Debt Collection in Serbia

The procedure for debt collection in Serbia begins with a legal and practical assessment of the debtor, the debt evidence and the realistic prospects of recovery. At this stage, it is important to determine whether the debtor is a company, entrepreneur or individual, whether the debtor continues business activity, whether there are pending court cases, enforcement proceedings, blocked bank accounts or signs of insolvency, and whether the claim is supported by documents suitable for court or enforcement proceedings.

For corporate debtors, the assessment should include a review of company data available through the Serbian Business Registers Agency, including registration status, company history, published financial statements and possible changes affecting the debtor’s business position. For recovery planning, it is also useful to check whether the debtor appears in the National Bank of Serbia’s forced collection system, because bank account blocking may significantly affect the practical choice between negotiations, court proceedings, enforcement and bankruptcy.

If the debtor has no current court cases or outstanding enforcement measures that make voluntary recovery unrealistic, and continues to operate commercially, it is advisable to use the stage of out-of-court debt recovery before initiating court proceedings.

This stage includes structured negotiations with the debtor in order to obtain payment, agree a repayment schedule, secure acknowledgement of the debt, arrange the return of goods, transfer the debt to a third party, set off mutual obligations or agree another lawful settlement solution.

Communication with the debtor begins after sending a written notification by mail, email, phone, or messenger. The main task is to establish contact with the debtor’s authorized representatives or key decision-makers, confirm the debtor’s position, preserve evidence of communication and determine whether the debt can be recovered without litigation. If this stage does not produce a practical result, or if the initial analysis shows that voluntary recovery is not appropriate, the next step is judicial debt collection.

Before initiating legal debt collection, it is important to assess the statute of limitations. Under the Serbian Law on Obligations, the general limitation period is 10 years, unless a shorter period is prescribed by law. Mutual claims of legal entities arising from contracts for the sale of goods and services, including related reimbursement claims, are generally subject to a 3-year limitation period. This period runs separately for each delivery of goods, completed work or service.

Expiration of the limitation period does not automatically prevent the creditor from filing a lawsuit, because the court does not apply limitation on its own initiative. However, if the debtor invokes limitation in the proceedings, the claim may be dismissed. The running of limitation may be interrupted by the debtor’s acknowledgement of the debt, including partial payment, payment of interest or provision of security, and by filing a lawsuit or taking another action before a court or competent authority to establish, secure or enforce the claim. A simple written or oral demand for payment is not sufficient by itself to interrupt limitation.

In addition, the Republic of Serbia is a party to the United Nations Convention on the Limitation Period in the International Sale of Goods of 1974. Therefore, where the claim falls within the scope of this Convention and the relevant international sales relationship is covered by it, a 4-year limitation period may apply.

Depending on the value of the claim, the available documents and the debtor’s position, Serbian legislation provides for several options for judicial debt collection:

1. Standard lawsuit proceedings are used when the case cannot be resolved through a payment order, when the debtor contests the claim, or when the dispute should be examined in the ordinary civil or commercial litigation procedure. This process is carried out by filing a lawsuit, serving the claim on the defendant, allowing the defendant to respond, holding hearings where necessary and examining the evidence submitted by the parties.

As a result of the consideration of the case, the court issues a judgment, which becomes final after the expiration of the appeal period if no appeal is filed, or after the appellate procedure is completed.

Each party that is not satisfied with the first-instance judgment has the right to appeal within 15 days from the date of receipt of the transcript of the judgment, unless a special rule provides another deadline. As a rule, the second-instance court decides on the appeal without holding a hearing and, if no hearing is held, must decide within nine months from the date of receipt of the case file from the first-instance court.

A final second-instance judgment may be challenged by an extraordinary legal remedy before the Supreme Court within 30 days from the date of delivery of the judgment, where the procedural requirements for this remedy are met. In property disputes, this remedy is generally not allowed if the value of the contested part of the dispute does not exceed the dinar equivalent of €40,000, and in commercial disputes if it does not exceed the dinar equivalent of €100,000, calculated according to the middle exchange rate of the National Bank of Serbia on the date of filing the lawsuit.

2. The procedure for issuing a payment order is applicable to due monetary claims that are supported by reliable documents attached to the claim, together with proof that the debtor was warned to pay the overdue debt. Reliable documents may include public documents, certified private documents, bills of exchange and cheques, extracts from certified business books, invoices and other documents that have the status of public documents under special regulations. The court may also issue a payment order even if the claimant did not expressly request it, provided that all statutory conditions are met.

The payment order is issued without holding a hearing. In the payment order, the court orders the defendant to satisfy the claim and costs within 8 days from delivery, or within 3 days in disputes based on bills of exchange and cheques, or to submit an objection within the same period. If the defendant does not submit a timely objection, the payment order becomes final in the uncontested part.

If the debtor submits a timely objection, the court schedules the main hearing and the case continues in litigation. In the final decision on the merits, the court decides whether the payment order remains in force in full or in part, or whether it is cancelled.

3. The small-value dispute procedure applies to monetary claims that do not exceed the dinar equivalent of €3,000 in ordinary civil disputes and €30,000 in commercial disputes, calculated according to the middle exchange rate of the National Bank of Serbia on the date of filing the lawsuit. This procedure generally follows the logic of standard lawsuit proceedings, but with procedural simplifications: the claim is not served on the defendant for a written response, no preparatory hearing is held, and appeals are limited to essential procedural violations and incorrect application of substantive law. The appeal period in small-value disputes is 8 days, and revision against the second-instance decision is not allowed.

If the creditor already has a foreign court judgment against a Serbian debtor or against a debtor with assets in Serbia, the next stage is recognition and enforcement of foreign court judgments in Serbia. A foreign court judgment has legal effect in Serbia only after it is recognized by a Serbian court. For recognition, the creditor must usually submit the foreign judgment together with a certificate confirming that the judgment is final under the law of the country where it was issued.

For enforcement of a foreign judgment, the creditor must also provide a certificate of enforceability under the law of the country of origin. The Serbian court may refuse recognition or enforcement if, for example, the debtor was unable to participate in the foreign proceedings because of improper service, if the matter falls within exclusive Serbian jurisdiction, if there is already a final Serbian decision or another recognized foreign decision in the same matter, if recognition would be contrary to public order, or if reciprocity is absent.

After receiving a final court decision, if the debtor refuses to comply voluntarily, the creditor should initiate forced execution of the court decision. Serbian enforcement proceedings are conducted by courts and public enforcement officers on the basis of enforceable and credible documents. In monetary claims, enforcement may be directed against the debtor’s bank accounts, wages, receivables, movable property, immovable property, financial instruments, shares in business entities and other property rights.

In practice, enforcement against bank accounts is especially important. The National Bank of Serbia carries out forced collection from all debtor accounts held with banks, including dinar and foreign-currency accounts, without the debtor’s consent and according to the statutory priority order. Where the creditor is a foreign individual or legal entity, adjudicated amounts may be executed in favor of non-resident bank accounts in the dinar equivalent of the foreign-currency debt. Enforcement through bank accounts may also involve blocking the debtor’s identification number, blocking all bank accounts and preventing banks from opening new accounts for that debtor.

If enforcement proceedings do not lead to recovery and the debtor shows signs of insolvency, bankruptcy proceedings may become a separate recovery option. Under Serbian bankruptcy legislation, bankruptcy proceedings may be opened if at least one bankruptcy ground exists, including permanent inability to pay, threatening inability to pay, over-indebtedness, failure to comply with an adopted reorganization plan, or a reorganization plan obtained by fraud or in an unlawful manner.

A creditor may file a proposal to open bankruptcy proceedings in cases of permanent inability to pay, failure to comply with an adopted reorganization plan, or where the reorganization plan was obtained by fraud or in an unlawful manner. Permanent inability to pay exists, among other cases, where the bankruptcy debtor cannot meet monetary obligations within 45 days from maturity. In debt recovery practice, a continuous bank account blockage may also be an important indicator when assessing insolvency risk and the practical value of further individual enforcement.

In connection with bankruptcy proceedings or other recovery actions, the creditor may also assess whether there are grounds to claim liability from persons behind the debtor company. Under Serbian company law, a limited partner, member of a limited liability company or shareholder who abuses the rule of limited liability may be liable for the company’s obligations. This is an exceptional mechanism and requires evidence of abuse, such as using the company or its property to harm creditors, treating company assets as personal assets, or otherwise misusing the limited liability structure.

If you need support with debt collection in Serbia, our team can assist at every stage of the process: debtor assessment, review of contracts and evidence, out-of-court negotiations, preparation of a litigation strategy, payment order proceedings, standard court proceedings, recognition and enforcement of foreign judgments, forced execution, bankruptcy-related recovery and assessment of liability risks connected with abuse of limited liability. We help creditors choose a legally grounded and commercially realistic recovery strategy based on the debtor’s status, available documents, assets and procedural options in Serbia.

# DEBT COLLECTION AGENCY SERBIA

12.04.2024

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