Debt Collection in Slowenien

In Slovenia there is no minimum amount requirement to start a judicial process for debt recovery. Even so, the costs to carry it out may cause it to be inconvenient. In general, we consider that a claim which can most likely not be recovered due to the fact that the debtor does not have sufficient assets from which the debt can be repaid is uneconomical due to the costs involved in its recovery.

The creditor shall make an advance payment of the court fees (stamp duty for enforcement proceeding in December 2020 amounts to EUR 55; stamp duties for the Order for Payment Procedure and the regular litigation proceeding depend on the claimed amount) and the fees of enforcement officers, valuators or similar (if the services of those are required). The amount of attorney fees depends on the amount of claim.

In Slovenia, the claimed amount determines the court before which the proceeding should be initiated, namely: (i) for claimed amounts of EUR 20.000 or less, the circuit court (Okrajno sodišče) shall have jurisdiction; (ii) for claimed amounts exciding EUR 20,000, the district court (Okrožno sodišče) shall have jurisdiction. It shall however be noted that in commercial disputes (e.g. disputes between commercial entities) the district court shall have jurisdiction regardless the amount of the claim. For all the commercial disputes applicable Civil Procedure Rules governing commercial disputes shall apply (which among others enable the court to issue a judgement without a hearing in certain cases,..).

The claimed amount determines the type of the proceeding, namely: in commercial disputes where the claimed amount does not exceed EUR 4,000, the rules on the Summary Process Disputes (postopek v sporih majhne vrednosti) shall be applied (in non-commercial disputes the relevant threshold shall be EUR 2,000). Where the value of dispute exceeds the above specified thresholds, the rules applicable to the “ordinary procedure” shall apply.

The Summary Process Dispute has some specifics, namely:

• the court’s decision is, in principle, adopted only based on written submissions of the parties;
• in certain cases, the court may issue a judgement without conducting the hearing;
• the claimant shall be obliged to provide all the arguments and evidence already in the lawsuit and the defendant in the response to the lawsuit; each party shall then be able to submit only one additional submission in which it may respond to the other party’s statements and evidence;
• special sanctions apply if the parties do not attend the hearing;
• deadlines for filing the response to the lawsuit and written submissions are short (i.e. shall be filed within 8 days);
• deadlines for filing the appeal are shorter (8 days after receipt of the court’s decision instead or 15 days applicable to “ordinary procedure”);
• a party may file an appeal only against the decisions by which the procedure is terminated (and there is no right to appeal other decisions issued throughout the proceeding - those may be challenged only in the appeal against the decision by which the proceeding is terminated);
• reasons for which the court’s decision may be challenged are very limited.

As an alternative, irrespective of the claimed amount, the creditor can initiate an Order for Payment Procedure (“Postopek za izdajo plačilnega naloga”) before the competent court. This is a fast and automatic procedure without hearing.

To initiate the procedure, the creditor must demonstrate that the debt is due and payable and evidenced by so called “authentic instrument” (“verodostojna listina”) (the following documents are considered authentic instruments under the Slovenian law: an invoice; a bill of exchange/promissory note; or a cheque with protest and a return invoice when these are required for the origination of the claim; an official instrument; an extract from the accounting books certified by an authorised person; a private document notarized according to applicable laws and a document having the nature of an official instrument according to special regulations). The authentic instrument(s) evidencing the claim must be submitted to the court (however, such documents are not required if the claimed amount does not exceed EUR 2,000).

Once the lawsuit with the proposal for issuance of the payment order is filed, the court issues a payment order (“plačilni nalog”) ordering the debtor to either pay or contest the creditor’s claim within 8 days from the receipt of the order (or in cases of bill of exchange/promissory note or cheques within 3 days). If the debtor does not pay and does not contest the order within that time limit, then the creditor is entitled to apply for an enforcement order (“predlog za izvršbo”) in a separate enforcement procedure. If the debtor contests the payment order and files an objection in due time, court cancels the issued payment order automatically and the proceeding shall then continue as a regular court proceeding before the competent court (considering applicable rules e.g. for commercial disputes rules, summary proceeding rules..). In such a proceeding, both parties must support their statements with respective documentary evidence and/or witnesses and/or other means (e.g. onsite inspections, experts,..) and the court then issues a judgement. Parties have the right to appeal the judgment.

Choosing the Order for Payment Procedure may be reasonable where the creditor expects that there will be no objection raised by the debtor (it is however more common that enforcement proceeding as described further below is commenced in such cases).

However, in Slovenia the most common way to start a recovery claim in case of unpaid invoices is to commence an enforcement proceeding on the basis of so called “authentic instrument” (“verodostojna listina”) (the following documents are considered authentic instruments under the Slovenian law: an invoice; a bill of exchange/promissory note; or a cheque with protest and a return invoice when these are required for the origination of the claim; an official instrument; an extract from the accounting books certified by an authorised person; a private document notarized according to applicable laws and a document having the nature of an official instrument according to special regulations). In case of enforcement motion on the basis of an authentic instrument (predlog za izvršbo na podlagi verodostojne listine) the enforcement court issues an enforcement order by which the court is ordering the debtor to pay the claimed amounts. The debtor may object within 8 days (or in cases of bill of exchange/promissory note or cheques within 3 days). If the debtor files a substantiated objection in which it contests the grounds and/or the amount of the claim and proposes evidence in this regard, the enforcement court cancels the issued enforcement order automatically and the proceeding shall then continue as a proceeding for Order for Payment Procedure as specified above before the competent court.

Once the final judgement is issued in the ordinary court procedure or in the Order for Payment Procedure, the creditor shall in any event be obliged to commence an enforcement proceeding if the debtor fails to fulfil its obligations. 

In legal relationships which do not specifically stipulate the deadline for fulfilment of the debtor’s monetary obligation (and such a deadline may also not be established considering the purpose of the transaction, the nature of the obligation and other circumstances of the matter), the creditor must firstly request an immediate payment of the obligation from the debtor. For this purpose the creditor has to notify debtor and declare the debt due and payable and give the debtor a reasonable deadline for fulfilment of the monetary obligation.

Except from the situation specified in the previous paragraph, sending a warning letter to the debtor is not required under the Slovenian law.

Although to send a warning letter before starting legal action is in principle not mandatory under the Slovenian law, it is common and advisable to do so as a preliminary step.

There are no specific requirements what the warning letter shall contain, however, it is recommended that the letter includes: (i) the amount due and payable (together with interests and attorney costs related to preparation of the warning letter), (ii) a final reminder that the due amounts due shall be paid within certain deadline specified in the warning letter, (iii) the payment instructions (bank account details to which the due amounts shall be paid) and (iv) an announcement that the creditor will commence appropriate court proceeding without further notice if all the outstanding amounts are not paid within the deadline stated in the warning letter. Warning letters are normally sent by a registered mail.

In order to emphasise the seriousness of a warning letter, it is helpful to have it sent by a lawyer on behalf of the creditor.

It is finally advisable to send a warning latter only after the creditor is willing to commence legal proceedings if the debtor fails to fulfil outstanding obligations. Unsuccessful warning letters that are not followed by further (legal) actions are often counterproductive and might further encourage noncompliance on the part of the debtor.

To increase the possibility to recover the debt we recommend to the creditors taking as many as possible of the following:

• to conduct an adequate review of the debtor’s financial standing prior to commencement of business cooperation with the debtor and periodically throughout the business relationship with the debtor.
• properly documenting the relationship with the debtor and creating effective collateral for claims towards the debtor (pledge(s), first demand bank guarantees; promissory notes, etc) or requesting advance payments.
• properly documenting the relationship at the beginning as well as throughout the existence of business relationship between the parties by:
• ensuring signed contracts and/or other written documents containing and evidencing the obligations of the parties.
• organizing orders and order confirmations for goods or services with detailed written documents.
• organizing transportation documents, delivery documents and other evidence demonstrating that the goods were delivered or services were provided to the debtor.
• to agree in writing any further modification of the obligations.
• always try to find out and keep documents that can be used to locate assets of the debtor subject to future seizure if necessary (such as bank accounts, movable properties, immovable properties etc.)

In case of dispute, the creditors shall ensure the evidence that demonstrate the grounds of their claim and the amount of the claim.

According to Slovenian procedural rules, written evidence as well as other forms of evidence are allowed. Therefore, any evidence that documents business relationship and the amount of claim can be used: correspondence, messages, witnesses, experts, third party documents and any other possible evidence that can prove the relationship between the parties, the grounds for the claim as well as the amount of claim. Normally, a written evidence (e.g. written agreement signed by authorized representatives of all the parties) would be most useful for evidentiary purposes.

It is not obligatory to have a lawyer for starting a judicial process for debt recovery in Slovenia (representation through an attorney is requested only for filing certain extraordinary legal remedies). It is however required that a foreign party appoints a Slovenian proxy for acceptance of mail and deliveries on its behalf (if the party fails to do so, the proxy is appointed by the court).

It shall also be noted that the court only accepts submissions and evidence in Slovenian language. Therefore, it is advisable that foreign creditors are represented by a lawyer. A written power of attorney shall be issued by the client to the lawyer (the PoA must be signed by legal representatives of the creditor and with the company’s stamp on it (if the creditor uses a stamp)).

Court fees (stamp duty) are payable to Slovenian courts in order to bring an action or commence a proceeding (the amount varies depending on the type of proceeding and on the claimed amount). The party shall also bear the costs of the bailiff (if appointed), witnesses, experts etc. Those costs shall be borne by the creditor in advance whereby in case of the creditor’s success in the proceeding, the debtor shall be obliged to reimburse those costs to the creditor.

In many cases and particularly in those where the parties wish not to stop their relationship, it is very convenient to previously try mediation as an alternative dispute resolution procedure (such process is however not mandatory). Mediation allows the parties to continue their relationship, it spares time, it is less expensive than a complete court procedure, offers the possibility to the parties to discuss on different alternative solutions to their situation, and can be organized in Slovenia with institutions (e.g. before the mediation centre of the Slovenian Bar Association).

A foreign creditor may start an enforcement proceeding on the basis of so called “authentic instrument” (“verodostojna listina”) or the Order for Payment Procedure or a regular litigation proceeding. We refer to our response under the Section 2 above in this regard.

The Regulation (EC) No 805/2004 of the European Parliament and of the Council of 21 April 2004 creating a European Enforcement Order for uncontested claims and the Regulation (EC) No 1896/2006 of the European Parliament and of the Council of 12 December 2006 creating a European order for payment procedure shall also apply within the scope set forth in these regulations.

For commencement of an enforcement proceeding on the basis of so called “authentic instrument” (“verodostojna listina”) (an unpaid invoice qualifies as an authentic instrument under the Slovenian law) a motion/application shall be filed electronically and the unpaid invoices do not need to be enclosed to the motion (they must, however be specified in the motion/application). If the debtor objects to the issued enforcement order, the creditor shall evidence the grounds for its claim and the amount of claim by submitting sufficient evidence.

When commencing the Order for Payment Procedure, unpaid invoices must necessarily be enclosed to the application. When commencing a regular litigation proceeding the creditor shall evidence the grounds for its claim and the amount of claim by submitting sufficient evidence. Careful and thorough filing of all documentation relevant to a business relationship is therefore essential for success in any eventual debt collection case.

Under the Slovenian law, a special form is not required for majority of commercial agreements (exceptions are, e.g., surety agreements, real estate sales agreements..). Therefore, the main element to verify before taking any decision to recover the debt before a court will be how to prove the debt (the existence as well as its amount). As already explained under the Section 2 above, written evidence as well as other forms of evidence are allowed before the Slovenian courts. Therefore, any evidence that documents business relationship and the amount of claim can be used. Although in Slovenia there is the principle of free evaluation of the evidence by judges, a written evidence will normally be better evidence than a witness, for example.

If the creditor does not have the documents or other sufficient evidence evidencing the claim, it shall be assessed whether to commence the debt recovery proceeding or not (such assessment to be made on a case by case basis considering all the circumstances of particular case). Claims not supported by adequate evidence will not succeed.

If the Court procedure has still not been initiated and there is only a warning letter, the debtor's actions or response may impact further decision of the creditor on how to proceed with the debt recovery.

If the debtor settles the debt after receipt of the warning letter, but was in default and the creditor hired a lawyer to recover the debt, the debtor is normally obliged to pay the lawyer’s fee (according to the valid tariff, regardless the specific fee arrangement concluded between the lawyer and the creditor). The debtor's acceptance and payment present recognition of debt (pripoznava dolga).

If the debtor is willing to pay, but does not have the required liquidity, it is advisable to negotiate on the new payment terms and schedule and to conclude a written instalment agreement, with specific payment dates which the debtor will have to follow. It is highly recommended that such an agreement contains the debtor’s statement on recognition of claim (pripoznava dolga) and that it is concluded in a directly enforceable notary deed form (neposredno izvršljiv notarski zapis). Such a form presents an enforcement title (same as the court’s judgement) and enables the creditor to enforce the claims against the debtor directly in the enforcement proceeding in case of the debtor’s default.

If the debtor refuses to pay the debt or contests the relationship or the amount, or if it poses some counterclaims, and the creditor decides not to enter into negotiations with the debtor, or if the debtor simply does not answer, the creditor may commence: (i) an enforcement proceeding on the basis of so called “authentic instrument” (“verodostojna listina”) or (ii) the Order for Payment Procedure or (iii) a regular litigation procedure. Further details on these procedures are given in the response to Section 2 above.

If an enforcement procedure was initiated and the debtor does not object to the issued enforcement order, such order becomes final and the debt is repaid from the debtor’s assets (considering the proposed means of enforcement; in case of proposed enforcement on the assets on the debtor’s bank account, the final court’s order is sent to the bank which seizes the assets on the debtor’s account and transfers those assets to the creditor’s account).

Interim measures can be taken under certain circumstances and according to strict prerequisites set forth under the Slovenian law.

An interim measure is intended to secure future enforcement of a monetary claim. The court shall grant an interim measure (začasna odredba) to secure the enforcement of the creditor’s a monetary claim towards the debtor if the following conditions are met:

(i) the creditor shall demonstrate the probability that it has the monetary claim against the debtor or that such a claim is about to come into existence; AND

(ii) the creditor shall prove the existence of risk (danger) that the enforcement of his claim is likely to be rendered impossible or considerably impeded due to the alienation, concealment or other manner of disposal of property by the debtor. The risk shall be deemed to exist if the claim is to be enforced abroad - outside the EU Member States.

Worsening of the debtor's financial standing or deterioration of its business are not sufficient grounds alone for issuance of interim measures and specific action(s) of the debtor which fulfil the requirements specified under the item (ii) above must be demonstrated.

The creditor shall not be required to prove the risk specified under the item (ii) above if he proves that it is likely that the issued interim measure will cause only insignificant loss to the debtor.

In his application for issuance of an interim measure or at a later date, the creditor may state that, instead of being granted an injunction, he would be satisfied if the debtor provides a security deposit as security for the claim. The court may also permit the security deposit instead of issuance of interim measure at the debtor’s proposal.

The court’s decision on interim measure may be challenged by the debtor.

The proposing and use of interim measure pending judgement needs to be made after thorough preparation but also quickly, to give the best prospect of interim relief. It shall also be noted that the debtor shall have the right to demand compensation from the creditor for damage suffered as a consequence of an interim measure which was unfounded or which the creditor was unable to justify.

Regulation (EU) No 655/2014 of the European Parliament and of the Council of 15 May 2014 establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters shall also apply within the scope set forth in the regulation.

According to Slovenian laws (Corporate Income Tax Act) appropriate documents are needed for allowing a creditor to write off a claim in its financial books. The off-written claim is recognized as an allowable tax deduction on the basis of the following documents: (i) final court’s decision on termination of bankruptcy procedure over the debtor or final court’s decision on termination of compulsory settlement procedure; or (ii) documents evidencing unsuccessfully terminated enforcement proceeding; or (iii) in case no enforcement proceeding was commenced, documents evidencing that the costs of the court proceeding would exceed the amount of recovered debt or if it is demonstrated that all the appropriate actions with respect to debt recovery were taken with a diligence of a good businessman and any further legal proceedings would not be economically justifiable. With respect to the foregoing, obtaining a written confirmation by a lawyer who has unsuccessfully tried to recover a debt or at least analysed the chances of success of such debt recovery, but came to the conclusion that there is no prospect of success, might be helpful.

The creditor shall pay attention if the bankruptcy proceeding is initiated over the debtor and shall in such case lodge its claim into the insolvency proceeding in order to preserve its rights in the insolvency proceedings. Application for lodging a claim must be drafted with care in a very short period after the opening of the insolvency proceeding. Failing to lodge the claim results in creditor’s loss of claim and the creditor not being entitled to recovery of any amounts from the debtor’s bankruptcy estate.