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What does it mean for the legal industry? - Commercial Law League ...

What does it mean for the legal industry? - Commercial Law League ...

foreign

foreign collections Domestic business within the United States is the mainstay of the vast majority of CLLA members. However, the increasing globalization of trade makes it important for all lawyers and other collection industry members to know at least a little about how collection work is handled in other countries to manage expectations and identify problems before they arise. Clients and creditors may think that it is just as easy to collect a debt in another country as it is in the United States — but that rarely is the case. As always, local representation can be key to successfully collecting debt in another country. However, England-based attorney Steven A. Frieze offers insight on international practices in this issue’s international Q&A. Steven A. Frieze MA (Oxon) Frieze is a solicitor of the Supreme Court of England and Wales and is a licensed insolvency practitioner. He is a partner in the fi rm of Brooke North, which has offi ces in London and Leeds (England). Throughout his career, Frieze has been involved in litigation — especially insolvency litigation — although for the last 15 years, he has also specialized in international debt recovery litigation for clients based outside the U.K. who have claims in England and Wales. TEN QUESTIONS AND ANSWERS TO A FOREIGN COLLECTION LAWYER: England Are there any problems with a U.S. claimant pursuing a claim against a debtor in your country? Providing that the debtor is resident in England and can be served with the proceedings, there is jurisdiction to bring a claim. This assumes that there is no exclusive jurisdiction clause in the contract between the parties that would require the suit to be fi led somewhere else. Choosing which system of law applies to the contract is not the same as an exclusive jurisdiction clause. The only disadvantage that foreign claimants have in the U.K. is that they may be required to provide security for the debtor’s legal fees and expenses in the event that they do not succeed in their claim against the U.K. debtor. The outstanding invoices are in dollars. Can the claim made in court proceedings be in dollars? Claims can be made in whatever currency was the currency of the agreement between the parties. If there is no contractual right to interest, can interest nonetheless be claimed — and if so, at what rate? If there is a contractual right to interest, then it can be claimed at the contract rate. If there is no contractual rate, then interest pursuant to statute can be claimed — if proceedings have begun — and the usual rate allowed is 8% per annum simple. Debt 3 March/April 2010 16 He is the author of a number of practitioners’ books on insolvency law and has been the general editor of Insolvency Intelligence (a journal on insolvency law published in England) since its inception in 1988. Frieze is a regular speaker at seminars on creditors’ rights and insolvency and has taken part in such seminars in many countries, both on behalf of the CLLA and other organizations.

Can lawyers in your jurisdiction work upon a contingency fee basis — and if so, and insolvency practitioner and what are the typical rates? Lawyers in the U.K. can act on a contingency fee basis up to the time that legal action is actually commenced. They then are not allowed to act on a contingency-fee basis but can enter into an agreement that has a similar effect called a conditional fee agreement. The agreement gives the lawyers an enhanced fee for taking the risk — because, if the case is not successful and recovery isn’t made, they otherwise would not be paid. How do court costs compare with the U.S.? Court costs in the U.K. are much higher than in the U.S. They vary, according to the size of the claim, from $200 to $3,400. What language would the court proceedings be in, and do documents have to be translated? English, of course, is the official language in the U.K., so there is no need for translation. Will witnesses be required to visit your country for depositions in the trial? Deposition hearings don’t exist in the U.K. Evidence is initially given through a statement — but ultimately, witnesses will have to attend for the trial, if there is one, although it is possible for evidence to be given by video link. What are the rules regarding enforcement of a judgment obtained against a debtor in the U.S.? Judgments from the U.S. are not enforceable in the U.K., and it is necessary to start legal action again, even though a judgment has been obtained elsewhere. There are different rules regarding judgments obtained in other EU countries and countries of the British Commonwealth. What personal liability exists for the officers of a corporation that has issued checks which have not been honored? Officers of a corporation are not liable on a check that was not honored — unless they knew initially that the check would not be honored and that they would obtain goods or services in return for that check, which would amount to fraud. What liability do officers of the corporation have if the corporation goes into bankruptcy? Officers of a corporation can be made personally liable for the debts of an insolvent corporation — but only if it can be shown that they have been guilty of fraudulent or wrongful trading. Steven A. Frieze Steven A. Frieze is a solicitor and insolvency practitioner and a partner in the fi rm of Brooke North, London and Leeds. He is a specialist in international commercial collections and in all forms of insolvency work. He has been a member of the CLLA for more than 25 years and is a Debt3 Contributing Editor. E-mail: saf@brookenorth.co.uk Web site: www.brookenorth.co.uk Debt 3 March/April 2010 17

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