Authors: Davinia Cutajar, Isaac James Camilleri – WH Partners
Late payments are the quiet tax on business. They erode working capital, force firms to borrow and, in the worst cases, turn a profitable contract into a loss. In Malta – as elsewhere – creditors have more leverage than they often assume, provided they choose the right procedure and act quickly, before funds are dissipated.
Within Malta: A Fast Track for Straightforward Debts
For domestic claims, Maltese law offers a shortcut that can avoid the time and cost of a full lawsuit. Article 166A of the Code of Organisation and Civil Procedure allows a creditor to turn certain uncontested monetary claims into an executive title – one that can be enforced against the debtor – without litigating the merits.
The procedure is available for debts that are certain, liquidated and due – and that do not require the debtor to perform an act.
It is a straightforward procedure whereby the creditor files a judicial letter in the prescribed form, confirmed on oath before the Registrar or a legal procurator appointed as a Commissioner for Oaths, setting out the cause of the claim and the facts supporting it. If the debtor does not contest the letter within 30 days, the creditor may proceed directly to enforcement (for instance, by garnishee order or warrants of seizure), rather than starting a fresh case on the substance.
While very effective, this procedure has its limitations. It applies only where the claim does not exceed €25,000, is limited to debtors present in Malta, and excludes certain sensitive categories of claim (including matters involving vacant inheritances, minors and incapacitated persons).
Still, for the right kind of dispute, it offers what most creditors want: speed, a predictable timetable and a clear route to execution.
Across Borders: The European Order for Payment
When the debtor is in another EU Member state, Regulation (EC) No 1896/2006 which created the European Order for Payment (EOP), can be used. Similar to Article 166A, it is a standardised procedure for recovering uncontested cross-border monetary claims in civil and commercial matters (subject to the Regulation’s scope, and excluding Denmark).
The creditor files a standard form with the competent court, describing the amount (and any interest), the basis of the claim and the grounds for jurisdiction. Unlike Article 166A – and unlike the European Small Claims Procedure (under Regulation (EC) No 861/2007, as amended), which is limited to claims not exceeding €2,000 (later raised to €5,000 by Regulation (EU) 2015/2421) – the European Order for Payment procedure is not subject to any specific value limit. The court will issue an order unless the debtor lodges an opposition within the prescribed time.
If the debtor stays silent, the order is declared enforceable in the Member state of origin. However, an enforceable European Order for Payment is recognised and directly enforced in other Member states without the need for a separate declaration of enforceability (the old “exequatur” step).
Interim Protection: Freezing Funds with an EAPO
Where there is a real risk that a debtor will move or dissipate funds, Regulation (EU) No 655/2014 offers a pre-emptive remedy: the European Account Preservation Order (the “EAPO”). This procedure can freeze funds held in the debtor’s bank accounts in another Member state, buying the creditor time to obtain (or enforce) a title on the substance in the meantime.
To obtain an EAPO, the creditor must show urgency and persuade the court that, without the measure, enforcement would be jeopardised. If the creditor does not yet have a decision or equivalent title, the Regulation also requires follow-on action: proceedings on the substance must be started within 30 days of lodging the EAPO application or within 14 days of the order being issued – whichever is later. Courts may also require security to deter abuse and compensate the debtor for unjustified harm.
Conclusion
In summary: An Article 166A judicial letter can quickly produce an executive title for smaller, clear-cut sums in Malta. The European Order for Payment can do the same across Member states for uncontested cross-border claims. And where speed matters most, an EAPO can preserve the pot before enforcement begins.
