Debt Collection in South Sudan

The procedure for debt collection in South Sudan begins with a legal and enforcement assessment of the debtor, the basis of the claim and the assets or business presence that connect the dispute with South Sudan. For a commercial debt, this assessment includes the debtor’s legal status, business activity, place of performance of the contract, location of movable or immovable property, existing court cases, previous judgments, enforcement exposure, insolvency indicators and the documentary proof of the debt.

For a foreign creditor, the first practical question is whether South Sudanese courts can be used as an effective recovery forum. A business claim against a foreign debtor may be connected with South Sudan if the dispute concerns property located in South Sudan, if the liability arose, was performed or should have been performed in South Sudan, or if an act of bankruptcy or another relevant event took place in South Sudan. This jurisdictional analysis is carried out together with a review of contracts, invoices, delivery records, account statements, correspondence, acknowledgements of debt, partial payments, guarantees, security documents and any foreign judgment already obtained by the creditor.

If the debtor is still operating, has no effective enforcement measures pending against it and there is a realistic possibility of voluntary payment, the creditor may proceed with out-of-court debt collection.

This stage is based on lawful negotiation with the debtor, a documented written demand, verification of the amount due and discussion of commercially reasonable settlement options. These options may include payment of the creditor’s claim, a repayment schedule, return of goods, transfer of debt to a third party, set-off, exchange of services or goods, or another settlement structure suitable for the transaction.

Communication with the debtor may be carried out by mail, email, phone, messengers or other available business channels, but each material contact is documented. The purpose of this stage is to identify decision-makers, record whether the debt is admitted or disputed, preserve evidence of the debtor’s position and determine whether voluntary recovery is realistic before formal proceedings are initiated.

If negotiations do not lead to payment, if the debtor avoids contact, raises unsupported objections, transfers assets, faces insolvency indicators or has no realistic settlement proposal, the next step is court recovery, enforcement of an existing judgment or insolvency-related action, depending on the documents and assets available.

South Sudanese legislation does not establish a specific general statute of limitations for ordinary debt collection claims in the contract and civil procedure rules applicable to commercial debt recovery. Therefore, an unpaid debt may still be pursued even if a long period has passed after the due date, provided that the creditor can prove the obligation, the amount due and the legal basis for recovery.

South Sudanese law provides for judicial debt collection primarily through ordinary civil proceedings, unless the creditor already has an enforceable judgment, a foreign judgment suitable for enforcement, or statutory grounds for insolvency-related recovery.

Court competence in debt matters depends on the value and subject matter of the claim. A Payam Court has original jurisdiction over suits with a value not exceeding SP500, subject to its warrant of establishment. A County Court of the Second Grade Judge has original jurisdiction over suits not exceeding SP1000. A County Court of the First Grade Judge may try suits without a value limit and hears appeals from Payam Courts. The High Court may try original suits without a value limit and has exclusive jurisdiction over matters concerning companies, trade marks, business names, bankruptcy and settlement between creditors.

As a general rule, a suit is brought before the lowest court competent to try it. In contract-related debt matters, local jurisdiction may be connected with the place where the contract was made, the place where it was to be performed or executed, the place where the defendant resides or conducts business, or the place where the cause of action arose in whole or in part.

The ordinary civil proceedings begin with the filing of a plaint. If the plaint is presented in the proper form and is not rejected, the court allows the plaint, orders payment of court fees and issues summons. Court fees must be paid within 7 days from the date on which payment is ordered; otherwise, the court may dismiss the plaint. A suit is treated as instituted on the date of payment of court fees, unless the plaintiff is exempted from payment by law or court order.

After the court fee is paid, the court issues a summons signed by the judge. The summons contains a precise statement of the cause of action and the relief claimed and directs the defendant to appear and answer at the stated date, time and place.

Formal service of summons is carried out by officials of the court unless the court or the law directs otherwise. Service is generally made by delivering or tendering a copy of the summons to the defendant, and personal service is used where practicable. If the defendant cannot be found or refuses to accept service, the serving officer reports the circumstances to the court. Where the court is satisfied that the defendant is avoiding service or that the summons cannot be served for another reason, substituted service may be ordered, including fixing a copy at the courthouse and the defendant’s last known address, advertisement in a newspaper of wide circulation or another method directed by the court.

If the defendant does not reside in South Sudan and has no agent empowered to accept service, the summons is sent to the Chief Registrar of the Judiciary and then through the Ministry route for service by diplomatic channels or another method directed by the court. For a foreign company with a branch or agent in South Sudan, the summons may be served on that branch or agent.

On the day appointed for the hearing, the parties appear in court personally or through their advocates. The official languages of the courts are English and Arabic, and a party or witness who does not know these languages may be heard through an interpreter on oath.

At the first hearing or at a later hearing, the court examines the parties to determine the questions of law or fact in dispute or orders written pleadings. Pleadings must state material facts in concise form, include dates, sums and numbers in figures, and be signed by the party, authorized agent or advocate. A written defence must contain all grounds of defence and a specific admission or denial of each ground alleged by the plaintiff, except the amount of damages.

On the basis of the parties’ statements and pleadings, the court records the agreed facts, the disputed questions of law or fact and the evidence that the parties intend to present. If the defendant fails to present a defence when required, the court may take evidence in support of the plaintiff’s claim and pronounce judgment against the defendant or make another order that it considers appropriate.

At the hearing, the party bearing the burden of proof presents its case and evidence first, after which the opposing party presents its case and evidence. After considering the disputed issues, the court pronounces judgment immediately or within a short and reasonable time.

In a money judgment, the court may order interest on the principal sum adjudged from the date of initiation of the suit until payment or another date determined by the court. The rate of interest may not exceed the rate adjudged on the principal sum for the period before the suit and may not exceed the prime rate established by the Bank of Southern Sudan plus five basic points. Interest must be claimed in the plaint; if the decree is silent on interest, the court is treated as having refused it and a separate suit for that interest may not be filed.

A judgment of the Payam Court may be appealed to the County Court. A judgment of the County Court may be appealed to the High Court. A judgment of the High Court may be appealed to the Court of Appeal, and a judgment of the Court of Appeal may be appealed to the Supreme Court of South Sudan. The appeal must be submitted within 15 days from the commencement of the time for objection. As a general rule, this time starts from communication of the judgment or order to the parties; if the person against whom the decree was passed was present when judgment was pronounced or was summoned to attend and failed to appear, it starts from pronouncement of judgment. The judgment of the Supreme Court is final in the ordinary appeal chain.

Where the creditor already has a foreign court judgment and the debtor is resident in South Sudan or has property there, the creditor may use the route for recognition and enforcement of foreign judgments. A foreign judgment, decree or order may be enforced in South Sudan if it was issued by a competent judicial tribunal, became final under the law of the issuing country, the parties were duly summoned and represented, it does not conflict with a prior judgment or order of South Sudanese courts, is not contrary to public order or morality in South Sudan, was not obtained by fraud and is not founded on a breach of South Sudanese law.

A certified copy of a foreign judgment is presumed to have been pronounced by a foreign court of competent jurisdiction unless the contrary appears on the face of the record, although this presumption may be rebutted by proof of lack of jurisdiction. If the foreign judgment is executory in the country where it was given, the creditor may institute a suit for enforcement in South Sudan against a resident debtor or a debtor with property located in South Sudan.

After the judgment becomes enforceable, the creditor initiates enforcement proceedings before the competent court. Enforcement may target movable property first; immovable property is generally reached where the proceeds of movable property are insufficient to satisfy the judgment debt. The court may control disputes arising during execution, and a dispute relating to execution does not automatically stop execution unless the court directs otherwise.

In money judgments that remain wholly or partly unsatisfied, the court may summon the judgment debtor for examination regarding the ability to pay. In defined cases, the court may issue a warrant or commit the judgment debtor to prison, for example where the debtor had the means to pay but refused or neglected payment, contracted debts recklessly while unable to pay, gave an unfair preference, or transferred, concealed or removed property in bad faith to obstruct or delay execution.

Execution may also involve attachment and sale of property. Attachment of immovable property is made by order of a competent court and may prohibit transfer or charging of the property. The warrant should identify the execution debt and the property, and the attachment of immovable property is registered in the Office of the Registrar of Lands. Sale in execution is conducted by public auction, and shares or other stocks may be sold through a bank, stockbroker or another method ordered by the court.

The creditor keeps the enforcement process active throughout the execution stage. Where no application is made to the court within six months from the date of the last order made in an execution, the execution is deemed satisfied and the record is closed, although the judgment creditor may apply to reopen it after payment of the prescribed fee.

An alternative route for debt recovery is the insolvency or bankruptcy procedure of the debtor. This route may be relevant when the debtor is unable to pay debts, where ordinary enforcement has been returned unsatisfied or where there is a need to examine asset transfers that may have reduced the estate available to creditors.

Under the Insolvency Act of South Sudan, a debtor is presumed unable to pay debts if the debtor has failed to comply with a statutory demand, if execution issued against the debtor in respect of a judgment debt has been returned unsatisfied in whole or in part, or if all or substantially all of the debtor’s property is in the possession or control of a receiver or another person enforcing a charge over that property.

A statutory demand must concern a debt not less than the prescribed amount. In the case of an individual, the debtor must be a judgment debtor; in the case of a company, the company must owe an ascertained debt, which does not have to be a judgment debt. Except where the debt is a judgment debt, the demand must be verified by a statutory declaration, served on the debtor and require the debtor to pay, compound with the creditor or give a charge over property to secure payment within 20 working days after service or a longer period ordered by the court.

The debtor may apply to set aside the statutory demand within 10 working days after service of the demand. The application must be supported by an affidavit and served on the creditor with the affidavit within the same 10-working-day period. The court may set aside the demand where the debtor has a counterclaim, set-off or cross-demand, where the creditor holds security covering the debt, or where another sufficient ground exists. Evidence of failure to comply with a statutory demand is admissible as evidence of inability to pay debts only where the petition is presented within 30 working days after the last date for compliance with the demand.

If the debtor’s assets are insufficient to satisfy creditors, the insolvency framework may be used to challenge voidable transactions. These include preferences, transactions at undervalue, voidable charges and insider dealings. A preference may involve a transfer on account of an antecedent debt made when the debtor was unable to pay due debts and within one year before the commencement of winding up or bankruptcy, or a transfer that allowed one creditor to receive more than would be received in the insolvency distribution. A transfer within the six months before commencement is presumed, unless the contrary is proved, to have been made while the debtor was unable to pay due debts and on account of a debt outside the ordinary course of business.

Transactions at undervalue may be challenged where they were entered into within one year before the commencement of winding up or bankruptcy and the debtor received consideration significantly below the value provided, became unable to pay due debts as a result, acted while financial resources were unreasonably small, incurred an obligation knowing it could not be performed, or entered into the transaction to put assets beyond the reach of creditors.

A charge over property given within one year before the commencement of winding up or bankruptcy for an antecedent debt may be voidable, subject to statutory exceptions. A charge given within six months before commencement is presumed, unless the contrary is proved, to have been given when the debtor was unable to pay due debts immediately after giving the charge. Insider dealings may also be voidable when a transaction within 12 months before insolvency involves spouses, siblings, children, socially close persons, employees, officers, professional service providers, business associates, partners, shareholders, directors or similar persons.

A creditor, liquidator, receiver, member, contributory or trustee seeking to set aside such a transaction files a notice in court specifying the transaction, the property or value to be recovered and the effect of the procedure, and serves the notice on the relevant persons. If no affected person applies to court, the transaction is set aside from the twentieth working day after service of the notice. Where a transaction is set aside, the court may order payment of the value of benefits received, restoration of transferred property, vesting of property in the company or trustee, release of a charge, provision of security or determination of the affected person’s creditor claim in the winding up or bankruptcy.

If you need support with debt collection in South Sudan, Grandliga can assist at each stage of the recovery process: debtor and asset assessment, preparation of a lawful demand and settlement strategy, analysis of jurisdiction and limitation issues, court proceedings, foreign judgment enforcement, execution against assets and insolvency-related recovery. The appropriate route is selected after reviewing the documents, the debtor’s status, available assets, enforceability of the claim and the practical prospects of recovery in South Sudan.

# DEBT COLLECTION AGENCY SOUTH SUDAN

15.11.2024

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