Debt Collection in Eritrea

The debt collection process in Eritrea begins with an assessment of the debtor’s solvency, their line of business, the history of the business, the availability of documentary evidence of the debt, ongoing court cases and enforcement proceedings, and the ability to dispute 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 to reach an agreement on 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 in order 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 payment 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 general limitation period is 20 years. The limitation period for contractual obligations is 5 years. The consequences of the expiration of the limitation period are applied in court only at the request of the debtor. The limitation period is interrupted by a written warning or a written message in which the creditor clearly demands payment of the debt or in the event of the debtor acknowledging the debt. After the interruption, the limitation period begins to count anew.

Eritrean law provides for judicial collection of debts through the ordinary court procedure and through a special procedure for the collection of monetary debts.

The ordinary court procedure begins with the filing of a statement of claim in court, after which, if the claim complies with the procedural requirements, the registrar enters it in the register of civil claims. The court then issues a summons to the defendant to appear and answer the claim on the date specified in the summons and orders that it be served on the defendant along with the statement of claim and its annexes. The court also specifies in the summons that on the day of the hearing, the case will be heard despite the defendant’s failure to appear or his appearance without an answer.

On the appointed day, if the defendant appears and provides an answer denying the fact stated in the statement of claim, the defendant must answer on the merits and not use evasive answers. If the allegation contains many facts, a general denial will not suffice. Every factual allegation in the statement of claim, unless specifically, implicitly, or stated as unadmitted in the answer, shall be deemed to have been admitted by the defendant.

At the first hearing, the court shall also determine what material questions of fact or law the parties disagree upon and shall then proceed to formulate and record the questions upon the correct determination of which the outcome of the case depends (this provision shall not be necessary if the defendant has not filed an answer at the first hearing). If the court finds that the parties have no disagreement on questions of law or fact, the court may immediately render a decision.

If the court considers that the questions cannot be properly formulated without the examination of a person not present or without inspection of a document which the court considers relevant, it may adjourn the framing of the questions to another day. The court may compel the attendance of any person or the production of any document by a person in whose possession it is in the case by subpoena or other process.

When the parties disagree on any question of law or fact, and the court has framed the relevant issues as above, if the court is satisfied that no further evidence or argument is required to decide the case on such issues other than what the parties can immediately produce, and if no injustice would result from the immediate continuation of the case, the court may proceed to consider the issues in question.

Once the evidence has been considered and all disputed issues have been resolved, the court will make a decision immediately or at a separate hearing. 

A special procedure for collecting a monetary debt is carried out unilaterally against the debtor for a claim based on negotiable instruments such as a bill of exchange, promissory note or cheque, as well as on an undertaking or contract drawn up for the payment of a certain sum of money, or on a guarantee if the claim against the principal debtor concerns only a debt or a certain amount. To implement this procedure, the creditor must file a statement of claim with the court, but with the note – “procedure for collecting a monetary debt”. After receiving the statement of claim, if the court considers the claims justified, it makes a decision and determines the amount to be collected. After receiving the decision, the debtor has 15 days to pay the debt or file an objection to the decision. If the debtor does not file an objection, the decision acquires the force of a final decision and can be brought for enforcement. If the debtor files an objection, the proceedings will continue according to the rules of the ordinary court procedure.

The decision of the court of first instance may be appealed to the court of appeal and the decision of the court of appeal may be appealed to the Supreme Court of Eritrea. To appeal the decision, a notice of appeal must be filed within 15 days from the date of the contested decision and a memorandum of appeal must be filed within 60 days of receiving a copy of the decision. During the appeal period, the contested decision may be suspended. The decision of the Supreme Court is final and cannot be further appealed.

Once the judgment has entered into legal force, the creditor must initiate enforcement proceedings. The judgment may be brought for enforcement within 20 years. As part of the enforcement of the judgment, the creditor’s claims may be satisfied by seizing and writing off funds from the debtor’s accounts; seizing the movable and immovable property of the debtor and then selling them; seizing and confiscating securities; seizing and confiscating company shares; seizing and confiscating ships and aircraft; seizure and confiscation of the debtor’s property held by third parties.

One of the alternative ways to collect a debt from a company or entrepreneur is to file for bankruptcy of the debtor. According to the Commercial Law of Eritrea, a creditor may initiate this process if the debtor is unable to meet its obligations using its available assets and if the debt is clearly defined, liquid and enforceable. At this stage, if the debtor’s assets are insufficient to fully pay off the debts to creditors, it is possible to cancel transactions entered into by the debtor with the purpose of causing damage to creditors. Such transactions include, for example: all gratuitous transactions transferring ownership of property; contracts with the debtor’s obligations significantly exceeding the obligations of the other party; payment of debt before the due date; payment of debt not in accordance with the procedure established by the contract; transfer of assets as security for old debts. Cancellation of such transactions allows the return of property lost by the debtor, which helps to increase the liquidation estate to satisfy the claims of creditors and cover the costs of the bankruptcy process.

If you have any questions or need support on international debt collection in Eritrea, 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 ERITREA

14.11.2024

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