Bringing a claim - initial considerations

Key issues to consider

What key issues should a party consider before bringing a claim?

The most important issues to be considered by the parties are as follows:

  • whether the claim has met the statute of limitations;
  • whether the object of the claim can be attainted by means of litigation;
  • whether the available evidence supports the claim and if there is a chance that the opposing party might disprove said evidence;
  • whether, should the claim be admitted, the object of the claim is enforceable; and
  • whether the claim is cost-efficient.
Establishing jurisdiction

How is jurisdiction established?

Jurisdiction is established expressly by the Civil Procedure Code as well as international legislation such as EU Regulation No. 1215/2012 of the European Parliament and the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

Territorial as well as hierarchical jurisdiction is based on a few key elements, such as:

  • the parties: as a rule, in commercial litigation territorial jurisdiction is determined according to the headquarters of the defendant; the parties can, however, agree on a distinct jurisdiction, in which case the competent court will be the one chosen by the parties;
  • the value of the claim: claims with a value of over €42,000 are judged by the tribunal (the relevant county court) as a first instance court; and
  • the object of the claim: claims concerning immovable property, insolvency, corporate matters or consumer rights are subject to special jurisdictional norms.

Parties may agree upon jurisdiction outside Romania, but they would have to prove before the Romanian judge that there is a sufficient link between the object of the case and the parties on one side, and the foreign country where the desired court is located on the other. In addition, if the parties agree upon jurisdiction outside Romania, this decision will be voided by the Romanian court if it breaches the exclusive jurisdiction of the Romanian court as established by law for the object of the matter, or if by choosing the foreign court, one of the parties is abusively deprived of the protection that would have been provided by the Romanian court.

Jurisdiction is verified by the court, ex officio, at the first hearing. Parties may also raise procedural pleas regarding jurisdiction via the memorials that they submit before the first hearing or directly in the oral debates of the first hearing.

Preclusion

Res judicata: is preclusion applicable, and if so how?

Yes, preclusion is applicable in the sense that a claim concerning the same parties, object and cause as a previously judged claim will be rejected by the courts on the grounds of res judicata.

Applicability of foreign laws

In what circumstances will the courts apply foreign laws to determine issues being litigated before them?

According to the Romanian Constitution, EU regulations and the provisions of international treaties to which Romania is party are considered national law and applied directly by the courts.

The Romanian courts can apply foreign law should the object of the case or the parties have strong ties with another country and the parties have agreed such in their contract. In cases where the judgment is to be rendered in accordance with foreign law, the party invoking the said law must prove its content by presenting relevant documents (translated and apostilled) from the authorities of the respective country.

Foreign law may be invoked only when it is applicable according to the provisions of the Civil Code.

Initial steps

What initial steps should a claimant consider to ensure that any eventual judgment is satisfied? Can a defendant take steps to make themselves ‘judgment proof’?

The first and most important step to ensure that any claim will be satisfied is a well-drafted agreement that states all the rights and obligations of the parties as well as the guarantees set forth in cases of non-compliance. Unclear clauses may lead to faulty judgments.

Another important step is to retain firm evidence of documents and correspondence circulated between the parties to ensure that, should there be the case for litigation, evidence will be readily available. It is also advisable that the claimant seek guarantees from the defendant debtor (mortgages or pledges over the debtor’s assets) that will be registered in public records and thus become opposable to any future buyer of the assets.

To ensure that the goods are not sold during the litigation and can be later liquidated to cover the debt, the claimant can also require the freezing of the defendant’s assets. The freezing order is issued by the court and may also be applied to the object of the litigation, should it be immovable property or wares.

To reduce the potential grounds for litigation, parties are also free to limit their accountability, but such clauses cannot alleviate their liability in the case of fraud or malicious intent.

The defendant, on the other hand, if it bears contractual fault, will usually try to hide its assets, or donate or sell the same without receiving any actual money in return but with the intention of committing fraud with respect to the claimant creditor.

Freezing assets

When is it appropriate for a claimant to consider obtaining an order freezing a defendant’s assets? What are the preconditions and other considerations?

The claimant can request the freezing of the defendant’s assets whenever there is a reasonable risk for the debtor’s assets to be sold before the judgment is finalised.

For the court to freeze the defendant’s assets, a claim regarding the merits must already be registered with the court and, in general, a security deposit is necessary. In some cases, this deposit may reach half of the amount sought via the claim on the merits. Should the court decide that it is likely that the defendant will dispose of its assets and that all conditions provided by the law are met with respect to the object of the case, the freezing order shall be applied until the litigation is finalised.

Pre-action conduct requirements

Are there requirements for pre-action conduct and what are the consequences of non-compliance?

No pre-action conduct is necessary in the case of complex commercial litigation. Should the parties try debt recovery through special procedures (such as a fast-track claim), a prior notification is mandatory. Should the notification not be sent out prior to initiating the fast-track claim, the claim will be rejected as inadmissible. Note that the fast-track claim procedure is favourable to the claimant if there is enough documentary evidence showing that the debt is certain (recognised by the defendant), payable and due.

In other words, the fast-track procedure is used when commercial litigation lacks elements of complexity that require the administration of multiple evidence such as witness testimony and technical expertise.

Other interim relief

What other forms of interim relief can be sought?

The parties can try to reach a settlement prior to filing claims before the courts. An alternative means to resolve the issue is to bring the case before a mediator.

Depending on the object of the case, the claimant might also obtain various interim measures from the court via the special procedure of an injunction. For instance, the judge may issue an injunction stating that the defendant will refrain for a period of time from actions allegedly hurting the claimant’s business. The merits of the dispute are not decided during the special procedure of the injunction.

Alternative dispute resolution

Does the court require or expect parties to engage in ADR at the pre-action stage or later in the case? What are the consequences of failing to engage in ADR at these stages?

The current legislation does not provide an obligation to engage in ADR before or during litigation.

Claims against natural persons versus corporations

Are there different considerations for claims against natural persons as opposed to corporations?

In general, commercial litigation takes place between companies. The involvement of a natural person may transform the litigation into a civil action or one concerning consumers.

In cases where the natural person is, for instance, a shareholder, and the object of the litigation is clearly commercial, the same rules apply as in the case of corporate litigations. There are no special procedural regulations tailored specifically for natural persons or for corporations. In a commercial litigation, the natural persons receive the same rights and protection as the corporation. There are of course small differences deriving from the nature of the two. For instance, in the case of cross examination, the natural person will be present before the judge to answer questions, while a corporation will reply in writing (considering it has various executives that together make corporate decisions and know the full facts).

Class actions

Are any of the considerations different for class actions, multi-party or group litigations?

No, there are no different considerations for class actions, multi-party or group litigations. The same norms apply regardless of the number of parties or their shared interest. If the number of parties is considered high enough to negatively influence the proceedings, the court can ask all parties who share the same interest to agree upon common representatives.

Third-party funding

What restrictions are there on third parties funding the costs of the litigation or agreeing to pay adverse costs?

In accordance with Romanian law, payment of the cost of litigation made by a third party in the interest of one of the parties in a trial is accepted as long as the destination of the amounts and the intent are clear.

Contingency fee arrangements

Can lawyers act on a contingency fee basis? What options are available? What issues should be considered before entering into an arrangement of this nature?

Contingency fees are not allowed if the entire payment of the legal services is based on a favourable outcome of the litigation (quota litis pact).

Success fees are, however, allowed as long as they are agreed upon between the parties as a supplement to hourly fees or cap fees. The lawyer and the client are free to settle on any combination of hourly fees, cap fees and success fees, except for exclusive contingency fees.