The German & Irish Law on Debt Collection Procedures

GERMAN LAW

1.1. Mahnverfahren

1.1.1 General
The Summary proceedings for recovering a debt or liquidated sum (Mahnverfahren) as detailed in ss 688-703d of the Rules of Civil Procedure (ZPO) consist essentially of two steps: firstly, an application for a Mahnbescheid (Summons) must be made. Should it issue and within two weeks no defence be filed, the court will, on further application, issue an Order for Judgement (Vollstreckungsbescheid). This is the equivalent to a provisionally enforceable Judgement in Default of Appearance (Versäumnisurteil). The debtor can within two weeks of the service upon him of the Order file a Notice of Intention to Defend. Should he not do this, the Order becomes enforceable. As the filing of a Notice of Intention to Defend will result in the judicial examination of the claim, Summary Judgement proceedings are only to be recommended if one can expect from the outset that the debtor will not defend. Should the debtor have indicated from the start an intention and readiness to defend, the taking of proceedings by way of an application for Summary Judgement will only lengthen the judicial decision making procedure.

1.1.2 Conditions for the Issue of a Summons (Mahnbescheid)
The standard form of application for a Summons issued by the Federal Ministry of Justice must be used in order to commence Summary Judgement proceedings (see the formal requirements of ss 688 ff. ZPO). It is worth noting here that there are different standard forms of application for a Summons depending on whether it is to be served within the Federal Republic of Germany or abroad. These standard forms which are available in ordinary stationery shops, and therefore easily available to everyone, must be completed and sent then to the competent court in the area which deals with Summary Judgement proceedings so that the court can then issue the Summons.

1.1.2.1. Admissibility
Not every claim can be brought by way of Summary Judgement proceedings. The sum which is to be claimed must be a liquidated Euro sum. Payment claims to which the German Consumer Credit Statute applies, and in which the commencement or effective interest rate exceeds the discount rate of the German Federal Bank (now the discount rate of the ECB) plus 12%, as well as those claims in which the Applicant has not yet discharged the consideration due by it prior to making the claim, may not be processed by way of Summary Judgement proceedings. Service of the Summary Judgement proceedings outside the jurisdiction must comply with German laws concerning the Recognition and Enforcement of Judgements.

1.1.2.2. Formal Conditions
Before the Summons is issued there are certain formal obligatory requirements which must be fulfilled (these are set out on the standard form). The application must include.
– a description of the parties, their lawful representative and the party authorised to accept service of the proceedings;
– a description of the court to which the application is to be made; this is in principal the court which has jurisdiction for the hearing of applications from the Applicant/Plaintiff. The various State Governments have allocated the jurisdiction in Summary Judgement proceedings to particular regional courts (Amtsgerichte or Landgerichte depending on the size of the claim). However if none of these courts have jurisdiction over the claim then the matter must be heard before the regional court at Berlin-Schöneberg.
– a description of the claim by reference to particular headings of claim distinguishing between principal and ancillary claims.
– a statement that the claim is not conditional on any consideration being given or that the consideration has been provided.
– a description of the court which will have jurisdiction in the proceedings for the delivery of the Notice of Intention to Defend.
– the hand-written signature of the Applicant.

1.1.3 Further procedures
If all the requirements mentioned above are complied with the Summons will be issued by the court. The court does not investigate whether the applicant has any entitlement to the claim or not; the applicant does not even have to prove any facts. Only if the claim is self-evidently bad, will the court dismiss the application
After the Summons has been issued it is served ex officio, i.e. by the court and the applicant will be informed of the service. After the deadline for the filing of a notice of intention to defend has expired the Order for Judgement (Vollstreckungsbescheid) will issue on the creditor’s further application without any judicial investigation.
If a Notice of Intention to Defend is to be filed (Widerspruch) after the issue of the Summons, the defendant must use the form which is attached to the Summons. The proceedings will then, on the creditor’s application, be referred to the court designated in the Summons. The Summary Judgement proceedings are then of no further account. If the debtor does not make the deadline when filing the Notice of Intention to Defend, it will be dealt with as if it was a protest against the Default Judgement, similar to a Motion to set aside a Judgement. under Irish Law. Since the Order for Judgement is a title of execution, the case is referred to the designated court ex officio if the debtor files the Motion to set aside a Judgement. The creditor need not make any application.

1.2 Versäumnisurteil – Judgement in Default of Appearance

1.2.1 General
The Versäumnisurteil is the equivalent to a Judgement in Default of Appearance or in Default of Defence under Irish law. This type of Judgement does not only arise from failure to make an Appearance or Defence in the course of a full court hearing. Under German law, upon service of the proceedings by the court office, the Judge can also decide that the matter will be decided by a somewhat more informal sitting of the court at which only the parties lawyers are in attendance (früher erster Termin) – or by written correspondence between the parties under the adjudication of the Judge (schriftliches Vorverfahren). However in the case of written proceedings, should the Plaintiff wish to make an application for Judgement in Default of Appearance such a request would need to have been specified in the initial stages of the proceedings when the application was made for the issue of the summons. This process makes it possible to get a Judgement without there being any court hearing. In all three types of hearing, for Judgement to issue the defendant or his lawyer must have failed to file a Notice of Intention to defend within two weeks of service of the Summons. Legal representation is necessary if a claim exceeds €5000. Where there is an Appearance by the defendant but not by his legal representative where one is required, this will be also be seen as a failure to enter an Appearance. If there are mitigating circumstances which have prevented the party from appearing, the court hearing may be adjourned until a later date.

1.2.2 Requirements for the issue of a Judgement in Default of Appearance
There are further procedural requirements common to any court action which must be complied with. If these procedural requirements are not complied with, the hearing may be adjourned in order to allow the defects to be remedied. There are however some essential procedural requirements which if not complied with cannot be met subsequently. Where there is no Appearance of Defence but procedural requirements have not been and cannot subsequently be complied with, an Order for Judgement is made which is known as an “insubstantial” Default Judgement (unechtes Versäumnisurteil). This insubstantial Default Judgement has different rights of Appeal in comparison with the standard Default Judgement discussed earlier. The insubstantial Default Judgement is heard by a higher court on appeal ( Landgericht/Oberlandgericht) whereas any appeal to the standard Default Judgement is heard by the same court. In both types of Default Judgement the Judgement can issue against either the Plaintiff or the Defendant. There are further requirements which must be met depending against which party the Judgement issues.

1.2.2.1 Default Judgement against the Plaintiff
In this instance Judgement will issue against the Plaintiff if it was clear that they had been duly summoned to appear in court on the day in question and had failed to do so.

1.2.2.2 Default Judgement against the Defendant
In addition to the above, the court will also examine whether the claim is on the face of it valid. If it finds that the claim is not on the face of it valid then it will issue an insubstantial Default Judgement against the Defendant. For a Judgement to issue they will need to show that the defendant has been informed in good time about the proceedings, and in the case of written proceedings that the defendant has been notified that there is a two week time limit and of the consequences of them not filing a Notice of Intention to Defend.

1.2.3 Objection/Appeal and the Second Default Judgement
(Zweites Versäumnisurteil)
The party against whom Judgement has issued can file an objection to same within two weeks of the issue of the Judgement. The case will then be dealt with by the court as with normal court proceedings. As the defaulting party should have filed an Intention to Defend at the start of the Summary Judgement proceedings, unless he can show that he was not given adequate notice of the proceedings, he will be responsible for the costs of the action even if his case is successful. If the party making the objection once again fails to appear in Court a Second Default Judgement is issued. The party against whom such Judgement was issued can only appeal the making of this Judgement on technical rather that substantial grounds. After the issue of an insubstantial Default Judgement, the party against whom Judgement was made does not have to make an objection but instead appeals the Judgement directly.

IRISH LAW

2.1 General

There is no equivalent to the German Mahnverfahren in Ireland. But there are similarities between the German Versäumnisurteil and applications for Summary Judgement in Default of Appearance/Defence under Irish Law. In such cases, if the debtor does not react to the initial demand letter setting out the deadline for payment, proceedings are then served upon him which, if not contested, will result in a Judgement in Default of Appearance or Defence issuing against the debtor.
Different procedural steps have to be taken depending on the size of the claim as it is this figure which decides which court has jurisdiction. The monetary jurisdictions of the Irish courts are as follows:
District Court: (maximum jurisdiction: €15,000.00),
Circuit Court: (maximum jurisdiction: €15,000.01 – €75,000.00)
High Court: (minimum jurisdiction:  €75,000.01).

2.2 District Court

· Court fees must be paid and stamped on the Summons
· In Dublin, the Summons is brought to the court office where it is issued. A preliminary court date called a return date is then assigned. This is not the date of the hearing but, if the matter is to be contested, the date on which both parties must turn up in court in order for a further hearing date to be assigned.The debtor has ten days after service within which to submit a notice of intention to defend. This ten day period corresponds to the two week deadline of the German schriftliches Vorverfahren, s 276 para 1 ZPO;
· The Civil Summons must include:
>full descriptions and addresses of the Plaintiff and Defendant
>cause of action and amount of debt
>statement/ endorsement of the failure to discharge despite demand and reminder
>interest and costs
· The Civil Summons is served by the solicitor upon the debtor by registered post if the debtor is an individual and by certified post to the debtors registered office if the debtor is a company. An endorsement of service, a formal statutory declaration, included in the Civil Summons, has then to be completed and sworn before a Commissioner for Oaths by the person who served the proceedings. This declaration must state that the letter was not returned undelivered to the solicitor. The registered post slip or Certificate of posting must also be attached to the Endorsement of Service.

If the debtor responds within ten days from the date of service and pays the claim and the costs to the plaintiff or his solicitor, further proceedings will be stayed and further costs will be avoided. If there is no response from the debtor the proceedings must be entered prior to the return date along with the Endorsement of Service in the relevant District Court office.

2.2.1 Obtaining Judgement
After the return date, a creditor’s Affidavit of Debt, sworn before a Commissioner for Oaths, and a draft of the Judgement decree have to be lodged in the District Court Office. The Judgement Decree issues according to the Affidavit of Debt. This Decree is the instrument of execution. The debtor is notified that Judgement has been obtained against him and that it will be enforced if he does not pay within seven days. If the debtor ignores this notice, the Decree is sent to the Sheriff for enforcement.

2.2.2 Judgement in default of Appearance
If the debtor wishes to contest the claim, a Notice of Intention to Defend must be filed in the court office within ten days. On application by the creditor the return date now becomes the first hearing date. Should the Defendant fail to appear on the hearing date, the Plaintiff can apply for a Judgement in Default of Appearance.
If the Plaintiff does not appear on the hearing date, the action will be dismissed. The Plaintiff can appeal against this within 14 days, where he will have the opportunity to excuse his non-appearance. If the Plaintiff does not receive the Defendant’s Notice of Intention to Defend, due to the Defendant having filed his notice in court only and not with the Plaintiff’s solicitor, and if the Plaintiff’s solicitor is not in court because of this, the proceedings may nevertheless be struck out. The plaintiff however may make ex-parte application to the court to have the proceedings reinstated.

2.3 Circuit Court

To obtain Judgement in Circuit Court, two draft Civil Bills stamped with the relevant stamp duty must be brought to the Circuit Court office with jurisdiction. The plaintiff’s solicitors sign the draft Civil Bills and the Circuit Court office then stamps and issues same. One of the Civil Bills is kept in the Circuit Court office and a copy of the other is served upon the debtor. Unlike the Civil Summons in District Court proceedings, the Civil Bill does not get a return date, so no form of a Notice of Intention to Defend has to be attached to the copy Civil Bill when served upon the Defendant. Instead the Civil Bill informs the Defendant of their right to file an Appearance within ten days from the service of the Civil Bill; they are also notified that a written defence should be filed in order to prevent the issue of a Judgement in Default of Defence. The plaintiff has to attach to the Civil Bill an endorsement of claim, which must include details about how the claim arose and the amount of the claim. Should the Defendant pay the amount of the claim and the costs within ten days after service all further proceedings are stayed and further costs avoided. After the ten day period is up, the plaintiff can make an application for a Judgement in Default of Appearance.

2.3.1 Judgement in Default of Appearance
After the ten day period has elapsed the Plaintiff’s solicitor will draft an Affidavit of Debt to be sworn by the Plaintiff or the Plaintiff company’s credit controller. This Affidavit must be sworn before a Commissioner for Oaths. The Affidavit of Debt and the application for the issue of a Judgement in Default of Appearance have to be stamped and then lodged in the Circuit Court Office together with other Judgement papers, such as the original Civil Bill, the Endorsement of Service and the Certificate of no Appearance. After the court has examined the papers and established that all procedural requirements are in place, Judgement in Default of Appearance will issue along with an Execution Order. The debtor is then notified that Judgement has been obtained and is given seven days to pay, in default of which the Execution Order is sent to the Sheriff for Enforcement.

2.3.2 Judgement in Default of Defence
Should the Defendant enter an Appearance but then fail to provide a Defence to the claim, the Plaintiff may make an application for a Judgement in Default of Defence. The procedure corresponds to that described above at para 2.3.1.

2.4 High Court
The procedure before the High Court corresponds to a large extend to that before the Circuit Court. The written statement of request to institute proceedings is called Summary Summons. The period, within which the debtor has to file an appearance, is 8 days after the service of the Summons.
2.4.1 Judgement in default of appearance
If the deadline passes without an appearance from the Defendant, the plaintiff has to lodge the following documents in the High Court Office to obtain judgement:
– Originating Summons with Endorsement of service filled out
– sworn Affidavit of Service
– Plaintiff’s Affidavit of Debt
– solicitor’s certificate of degree, quality, profession etc. of the parties
– Form of Judgement
– application for the issue of a fieri facias, the instrument for execution
The Judgement in Default of Appearance is then issued.

2.4.2 Procedure in the Event of Filing of an Appearance by the Defendant
If the Defendant however files an Appearance within eight days, the Plaintiff has to apply before the Master of the High Court, for liberty to enter final Judgement. An Affidavit is drafted and duly sworn by the Plaintiff. The Affidavit and a Motion for Judgement have to be stamped and lodged with the Master’s Registrar following which a hearing date is given. Both documents have to be served on the Defendant. Should the Defendant or his solicitor fail to be in court on the day of hearing, having filed a replying Affidavit, the Master will issue an order granting liberty to enter final Judgement. This Order and the Judgement papers are then lodged in the Central Office. Summary Judgement issues following conclusive examination of the claim. Should the Master decide that the Defendant has a prima facie defence, then the proceedings will be put to the Plenary hearing, which is a full hearing before the court. Both parties will be given time to file further papers: the plaintiff may file a Statement of claim and the Defendant may file a defence. If the Plaintiff seeks interest before Judgement, the matter goes before the Master or the Registrar of the High Court, where no appearance was entered. Once Judgement issues, the debtor must be notified and given seven days to pay. In default of payment by the debtor, the Order of Fieri Facias, being the instrument of execution, is forwarded to the Sheriff.

We would like to thank our German trainee lawyer Christoph Schaal for his research on this topic.