The process of recovering debts can be extremely challenging, particularly when the individual debtor in question is sophisticated, and holds assets in multiple jurisdictions around the world.
The legal process of asset sequestration, or seizure, differs markedly depending on which country or legal system is governing the courts in question. There are powerful tools available to help to locate, freeze and recover international assets from a judgment debtor, which can be utilised before a judgment has been won, but there are tough standards.
These tools are referred to differently according to jurisdiction and are called, variously, pre-judgment attachment orders, pre-trial seizure orders and precautionary garnishee orders.
Understanding the requirements to gain access to these legal options is key, and for that, local expertise is required. In Florida, for instance, the standards are equivalent to clear and convincing evidence of fraud, while in the civil law jurisdictions of Portugal and Italy, the legal concepts of Periculum in mora and Fumus boni iuris must be satisfied before a pre-judgment order can be gained against a problem debtor.
Once access to these localised systems of sequestration has been secured, the task of recovering international assets becomes much easier. In some jurisdictions, the powers granted are significant, such as in the Dominican Republic, for example. A plaintiff creditor can attend a debtor’s bank with a pre-judgment order and have his assets immediately frozen since the country’s financial system operates on the principle of prima facie non-judgment of embargo claims.
Plaintiffs may have to pay substantial refundable deposits to the court in question in order to enable sequestration, as is the case in Taiwan, but this seems a fair price to pay for the ability to trace, freeze and eventually seize assets in payment of a debt. In China, this requirement for a deposit can be avoided, by utilising a guarantee company, who will satisfy the bond requirement for a small percentage of the eventual claim.
If there are concerns about the ability of the debtor to relocate, sell or hide assets prior to judgment, then pre-judgment attachment orders can be applied for anonymously in certain circumstances, making it more difficult for debtors to escape justice. The ways and means of achieving this in different parts of the world are discussed in more detail below and do, again, rely on an intimate knowledge of the legal systems in question.
The following discussion is designed to provide a good understanding of international debt recovery, as applicable to personal assets. It details an interesting cross-section of jurisdictions and the various options available to aid asset recovery in each country. The most important point to take away though must be the importance of engaging local legal expertise in the process from an early stage, to ensure efficient navigation of the legal system and full utilisation of the most powerful sequestration tools available.
The feature includes commentary from IR Global members in the US – Florida, Portugal, China, Taiwan, Italy, Luxembourg, Switzerland, Malta, Brazil and the Dominican Republic.