Debt collection in Morocco

Debt collection in Morocco begins with a legal and financial assessment of the debtor: the civil or commercial nature of the debt, solvency, actual business activity, business history, available assets in Morocco, pending court or enforcement proceedings, possible restructuring or judicial liquidation risks, and the likelihood of a dispute over the debt. For commercial debts, it is important to review not only the contract, but also invoices, delivery documents, correspondence, debt acknowledgments, partial payments and accounting records. This assessment helps determine the most suitable debt collection strategy in Morocco: amicable recovery, court proceedings, payment order proceedings, compulsory enforcement or filing the claim in restructuring or judicial liquidation proceedings.

If the debtor has no ongoing court cases or outstanding judgments for debt collection and is actively engaged in commercial activities, it is advisable to use the out-of-court debt collection stage.

This stage involves active negotiations with the debtor in order to reach an agreement on the payment of the creditor’s claims or other possible settlement options (e.g. return of goods, transfer of the debt to a third party, exchange of services or goods).

Interaction with the debtor should be based on a clear and provable payment demand, followed by documented negotiations. Communication may take place by mail, email, phone or messaging services, but its purpose should not be informal pressure. The aim is to clarify the debtor’s position, obtain voluntary payment, a payment schedule, security, a written acknowledgment of the debt or other evidence useful for further recovery.

Documented negotiations may strengthen the creditor’s position if court proceedings later become necessary. The duration of amicable recovery depends on the debtor’s conduct, the amount of the debt, the strength of the evidence, the existence of identifiable assets, the possibility of obtaining a written payment commitment and the limitation risk. If the debtor does not pay, transfers assets, denies the debt or there are signs of restructuring or judicial liquidation risks, the amicable stage should not be unnecessarily prolonged and judicial recovery should be considered.

Before initiating judicial recovery, the limitation period applicable to the specific claim must be determined. Under Moroccan law, the general limitation period for claims arising from obligations is fifteen years, unless a special rule provides otherwise. For obligations arising from commercial activity between merchants or between merchants and non-merchants, commercial law generally provides for a five-year limitation period, subject to special provisions.

Specific limitation periods may apply to certain instruments or legal relationships. For example, claims arising from a bill of exchange against the acceptor are time-barred three years after maturity, while other claims related to negotiable instruments may be subject to shorter periods. The consequences of limitation are not applied by the court on its own initiative and must be invoked by the interested party.

The limitation period may be interrupted by a court or out-of-court demand with a certain date, a protective or enforcement measure against the debtor’s assets, filing the claim in collective proceedings, or any act by the debtor acknowledging the creditor’s right. In practice, a written acknowledgment of debt, partial payment, request for payment deferral, provision of a surety or other security, or reliance on set-off may be relevant for limitation purposes. After interruption, a new limitation period begins to run.

If amicable recovery does not result in payment, the creditor may proceed to judicial recovery. Under Moroccan law, the main court routes for recovering a debt are ordinary court proceedings and payment order proceedings. The choice depends on the amount of the debt, the quality of the supporting documents, the debtor’s address, whether service abroad is required, and whether there is a serious dispute over the claim.

The ordinary court procedure begins with the filing of a written application to the court. The claim is then entered in a special register in the order in which it was received, indicating the names of the parties, as well as the date of the summons to court. Immediately after the registration of the application, the presiding judge appoints, depending on the case, the reporting judge or the judge who will conduct the case.

The judge also immediately summons the plaintiff and the defendant in writing to appear in court on the day specified by him. Between the notice of summons and the day appointed for appearance there must be at least five days if the party is in the judicial district or in a neighboring locality; and fifteen days if the party is in any other place in Morocco. If the person summoned is outside the Kingdom, the period for appearance is from two to four months, depending on the distance from Morocco.

On the appointed day indicated in the summons, the parties must appear in person or through their representatives. Depending on the state of the case and the applicable time limits, the court may hear the case at the same hearing or adjourn it to a later session. If the defendant or their representative, having been duly notified, fails to appear on the appointed day, the case may be heard in absentia, subject to the rules applicable to decisions deemed adversarial.

At the request of the parties or on its own initiative, the court may, before rendering a decision on the merits, order an expert examination, inspection of the scene, examination of witnesses, verification of the authenticity of documents or take any other measure to collect evidence. After completing the actions to collect evidence, the court holds a debate between the parties and makes a decision on the merits.

Payment order proceedings may be used to recover a monetary claim exceeding 1,000 Moroccan dirhams when the debt is based on a document or an acknowledged obligation. The application must identify the parties, state the amount claimed and explain the basis of the debt, with documents proving the existence and amount of the claim attached. This route is particularly suitable for documented, liquid and weakly disputed claims.

The application is inadmissible if service on the debtor must be carried out abroad or if the debtor has no known residence in the territory of the Kingdom of Morocco. If the claim appears justified, the court issues an order requiring the debtor to pay the debt and costs. If the conditions are not met, the application is rejected by a reasoned decision and the creditor is referred to ordinary court proceedings. The rejection decision is not subject to appeal.

After notification of the payment order, the debtor has eight days to pay or, if they intend to raise defenses on jurisdiction or the merits, to use the legal remedy provided by law. If no payment or remedy is made within this period, the payment order becomes enforceable by operation of law.

Where the claim is based on negotiable instruments or authentic documents, the time limit for the remedy and the remedy itself do not automatically suspend enforcement, unless the competent court orders suspension in the cases provided by law. If the remedy is dismissed and the court finds that it was filed only to delay the proceedings, the debtor may be ordered to pay a civil penalty to the Treasury equal to 10% to 25% of the claim amount.

A decision of the court of first instance may be appealed within thirty days from notification, unless the law provides for a special time limit. In commercial cases, appeals against commercial court judgments must be filed within fifteen days from notification of the judgment. Default judgments of the court of first instance that are not subject to appeal may be challenged by objection within ten days from notification.

Final-instance decisions may be challenged before the Court of Cassation of Morocco under the conditions provided by law. However, for certain claims, cassation may be excluded, particularly where the value of the claim is below 20,000 Moroccan dirhams. A cassation appeal generally does not suspend enforcement of the contested decision, except in limited cases provided by law. The decision of the Court of Cassation closes the cassation stage.

After obtaining an enforceable court decision, the creditor must initiate compulsory enforcement. Decisions issued by Moroccan courts are enforceable throughout the national territory at the request of the successful party or their representative. Enforcement requires an enforceable title and, for seizure of movable or immovable property, the claim must be liquid and certain.

In compulsory enforcement, the enforcement officer notifies the decision to the debtor and requires immediate payment or a statement of the debtor’s position within a period not exceeding ten days. If the debtor does not pay or states that they cannot pay, enforcement may continue through seizure of movable property, seizure of immovable property where movable assets are insufficient, seizure of claims or assets held by third parties, and forced sale of seized assets under the applicable procedural rules.

If the creditor already has a foreign court decision, that decision cannot be enforced automatically in Morocco. The creditor must first apply to the competent court of first instance for recognition and authorization to enforce the foreign decision. The Moroccan court examines, among other points, the regularity of the decision, the jurisdiction of the foreign court that issued it and its compatibility with Moroccan public order. The application must be accompanied by the documents required by law, including an authentic copy of the decision, proof of notification or an equivalent document, a certificate confirming the absence of ordinary or extraordinary remedies and, where necessary, a certified Arabic translation.

When recovering a debt from a company or an entrepreneur, restructuring or judicial liquidation proceedings may be relevant in addition to individual recovery. Under Moroccan commercial law, a commercial enterprise may be considered to have ceased payments if it cannot meet due debts with available assets. If the financial situation can be corrected, restructuring proceedings may be opened. If recovery is not possible, judicial liquidation may lead to the realization of the debtor’s assets and distribution of the proceeds among creditors according to their ranking.

The opening of such proceedings changes the creditor’s strategy. The opening decision suspends or prohibits individual actions by earlier creditors seeking an order against the debtor to pay a sum of money, as well as individual enforcement measures against the debtor’s movable and immovable property. Therefore, the creditor must file its claim with the insolvency officer, even if the claim has not yet been established by an enforceable title. Filing the claim is necessary to participate in verification of liabilities and any distribution of assets.

The filed claim must state the amount due on the date of opening of the proceedings, the part not yet due in restructuring proceedings, any privilege or security, the evidence proving the existence and amount of the claim, the basis for calculating interest if it resumes, and the competent court if the claim is already in dispute. Supporting documents are attached in a list, and the insolvency officer may request originals or additional documents.

The suspicious period is especially important for creditors. It runs from the date of cessation of payments until the court decision opening the proceedings and may be extended to an earlier period for certain contracts. Gratuitous acts carried out by the debtor after cessation of payments are invalid. The court may also annul certain gratuitous acts carried out during the six months before that date, as well as certain onerous transactions, payments, guarantees or security arrangements made after cessation of payments.

An invalidity claim is brought by the insolvency officer and aims to restore the company’s assets. For a creditor, this mechanism may be important where the debtor transferred assets, granted security or made certain payments after cessation of payments. Annulment of such acts may increase the available assets and improve creditors’ chances of payment within restructuring or judicial liquidation proceedings.

If you need to assess the recoverability of a debt in Morocco, choose between amicable recovery, payment order proceedings, court proceedings, compulsory enforcement or filing a claim in restructuring or judicial liquidation proceedings, we can analyze the available documents, the debtor’s situation and the recovery routes applicable to the case. Contact us to receive an initial assessment of your situation and determine the possible next steps.

# DEBT COLLECTION AGENCY MAROCCO

27.11.2024

1532