Debt collection in Sudan

Debt collection in Sudan begins with a legal and practical assessment of the debtor, the debt documents and the place where recovery can realistically be pursued. For a Sudanese company or a foreign company operating in Sudan through a branch, representative office or local agent, this assessment should cover the exact legal name, registered or operating address, business activity in Sudan, available assets, pending court cases, previous enforcement proceedings and the source of the obligation. For individuals and partnerships, the analysis should also cover residence, place of business, acknowledged debts, guarantees and property that may be reached through enforcement.

The first stage is to classify the debtor and the claim. A commercial debt based on a contract, invoice, delivery note, loan, settlement agreement, guarantee or acknowledged balance may require a different strategy from a disputed damages claim or a claim connected with employment, sale defects or termination of contract. This classification is important in Sudan because the available route may involve ordinary court proceedings, enforcement of an existing foreign judgment, corporate winding-up, or bankruptcy proceedings against a debtor to whom the Bankruptcy Law applies.

If the debtor is still active, has identifiable decision makers and has no enforcement history showing clear inability to pay, the case can begin with out-of-court debt collection. This stage is built around a written demand, evidence of delivery, structured negotiations and a settlement record that can later be used to support the creditor’s position if the matter proceeds to court.

Negotiations may cover full repayment, instalments, return of goods, replacement performance, transfer of the debt to a third party, provision of security, or another commercially acceptable settlement. Communication with the debtor should remain traceable: letters, email correspondence, messages, minutes of calls and written settlement proposals may become important evidence of the creditor’s conduct, the debtor’s response and any acknowledgment of the debt.

If the debtor refuses to cooperate, disputes the obligation without sufficient grounds, avoids communication, conceals assets or the initial review shows that voluntary payment is unlikely, the next stage is court debt collection or another legally available recovery route.

Sudanese law contains specific limitation periods for different types of civil claims, so debt collection in Sudan should be assessed by the legal nature of the obligation and the relief requested. Under the Civil Transactions Law, a claim to annul a suspended contract is subject to a five-year period. A claim concerning the nullity of a void contract is not heard after ten years from the date of the contract. A compensation claim for tort damage is subject to five years from the date when the injured party became aware of the damage and the person responsible for it, and in all cases fifteen years from the date of the harmful act.

A claim for rescission of a sale contract, reduction of the price or completion of the price is subject to one year from delivery. A claim based on a defect in sold goods is generally subject to six months from delivery, unless the seller accepted a longer warranty or fraudulently concealed the defect. Claims arising from an employment contract are generally subject to one year from the end of the contract, except claims relating to confidential information of the employer.

Sudanese law provides for court debt collection through the ordinary court procedure.

The ordinary court procedure begins with the filing of a statement of claim before the competent court. The claim file should contain the creditor’s claims, the facts on which they are based, the amount sought, the supporting documents and the witnesses on whom the plaintiff intends to rely. In a debt case, the evidence usually includes the contract, invoices, delivery or acceptance documents, payment records, correspondence, debt acknowledgments, settlement attempts, guarantees and powers of attorney. The list of evidence should be prepared at the filing stage so that the court and the defendant can understand the basis of the claim from the beginning of the proceedings.

The court then sets an open court hearing to register the claim. At this hearing, the court discusses the grounds for the claim with the plaintiff and examines the evidence presented. If the claim meets the legal requirements, the court issues an order to accept the claim, pay the court fee and summon the defendant. The court fee must be paid within one day of the court order. Otherwise, the claim is dismissed.

On the appointed day of the case hearing, the parties must appear in person or through their authorized lawyers. If neither the plaintiff nor the defendant appears at the first hearing, the case is subject to dismissal. The plaintiff has the right to file a new claim or, within seven days of the case being dismissed, to petition for its reinstatement. If the court finds the plaintiff’s reasons for not appearing to be valid, it reverses the decision to dismiss the case and sets a new hearing.

If the plaintiff appears and the defendant fails to appear at the first hearing, the court shall hear the case in absentia if the defendant has been duly notified. If the court finds that the defendant has not been notified or that insufficient time has passed between notification and the hearing, the hearing shall be adjourned for further notice. If the defendant appears at subsequent hearings and gives a valid reason for not appearing at the first hearing, the court may allow the defendant to present a defense, subject to reimbursement of costs or other conditions.

If the plaintiff fails to appear at the first hearing and the defendant appears, the court may dismiss the claim unless the defendant admits all or part of the plaintiff’s claims. If the claim is dismissed in this situation, the plaintiff is generally not allowed to file a new claim on the same cause of action, but may apply within seven days to set aside the dismissal if there was a sufficient reason for non-appearance.

If a default judgment is entered against an absent defendant, the defendant may, within seven days of notice of the judgment, file a motion to set aside the judgment. If the court finds that the defendant was not properly notified or had good cause for absence, the court shall set aside the judgment and order a new hearing, subject to possible costs or other conditions.

At the hearing, the court shall hold a discussion with the parties present to determine the legal and factual issues in dispute between them. In lieu of a discussion, the court may order the parties to submit written explanations. If the defendant fails to present a defense and written explanations, the court may, after hearing the plaintiff’s evidence, enter judgment against the defendant or make any other decision it considers appropriate.

After completing the discussion or consideration of the written explanations, the court shall determine on the basis of them: 1) issues that are not in dispute between the parties; 2) legal and factual issues on which there is disagreement; 3) a summary of the evidence that the parties intend to provide to support the disputed facts.

After the disputed issues have been determined, the court proceeds to the hearing of the case, where it hears each party and its evidence. After reviewing the evidence, the court holds a final debate between the parties and makes a decision.

The decision of the court of first instance may be appealed to the court of appeal within 15 days from the date of notification of the contested decision. The decision of the court of appeal may be challenged before the National Supreme Court of Sudan within 15 days from the date of notification of the contested decision. The decision of the Supreme Court is final for the purposes of ordinary appeal.

If the creditor already has a judgment issued outside Sudan, the recovery strategy may include recognition and enforcement of a foreign judgment in Sudan. A foreign judgment or order may be enforced in Sudan only if it meets the statutory conditions for enforcement. These conditions include the competence of the foreign court, finality of the judgment, proper summons and representation of the parties, absence of conflict with a Sudanese judgment, compliance with Sudanese public order and morals, absence of fraud, absence of a claim based on breach of Sudanese law, and reciprocity of enforcement between Sudan and the foreign state.

A creditor may also bring a claim based on a foreign judgment if the debtor resides in Sudan or owns property in Sudan, provided that the judgment is enforceable in the country where it was issued. For international creditors, this route is important when the debt has already been confirmed abroad and the debtor’s assets, business activity or responsible persons are located in Sudan.

After the court decision becomes enforceable, the creditor should initiate the enforcement procedure. In Sudan, enforcement of a money judgment may include attachment and sale of movable property, attachment and sale of immovable property, attachment of debts, shares and securities, appointment of a receiver, and other measures available under the Civil Procedure Act. If the debtor is a legal person, enforcement planning should also consider the persons legally responsible for payment on behalf of that entity where the law allows measures against them.

For a money judgment, Sudanese law also provides for arrest and detention of the judgment debtor in the circumstances prescribed by the Civil Procedure Act. The debtor may be released if the amount is paid, the judgment creditor’s claim is satisfied, the creditor waives the claim, or the court accepts the debtor’s insolvency. These measures make asset tracing, correct identification of the debtor and timely enforcement filings important parts of debt recovery in Sudan.

Since the armed conflict that began in Sudan in April 2023 has affected parts of the justice system and legal infrastructure, practical planning should include the region where the debtor, assets, documents and competent court are located, the availability of service channels, and the feasibility of enforcement in the relevant area.

An alternative route for debt collection in Sudan may involve insolvency measures, but the correct procedure depends on the debtor’s legal status. If the debtor is a registered company, the relevant route is usually winding-up under the Companies Act. If the debtor is an individual or another debtor to whom the Bankruptcy Law applies, the creditor may consider bankruptcy proceedings.

For a corporate debtor, the Companies Act allows winding-up by the court, voluntary winding-up, or winding-up under the supervision of the court. A company may be wound up by the court if it is unable to pay its debts. A company may be treated as unable to pay its debts if a creditor with a due debt exceeding 50,000 Sudanese pounds serves a written demand at the company’s registered office and the company does not pay, secure or reasonably settle the debt within three weeks. A company may also be treated as unable to pay its debts if execution or another court process issued in favor of the creditor is returned unsatisfied, or if the court is otherwise satisfied that the company is unable to pay its debts, including contingent and future debts.

A winding-up petition may be presented by the company, a creditor, a contributory or other persons allowed by law. A contingent or future creditor may present a petition if the court is satisfied that there is a prima facie case for winding-up and that security for costs has been provided in the amount the court considers reasonable. Once a winding-up order is made, legal proceedings against the company are restricted and generally require permission of the court.

In a company liquidation, all debts and claims against the company, including contingent and future debts, may be proved. The Companies Act also regulates the priority of payment, including liquidation costs, certain government claims, secured debts, employee claims and ordinary unsecured debts. Transfers of shares after the commencement of liquidation may be void, and attachment, distress or execution against the company’s property after the commencement of winding-up by or under the supervision of the court is void without permission of the court. A floating charge created within three months before the commencement of winding-up may also be void unless the company was solvent immediately after its creation.

For a debtor covered by the Bankruptcy Law, the creditor may file a bankruptcy petition if the debt is a specific amount that is payable immediately or at a fixed future time, and the debtor committed an act of bankruptcy within three months before the filing of the petition. Acts of bankruptcy include transferring property to a trustee for creditors, transferring property with intent to defeat or delay creditors, making a fraudulent preference, leaving Sudan or remaining outside Sudan to avoid creditors, keeping away from the debtor’s place of residence or business, having property seized and sold in execution of a court judgment, notifying a creditor that payments have stopped or will stop, being imprisoned for more than 21 days for failure to pay a sum of money under a civil court order, or failing to satisfy a final judgment after a written demand.

If the debtor’s assets are insufficient to satisfy creditors, insolvency proceedings may allow transactions made with intent to damage creditors to be challenged. These transactions may include undervalue transfers, preferential treatment of one creditor over others, fraudulent transactions, and other acts affecting the debtor’s estate. If the relevant legal conditions are met, the court may reverse the effect of such transactions and return value to the debtor’s estate so that it can be used for the benefit of creditors and the costs of the insolvency procedure.

In company liquidation, the court may also examine the conduct of founders, directors, liquidators and other officers. If a person has retained, misused or become accountable for company money or property, or has committed breach of trust or misfeasance, the court may order that person to repay, restore or compensate the company. The court may also make orders involving related companies where it is just and equitable, including orders requiring a related company to contribute to the debts of the company in liquidation or pooling assets in appropriate cases.

Grandliga assists creditors with debt collection in Sudan at every stage of the recovery process: preliminary debtor and asset review, preparation of a demand file, settlement negotiations, court proceedings, recognition and enforcement of foreign judgments, enforcement measures, bankruptcy assessment and company liquidation strategy. If the debt involves a Sudanese debtor, assets in Sudan or a foreign judgment that may need to be enforced in Sudan, our team can help structure the case, prepare the evidence and choose the recovery route that fits the debtor’s legal status and available assets.

18.11.2024

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