Recovering a debt from a counterparty in another country is a different exercise from recovering one at home, and the difference is not merely distance. It is that the debtor’s assets, records and legal protections sit in a system the creditor does not control, and the tools that work domestically, a familiar court, a known enforcement process, may not translate. Cross-border recovery is won or lost on preparation and on choosing the right pressure, not on the strength of the underlying claim.
The claim is rarely the problem
In most cross-border recovery the debt is not seriously disputed. The problem is collection: the debtor is in another country, the assets are unclear, and the cost and delay of pursuing the matter through a foreign court are exactly what the debtor is relying on. A creditor who understands that the contest is about collectability rather than liability approaches it correctly; one who assumes that being right is enough tends to spend money proving a point that was never in question.
Part of the pressure is already supplied by law. Directive 2011/7/EU on combating late payment in commercial transactions requires Member States to ensure that, in commercial transactions between undertakings, the creditor is entitled to interest for late payment without the necessity of a reminder where two conditions are satisfied: the creditor has fulfilled its contractual and legal obligations, and the creditor has not received the amount due on time, unless the debtor is not responsible for the delay. Where the contract fixes no date or period for payment, Article 3(3)(b) starts the interest on the expiry of thirty calendar days following the date of receipt by the debtor of the invoice or an equivalent request for payment, or, where that date of receipt is uncertain, thirty calendar days after receipt of the goods or services, with further variants for early invoicing and for an agreed acceptance or verification procedure.
Article 3(5) then caps the contractual period: Member States must ensure that the period for payment fixed in the contract does not exceed sixty calendar days, unless otherwise expressly agreed in the contract and provided it is not grossly unfair to the creditor within the meaning of Article 7. The directive rests on Article 114 of the Treaty on the Functioning of the European Union, the internal market basis, and carries no recital on Protocol No 22, which is not true of the judicial cooperation instruments discussed below. Its obligations reached national law by transposition, required by Article 12(1) for Articles 1 to 8 and 10 by 16 March 2013, so what a creditor invokes in practice is the implementing national statute.
Article 10(1) sets the pace the courts are meant to keep. Member States must ensure that an enforceable title can be obtained, including through an expedited procedure and irrespective of the amount of the debt, normally within ninety calendar days of the lodging of the creditor’s action or application at the court or other competent authority, provided that the debt or aspects of the procedure are not disputed. Article 10(3) leaves out of that count the periods for service of documents and any delays caused by the creditor, such as periods devoted to correcting applications. The ninety days measure the court, not the file.
Pressure before proceedings
The most cost-effective recovery happens before a court is involved. A well-constructed demand, from counsel who can credibly pursue the matter in the debtor’s own jurisdiction, changes the debtor’s calculation. Debtors who assume a foreign creditor will not follow through behave differently when it is clear the creditor will. Much of the value of a specialist cross-border practice is in making that threat credible, so that the matter settles before the expense of litigation.
What makes a demand credible is arithmetic the debtor can check. Article 2(6) of the same directive defines statutory interest for late payment as simple interest for late payment at a rate equal to the sum of the reference rate and at least eight percentage points, and Article 3(2) fixes the applicable reference rate twice a year, at the rate in force on 1 January for the first semester and on 1 July for the second. Article 6(1) entitles the creditor, as a minimum, to a fixed sum of EUR 40, which Article 6(2) makes payable without the necessity of a reminder, and Article 6(3) adds reasonable compensation for any recovery costs exceeding that fixed sum, which the directive describes as capable of including expenses incurred in instructing a lawyer or employing a debt collection agency.
Standard terms do not quietly undo any of that. Article 7(1) makes a contractual term or a practice relating to the date or period for payment, the rate of interest for late payment or the compensation for recovery costs either unenforceable or a ground for a claim for damages if it is grossly unfair to the creditor, and lists the circumstances to be weighed, among them any gross deviation from good commercial practice and whether the debtor has an objective reason to deviate. Article 7(2) treats a term or practice excluding interest for late payment as grossly unfair outright, while Article 7(3) states the weaker rule for the money: a term or practice excluding compensation for recovery costs is presumed to be grossly unfair.
The demand also has to reach everyone who is liable, not only the entity that signed the invoice. Where the obligation is backed by personal or corporate guarantees, each guarantor is a separate obligor with its own assets and often its own jurisdiction, and a demand addressed only to the operating company leaves the rest of the structure untouched.
The debtor is not betting that they are right. They are betting that pursuing them is not worth the creditor’s trouble. The whole task is to change that bet.
Asset tracing comes first
Before committing to litigation, a creditor needs to know whether there is anything to recover and where it sits. Asset tracing across borders, through corporate records, registries and the structures debtors use to obscure ownership, determines whether the effort is worthwhile. There is no purpose in obtaining a judgment against a debtor whose assets have been moved or cannot be found, which is why tracing precedes rather than follows the decision to sue, and why it connects directly to enforcement, as we set out in our note on enforcing a judgment across European borders.
Tracing is not only a private exercise. Article 14(1) of Regulation (EU) No 655/2014, which created the European Account Preservation Order, lets a creditor who has obtained in a Member State an enforceable judgment, court settlement or authentic instrument, and who has reasons to believe that the debtor holds one or more accounts with a bank in a specific Member State but knows neither the name and/or address of the bank nor the IBAN, BIC or another bank number allowing the bank to be identified, ask the court to have the information authority of the Member State of enforcement obtain that information. The same article opens the request where the title obtained is not yet enforceable, on conditions that run together in a single sentence: the amount to be preserved is substantial taking the relevant circumstances into account, the creditor has submitted sufficient evidence to satisfy the court that there is an urgent need for the information because without it enforcement is likely to be jeopardised, and that this could consequently lead to a substantial deterioration of the creditor’s financial situation.
The order itself is available under Article 5 before the creditor initiates proceedings on the substance, at any stage during them up until the issuing of the judgment or the approval or conclusion of a court settlement, or after a judgment, court settlement or authentic instrument has been obtained. Article 7(1) requires sufficient evidence of an urgent need for a protective measure because there is a real risk that, without it, the subsequent enforcement of the claim will be impeded or made substantially more difficult, and Article 7(2) adds, where no title exists yet, sufficient evidence that the creditor is likely to succeed on the substance. Article 11 provides that the debtor is neither notified of the application nor heard before the order issues, and Article 22 makes the order recognised in the other Member States without any special procedure and enforceable there without a declaration of enforceability.
The symmetry matters as much as the remedy. Where the creditor applied before starting proceedings on the substance, Article 10(1) requires those proceedings to be initiated, and proof of it filed, within thirty days of the date the application was lodged or fourteen days of the date the order issued, whichever date is the later, with the court able to extend that period at the debtor’s request; Article 10(2) revokes or terminates the order if the proof does not arrive. Article 12(1) requires security from a creditor who has no title yet, though by way of exception the court may dispense with it where it considers the provision of security inappropriate in the circumstances of the case, and Article 13(1) makes the creditor liable for damage caused to the debtor by fault on the creditor’s part, with the burden of proof on the debtor. Article 13(2) reverses that burden in defined cases, one of them revocation for failure to initiate proceedings on the substance, unless the omission followed payment by the debtor or another form of settlement between the parties. Article 33 then lists the grounds on which the debtor can have the order revoked or modified.
Choosing the forum
Where to pursue the debtor is a strategic choice driven by where the assets are and where a judgment can reach them. Sometimes the right forum is the creditor’s, sometimes the debtor’s, sometimes a third country where assets sit. Within the European Union the recognition of judgments between member states widens the options, because a judgment obtained in one place reaches assets in another. The forum decision is inseparable from the enforcement analysis and should be made with it.
The default is narrow. Under Article 4(1) of Regulation (EU) No 1215/2012, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State, and Article 5(1) allows them to be sued in another Member State only by virtue of the rules set out in Sections 2 to 7. The contract head in Article 7(1) is the one that moves most debt claims: the courts for the place of performance of the obligation in question, which, for the purpose of that provision and unless otherwise agreed, for the sale of goods is the place in a Member State where, under the contract, the goods were delivered or should have been delivered, and for the provision of services the place where the services were provided or should have been provided.
A clause displaces all of that, and its formal conditions are exact. Article 25(1) gives effect to an agreement by which the parties, regardless of their domicile, have chosen the courts of a Member State, and makes that jurisdiction exclusive unless the parties have agreed otherwise, subject to two distinct tests in the same paragraph: the agreement fails if it is null and void as to its substantive validity under the law of that Member State, and it fails if it does not take one of the prescribed forms, which are in writing or evidenced in writing, a form which accords with practices the parties have established between themselves, or in international trade or commerce a form which accords with a usage of which the parties are or ought to have been aware and which is widely known to and regularly observed by parties in the trade concerned. Article 25(2) equates to writing any communication by electronic means providing a durable record of the agreement.
There is a third way for the clause to give way, and it bears on enforcement in particular. Article 25(4) provides that agreements conferring jurisdiction shall have no legal force if they are contrary to Articles 15, 19 or 23, which police departures from the protective rules for insurance, consumer and employment matters, or if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 24. Article 24(5) puts proceedings concerned with the enforcement of judgments in that exclusive category, in the courts of the Member State where the judgment has been or is to be enforced, and Article 27 requires a court seised of a matter principally concerned with an Article 24 head to declare of its own motion that it has no jurisdiction. None of that is a reason to draft loosely; it is a reason to draft knowing which battles a clause cannot win, a point we develop in our note on governing law and jurisdiction in cross-border contracts.
The regulation also has edges. Article 1(2) takes out, among other matters, bankruptcy and proceedings relating to the winding up of insolvent companies, social security, arbitration, and maintenance obligations arising from a family relationship. A contract that sends disputes to arbitration therefore sits outside the instrument the creditor would otherwise use to carry a judgment across a border, and the route for an award is a different one.
Turning a claim into a title that travels
Once a judgment exists, Chapter III of Regulation 1215/2012 does the travelling. Article 36(1) provides that a judgment given in a Member State shall be recognised in the other Member States without any special procedure being required, and Article 39 that a judgment enforceable in the Member State of origin shall be enforceable in the others without any declaration of enforceability. Article 41(1) hands the mechanics back to national law, since the procedure for enforcement is governed by the law of the Member State addressed. Article 43(1) adds the step most often missed: the certificate issued under Article 53 must be served on the person against whom enforcement is sought before the first enforcement measure, accompanied by the judgment if that has not already been served on that person. Article 43(3) then lifts that warning where it would destroy the remedy, since the article does not apply to the enforcement of a protective measure in a judgment, nor where the person seeking enforcement proceeds to protective measures in accordance with Article 40, which gives an enforceable judgment the power by operation of law to proceed to any protective measures existing under the law of the Member State addressed.
Refusal is narrow, and it proceeds on the application of an interested party rather than of the court’s own motion. Article 45(1) lists recognition manifestly contrary to public policy in the Member State addressed; a judgment given in default of appearance where the defendant was not served with the document instituting the proceedings in sufficient time and in such a way as to enable him to arrange for his defence, unless he failed to commence proceedings to challenge the judgment when it was possible to do so; irreconcilability with a judgment between the same parties in the Member State addressed; irreconcilability with an earlier judgment meeting the conditions for recognition there; and conflict with the protective jurisdiction rules for insurance, consumer and employment matters where the protected party was the defendant, or with the exclusive jurisdiction rules.
That second ground is usually won or lost on service. Under Article 12(1) of Regulation (EU) 2020/1784 the addressee may refuse to accept a document that is not written in, or accompanied by a translation into, either a language the addressee understands or the official language of the Member State addressed, or, where that State has several, the official language of the place where service is to be effected; Article 12(3) allows the refusal at the time of service or within two weeks of it by written declaration. Article 22(1) then provides that where a document instituting proceedings has had to be transmitted to another Member State for service under that regulation and the defendant has not entered an appearance, judgment shall not be given until it is established that service or delivery was effected in sufficient time to enable the defendant to enter a defence and by one of the prescribed methods. Article 22(2) supplies the way past a defendant who cannot be pinned down: a Member State may allow its courts to give judgment even where no certificate of service has been received, provided the document was transmitted by one of the methods in the regulation, a period the court considers adequate in the particular case and in any event not less than six months has elapsed since transmission, and no certificate of any kind has arrived despite every reasonable effort to obtain one. Evidence has its own instrument, Regulation (EU) 2020/1783, whose Article 12(1) requires the requested court to execute a request without delay and at the latest within ninety days of receipt, with that period running instead from the payment of any deposit or advance the requested court has asked for under Article 22(3). Both regulations apply from 1 July 2022.
For claims nobody really disputes there are shorter routes. The European order for payment under Regulation (EC) No 1896/2006 is built for pecuniary claims for a specific amount that have fallen due at the time the application is submitted, in a cross-border case, meaning one in which at least one of the parties is domiciled or habitually resident in a Member State other than that of the court seised. Article 16(2) requires the statement of opposition to be sent within thirty days of service of the order on the defendant, which is a deadline for sending and not for arrival, and Article 16(3) lets him contest the claim without specifying reasons. If it is sent in time, Article 17(1) continues the proceedings before the competent courts of the Member State of origin, under the European Small Claims Procedure where applicable or any appropriate national civil procedure, unless the claimant has explicitly requested that the proceedings be terminated in that event. If it does not arrive, Article 19 abolishes exequatur for the order.
Two neighbouring instruments complete the set. The European Small Claims Procedure under Regulation (EC) No 861/2007 applies where the value of a claim does not exceed EUR 5 000 at the time when the claim form is received by the court or tribunal with jurisdiction, excluding all interest, expenses and disbursements. The European Enforcement Order under Regulation (EC) No 805/2004 certifies judgments, court settlements and authentic instruments on uncontested claims, a claim being uncontested where the debtor has expressly agreed to it by admission or by a court-approved settlement, has never objected to it in compliance with the procedural requirements of the Member State of origin, has not appeared or been represented at a hearing after initially objecting where that conduct amounts to a tacit admission under that law, or has expressly agreed to it in an authentic instrument, which in civil law systems is typically a notarial deed. The minimum procedural standards in Chapter III apply to the two limbs resting on silence and on non-appearance. Article 21(1) confines refusal of enforcement to irreconcilability with an earlier judgment on three cumulative conditions, and Article 21(2) forbids any review of substance. That regulation still cross-refers to Regulation 44/2001, which Article 80 of Regulation 1215/2012 directs to be read as references to the later regulation in accordance with its correlation table.
Where the map stops being uniform
Denmark is the standing exception and the one that catches people out. Recital 41 of Regulation 1215/2012 records that, under Articles 1 and 2 of Protocol No 22, Denmark took no part in its adoption and is not bound by it, without prejudice to the parallel agreement of 19 October 2005 between the European Community and Denmark. Under Article 3(2) of that agreement Denmark notified the Commission by letter of 20 December 2012 of its decision to implement the contents of Regulation 1215/2012, and the notice published in the Official Journal states that the provisions of the regulation will be applied to relations between the Union and Denmark. On jurisdiction and the enforcement of judgments, then, Denmark is in.
On the rest the answer has to be checked instrument by instrument, and it is not the same answer. Article 2(3) of Regulation 1896/2006 and Article 2(3) of Regulation 805/2004 both define Member State as the Member States with the exception of Denmark. Recital 38 of Regulation 861/2007 and recital 26 of the amending Regulation (EU) 2015/2421 record that Denmark takes no part in the small claims procedure. Recital 51 of Regulation 655/2014 does the same for the account preservation order, recital 38 of Regulation 2020/1783 for the taking of evidence, recital 88 of Regulation (EU) 2015/848 for insolvency and recital 46 of Regulation (EC) No 593/2008 for the law applicable to contracts. Service is the exception inside the exception: under the parallel service agreement Denmark notified the Commission on 22 December 2020 of its decision to implement Regulation 2020/1784, which is accordingly annexed to that agreement.
Ireland and the United Kingdom sit under a different protocol, and there too the answers diverge. Recital 49 of Regulation 655/2014 records that Ireland notified its wish to take part in the account preservation order; recital 50 records that the United Kingdom did not. Since the United Kingdom left the Union it is a third State for these instruments, subject to the transitional rules of the Withdrawal Agreement, whose Article 67(2)(a) keeps Regulation 1215/2012 applicable to the recognition and enforcement of judgments given in legal proceedings instituted before the end of the transition period, which Article 126 fixed at 31 December 2020.
What is left for third States is the Hague machinery, and dates decide. The Hague Convention of 30 June 2005 on Choice of Court Agreements entered into force on 1 October 2015 following approval by the Union; Denmark acceded separately with effect from 1 September 2018, and the status table lists the United Kingdom as a Contracting Party in its own right, with an accession recorded on 28 September 2020. The Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments entered into force on 1 September 2023, the Union having acceded on 29 August 2022; the United Kingdom ratified on 27 June 2024 with entry into force on 1 July 2025, and Denmark does not appear in that table at all. Article 16 of the 2019 Convention then decides whether it is available at all, since it applies to recognition and enforcement only if, at the time the proceedings were instituted in the State of origin, the Convention had effect between that State and the requested State.
Distressed debt and the vehicle
Where recovery involves acquiring or holding distressed claims rather than pursuing a single debt, the structure through which the claims are held becomes relevant. For a creditor building a position in distressed claims across borders, the recovery strategy and the holding structure have to be designed together.
The reason is that buying a claim does not buy a uniform product. Article 14(1) of Regulation 593/2008 governs the relationship between assignor and assignee under a voluntary assignment by the law that applies to the contract between them, while Article 14(2) sends to the law governing the assigned claim four separate questions: its assignability, the relationship between the assignee and the debtor, the conditions under which the assignment can be invoked against the debtor, and whether the debtor’s obligations have been discharged. Article 14(3) states that the concept of assignment there includes outright transfers of claims, transfers of claims by way of security, and pledges or other security rights over claims.
A portfolio assembled across several governing laws therefore carries several answers to the same question, and the work runs claim by claim rather than at portfolio level, with the same discipline as the legal due diligence that precedes any acquisition. Denmark enters this exercise through the forum rather than through the governing law. Article 2 of Regulation 593/2008 gives the regulation universal application, since any law it specifies is applied whether or not it is the law of a Member State, so a court in a bound Member State applies Article 14 even to a claim governed by Danish law, and Article 14(2) then designates Danish law by Article 14 rather than in place of it. It is before a Danish court that Article 14 does not run and Danish conflict rules answer instead. Either way the portfolio has to be sorted before it is priced.
Knowing when to settle
The discipline of recovery is knowing the collectable value and pursuing it efficiently, which frequently means settling for a sum certain rather than chasing a larger judgment that may never be collected. A creditor advised to litigate to the end regardless of the recovery prospects is being advised to spend money for satisfaction rather than return. The right adviser measures success in what is recovered net of cost, not in judgments obtained.
Insolvency changes the instruments, and it does not change them all in the same way. Article 2(2)(c) of Regulation 655/2014 excludes claims against a debtor in relation to whom bankruptcy, winding-up or analogous proceedings have been opened, so the account preservation route closes. Regulation 1215/2012 does not close with it. Article 1(2)(b) takes out bankruptcy, proceedings relating to the winding up of insolvent companies and analogous proceedings, and recital 35 of Regulation 2015/848 states the contrary case in terms: actions for the performance of the obligations under a contract concluded by the debtor prior to the opening of proceedings do not derive directly from those proceedings. A judgment already obtained on such a claim still travels under Chapter III, Article 32(1) of Regulation 2015/848 has insolvency judgments themselves enforced in accordance with Articles 39 to 44 and 47 to 57 of Regulation 1215/2012, and Article 18 leaves the effects of the insolvency on a pending lawsuit to the law of the Member State in which that lawsuit is pending.
What the opening does bring is a second regime on top. Article 3(1) of Regulation 2015/848 gives jurisdiction to open main proceedings to the courts of the Member State where the debtor’s centre of main interests is situated; for a company or legal person that is presumed to be the place of the registered office in the absence of proof to the contrary, and the presumption is disapplied where the registered office was moved to another Member State within the three months before the request. Article 7(1) applies the law of the State of the opening of proceedings to those proceedings and their effects, but it opens with the words save as otherwise provided in this Regulation, and the derogation that matters most to a secured creditor is Article 8(1), under which the opening of insolvency proceedings shall not affect the rights in rem of creditors or third parties in respect of assets situated within the territory of another Member State at the time of the opening. Article 19(1) then recognises the opening judgment in all other Member States from the moment it becomes effective in the State of opening.
What the creditor does next is prescribed rather than negotiated. Article 53 allows any foreign creditor to lodge claims by any means of communication accepted by the law of the State of opening, and provides that representation by a lawyer is not mandatory for the sole purpose of lodging. Article 55(1) supplies a standard claims form and Article 55(2) sets out what it must contain, including the principal and interest, whether preferential creditor status is claimed, whether security in rem or a reservation of title is alleged, and whether set-off is claimed. Article 55(6) fixes the floor on timing: claims are lodged within the period stipulated by the law of the State of opening, and for a foreign creditor that period may not be less than thirty days following publication of the opening in that State’s insolvency register, or, where the Member State relies on Article 24(4), thirty days from the creditor being informed under Article 54. A recovery plan that meets these deadlines after they have run has turned a collectable claim into a written-off one.
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This article is informational and does not constitute legal advice. The law differs by jurisdiction and the treatment of any matter depends on its facts. Each engagement is subject to scope and applicable regulation.