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Spanish Debt Collection Guide: Resolving Disputes, Protecting Business
A well-known result of Brexit, EU law no longer applies in the England and Wales except those laws that were enshrined in the law of England and Wales. One of the other consequences is that there is no longer reciprocal arrangements regarding enforcing court orders obtained through the English courts. This can affect businesses in many ways, causing an increased difficulty in collecting business debts as European Payment Orders or the European Small Claims procedure are no longer available.
Additionally, there are also added difficulties associated with cross-border disputes due to different business practices, culture, politics and language.
This guide explains how using a specialist international lawyer can assist with collecting debts from businesses in Spain, and how to protect your business from payment disputes in the future. We also provide guidance on how to resolve disputes in the most efficient, cost-effective way.
Click on the links below to jump to that section:
How specialist multi-jurisdictional lawyers in cross-border disputes can recover a business debt.
How to protect your business from the consequences of Spanish debt
Why ADR is a beneficial approach for cross-border debt
How cross-border lawyers can assist in Spanish dept collection
In Spain, the average payment term for an invoice is 48 days with a payment delay of 14 days for late payments. This differs from the UK – the default payment term is 30 days with a maximum of 60 days.
Language and cultural barriers can also be a problem, and finding the right lawyer for cross-border disputes is very important. A lawyer who has knowledge and expertise in multi-judicial law and who is multi-lingual and understands the cultural differences of both countries is a considerable assistance in cross-border disputes, especially where business practices differ. Giambrone offers a full cross-border debt collection service.
The documents that will be required in order to resolve a cross-border dept dispute amount to a contractual agreement on the payment amount, the terms of payment and also provide proof of your business relationship.
Protecting your business from cross-border debt
Preventing outstanding cross-border complications is the best strategy for businesses and avoids legal intervention down the line. There are a number of ways that you can avoid resorting to judicial intervention through your contractual agreements.
There are three main clauses that can protect your business from late payment of invoices:
- Retention of title: this provides the supplier with ownership of goods until your client has settled the invoice. In the event of late or missing payment, you still have ownership of the goods and may reclaim them from your customer.
- Jurisdiction: This clause allows your business to determine which court will have jurisdiction over a dispute should one arise. This allows your business to choose a jurisdiction that offers the best chance of recovering debts.
- Alternative Dispute Resolution (ADR): Ensures that disputes can be settled quickly and cheaply through negotiation using an arbitrator or a mediator. This needs to be agreed to prior to a dispute arising.
You will also want to set out the settlement terms. In England & Wales if no clause has been included regarding settlement terms, 30 days is applied. However obligatory Spanish settlement terms tend to be longer and can impact on the business.
The benefits of Alternative Dispute Resolution (ADR) for cross-border debt collection
Overseas business debts create a financial strain, and it can also be more complicated to obtain settlement.
Alternative Dispute Resolution (ADR) is a method of settling disputes through negotiation using third party mediation or arbitration. ADR with arbitration results in a legally binding decision reached by the arbitrator while ADR with mediation results in a non-legally binding decision reached by a mediator.
The benefits to ADR in cross-border disputes are that it tends to be much quicker to reach a resolution and it is much more cost-effective. This is because there is no need for judicial intervention.
Contact Giambrone & Partners
Giambrone & Partners offers remote ADR to further simplify your cross-border conflict resolution. For assistance in resolving your dispute today, please contact us via our online enquiry form or email us at clientservices@giambronelaw.com.
If you are having difficulty in collecting your outstanding invoices in Spain and your customers are extending their credit beyond your terms of business, Giambrone & Partners’ Spanish lawyers will help you manage this critical aspect of your company. We have experienced multi-lingual commercial lawyers based in Spain who can navigate both the courts and the business culture and collect your outstanding debts from all over Spain and Spanish territory. We are able to provide advice and assistance on all stages of the debt recovery process, from sending initial letters to the debtor company, issuing proceedings and enforcing judgments.
One of the major strengths of Giambrone is our wide-ranging cross-border capacity; our highly regarded teams of English-speaking Spanish lawyers offer specialised knowledge in a variety of areas of law, including:
- Company searches
- Tracing services
- Letter before Action
- Legal Action – Monitorio (Small Claims Court)
- Representation at a contested hearing
- Enforcement
- Insolvency.
Contact us today for assistance.