Debt Collection in Yemen

The debt collection procedure in Yemen begins with an assessment of the debtor’s solvency, scope of activity, business history, availability of documentary evidence of the debt, current court cases and enforcement proceedings, and the possibility of disputing the debt. This assessment determines the strategy to be employed 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 the 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 prompt debt collection.

The average time for informal out-of-court collection is up to 60 days (except in cases where a payment plan has been agreed upon). If this stage does not produce the expected results or, after an initial analysis, it becomes clear that it is not applicable, it is necessary to 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 5 years. The consequences of the expiration of the limitation period are applied in the court of first instance and on appeal 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. After the interruption, the limitation period begins to count anew.

Yemeni law provides for judicial debt collection in the ordinary court procedure and by issuing an order for payment.

The normal judicial procedure begins with the filing of a claim with the court. The court secretary then prepares a separate case file, assigning it a sequential number for inclusion in the court schedule. The original claim is given to the bailiff for notification of the defendant. After notification, the original claim is attached to the case file.

After notification, the defendant must submit a written or oral response to the claim at the scheduled hearing. In the case of an oral response, the secretary enters it into the minutes, which the defendant signs, and attaches it to the case file. The period for appearing in court is 10 days, but if the defendant is outside Yemen, the period for appearing is 60 days. The parties or their representatives must appear in court at the appointed time, by 8:00 a.m., waiting to be called by name.

If both parties fail to appear, the court adjourns the case for 60 days. If the plaintiff does not request a hearing within the specified period, the case is dismissed. If the plaintiff is present and the defendant, despite due notice, fails to appear without good cause, the court shall issue a second notice and may impose a fine. If the defendant fails to appear again, the court shall appoint a representative from among his relatives up to the third degree, an attorney, or another person at the discretion of the court, to conduct the case on behalf of the defendant. If the defendant appears, the representative shall be removed unless the defendant authorizes him.

At the hearing, the court shall accept documents not previously submitted with the statement of claim and the answer thereto and shall bring their contents to the attention of the other party. If the claim is in order, the judge shall require the defendant to answer all the facts, stating specifically what he admits and what he denies. The court shall record the admitted and contested points and shall instruct the plaintiff to prove the defendant’s denials by hearing his arguments and witnesses.

If the defendant has admitted, denied, or remained silent, and the plaintiff has proven the facts denied by the defendant, or if the plaintiff has demanded an oath from the defendant and the defendant has refused, the court shall rule in favor of the plaintiff. If the plaintiff has failed to provide evidence or has not demanded an oath, or if the defendant has taken an oath, the claim shall be dismissed. The court shall grant a stay if a party requests time to produce a significant document, to respond to a document produced, or to call witnesses.

The parties may agree to suspend the proceedings for up to one year to obtain evidence that has not been provided previously, if they present compelling reasons to the court. In this case, the court may set a period sufficient to suspend the case.

When the court finds the evidence provided sufficient to make a decision, the court concludes the hearing and makes a decision.

The procedure for issuing a payment order is used to collect debts in a clearly defined amount that are supported by documents. To do this, the creditor must send the debtor a demand for payment, and if the debtor does not comply with it within five days, the creditor has the right to file an application with the court for an order. The application must be accompanied by documents confirming the existence of the debt and proof of service of the demand. After the application is filed, the court issues an order for payment within a week. If the court cannot satisfy the application, a hearing is scheduled.

The application and the order must be served on the debtor within three months from the date of issuance of the order, otherwise it loses force. The debtor may appeal the order within 10 days of receiving it. The objection is considered in the same manner as a claim. If the defendant fails to file an objection within the prescribed period, the payment order becomes a final decision.

The decision of the court of first instance may be appealed to the court of appeal within 60 days from the date of notification of the contested decision. However, appeals against decisions of the courts of first instance are not allowed if the amount of the claim for a civil case is less than 100,000 riyals, for a commercial case 300,000 riyals. The decision of the court of appeal may be appealed to the Supreme Court of Yemen within 60 days from the date of notification of the contested decision. 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 procedure for enforcement. The decision can be presented for enforcement within 5 years. In the context 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 movable and immovable property of the debtor with their subsequent sale; seizing and confiscating securities; seizing and confiscating company shares, seizing and confiscating the debtor’s property held by third parties.

An alternative option for collecting a debt from a company or an entrepreneur is the bankruptcy procedure of the debtor. According to the Commercial Law of Yemen, the creditor has the right to initiate this procedure if the debtor’s activities are disrupted and he has stopped paying his debts. At this stage, if the debtor’s assets are insufficient to fully satisfy the creditors’ claims, it is possible to cancel the debtor’s transactions made with the intent to harm the creditors. Such transactions or actions made after the date of cessation of payments, but before the bankruptcy decision is made, include, in particular: any gifts, with the exception of small gifts; early repayment of debts that are not yet due; repayment of debts in a manner not agreed upon by the parties; provision of security for pre-existing debts; any transaction that causes damage to creditors, provided that the debtor’s counterparty knew about the cessation of payments. Claims for the cancellation of these actions or transactions may be filed within one year from the date of the bankruptcy decision. As a result of the cancellation of the above transactions, it is possible to return to the debtor what he lost from such transactions and, due to this, increase the liquidation estate to satisfy the claims of creditors and cover the costs of implementing the bankruptcy procedure.

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

# DEBT COLLECTION AGENCY YEMEN

08.11.2024

277