A major event in Tunisia
The National Order of Judicial Officers of Tunisia, with the cooperation of the International Union of Judicial Officers and the French National Chamber of Judicial Officers, organised a colloquium on the topic: “Debt Collection, Judicial Officers and the Company”.
This colloquium was an important event for several reasons.
First, the selection of the topic, which is of current importance for our Tunisian colleagues, was able to bring together a plentiful and diversified audience. In addition to judicial officers, representatives of companies and institutions active in different socio-economic sectors were invited. Amongst them, several were included in the presentations on the topic.
Moreover, we noted the participation of several foreign delegations of judicial officers who came from different parts of the Europe-Mediterranean area. One novelty compared to previous gatherings was the presence of a significant Libyan delegation.
The President of the Tunisian National Order of Judicial Officers, Mr Mourad Skander, opened the work of the colloquium by mentioning that it was organised for the first time in partnership with representatives of different economic sectors and that he considered this day as the first sign of a fruitful cooperation based on confidence and mutual respect. He also considered that the cooperation with UIHJ and the National Procedures School in the organisation of the colloquium was a new manifestation of reaffirmed cooperation with the National Order of Judicial Officers.
The representative of the Minister of Justice and Human Rights, Mr Mohamed Fatnassi, then took the floor to express the Ministry's support for judicial officers in the achievement of their tasks so as to ensure debt collection through appropriate regulation. In conclusion, he wished the colloquium great success in its work.
A judicious choice
The choice of the topic of the colloquium was no accident. It was dictated by the conditions of debt collection that prevail today in Tunisia. It is a sort of alarm bell. It is high time to take stock of the situation, to put the problems that are of interest on this subject at the heart of a frank and profound discussion, with the hope of seeing collection evolve in the right way and thus allow companies to look ahead to better times.
Because of certain peculiar conditions, economic development in Tunisia has given way to a phenomenon that has assumed alarming proportions today and had a significant impact on companies; namely unpaid bills.
Mr Mohsen Trabelsi, a member of the Executive Bureau of the Employers' Organisation (UTICA), pointed out in his introductory remarks that: “In our time, unpaid bills are no longer considered as occasional accidents, they have become dangerous destabilising factors, sometimes influencing the whole financial policy of the country.”
The staggering rise in the number of unpaid bills is associated with the partial or total failure of actions designed to collect the unpaid debt.
The impression that is created is that debt collection lacks efficiency and the debt collection system is unreliable.
The negative performance of collection reaches all economic sectors. All companies, with perhaps a few exceptions, are confronted with the problem of unpaid bills and the lack of their collection. Particularly banks when they need to collect loans they make to companies and individuals.
Mr Mohamed Ben Sassi, a bank manager, considered that “financial institutions are the most exposed to the risk of non-payment. This risk has grown so much that it has affected the business of several institutions.”
But also manufacturing companies that make products for domestic use (especially household appliances), the number of which has taken off in Tunisia in recent years. These companies, so as to grow and enlarge their client base, have moved to selling on credit. This is not without risk, given delays and even defaults in payments for the companies involved.
There are certainly reasons behind what the representative of the Tunisian employers' organisation at the colloquium referred to as the dysfunctionality of the debt collection process for companies.
The unlimited multiplication of the number of unpaid accounts that drag on for a long period before the courts is one example.
Another is the attitude of debtors coupled with their assumed material needs who, instead of trying to meet their debts, prefer to try out ingenious schemes to avoid paying.
There are also the obstacles and difficulties which the judicial officer or bailiff must overcome so that he can carry out his responsibilities and obtain solid results in line with the expectations of lenders that have given him their debts to collect. These obstacles and difficulties are fundamentally linked to the legal instruments at the disposal of the judicial officer in Tunisia. And it's there that the harm is done.
All the participants in the colloquium noted that the legal system for collections, and in more general terms the civil and commercial procedures system that applies today, does not meet the real needs of participants in the economy and as a result cannot foster harmonious socio-economic development. This development really depends heavily on the growth of companies that create goods. Such development is also a product of what the chairman of the UIHJ Mr Jacques Isnard called legal security.
In essence he said: “Today, the reality is brutally logical that a country that does not display secure legal rules must expect to see a reduction in investments. Indeed, economists have underestimated the harmful impact on investment of uncertain and unsatisfactory legal environments.” He concluded on this subject that “no investment incentive or tax reduction can compensate for a lack of legal security.”
It is this security that seems to be missing or at least needs to be reformulated.
Failures in the system of legal collections
The different presentations each put a finger on the failures of the procedural system concerning enforcement of collections. Some show fundamental errors and combine to erect obstacles to legal debt collection.
Mr Mohamed Kamel Dridi, a judicial officer from Tunis and a member of the Scientific Council of the National Order of Judicial Officers of Tunisia discussed in his presentation the limits of the new features of seizure included in law No. 2002-82 of 3 August 2002. The amendments concerned several aspects including time periods for notification of seizure, the time period for filing of declarations of hearings of pleadings, the revision of the procedure of the implication of third party seizure, etc.
The speaker considered that the changes that had been made constitute a “real innovation on the subject” but are still not sufficient to meet the expectations of practitioners, in this case the judicial officers. The changes in the time period for registration, far from solving the problems that had shown up on the question of seizure, made its application more complicated still with results well under the desired level in terms of collections. “Three years after the date of this amendment, seizure remains a chancy thing and presents a procedural complexity. This, without even taking into account the colossal expenses for enforcement in the context of approval of a seizure.”
Mr Mahmoud Zarrouki, a judicial officer at Ariana and a member of the Chamber of Judicial Officers of Tunis, gave an overview of the current procedure for auction of good seized. As a matter of fact, the title of his presentation, “The Archaic Procedure for the Sale of Seized Goods” foreshadows the inadequacies that this method of enforcement can be accused of. This archaic aspect is perhaps the reason that has made legal sale in a public auction, which should have, in principle, constituted the end point of a procedure to recover debts, into a procedural burden with uncertain consequences concerning the collection. Law 2002-82 of 3 August 2002 includes, in article 394a of the civil and commercial procedural code, that “the bailiff must request the court of jurisdiction to designate an assessor to determine the actual value of significant non-fixed assets.” This procedure causes a great deal of slowness, beyond the fact that it requires the creditor to pay, in the first instance, for the expense of the assessment.
But beyond this aspect of the difficulties, it should be pointed out that the amendment of 3 August 2002 includes the cancellation forthwith of the seizure process when no bidder comes forward on the third date of sale and this outcome provided by the legislator, constitutes a penalty for the seizing creditor. If the creditor does not, as is generally the case, decide himself to act as the buyer of the seized goods, the seizure is cancelled forthwith. The consequences that one can imagine would be that the creditor would see his seizure order gathering dust on the bailiff's desk.
Independently of these two enforcement aspects, the proper carrying out of collections is confronted with the problem of the information that is useful in the collections process and considered the “full information concerning the debtor that make it possible to execute the order”.
Mr Tarak Torjmane, a judicial officer at La Manouba, Secretary General of the Chamber of Judicial Officers of Tunis, considered that “information is the condition required for efficient action by the judicial officer”. This information first concerns the location of the debtor. In the second place, it concerns the determination of the assets and liabilities of the debtor. In this regard, the debtor is not required to declare his assets. “It is incumbent upon the creditor to inform the judicial officer responsible for enforcement of what the debtor's assets are. Even though there is a requirement to register property assets, given that title documents to a property are the only informational basis for ownership of these buildings, and are held only by the owners, access to information concerning these buildings is very difficult. In general, Tunisian law has not dealt with the means that the judicial officer should have in order to gain access to information.” There is no legal text that assigns the judicial officers the task of researching information. Contrary to the case in French law for which the research of information was regulated by the law of 9 July 1991, where article 54 of said law acknowledges the right of judicial officers to search for information.
New strategy for collections
This conclusion that we have just been discussing several of the most important aspects of, caused a number of participants to say that there is a need today to put un place a new strategy for debt collection. The goal would be, in the words of Mr Mohamed ben Sassi, a bank manager, to “optimise the collection methods, facilitate the acts required to do that, and to rationalise the methods and efficiency of management.”
In this line of thinking, the French experience should be used as a model for debt collections. Mr Francis Guépin, former Chairman of the National Chamber of Judicial Officers of France and a member of the UIHJ, presented the reform that the law of 1991 had brought, applicable in 1993. The 1991 reform is “a good reform because it took account of the way society had changed...and because it gave priority to the indispensable role of the judicial officer who is the prime mover in enforcements procedures.”
The change in the procedure for legal debt collections reflects the changes in the economy and society. “The asset base of a debtor has changed considerably, it has been transformed and scattered. Some people own shares or have ownership stakes in companies or property companies or partnerships. Then the creditor has an open choice as to the enforcement procedure, the only limit being the abuse of law clause.”
The reform allowed the French judicial officers to gain access to information concerning debtors for all enforcement orders.
“The public authorities wanted to harmonise civil enforcement procedures by avoiding the need for direct procedures and by going to the ‘debtors of the debtors', which are the banks.”
This procedure has the advantage, because of its speed, of putting financial flows back into the economy. In this way the judicial officer has a primary mission in the economic activity of the country. The results attesting to the importance of this role are there to see, since in 2003 French judicial officers were able to collect the equivalent of €10 billion, or 16 billion Tunisian dinars.
For the debt collection procedure to take off and satisfy companies, certain conditions need to be met. “Tunisia,” stated Chairman Jacques Isnard, “must satisfy a certain number of indispensable criteria, including adopting European instruments of so-called derivative law. It is not too much to ask today for a harmonisation of the texts of internal law with those of community law.”
Business security depends on the “construction of strong legal institutions with appropriate legal instruments and professional legal practitioners who are informed and efficient. It is important for the future that companies and judicial officers conduct a full dialogue to take advantage of this cadre of professionals who can offer complementary services to business that are too often underestimated.”
Collections strategy should not be confined to collections ordered by a court. This legal collections method, as the participants in the colloquium suggested, needs to evolve and be adapted to new economic circumstances if it is to be able to provide its full benefit. Judicial officers must consider that collections settlements on an amicable basis are also part of their business.
The afternoon session of the international colloquium on “Debt Collection, Judicial Officers and the Company” was, precisely, devoted to debt collections on an amicable basis.
For Mr Belhassen Denghezli, a judicial officer from Tunis, “the judicial officer, with his attribution as a public official, his level, his professionalism, his integrity and his sense of justice, can on his own guarantee the proper carrying out of the process of approaching the debtor in order to encourage him to pay off his debt.”
This participant stressed that the Tunisian lawmakers, even though they did not give proper recognition to collections on an amicable basis by judicial officers, did acknowledge that he has the attributes required for debt collections on an amicable basis. “In article 4 of the combined decree of the Minister of Justice and Human Rights and the Minister of the Finance of 8 May 2002 concerning the pricing of actions of judicial officers it is stipulated that judicial officers will receive a greater percentage of proceeds when the collection is not made pursuant to a judgement or a protest.
However, legislation concerning amicable collections is still halting and does not really give judicial officers the legal instruments required for them to encourage amicable collection of debt in the first instance. There is currently a tendency to limit the role of the judicial officer exclusively to enforced legal debt collection. But elsewhere, as in France, collection on an amicable basis has become a real institution with a fairly precise shape.
“Collection on an amicable basis,” as Mme Françoise Andrieux, an instructor at the National Procedural School of France, stated, “ends where legal collection procedures begin. Are they complementary? Yes, because amicable collection makes it possible to avoid legal collection procedures which are sometimes cumbersome and costly.”
But “even with a court order in hand, the judicial officer can make the choice to collect without legal process. Thus collection on an amicable basis becomes a first option and an accompaniment to enforced legal collection.”
In carrying out their work of collection on an amicable basis, judicial officers in France have adopted specific operating methods that take major advantage of changes in technology to obtain information on the debtor. These methods can be negotiated between the creditor and the judicial officer, so as to find the most appropriate methods for a collection on an amicable basis that is quicker and more efficient.
On the other hand, while in French law legal debt collection and implemented enforcement have been established by monopoly that benefits the judicial officer, collections on an amicable basis are not a monopoly and imply competition.
The debate: judicial officer / debt collecting companies
The Tunis colloquium was an opportunity for a frank and highly informative exchange of views between judicial officers of all the nationalities present and representatives of collections companies.
The question was asked in the presentation of a manger of a collections company, Mr Mouran Ben Cheikh Larbi: “judicial officers and collections companies - are they rivals or complementary?”
He felt there was complementarity. Collections companies are a business, contrary to the judicial officer.
“The distinction must be made,” said a manager of a collections company, “between a collections company and the charlatans that come across as such. Good collections companies are subject to strict rules in carrying out their business.”
Chairman Jacques Isnard pointed out that there was no question of creating antagonism between judicial officers and collections companies.
That does not change the fact that according to the law, legal professionals are judicial officers and lawyers in accordance with worldwide rules dictated by the Conference on Private Law at The Hague.
For his part, the Chairman of the National Order of Judicial Officers of Tunisia, Mr Mourad Skander, in his reply to remarks made by a representative of a collections company, attempted to describe the beginning of collections in Tunisia. “Collections on an amicable basis are an idea initiated by judicial officers in the framework of a legal collections process. It is when the legal methods of collection proved inadequate that judicial officers were obliged to adopt solutions that resulted in collections on an amicable basis.”
So amicable collection was a response to the insufficiencies and inadequacies of the legal collections system and was used to meet the expectations of companies.
“Before the 1998 Law concerning the establishment of collections companies, certain companies took advantage of the weaknesses in the collections system to portray themselves as service providers. These companies recruited many former employees of bailiffs who had been trained to use wrong methods.”
The 1998 Law was a reaction by Tunisian lawmakers to the requirements of international institutions to improve the banking system and clear indebtedness. “Seen in this light, collections companies are in fact just remote collections and dispute resolution services.”
At the end of the working session of the colloquium, there was a reading of the summary report drafted, as is now the custom, by Mr Nadhir Ben Ammou, Professor at the School of Law and Political Science of Tunis.
