Debt collection from international agency
Thread poster: Emal Ghamsharick

Emal Ghamsharick  Identity Verified
Germany
Local time: 00:31
English to German
+ ...
Nov 25, 2014

Hello all, I have the following issue:
An international agency owes me a big sum for a job. They're about 1 month overdue by their terms, 3 months by my payment terms.

They have an office in the UK, but also in Berlin. The problem is: the two offices are separate companies. UK is an Ltd., Berlin is a GmbH, but they run under the same name.

My question: Can I legally collect the money from the German subsidiary? It would be a lot easier for me, because it's my own jurisdiction.
Second question: Whose payment terms apply? On my invoice, I always write 14 days, but they wrote 60 days (that's the EU-wide maximum). Whose terms apply?

Any previous experiences?


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Joakim Braun  Identity Verified
Sweden
Local time: 00:31
German to Swedish
+ ...
No Nov 25, 2014

It's immaterial if the companies have the same name. Each company is a separate legal entity (after all, that's the whole point of having separate companies). I'd be extremely surprised (and alarmed) if it were possible to collect the debts of one company from other companies in the same group.

You will have to take action against the company that signed off on the PO.


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Sheila Wilson  Identity Verified
Spain
Local time: 23:31
Member (2007)
English
+ ...
You sue the company that has ignored your invoice Nov 26, 2014

You sue the company whose name you wrote on the invoice. As for T&C, it depends which you agreed to use. If the first the client knew of your 14 day rule was on receipt of the invoice, you'll have a hard job enforcing it. If you received the PO before you started work, and it stated in b&w that the term was 60 days, then that's how long you have to wait. It should have been discussed at the time if you weren't happy. If nothing at all was mentioned by either party either explicitly or in a reference to T&C (e.g. a link) before you started work then the EU 'norm' of 30 days theoretically applies.

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Emal Ghamsharick  Identity Verified
Germany
Local time: 00:31
English to German
+ ...
TOPIC STARTER
Thanks Nov 26, 2014

Thank you for clarifying. They might have written something in their PO.
In any case, the payment is overdue, because it's more than 60 days, the legal maximum. Anyone have experiences with EU-wide debt collection? Which sum makes it worth the time and trouble?


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Adam Kiolle  Identity Verified
Netherlands
Local time: 00:31
German to English
+ ...
Go to a lawyer! But, some general observations about cases such as.. Nov 26, 2014

Dear Colleagues,

First and foremost - I would discourage anybody from trying to seek clarity regarding (potentially complex) legal problems on a translation forum! In addition to not being qualified to give you the guidance you need, people who are not admitted as legal practitioners are not generally even allowed to provide legal advice!

This being said, perhaps I can make some general observations about some of the legal issues that are raised in cases of breaches of contracts with cross-border implications.

This should not be relied on as legal advice; it is merely for information purposes.

Issue 1
1) Who to sue
Joakim and Sheila are right - different corporate entities are regarded as distinct legal persons in basically any legal system. In most cases, trying to pursue XYZ GmbH for XYZ Ltd's debts or vice versa would be as legally unsuccessful as saying "John stole my cat, let me see if the court will let me sue his friend who also happens to be called John". There are some exceptions to this principle, but they are relatively rare, heavily dependant on the facts of the case in question and will be different from jurisdiction to jurisdiction.

2) Where to sue
Just because a company is incorporated in one jurisdiction, it does not necessarily mean that you have to bring actions against it in its "home" jurisdiction. In the European Union, a court's jurisdiction is established in accordance with the Regulation Brussels I (or, for proceedings initiated after 10 January 2015, so-called Regulation Brussels I bis/recast - Regulation (EU) No 1215/2012).

Under Art. 4 of Brussels I bis, the starting point is that a defendant who is domiciled in a member state should be sued in the courts of that member state. Thus (read in conjunction with Art. 63(1) and (2)), the general rule is that a company should be sued before the courts of the member state in which it has its registered office, central administration or principal place of business.

However, under Art. 25 RBI bis (and the equivalent under the old regulation), if the parties have included a so-called choice of forum clause in their contract, then this will identify the court(s) that have jurisdiction over any disputes arising out of or in relation to the contract, notwithstanding the general rule under Art. 4.

If the parties have failed to expressly elect a forum, the Regulation also provides some rules on the basis of which the jurisdiction of a court other than the defendant's home court may be established. Relevantly, in matters relating to contracts, Art. 7(1)(a) provides that "A person domiciled in a Member State may be sued in another Member State [...] in the courts for the place of performance of the obligation in question." Thus, a party who has failed to perform the obligation of payment under a contract may be sued in the courts of the place in which that obligation was to be performed, even if this leads to the courts of a member state other than that in which the non-performing party is domiciled.

According to the European Court of Justice, the question of where the performance of the obligation in question is a question that must be determined in accordance with the lex contractus (see the decision of the ECJ in Case 12/76, Industrie Tessili Italiana Como v. Dunlop AG), that is, the law applicable to the contract. Just as the question of which court(s) has/have jurisdiction over a dispute arising out of a contract with cross-border implications is complicated, so too is the question of which law applies to it. A contract between - let's say - a Germany-based translator and an England-based company could potentially be subject to German law, English law or perhaps some other law.

The relevant European norm for the determination of the lex contractus is Regulation (EC) No 593/2008 on the law applicable to contractual obligations (Regulation Rome I). Here, the starting point is the choice of the parties. Article 3 provides that "a contract shall be governed by the law chosen by the parties".

Like Regulation Brussels I bis, Regulation Rome I also provides rules which courts apply in determining the law of application in the absence of an express or implied choice by the parties. Relevantly, Art. 4(1)(b) provides that the lex contractus for contracts for the provision of services in which no choice of law has been made by the parties will be the law of the place in which the service provider has his or her habitual residence. Thus, in the example of the English translation agency and the Germany-based freelance translator, in the absence of a choice of law, the lex contractus would be German law.

The final answer to the question of whether or not German courts have jurisdiction would then depend on whether German law considers the place of performance of an obligation of payment to be the place in which payment is made or payment is received. Unfortunately, having undertken my legal training in Australia and the Netherlands, I cannot express any informed view as to how German law resolves this question. The upshot is: if German law found that the place of performance for an obligation of payment is the place in which the payee was to receive payment (in our example, Germany), then in the absence of an exclusive choice of forum, Art. 7(1)(a) of Regulation Brussels I bis would operate to bestow jurisdiction in the matter upon the courts of Germany, allowing the unpaid translator to bring his action before a German court if he so wished.

Note that there are quite a few "ifs" and assumptions in this response. In determining your precise position, reference will obvioiusly need to be had to the precise agreement between you and your client. In particular, you will need to establish whether you agreed on any choice of forum or choice of law clauses. These are usually towards the end of the contract and may be located under the "miscellaneous", "boilerplate" or "conflict of laws" provisions. If you never signed a written agreement or otherwise expressed agreement to your client's general terms and conditions, then the points regarding the rules for determination of lex contractus and court of jurisdiction outlined above could apply to your case.

Issue 2
3) Whose terms and conditions apply
This question is probably even more complicated than the last one, as there is no European regulation of automatic application. The following observations should be viewed as nothing more than very loose, general comments.

Generally (and I cannot stress the word "generally" enough! Different legal systems have different requirements!), a contract requires the making of an offer and the acceptance of the terms of that offer. Acceptance may be express or implied, for example by conduct.

Acceptance should generally(!) be in the same terms as the offer. Thus, if A offers B a cat for €10 and if B purports to accept the offer but for a purchase price of €9, this will generally(!) be deemed to be a counter-offer rather than an acceptance. This counter-offer must generally(!) then be accepted by the original offeror (here A) in order for a contract to arise.

I am reluctant to go any further than this because unlike issue 1, it goes beyond my area of specialty and involves questions that are more legal system-specific than those that arose under issue 1.

In relation to your case, the question of whether their terms of payment or yours apply is not of immediate importance as irrespective of the answer to this question, the agency in question appears to have failed to perform their obligation of payment (the question of whether a 30 or 60 day payment period applied will only really be relevant down the track when it comes to calculating the default interest that is payable). The more immediate issue is whether or not the terms and conditions that apply include a choice of law or choice of forum clause, as this question will be of central importance in determining whether or not you can bring an action before a German court.

In summary
I would once again emphasise that the above observations should not be relied on as legal advice. The only advice that I would give in relation to your case is the following:

1) Remember that litigation is often costly and lengthy. If you can resolve a dispute privately, this is almost always preferable to the "Gang zum Gericht". Options here include politely(!) but firmly reminding the debtor about the overdue invoice or threatening further steps such as the "Einschaltung eines Inkassobüros" or "Gang zum Rechtsanwalt". Sometimes this will be enough to prompt payment and will cost you no money and less time that it took me to write this post.

2) If you feel that you have exhausted your self-help options, then it is my strong recommendation that you take your matter to a lawyer (not a translators' forum ) without delay. A well-written lawyer's letter may be all that it takes to prompt payment. Certain legal costs may also be able to be recovered from the debtor. Failing this, your lawyer will be able to go over your matter, advise you on the courts to which your claim should be addressed and, should it come to it, represent you in any litigation.


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Sheila Wilson  Identity Verified
Spain
Local time: 23:31
Member (2007)
English
+ ...
Well, I'm prepared to stick my neck out Nov 26, 2014

Adam Kiolle wrote:
In addition to not being qualified to give you the guidance you need, people who are not admitted as legal practitioners are not generally even allowed to provide legal advice

Allowed or not, I suggest that you complete the online application form for a European Payment Order. Once completed, and before submitting the form with your payment of less than €50, I'd save it as a PDF and send it to your client. It could well be that the agency will pay immediately as they'll see that you aren't prepared to let them get away with non-payment.

But there may be a few steps before that. Have you tried phoning, sending reminders to different email addresses, sending a final demand by post to the company's registered address...?

Of course, if we're talking of several thousand euro then a lawyer would be worth the money. But the EU has special simplified procedures in place for small claims. I successfully used the French ones (we were both in France) without a lawyer and with all costs reimbursed by my (ex) client. I believe the EU used the French system as the basis for the EU one.


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Adam Kiolle  Identity Verified
Netherlands
Local time: 00:31
German to English
+ ...
European order for payment - great tip! Nov 26, 2014

Sheila's suggestion of looking into a European order for payment also sounds like a good idea. I was previously unaware of this procedure, but having looked at it now, I would join her in recommending this as an option before going to the expense of engaging a lawyer.

Be sure to let us know how it works out.

Good luck!


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Sergei Tumanov  Identity Verified
Local time: 01:31
English to Russian
+ ...
for state companies Nov 26, 2014

... then the EU 'norm' of 30 days theoretically applies.


it is for state companies...

for other entities 60 days is the norm

As far as I know this after reading the documents on the matter.


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Emal Ghamsharick  Identity Verified
Germany
Local time: 00:31
English to German
+ ...
TOPIC STARTER
Great tip Nov 27, 2014

Thanks for the idea with the EU payment order. I'm trying it ASAP.
As for contacting all members of the company, here's a real-live Skype conversation:


[26.11.2014 17:14:41] EG: Hello [PM], we worked together on a project recently
[26.11.2014 17:15:02] EG: could you forward me to somebody directly from your accounting department?
[26.11.2014 17:15:20] EG: the general e-mail does not seem to work...
[26.11.2014 17:41:09] [PM]: Hi Emal, I am afraid that's the only contact we have for our AP and they should be getting your emails
[26.11.2014 17:43:31] EG: thanks for the info. I've sent them 2 or 3 mails in the last weeks concerning the [...] project I did for you 3 months ago. it's more than 3 weeks overdue... maybe you can ask?
[26.11.2014 17:44:23] [PM]: I am afraid PMs don't have much powwer in these matters, as we are part of the production
[26.11.2014 17:46:00] EG: yes, I see you can't arrange payment
[26.11.2014 17:46:24] EG: but maybe there was something wrong with the delivery and I missed it?
[26.11.2014 17:47:25] EG: The project no. was [...]
[No reply]

Now I'm ready to send them a SWAT team


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Yolanda Broad  Identity Verified
United States
Local time: 18:31
Member (2000)
French to English
+ ...

MODERATOR
Blue Board? Nov 27, 2014

Have you considered making an entry on the Blue Board? You can always change it later, when/if you get paid. In the interim, it will let the company know others are watching, along with letting your fellow translators know that the company is unreliable.

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Debt collection from international agency

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