, if no objection has been submitted. Enforceable European payment represents an enforcement document on the basis of which, for example, debt can be collected from the debtor's bank account in Croatia, enforcement can be initiated on the real estate owned by the debtor, etc.

In terms of costs, the European payment order process follows local Croatian rules regarding court fees, attorney costs, etc. The amount of court fees is prescribed by the Regulation on Tariff on Court Fees, while attorneys fees are prescribed by the Tariff for Lawyers' Fees and Cost Compensation. Finally, it is important to point out that the costs are borne by the debtor, i.e. the party who loses the dispute.

B) Regular enforcement

If your company is outside the European Union, EU institutes cannot be used in that case, i.e. this means that regular procedure in Croatia shall be initiated.

The procedure for the collection of outstanding debt in the Republic of Croatia is initiated by a creditor against the debtor before the competent court. If you have an invoice - a credible document, with all data prescribed by the Enforcement Act, the procedure shall be initiated with an enforcement request. This request shall be submitted to the competent court in Croatia, which is determined depending on the seat of the debtor.

On the other side, if the invoice - credible document, does not have all the data prescribed by the Enforcement Act (mostly common in practice), the procedure is initiated by a lawsuit for payment. Same as in the previous case, the lawsuit shall be submitted to the competent court in Croatia, having in mind the headquarters of the debtor.

In both cases, when the proceedings before the court result in a final court decision, with this final court decision debt can be collected from the debtor's bank account in Croatia, enforcement can be initiated on the real estate owned by the debtor and other assets.

Regarding costs, the same regulation that applies to the European payment order also applies to these proceedings, which means that the amounts of attorney's fees and court fees are prescribed and regulated by the Tariff for Lawyers' Fees and Cost Compensation and the Tariff on Court Fees.

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