Debt Collection in Somalia

The debt collection process in Somalia begins with an assessment of the debtor’s solvency, their business, 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 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 is agreed upon). If this stage does not bring the expected results or after an initial analysis it becomes clear that it is not applicable, you should 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 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 an explicit or implicit recognition of the creditor’s claims by the debtor. Indirect recognition is considered to be cases where the debtor transfers his property to the creditor as collateral. After interruption, the limitation period begins to count anew.

It should also be taken into account that local courts have limited ability to resolve disputes and enforce their own decisions. Domestically, parties often turn to local councils of elders, clan leaders, religious authorities or al-Shabaab to resolve disputes. There is no statutory regulation of bankruptcy proceedings in Somalia. Somalia is not a party to any of the international conventions on commercial arbitration, so many foreign companies prefer to use arbitration courts in Djibouti or the United Arab Emirates and then enforce them in Somalia.

At the local level, debt collection proceedings are regulated by the Somali Civil Procedure Code of 1974, which was based on the then Italian Civil Procedure Code. The procedure can be implemented through the ordinary court process or the order for payment procedure.

The ordinary court procedure begins with the filing of a statement of claim with the court requesting the summons of the defendant. The court secretary then registers the case in the general register and prepares a dossier to which he attaches the registration form and the statement of claim. The secretary then hands the bailiff a notice of summons to notify the defendant.

The defendant’s appearance in court from the moment of receipt of the notice of summons is from 15 to 160 days. The appearance period depends on the location of the defendant. If the defendant fails to appear, the court may set a new appearance date or declare the defendant absent and continue the trial without the defendant’s presence. If the parties appear at the first court hearing, the court first attempts to reconcile the parties. If reconciliation is ineffective, the court begins the trial, during which it reads out the plaintiff’s statement of claim and then listens to the defendant’s position and the means of defense with which the defendant intends to defend himself.

After hearing the defendant’s position, if the judge considers that the case is ready for a decision without the need to consider the evidence, the court invites the parties to formulate their final conclusions and assigns the case to a final decision. Otherwise, the court establishes the procedure and timeframe for considering the parties’ evidence.

After the stage of consideration of the evidence is completed, the court hears the final arguments of the parties and makes a final decision.

The order for payment procedure is used to collect debts in liquid amounts supported by written documents. This procedure cannot be used if the defendant is outside of Somalia. To implement the order for payment procedure, the creditor must file a corresponding application with the court with evidence of the debt. If the court finds that the creditor’s claims are justified, the court issues an order requiring the debtor to pay the creditor the debt within 10 days from the date of receipt of the order, or to object to the order within the same period. If the defendant does not file an objection, the order for payment acquires the force of a final decision and can be brought for compulsory execution. If the defendant files an objection, it is subject to consideration according to the rules of ordinary judicial procedure with court hearings, only in a shorter time frame. In this case, the defendant becomes the plaintiff, and the creditor becomes the defendant. As a result of considering the defendant’s objection, the court makes a final decision. 

The decision of the court of first instance may be appealed to the court of appeal within 30 days from the date of the decision. If the defendant was not notified of the decision, the period is calculated from the date of notification. However, in such a case, an appeal is not allowed after one year from the date of the decision. The decision of the court of appeal may be appealed to the Supreme Court of Somalia. The appeal periods are the same as when appealing the decision of the first instance. Filing an appeal does not suspend the contested decision. However, upon the defendant’s application, the court, if there are appropriate grounds, may temporarily suspend the contested decision, provided that the defendant posts adequate bail. 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 enforcement procedure. The decision may be presented for enforcement within 3 years. As part of the enforcement of a court decision, the creditor’s claims may be satisfied by seizing and writing off funds from the debtor’s accounts; seizing the debtor’s movable and immovable property with their subsequent sale; seizing and confiscating the debtor’s property that is in the hands of third parties.

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

# DEBT COLLECTION AGENCY SOMALIA

11.11.2024

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