Debt collection in Albania

The debt collection in Albania procedure should begin with a legal and practical assessment of the debtor, not only with a formal check of the existence of the debt. At this stage, the creditor should verify the debtor’s current business activity, registered status, available documentary evidence, contractual basis of the claim, previous payment conduct, pending court cases, existing enforcement procedures, signs of insolvency, possible objections to the debt and the realistic prospects of later enforcement against assets in Albania. This assessment determines whether the matter should begin with negotiations, securing measures, court proceedings, enforcement of an existing title or insolvency-related recovery.

If the debtor is still operating, has no pending court cases that materially affect recovery prospects and has no outstanding enforcement actions that show an inability to pay, the creditor may first use an amicable recovery stage. If the documents already qualify as an enforceable title or if there is a risk that assets may be dissipated, the strategy may move directly to securing the claim or to formal proceedings.

The amicable debt collection stage involves structured communication with the debtor to obtain payment, agree a payment schedule or reach another lawful settlement, such as return of goods, transfer of debt to a third party, set-off or exchange of services or goods where this is commercially justified and documented.

Communication should start after a written demand notice has been sent by an appropriate channel, such as mail, email or another documented method used by the parties in their business relationship. The purpose is to identify the decision makers, present the legal basis and amount of the claim, request payment within a defined period and preserve evidence of the debtor’s response. A written acknowledgement of the debt, partial payment, a settlement proposal or another clear act of recognition may also be relevant for the limitation period.

The duration of out-of-court recovery depends on the debtor’s response, the quality of the documents, whether the amount is disputed, the debtor’s solvency and the possibility of reaching a binding payment arrangement. If the debtor refuses to pay, avoids communication, disputes the claim without a sufficient basis or the initial analysis shows that negotiations are unlikely to be effective, the creditor should proceed to judicial recovery or another formal route available under Albanian law.

Before initiating legal action, the creditor should assess the limitation period. Under the Civil Code of Albania, the general limitation period is 10 years unless a special period is established by law. Claims arising from forwarding contracts expire after one year, while certain other categories of claims may have shorter special periods. The legislation prohibits contractual changes to limitation periods and to the rules governing limitation. The period generally starts from the day when the claimant’s right to bring an action arises; for contractual obligations with a fixed performance date, it starts from the day when that date has expired.

The limitation period may be interrupted not only by a clear and full recognition of the creditor’s right by the debtor, but also by filing a claim, counterclaim or objection, by any act that places the debtor in default, and by filing a request for compulsory enforcement of a court judgment, arbitral award or another executive title. After interruption, the limitation issue should be assessed according to the renewed procedural position and the evidence of the interrupting act.

In Albanian court proceedings, securing a claim may be important where there is a risk that the debtor may dispose of assets before the final decision. The Civil Procedure Code allows securing a claim at any stage of the proceedings until the decision becomes final, and it may also be requested before the claim is filed. If securing measures are granted before filing the claim, the court sets a period of no more than 15 days for submitting the claim to court. Available measures include seizure of movable and immovable property, seizure of the debtor’s credits and other appropriate measures ordered by the court.

The legislation of the Republic of Albania provides for debt collection through the court mainly in general claim proceedings and in small claims proceedings. Civil debt disputes are generally considered by the courts of first instance of general jurisdiction, with further review by the Court of Appeal of General Jurisdiction and, where the statutory grounds are met, by the Supreme Court.

The general claim procedure is carried out by filing a statement of claim with the competent court. After the claim is accepted, the court notifies the defendant and gives the defendant 30 days to submit objections. After the preparatory actions, the judge sets the date for the main hearing. The case is considered in a court session with the parties summoned and their positions heard. Albanian legislation does not set one fixed period for consideration of every debt claim, but the proceedings must be conducted within a reasonable time.

As a result of consideration of the case, the court issues a decision. A first-instance decision enters into force after fifteen days from the date of notification of the party if it is not appealed within the procedural appeal period.

In the Court of Appeal, the case is reviewed under the rules for appellate proceedings. The parties are notified, and the absence of a duly notified party does not automatically prevent the appeal from being considered unless there is a lawful reason for the absence. The appellate court may review the appeal within the procedural limits established by the Civil Procedure Code and issue a decision according to the outcome of the review.

A decision of the appellate court may be challenged before the Supreme Court by a recourse within 30 days from the relevant notification, but only on the grounds established by law, such as incorrect application of substantive or procedural law of importance for judicial practice, divergence from Supreme Court practice or serious procedural violations. Recourse is not allowed against appellate decisions in claims with a value up to 150,000 Albanian lek.

Filing a recourse to the Supreme Court does not automatically suspend enforcement of the appealed decision. At the request of a party, the Supreme Court may suspend enforcement if immediate enforcement would create serious and irreparable consequences or where the party filing the recourse provides appropriate security for enforcement. The Supreme Court’s decision is final.

The small claims procedure applies to contractual claims with a value of up to twenty times the national minimum wage. These claims are examined in a simplified manner and, as a rule, in writing. The court may hold an oral hearing if it considers this necessary in the circumstances of the case. If the original claim falls within the small claims threshold but the counterclaim exceeds twenty times the national minimum wage, the case proceeds under the general rules for ordinary proceedings.

Where the creditor already has a foreign court judgment or a final foreign arbitral award, recovery may require recognition and enforcement of foreign court decisions in Albania before compulsory enforcement can begin. Foreign court decisions are recognized and enforced in Albania under the Civil Procedure Code or applicable special agreements. The request is considered by the Court of Appeal, which does not review the merits of the dispute but checks whether the statutory conditions for recognition are met. As a rule, the creditor must submit the foreign decision, confirmation that it is final, and the required Albanian translation and legalization documents.

After the Court of Appeal grants effect to the foreign decision, enforcement in Albania is carried out under the rules on compulsory enforcement. The same chapter of the Civil Procedure Code also applies to the recognition of final foreign arbitral awards, without prejudice to applicable international treaties on arbitration.

If, after a court decision enters into force or another enforceable document is available, the debtor does not voluntarily comply, the creditor should proceed to the forced execution procedure. Compulsory enforcement in Albania may be carried out only on the basis of an executive title, including final civil judgments containing an obligation, certain criminal judgments in the part concerning property rights, foreign court or arbitral decisions given effect in Albania, domestic arbitral awards, notarial acts containing monetary obligations, bank loan documents, documents issued by non-bank financial institutions, bills of exchange, checks, promissory notes and other acts recognized by law as executive titles.

To open enforcement, the creditor submits the original or notarized executive title, the original writ of execution, proof of payment of the fixed enforcement fee where applicable, and a power of attorney if the creditor acts through a representative. If the documents are incomplete, the bailiff gives a 5-day period to correct the deficiencies. The writ of execution is put into enforcement by the state or private judicial enforcement service on the creditor’s request, and enforcement must be initiated within 15 days from the filing of the creditor’s request.

At the commencement of enforcement proceedings, the bailiff must register the creditor’s request in the central register at the Ministry of Justice. If, during registration, the bailiff finds that another creditor has already opened a monetary enforcement procedure against the same debtor with the same object, the new proceeding is suspended and the creditor is directed to the bailiff who first registered the enforcement request. This rule is important where several creditors compete for recovery from the same debtor.

After enforcement is opened, the bailiff sends the debtor a notice for voluntary execution. The voluntary period is 10 days in ordinary cases and 5 days where the enforcement concerns salary or maintenance obligations. Upon receiving the notice, the debtor may be required to declare its assets and any property or credits owed to it by third parties. If the debtor does not comply within the voluntary period, the bailiff may begin compulsory enforcement.

The creditor’s claim may be satisfied by seizure of the debtor’s bank accounts and receivables, seizure and sale of movable or immovable property, and seizure of property or credits held by third parties. Enforcement is limited to the amount necessary to satisfy the obligation, and Albanian procedural law excludes certain categories of property from seizure, including basic personal and family items, limited food and fuel reserves, certain social payments and other protected assets.

If the debtor shows signs of insolvency, an alternative recovery route may be the initiation of bankruptcy proceedings. Under Albanian bankruptcy law, the purpose of bankruptcy is collective satisfaction of the debtor’s obligations through reorganisation of the business activity or through liquidation of the debtor’s assets and distribution of proceeds to creditors. A creditor may request the opening of bankruptcy proceedings if it proves that the debtor is insolvent and that there is a matured and unpaid obligation. Insolvency is presumed if compulsory enforcement has failed during the voluntary enforcement period under Article 517 of the Civil Procedure Code, unless the debtor proves solvency and the absence of a matured unpaid debt.

Where the debtor is a legal entity, members of the management or decision-making body must file a request to open bankruptcy proceedings within 60 days from the date when they knew or should have known that the debtor had become insolvent. Failure to file within this period may result in personal liability for damage caused to creditors by the delayed filing.

If the bankruptcy estate does not have sufficient assets to cover the costs of the bankruptcy procedure, the bankruptcy court may terminate the procedure due to lack of assets. Before doing so, the court informs creditors and publishes notice. Creditors and other interested parties may object within 60 days if they have information that the debtor has assets or if further investigation is needed in relation to assets transferred by the debtor that may be subject to avoidance actions. Where such objections indicate a need for further investigation into the debtor’s conduct, the court communicates the matter to the prosecutor and suspends the procedure for 6 months.

Albanian bankruptcy law also allows the challenge of certain debtor transactions through avoidance actions. As a general rule, actions carried out by the debtor within 2 years before the opening of bankruptcy proceedings may be challenged if they caused asset damage to the debtor or gave an unjustified preference to a particular creditor. Asset damage may exist where the debtor received a value substantially lower than the value transferred. Examples include gifts, transactions with related persons, performance of unsecured obligations that had not matured before the opening of bankruptcy proceedings, granting security for an existing unsecured obligation or discharging certain secured obligations before the start of bankruptcy.

The bankruptcy administrator or supervisory administrator is primarily responsible for bringing avoidance actions. Creditors that identify challengeable acts may notify the administrator; if the administrator does not act within 2 months from the notification, the notifying creditor may bring the action at its own cost and risk. An avoidance claim may generally be filed within 3 years from the opening of bankruptcy proceedings, unless it was objectively impossible to become aware of the grounds for challenge. If the action succeeds, the transferred asset, its value or the relevant security benefit may be returned to the bankruptcy estate, increasing the pool available for satisfaction of creditors.

If you have questions or need professional support with international debt collection in Albania, GrandLiga can assist with document analysis, debtor assessment, amicable recovery, securing measures, court proceedings, recognition and enforcement of foreign judgments or arbitral awards, enforcement proceedings and insolvency-related recovery strategies. The appropriate route depends on the documents, debtor status, available assets, limitation period and procedural stage of the claim.

# DEBT COLLECTION AGENCY ALBANIA

12.04.2024

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