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Brexit - will that stop a foreign Bank pursuing me in the UK

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This is a question that is becoming ever more relevant as thousands of individuals who have previously bought foreign property now find themselves unable – or unwilling – to meet the seemingly ever increasing costs associated with their overseas property; and are seeking a way out of their ownership obligations in foreign jurisdictions.

We presently represent hundreds of clients who, for one reason or another, are being pursued through foreign Courts for debts owed in that country. In Cyprus for example, we are one of the foremost legal firms who have clients who are being pursued by their Cypriot Bank due to non-payment of a Swiss Franc Mortgage previously taken out for the purchase of an immovable property in Cyprus.

For purchasers who had unilaterally decided simply to walk away from their property in Spain believing that “posting the keys through the letterbox” would be an end to the matter and their Spanish Bank would not pursue them for their unpaid mortgage debts, they have since found themselves being brought before the Spanish Courts.

Clients in Portugal who had taken a similar view, have also now found themselves as Defendants in Actions brought in Portugal by their Portuguese banks.

Most owners of overseas properties we speak with are acting under the belief that the foreign Banks will take their foreign properties and not pursue them as defaulters outside of the country where the property is situated. In time, and when these clients are duly “served” in the UK with the foreign Writs they have ignored the Service to them in the UK believing – wrongly - that the issue would end there.

Brexit sign with various flagsRegrettably, we are now representing clients who, having ignored the original service of the Writs from foreign Court(s) and a Judgement in default has since been issued against them in the foreign court, and if the Bank is within the EU, the foreign Bank is now actively and aggressively seeking the Enforcement of the foreign Judgement in the UK against the UK assets of these clients.

This is done through a legal procedure via a European Enforcement Order (EEO).

Similarly, we are regularly contacted by individuals who are being chased for non-payment of their timeshare maintenance fees by their Timeshare Resort in Spain or via a UK Debt Collection agency employed by their Timeshare Resort in Spain.

Whatever the reason is for a client being pursued for a debt related issue in a foreign jurisdiction, the creditor – a bank, a timeshare resort, a developer - normally has to start litigation in the country where the debt exists and then seek to enforce any judgements they obtain in the courts in that jurisdiction in the UK.

This all leads on more than ever to a mistaken belief that now that the UK has voted to exit Europe in the referendum that their overseas creditors cannot pursue them. In fact we have spoken to people who purposely voted “out” in the referendum under the belief that this will stop any litigation against them or will stop any overseas judgements being able to be enforced in the UK.

Although the UK voted for Brexit in the referendum, at the moment nothing has changed. All the treaties for the enforcement of judgements within Europe are still in place and will continue in place until the UK formally come out of Europe.

The period of 2 years to put into place the exit strategy for the future will see the current provisions continue.

So, what happens after Brexit?

This is of course uncertain, however it is highly unlikely that even after Brexit and the UK comes out of Europe that alternative treaties will not be put into place for the enforcement of foreign judgements between the UK and other countries within Europe, meaning judgment debts will continue to be enforceable.

The UK is a country that conducts a lot of trade with other countries internationally, and in particular within Europe and there will need to be mechanisms for individuals and businesses to pursue outstanding payment from their creditors within Europe. This will inevitably mean that creditors within Europe can also pursue people who owe them money but who are based in the UK.

It may be that very simple mechanisms such as the European Enforcement Order (EEO) may not be directly re-introduced and therefore things may be a bit more difficult, but mechanisms for the recovery of debts due and the enforcement of judgements will be introduced at some level and therefore debtors will not be able to avoid obligations just because the UK is no longer within Europe.

If you are being chased by creditors in relation to an overseas debt and wish to speak to a specialist international solicitor about your options then you can contact us for a free initial confidential consultation.

Disclaimer – International legal issues are a complex area of law and this information is no substitute for independent legal advice on an individual basis taking into consideration your personal circumstances and legal requirements. This information is provided to provide general information only and was correct at the time of publishing. The legal position in relation to international transactions can change frequently and this page may not have been updated following any changes in the law. You should therefore not rely on this information and should seek legal advice in relation to your personal circumstances.