Do you have any outstanding credit collection in Azerbaijan? Rely on Invenium!
Everybody should keep in mind that the Azerbaijani legal system is going through a critical phase of transition from the Soviet type of “court of justice” to a modern and independent legal system in a process of reform that has made the system considerably more transparent and favorable, especially for foreign counterparties.
Azerbaijan has a legal system divided into three levels: the courts of the first instance, the courts of appeal and the court of cassation.
Commercial mediation and arbitration have become a rather widespread practice since Azerbaijani legislation does not contain regulations governing credit collection. Nevertheless, he current legislation recognizes the principle of “freedom of contract” which implies that the parties are free to enter into agreements not directly provided for by law. Generally, legal credit collection is recommended only in the presence of three elements:
- Certainty and incontestability of the receivable
- Significant amount
- Attackable assets
In general and in consideration of the lengthy procedures and high costs, an initial out-of-court approach is always desirable. Despite the availability of legal means, even banks in Azerbaijan are reluctant to take legal action, preferring to restructure their overdue receivables, constantly monitoring the debtor and trying to obtain installment payments.
The two credit collection steps are:
- soft collection: this means sending a letter of formal notice to comply, informing the debtor that the payment is late and that a penalty will be applied
- hard collection: this consists of a direct meeting with the debtor aimed at reaching a settlement or a guaranteed repayment plan. This will provide the opportunity to obtain the acknowledgment of the debt that can be effectively used as evidence in court.
Due to the specificity of Azerbaijan, the most appropriate solution is certainly to rely on a company in charge of international debt collection such as Invenium, which thanks to the presence of one of its collaborators on site, will be able to exert at best all out-of-court resolution techniques.