Debt Collection in Djibouti

The debt collection process in Djibouti begins with an assessment of the debtor’s solvency, their business sector, the history of the business, the availability of documentary evidence of the debt, ongoing court cases and enforcement proceedings, and the possibility of disputing the debt. This assessment determines the strategy that will be used on behalf of the client in the collection process.

If the debtor has no ongoing court cases or outstanding judgments for debt collection and is actively engaged in commercial activities, then 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 begins immediately after sending a notice by mail, email, phone or instant messengers. This process involves intensive communication with the debtor in order to exert constant pressure. The main objective is to establish contact with key decision makers to achieve the fastest possible debt recovery.

The average time for informal extra-judicial collection is up to 60 days (except in cases where a debt repayment installment plan has been agreed upon). If this stage does not bring the expected results or after an initial analysis it becomes clear that it is not applicable, it is necessary to proceed to collection through the courts.

Before initiating judicial collection, it is worth paying attention to the limitation period. The limitation period for debt collection is 3 years. The limitation period in matters of commercial sale is two years. The consequences of the expiration of the limitation period are applied in the court of first instance and the appellate court only at the request of the debtor. The limitation period is interrupted if the debtor acknowledges the debt. After the interruption, the limitation period begins to count anew.

Djibouti law provides for judicial collection of debts through the ordinary court procedure, the simplified procedure for small disputes and the order for payment.

The ordinary court procedure begins with the filing of a claim with the court. The court then issues a summons to summon the defendant to the first court hearing and hands it over to the bailiff for delivery to the defendant. The interval between the day of acceptance of the claim and the first hearing must not exceed one month, except in cases where special time limits for distances, court holidays or special circumstances apply.

The period between the service of the summons and the day of appearance in court is five days if the defendant resides at the location of the court. This period is increased to 10 days if the defendant resides elsewhere in the country or to two months if the defendant resides outside the territory of Djibouti. Violation of the period between the service of the summons and the day of appearance renders the summons invalid.

On the appointed day, the case must be registered and transferred to the relevant chamber (civil or commercial) for consideration. The court may immediately consider at the first session a case that, according to the explanations of the parties and the documents submitted before the session, is ready for consideration on the merits, even in the presence of oral opinions. The court may also consider a case in which the defendant has not appeared, if the case is ready for consideration on the merits, or may appoint a re-summoning of the defendant in order to comply with the principle of adversarial proceedings.

The court may also postpone the consideration of the case to another session if the parties need to exchange conclusions or additional documents. The conclusions must clearly formulate the demands of the parties, as well as the factual and legal grounds for each demand, indicating the related documents and their numbers. A list of documents substantiating these demands is attached to the conclusions. On the appointed date, the court examines the conclusions of the parties and the documents submitted, and if the court finds that there is no need for an investigation and the case is ready for consideration, the court hears the parties or appoints a date for oral arguments. After the debate between the parties, the court makes a decision.

The simplified procedure for small disputes applies to debts up to 3,000,000 Djiboutian francs, supported by written documents. To implement this procedure, the creditor must file a corresponding application and supporting documents with the court. If, on the basis of the documents submitted, the judge considers the creditor’s claim to be justified, he issues a ruling on mandatory performance. This ruling is not subject to appeal. The judge determines the subject of the obligation, as well as the time and conditions under which it must be performed. The ruling also specifies the place, day and time of the first instance court hearing where the case will be heard. The registry notifies the parties of the ruling by means of an administrative notice. If the obligation has been fulfilled within the prescribed time, the plaintiff notifies the registry of this, and the case is withdrawn from consideration. If the claim is not fulfilled, the court considers the creditor’s claims and makes a final decision.

The order for payment procedure is used to deal with a claim for payment of a sum of money, provided that the debt is based on a contractual obligation and amounts to a certain sum not exceeding 2,000,000 Djibouti francs in principal and 200,000 Djibouti francs in penalties, or if the debt, the amount of which does not exceed 5,000,000 Djibouti francs, arises from a cheque, an acceptance or drawing of a bill of exchange, a promissory note, an endorsement or a guarantee of any of these documents. To implement this procedure, the creditor must file an application for an order for payment with the court. If the court finds the creditor’s application justified, it will issue an order for payment within 8 days and transmit it to the creditor for service on the debtor. An order for payment will not be issued if it is to be served outside Djibouti or if the debtor has no known place of residence or domicile in Djibouti. If the order is not served on the debtor within 6 months, it loses its force. After the debtor has been served with the order for payment, he may lodge a protest against it within 15 days. If the debtor does not lodge a protest, the order for payment acquires the force of a final decision and is subject to compulsory execution. If the debtor lodges a protest, it will be considered by the court within the limits of its competence and, as a result of the consideration, the court will make a decision on the dispute.

The decision of the court of first instance may be appealed to the court of appeal within one month from the date of notification of the contested decision. If the appellant resides outside the court, the appeal period is extended by 10 days; if the appellant resides outside Djibouti, the period is extended by two months. The decision of the court of appeal may be appealed to the Supreme Court of Djibouti within 15 days from the date of notification of the contested decision. The decision of the Supreme Court is final and cannot be further appealed.

After the court decision comes into legal force, the creditor should initiate the procedure for compulsory execution. The decision can be presented for compulsory execution within 3 years. Within the framework of the compulsory execution of the court decision, the creditor’s claims can be satisfied by arresting and writing off funds from the debtor’s accounts; arresting the movable and immovable property of the debtor with their subsequent sale; arresting and confiscating securities; arresting and confiscating company shares; arresting and confiscating sea and aircraft; arresting and confiscating the debtor’s property that is in the hands of third parties.

An alternative option for debt collection from a company or entrepreneur is the procedure for judicial liquidation of the debtor. According to the Commercial Law of Djibouti, the creditor has the right to initiate this procedure if the debtor is unable to cover its obligations from its available assets, and the debt is certain, liquid and enforceable. At this stage, if the debtor’s assets are insufficient to fully satisfy the creditors’ claims, it is possible to cancel the debtor’s transactions made with the intent to harm the creditors. Such transactions or actions made after the date of cessation of payments but before the bankruptcy decision are made include, in particular: all gratuitous transactions transferring ownership of movable or immovable property; all contracts with obligations of the debtor that significantly exceed the obligations of the other party; any payment of debt for which the payment term has not yet arrived; payment of debt in a manner not provided for by agreement of the parties; transfer of assets of the debtor as security for previously incurred debts. As a result of the cancellation of the above transactions, it is possible to return back to the debtor what he lost from such transactions and thereby increase the liquidation estate to satisfy the claims of creditors and cover the costs of implementing the bankruptcy procedure.

If you have any questions or need support for international debt collection in Djibouti, our company is ready to provide its expert assistance to effectively resolve your financial issue. Contact us to get additional information and professional support from specialists of the leading debt collection agency.

# DEBT COLLECTION AGENCY DJIBOUTI

13.11.2024

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