When is a CCJ not a CCJ?

Since the epoch of religious texts, the righteous have been empowered to get justice. Since the advent of Homo Habilis, our psyche has contained a desire for retribution. Trade has always been vulnerable to imbalance. The Roman Empire gave us Lady Justice and her Scales of Justice to represent access to an impartial judicial system. Her statue adorns many a courthouse, including London’s Old Bailey. In the world of debt recovery, the humble CCJ represents those scales being rebalanced.

As you may have read on this very website, UK debt collection is governed by Pre-Action Protocol (actions before court proceedings). Some cases are more suitable for a form of Alternative Dispute Resolution (ADR), such as Mediation or Arbitration. Court proceedings take place in our Adversarial System, where both claimant and defendant present their cases in front of an impartial judge. The judgment allows Enforcement through Bailiffs. Amongst the G20 group of nations, there are some stark differences which we’ll now look at. Or you could skip to the last paragraph for a Spoiler Alert!

Argentina: unlike the UK, there is a regional variation of court processes amongst Argentina’s provinces. For example, Buenos Aires has a compulsory mediation requirement. Some provinces, typically urban, have digitised the courtroom. The judgment makes the claimant a preferential creditor in event of insolvency. Compulsory and progressive fines can be imposed on a debtor until a judgment is satisfied.

Australia: claims are processed in the Magistrates Court, District Court or State Supreme Court, depending on value. There is no pre-action protocol. ADR is only compulsory if ordered by the court. Typically, the losing party is responsible for 50-75% of the winning party’s costs. Judgements are enforceable for up to 12 years, with a winding-up petition added to an otherwise familiar list of enforcement methods.

Brazil: the Civil Procedure Code and Mediation Act were both introduced in 2015 and encourage (not obligate) businesses to seek ADR before entering litigation. Brazilian courts are tilted towards favouring the clear and convincing presentation of evidence, as opposed to validating its integrity.

Canada: claims typically start out in provincial courts. In place of pre-action protocol, Canadian lawyers have an obligation to prevent cases proceeding to trial that could otherwise be resolved in ADR. Alberta and Ontario provinces have made ADR mandatory before litigation.

China: historically, China has used an inquisitorial judicial system where the courts actively investigate and validate the facts. In recent years it has moved towards adversarial. Internet Courts have been established since circa 2017 in Hangzhou, Beijing and Guangzhou. Claimants can choose to be represented by relatives, employees, or local community figures instead of lawyers. Enforcement also includes the option to prevent the company’s legal representative from leaving mainland China.

France: judges in the Commercial Court are elected by their peers rather than being appointed by a panel or government of the day. ADR is voluntary and unregulated, but both claimant and defendant must specify what steps they have taken to reach an amicable resolution before court proceedings begin.

Germany: although there is no pre-action protocol or ADR requirement in commercial disputes, contractually obligated mediation is enforceable. There is no time limit on how long after judgment the Gerichtsvollzieher (bailiff) can be instructed, although some claims are limited to 30 years. Unlike most EU countries, the judge actively questions witnesses to validate facts presented by the prosecution and defence.

India: claims are heard in the Commercial Courts where mediation is compulsory, although this is not consistently implemented across the country. A Lok Adalat (people’s court) can provide ADR. Online dispute resolution was only brought in as a temporary measure during the pandemic. The standard of proof for civil cases is relatively low, with the probability set at 50% for an argument to be deemed true. Enforcement options include arrest and up to 3 months in prison.

Indonesia: mandatory mediation is used in place of pre-action protocol. Indonesian courts are inquisitorial, with the judge actively getting involved in fact-finding. As such, judges are not bound by judicial precedent (also known as common law). Claims above circa £10.6K are heard by a three-member panel rather than a single judge. Each side bears their own legal costs regardless of the outcome.

Italy: the use of arbitration is far more common than mediation and often used in place of court proceedings. Reform and digitisation of the claim system are underway, although still lagging considerably behind the online portal benchmarks of Britain and Spain.

Japan: mediation for commercial matters in the Japanese system is rare, and arbitration is almost unheard of. Parties can request information from each other under pre-action protocol but this can be refused without incurring a penalty. Japan is yet to offer an online portal. Judgments can be enforced for up to 10 years.

Mexico: commercial claims are governed by Federal law taking place inside local courts. Arbitration and pre-court litigation are favoured over mediation. Unless more complex matters arise, claims are heard and ruled on in oral hearings.

Netherlands: judges are free to set their own standard/threshold of proof. Lawyers can only offer no-win-no-fee pricing in personal injury claims. The level of costs payable by the losing side is calculated using a point system.

South Korea: in place of a pre-action protocol is an obligation to attempt reasonable dialogue. In recent years arbitration has become popular and viewed as more efficient than mediation. Claims above circa £315K are heard in front of a panel of 3 rather than a single judge.

Russia: the inquisitorial judicial system is more geared towards arbitration and litigation than it is mediation. Pre-action protocol is noted by its absence. Claims are heard in the State Commercial Courts. Under the Commercial Procedure Code, judges rule based on their personal beliefs rather than meeting a threshold of proof/doubt or cross-referencing with common law (legal precedents).

Saudi Arabia: like Indonesia, the Saudi system is inquisitorial. Pre-action protocol has no place here. Arbitration is favoured over mediation. The implementation of Sharia Law forbids creditors from charging interest on the principal sum. Local courts are free at the point of use, with costs only incurred for legal counsel. Debtor’s prison exists as a method of enforcement when the claimant is a government body.

South Africa: in place of pre-action protocol is a requirement for mediation to be proposed, but either side can decline it. In large commercial disputes over circa £18K, South African courts expect adjudication, mediation or arbitration to have been attempted.

Turkey: the use of ADR has expanded since the founding of the Istanbul Arbitration Centre in 2015. Mediation is now mandatory for all claims as part of pre-action protocol. Claims are still initiated on paper before being digitised for processing. Claims above circa £21K are heard before a panel of 3 judges. The Turkish Bar Association caps lawyer’s fees at 25% of the principal sum.

United States: pre-action protocol has a wider scope than in most other G20 nations. Legal fees are generally not recoverable from the losing party, but there are mechanisms, precedents and sanctions that can award reasonable costs. The overly complex judicial system does lend itself to some of the theatrics demonstrated by eccentric TV characters such as Louis Litt and John Cage.

The European Union: the EU presidency has its own seat at the G20 table. The European Small Claims and European Payment procedures on the E-Justice portal offer two routes to obtaining cross-border judgments. Most cases are heard in an EU court, although the claimant and defendant can seek for it to be tried in their member state court. EU Judgements are enforced under local law.

Spain: taking the G20 to 21 is Spain which sits as a permanently invited permanent guest. The Spanish judicial system uses the LexNet portal for claims. Pre-action protocol does not exist, and ADR is voluntary, which means most claims proceed straight to litigation. ADR is only mandatory if contractual. Fast-tracked enforcement gives the debtor very little time or scope to object.

Spoiler Alert!

Common features in G20 judicial systems are the use of a registered address for issuing a claim; the right to enter a defence; recovery of some or all costs from the losing side; an adversarial judicial system; some form of online portal; and enforcement through bailiffs. There are some exceptions. In China, Netherlands, South Korea, Russia, Saudi Arabia, South Africa, and Spain, there is no such thing as pre-action protocol! Legal costs are not recoverable from the losing side in Indonesia, which like Saudi Arabia and Russia, have inquisitorial judicial systems.

No matter where you find yourself on planet earth, late payment of commercial debts is a global affliction with local solutions. In the G20, CCJs affect a company’s credit rating, putting their assets under threat of removal. However, the impact of a CCJ is greatest among nations where commerce has easy access to credit file databases and where society sees debt as a barometer of morality.