Debt collection in Tajikistan

Debt collection in Tajikistan requires choosing the legal route that can bring the creditor a practical result: out-of-court settlement, court order proceedings, a claim before the economic court, simplified proceedings, enforcement proceedings, or recognition and enforcement of a foreign court judgment or arbitral award. Before taking action, it is important to analyze the debtor’s legal status, location, actual business activity, assets in Tajikistan, pending court disputes, existing enforcement proceedings, contract terms, primary documents, correspondence, reconciliation statements, acknowledgment of debt and possible objections.

For a foreign creditor, it is especially important to check where the debtor and its assets are actually located, in what language the documents were prepared, whether the contract contains a jurisdiction clause or a pre-trial claim procedure, and whether the evidence can be used before an economic court in Tajikistan without delays caused by correcting or translating documents. If the debt is confirmed by a contract, invoices, acts, delivery documents, payment records, business correspondence or written acknowledgment of debt, the creditor’s position is usually stronger both during negotiations and in subsequent court proceedings.

If there are no open lawsuits against the debtor, no unexecuted court decisions on debt collection and the debtor continues business activity, out-of-court debt collection may be used first. This stage may include negotiations, a written payment demand, a repayment schedule, return of goods, set-off of mutual obligations, transfer of debt or another lawful settlement that allows the creditor to obtain a result without full court proceedings.

Communication with the debtor should be built in a way that can be documented. In practice, a written demand, postal delivery, email, telephone negotiations and official business correspondence may be used. The purpose of this stage is not improper pressure, but to record the creditor’s position, verify the debtor’s reaction, identify possible objections, assess the willingness to pay voluntarily and prepare an evidentiary basis if the dispute must later be brought before the court.

The average term for out-of-court collection is up to 60 days. If the debtor avoids negotiations, disputes the debt without convincing evidence, transfers assets, stops business activity or the out-of-court stage does not bring a practical result, the creditor should proceed with recovery through the court.

The general statute of limitations in Tajikistan is 3 years. The statute of limitations and the rules for calculating it cannot be changed by agreement of the parties. Expiry of the limitation period does not prevent the creditor from filing a claim, but if the debtor invokes the statute of limitations before the court act is adopted, expiry of the period may become a ground for dismissal of the claim.

The limitation period begins from the day when the creditor knew or should have known about the violation of its right and about the proper debtor. For obligations with a fixed performance date, the limitation period begins after that date expires. The limitation period may be interrupted by filing a claim in the established manner, as well as by actions of the debtor that indicate acknowledgment of the debt or another obligation. After interruption, the period starts running again, and the time that elapsed before interruption is not counted in the new period.

Before going to court, it is necessary to check whether the contract or the law provides for a mandatory pre-trial claim procedure. If the parties agreed that the dispute must first be resolved by sending a claim to the debtor, the creditor must comply with this condition before filing the claim: state the basis of the debt, the amount, the calculation, the payment deadline and keep proof of sending. When filing a claim with the economic court, it is also important to confirm that a copy of the statement of claim and attachments has been sent to the defendant, because procedural mistakes at this stage may lead to return of the claim or delay in the case.

The legislation of Tajikistan provides for several judicial ways to recover a debt: proceedings based on a court order, ordinary litigation and simplified proceedings. The appropriate procedure depends on the nature of the claim, the available evidence, the debtor’s position, the amount and whether there is a dispute over the right.

The procedure for issuing a court order may be used when the claim is based on a transaction concluded in simple written form and is supported by documents. The creditor submits an application to the economic court, indicating the claims, facts and documents confirming the debt. The order may be issued within three days after the application is filed, without a trial and without summoning the parties.

This procedure is not suitable for every debt. The judge may refuse to accept the application if the claim does not fall within the scope of court order proceedings, if the debtor’s place of residence or location is outside the Republic of Tajikistan, if documents confirming the claim have not been submitted, or if the application and documents show that there is a dispute over the right. Therefore, before choosing this procedure, it is necessary to assess not only the existence of the contract, but also the likelihood of objections from the debtor.

If the debtor does not file objections within 10 days after receiving the court order, the court issues the order to the creditor, certified by the official seal of the court, for further enforcement. If the debtor files objections, the judge cancels the order, and the creditor may pursue the claim through ordinary litigation.

Ordinary litigation applies when the debt is disputed, court order proceedings cannot be used, or the creditor needs to present a broader evidentiary basis. The statement of claim may be filed with the economic court in writing or electronically with a digital signature if electronic filing tools are used. The claim must state the demands against the debtor, the facts of the dispute, the calculation of the amount claimed, applicable legal grounds, information on compliance with the pre-trial claim procedure if it is mandatory, and the list of evidence.

The issue of accepting the statement of claim is decided by the judge within five days after it is received by the economic court. After acceptance, the court prepares the case for trial; such preparation must be completed within one month after the statement of claim is received. After the court issues a ruling setting the case for trial, the case must be examined and a decision must be adopted within one month, unless another term is provided by the code. In practice, the duration of the dispute may increase due to notification of the parties, submission of additional evidence, adjournment of the hearing, objections from the debtor or complexity of subsequent enforcement. The decision of the court of first instance enters into force within one month from the date of its adoption, unless a cassation appeal is filed.

Simplified proceedings may be used when the creditor’s claims are undisputed, acknowledged by the debtor or involve a small amount. This procedure may apply, in particular, to property claims based on documents confirming the debt, as well as claims of legal entities for an amount not exceeding one hundred statutory indicators for calculations and claims of individual entrepreneurs for an amount not exceeding ten statutory indicators for calculations.

A case in simplified proceedings is considered by a single judge under the general rules of litigation, but with the special features of this procedure. The term for examination must not exceed one month from the date when the statement of claim is received by the economic court, including preparation of the case and adoption of the decision. In the ruling accepting the claim, the court sets a 15-day period for submitting objections against simplified consideration, a response to the claims and other evidence. The case is considered without summoning the parties: the court examines written evidence, the response, written explanations and other documents.

If the debtor objects to the claims or if either party objects to consideration of the case in simplified proceedings, the court issues a ruling to consider the case under the ordinary rules of litigation. A decision in simplified proceedings may be adopted only if the debtor has not submitted objections on the merits of the claims within the period set by the court. Such a decision may be appealed within one month from the date of its adoption.

A cassation appeal against a court decision is considered within one month from the moment the complaint is received by the court. After considering the complaint, the court adopts a decision, which enters into force from the moment of its adoption.

A court act that has entered into legal force may be reviewed through supervisory proceedings within the system of economic courts of Tajikistan within six months after it enters into legal force. This remedy is not an ordinary rehearing of the dispute, but is used when the applicant refers to substantial violations of substantive or procedural law.

After a supervisory complaint is filed, the judge may examine whether the case file should be requested. The requested case file is examined within a period not exceeding two months, with the possibility of extension for one additional month. If the case is transferred for consideration on the merits in the supervisory instance, it is examined within a period not exceeding one month. The examination takes place in a court hearing with the participation of the persons involved in the case, if they appear, and the act adopted in the supervisory instance enters into force from the date of its adoption.

If the creditor has already obtained a judgment of a foreign court or a foreign arbitral award, recognition and enforcement of foreign judgments may be required to recover the debt from the debtor or its assets in Tajikistan. In economic disputes, such applications are considered by the economic courts of Tajikistan if recognition and enforcement of the relevant decision are provided for by an international instrument recognized by Tajikistan.

The application is filed with the economic court at the debtor’s location or place of residence; if that place is unknown, the application is filed at the location of the debtor’s assets. For a foreign court judgment, the application usually includes a duly certified copy of the judgment, a document confirming that it has entered into legal force, evidence that the debtor was duly and timely notified of the proceedings before the foreign court, a document confirming the representative’s authority, proof that a copy of the application was sent to the debtor, and a certified translation of the documents into the state language or the language of interethnic communication. For a foreign arbitral award, the duly certified award, the arbitration agreement and translations of the documents are attached, unless an international treaty provides otherwise.

The economic court considers an application for recognition and enforcement of a foreign court judgment or arbitral award within one month from the date it is received. In this procedure, the court does not reconsider the foreign decision on the merits, but checks whether the conditions for recognition and enforcement are met. After recognition, compulsory enforcement is carried out on the basis of a writ of execution issued by the economic court. A foreign court judgment or arbitral award may be submitted for compulsory enforcement within three years from the date it entered into legal force.

After the court decision enters into legal force, if the debtor does not comply with it voluntarily, the creditor must obtain a writ of execution from the court and present it to the enforcement authority. A writ of execution issued on the basis of a court act or court order may be submitted for enforcement within three years.

Enforcement proceedings in Tajikistan are aimed at actual recovery of the awarded amount, not merely at the formal existence of a court decision. Enforcement actions related to the sale of immovable property must be carried out within a period not exceeding four months, while in other cases enforcement actions must be carried out within a period not exceeding two months from the date the enforcement document is received by the enforcement officer in the order of receipt. In practice, enforcement may take longer if it is necessary to search for assets, identify bank accounts, establish the debtor’s actual location, levy execution on property or overcome obstruction by the debtor.

Enforcement measures may include seizure of the debtor’s funds, movable property, immovable property, claims against third parties and other transferable property rights. The law also provides for temporary restriction of the debtor’s departure from the Republic of Tajikistan. If during enforcement it is established that the debtor’s assets are insufficient to satisfy the debt and the law allows the debtor to be recognized as insolvent, the enforcement officer must notify the creditor.

Bankruptcy of the debtor may be considered as a separate tool for protecting the creditor when ordinary recovery does not bring results and there are signs of insolvency. Under the legislation of Tajikistan, legal entities, individual entrepreneurs and foreign legal entities may be considered unable to satisfy creditors’ monetary claims and mandatory payments if such obligations are not fulfilled within three months after they become due and the total amount of obligations exceeds the value of the debtor’s assets.

A bankruptcy case may be initiated by the court when the claims reach the threshold established by law: at least five hundred statutory indicators for calculations for small and medium-sized business entities and other legal entities, and two thousand statutory indicators for calculations for large business entities. After the court accepts the application to declare the debtor bankrupt, property claims against the debtor must be submitted in accordance with the bankruptcy procedure, while enforcement of writs of execution for property claims is generally suspended, subject to statutory exceptions.

The bankruptcy procedure is important not only as a way to participate in distribution of the debtor’s assets. The law also provides for consequences for persons who manage or control the debtor, including liability in cases established by law when insolvency is connected with failure to file a bankruptcy application or with actions that brought the debtor into insolvency. Therefore, in large debt cases, it is important to assess not only the assets of the debtor company, but also the conduct of the persons who actually influenced its financial condition.

Criminal liability does not replace civil or economic debt recovery, but it may become relevant after a court act has been obtained if there are signs of malicious non-execution of the court decision or obstruction of its enforcement. Under Article 363 of the Criminal Code of the Republic of Tajikistan, liability may arise for failure to execute a sentence, court decision or another court act. For the creditor, this mechanism is relevant when the court decision has already entered into legal force, enforcement actions have begun, and the conduct of the debtor or its officials indicates an intentional refusal to comply with the court act.

If you need to organize debt collection in Tajikistan, it is important to assess the documents, limitation period, debtor’s status, possibility of out-of-court settlement, appropriate court procedure, prospects of enforcement proceedings, bankruptcy risk and possible recognition of a foreign court judgment or arbitral award in advance. Our company can assist in analyzing the situation, choosing the legal route for recovery, preparing the necessary actions and supporting the process with regard to local law and the international element.

# DEBT COLLECTION AGENCY TAJIKISTAN

06.02.2022

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