Debt collection in San Marino

Debt collection in San Marino usually starts with an assessment of the debtor’s actual position in the Republic: whether the debtor is still active, whether it has a registered and reachable address, whether its corporate status is valid, and whether there are assets or economic interests that may make collection realistic. San Marino has its own legal system and a compact business environment, so the correct identification of the debtor, its address, corporate status and business continuity can directly affect the choice of the next steps.

If the debtor is a San Marino company, attention should be paid to whether the company is still validly registered, whether it maintains business activity, who manages it, and whether there are signs of inactivity, liquidation, financial distress or insolvency. This preliminary stage helps determine whether the matter may still be resolved through negotiation or whether non-payment is connected with deeper solvency problems.

If the initial assessment shows that the debtor is still operating, has a certain asset base or has a practical interest in avoiding a dispute, it is usually appropriate to establish formal contact quickly. At this stage, pre-court debt collection can help check whether the debtor is willing to pay, set a clear deadline for performance and determine whether a negotiated solution is realistically possible before court proceedings are started.

Pre-court debt collection is the formal handling of a payment request before proceedings are brought before the court. It may include a written demand, direct negotiations, a repayment schedule, a settlement proposal or a final deadline for voluntary payment.

This stage is useful when the debtor does not seriously deny the debt but delays payment, repeatedly promises to pay later, asks for more time or tries to reduce the amount without a proper basis. A clear formal communication helps establish the amount claimed, the payment deadline and the consequences of continued non-payment.

A written pre-court demand is important under San Marino law because it may interrupt the limitation period and cause a new limitation period to begin. For this reason, the pre-court stage is not only a negotiation tool; it may also affect the legal preservation of the claim.

If the debtor ignores the request, avoids communication, fails to comply with agreed terms or uses negotiations only to delay payment, the pre-court stage loses practical value. In that situation, the matter may proceed to the documentary summary procedure, where the conditions are met, or to ordinary court debt collection before the San Marino court.

Before moving to the documentary summary procedure or ordinary court debt collection, it is necessary to determine whether the claim is still enforceable and when the limitation period started to run. Relevant factors include the payment due date, formal notices already sent, acknowledgements of debt, documented negotiations and any events that may have interrupted or suspended the limitation period.

For debt collection in San Marino, the limitation period for claims is an important part of the collection strategy. San Marino law provides that, unless special rules establish a shorter period, credit rights are time-barred after ten years.

The limitation period runs from the date on which the fact or act giving rise to the right came into existence. In a commercial relationship, this may be the payment due date, the date of breach or another contractually or legally relevant event.

The limitation period may be interrupted by a written pre-court demand. After interruption, a new limitation period starts. The running of the limitation period may also be suspended where the entitled party is unable to exercise the right; in that case, the period during which the cause of suspension exists is not counted.

Ordinary court debt collection in San Marino takes place before the San Marino court and is usually started by filing a civil claim. After the proceedings begin, the judge sets the hearing for the parties to appear and participate in the case and invites the defendant to take part in the proceedings within the period indicated in the judicial order. The claim and the judicial order must be served on the debtor so that the debtor can appear, respond to the claim and present a defence.

If the debtor does not take part in the proceedings, the case does not automatically stop. San Marino procedural rules allow a second summons. After that step, further notifications to the non-appearing party may be made by public notice, except for documents concerning new claims and the judgment. This prevents the debtor’s passive behaviour from blocking the entire case.

During the proceedings, the evidentiary stage may be opened. The law provides for two evidentiary terms of three consecutive working days each, two rebuttal terms of three consecutive working days each and one counter-evidence term of two consecutive working days. Applications concerning evidence must be notified to the opposing party; the judge decides on them by order within ten calendar days. If evidence to be taken at a hearing is admitted, the judge sets the hearing within the following two months.

After the evidentiary stage, the period for legal submissions may be opened. This period is sixty calendar days. After it expires, the court registry forwards the file to the judge within the following ten days. The case then moves to the decision stage, and the judge must issue the judgment within five months.

The documentary summary procedure applies where the claim is based on specific documents to which the law gives strong evidentiary value. It is suitable where the payment claim is already supported by an appropriate documentary basis and does not require, at the initial stage, a full factual examination similar to ordinary litigation.

Under San Marino law, this procedure may be based, among other things, on public deeds, authenticated documents, matured bills of exchange, accepted bills, unpaid cheques, overdue insurance premiums, loan agreements, guarantees, professional fees assessed by a judicial authority, authenticated extracts from accounting records and other documents provided for by the applicable rules.

After the application is filed, the competent judge sets the period for any objection. Court guidance refers to a five-day period for objections to the payment demand preceding enforcement. An objection cannot be merely general; relevant grounds may include forgery, full or partial payment, discharge, settlement, res judicata, set-off proven by a public deed or limitation.

If no effective objection is filed, the document on which the procedure is based may be used in the later stages provided for under San Marino law. If an objection is filed, the dispute continues under the ordinary procedure. For amounts that are not disputed, a separate decision on payment may be requested, while a partial acceptance of the objection preserves the effects of procedural acts already carried out within the limits established by the judgment.

After the first-instance judgment, the party wishing to challenge the decision may file an appeal under San Marino civil procedure rules. In civil cases, the appeal document is addressed to the appellate judge. If the challenged decision was issued by the first-instance judge, the preparatory stage of the second-instance proceedings is assigned to a different judge from the one who issued the challenged decision.

The time limit for filing an appeal is thirty days from service of the first-instance judgment at the elected address for service or from the party’s acknowledgement of the judgment. If the judgment was served by public notice in the cases allowed by law, the time limit runs from the date of publication. A cross-appeal must be filed within thirty days from service of the main appeal.

The appeal is brought by filing the appeal document within the prescribed time limit. The appellate judge decides issues of inadmissibility, procedural defects or inability to bring the appeal, as well as urgent or interim requests that cannot wait until the final decision. The judge responsible for the preparatory stage of the appeal sets the hearing date and the following procedural steps by order.

In appeal proceedings, the same evidence already taken at first instance generally cannot be repeated to prove the same factual and legal circumstances. The second instance is therefore a review of the challenged decision rather than a full repetition of the first-instance proceedings.

For first-instance judgments that only order the payment of a sum of money, an appeal does not automatically suspend the effect of the decision. Suspension may be ordered in whole or in part by the appellate judge, with or without security, only if it is requested in the main or cross-appeal and serious, well-founded reasons exist.

After the appellate decision, a third-instance review may be possible where there is a difference between the first-instance and second-instance judgments, or between specific parts of those judgments. In this case, the party that lost at the appeal stage may file the application within thirty calendar days from service of the appellate judgment. The third-instance review is not a new hearing of the whole case; it serves to determine which of the conflicting decisions, or which conflicting parts, should become final.

In the third-instance procedure, after the application is filed, the parties usually have thirty days to submit written statements. After that period expires, the file is retained for decision; during the following fifteen days, the parties may review the file and submit additional observations. The third-instance decision must be issued and published within the following ninety days.

Recognition of foreign judgments in San Marino is relevant where the debt has already been confirmed by a court of another state and the debtor has a registered seat, assets, receivables or other economic interests in the Republic of San Marino. In this situation, the issue is not automatically to litigate the debt again on the merits, but to determine whether the foreign judgment can produce effects in the San Marino legal system.

San Marino court guidance indicates that foreign judgments must be recognised and declared enforceable before they can be used as a title in the territory of the Republic. This procedure reviews whether the foreign judgment satisfies the local requirements and whether it may have legal effect in San Marino.

In practice, attention should be paid to a certified copy of the judgment, proof that it is final or enforceable, a proper translation, any required legalisation or apostille, and other conditions required for recognition. If the foreign judgment has formal defects, doubts concerning service on the debtor or issues affecting compatibility with San Marino legal principles, the recognition procedure may become more complex.

Enforcement of foreign arbitral awards applies where the claim arises from arbitration rather than from a court judgment. San Marino is a party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, but a foreign arbitral award still has to be recognised and declared enforceable under the local procedure before it can be used in San Marino.

When dealing with a foreign arbitral award, attention should be paid to the arbitration clause, the text of the award, the regularity of the arbitration proceedings, whether the award is final, and whether the supporting documents meet the San Marino procedural requirements. Only after the award is accepted by the local legal system can it be used in the following procedural steps.

If the debtor has assets, receivables or other enforceable interests in San Marino, recognition and enforceability of the foreign arbitral award may become a key stage of cross-border collection. Compared with a court judgment, the source of the title, the focus of review and the applicable rules are different, so the award should be assessed separately.

Enforcement proceedings start when there is an enforceable title and the debtor still does not pay voluntarily. According to San Marino court guidance, the procedure usually requires an application through a representative requesting the issue of an enforcement order. The enforcement order is then served on the debtor together with a demand to comply within three days.

If the debtor still does not pay, seizure or attachment measures may follow. Enforcement may target the debtor’s movable property, immovable property, receivables and other property rights located in San Marino. The measures must be authorised by the judge and carried out by the competent authorities under the rules of enforcement procedure.

At the enforcement stage, search for attachable assets may be important. If the debtor does not pay after the expiry of the demand period, it is possible to request judicial authorisation to obtain information on the debtor’s economic and asset position through the relevant service of the Central Bank of San Marino. Based on the information obtained, assets or receivables may be identified for enforcement measures.

For salaries and pensions, San Marino rules provide specific limits. Court guidance refers to attachability up to one fifth within the limits established by law. For commercial creditors, this means that enforcement should be based on assets or income streams that can actually be identified and targeted, rather than on an abstract assumption about the debtor’s solvency.

When the debtor is a San Marino company and does not have sufficient means to pay its debts, procedures connected with insolvency may become relevant. San Marino company law regulates temporary financial crisis, insolvency and compulsory liquidation.

Compulsory liquidation may be opened by the competent judge at the request of a manager, a supervisory body, a company creditor or on the court’s own initiative where the company is clearly insolvent and the conditions for opening other collective creditor procedures are not met. The order usually includes the appointment of a court liquidator and is recorded and published as required by law.

From the publication of the order, pending court proceedings against the company are suspended and new individual collection actions cannot be started. Debts are treated as due and do not accrue interest during the procedure. Creditors must file documented claims within the period set by the competent judge.

If the procedure shows that the available assets are insufficient to satisfy creditors in full, attention should be paid to transactions carried out by the debtor before the procedure was opened. Transactions that reduced the company’s assets, transferred property to third parties, favoured certain persons or made creditor satisfaction more difficult may become relevant.

For transactions carried out during the year before the opening of the procedure, a clawback action in insolvency may be considered. Gratuitous acts may be treated as null, while transactions for consideration may be ineffective if they harmed creditors, unless the third party proves good faith. For earlier acts, an ordinary clawback action may be relevant where the debtor’s assets were reduced and the debtor and the third party were aware of the prejudice to creditors.

If the challenge to harmful transactions is successful, the transferred assets or their value may return to the pool of assets available for creditor satisfaction. This may increase the chances of collecting a larger part of the claim, especially where the debtor company is formally insolvent but carried out suspicious or non-ordinary transactions before the procedure started.

In addition to transactions carried out before the procedure, attention should also be paid to the conduct of company managers. Liability of managers may arise where the company’s assets are insufficient to satisfy creditors and that insufficiency is connected with a breach of duties aimed at preserving the integrity of the company’s assets.

Relevant conduct may include conflict-of-interest transactions, negligent management, continuation of harmful business activity, use of company assets or business opportunities for personal benefit or for third parties, failure to protect company assets, or breach of duties imposed by law, the company documents or a judicial authority. Where there are specific factual grounds, manager liability may become an additional protection tool, separate from ordinary collection against the company.

If you are interested in debt collection in San Marino, Grandliga can assist with assessing the debtor’s position, choosing the appropriate strategy and handling pre-court, court and enforcement stages. Assistance may include a preliminary check of the debtor company, a formal payment demand, negotiations, limitation assessment, proceedings before the San Marino court and use of the documentary summary procedure where the conditions are met.

In cross-border cases, Grandliga can also assist with recognition of foreign judgments, enforcement of foreign arbitral awards and the steps required to make the relevant title usable in San Marino. Where the debtor is a company in financial difficulty, assistance may also cover insolvency, compulsory liquidation, harmful transactions carried out before the procedure and possible manager liability, with the aim of building a realistic and proportionate collection route based on the value of the claim, the debtor’s position and the presence of assets or economic interests in the Republic of San Marino.

26.07.2024

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