By Hipolito García
The typical set-up
Documents required for an international sale can vary significantly from transaction to transaction, depending on the destination and the product being shipped, but will typically entail the issuance of a commercial invoice and a bill of lading as the transport documentation, as would be the case typically for exports to the Dominican Republic.
The importer or local purchaser of the merchandise will often provide the exporter with a list of documents or information needed to allow entry of the goods into the Dominican Republic, and will complete any regulatory filings before local authorities, as required, with the same intent; many times aiming at clearing customs at the local port as efficiently and economically as possible.
However, a local buyer will not often make any suggestions as to the documentation that would evidence a claim against the same for international sales on credit, or any sale which does not require the importer to make a payment in full at the time of purchase, that would (i) enhance the exporter’s position if needing to enforce an invoice against the importer locally, or (ii) include a binding representation by the importer as to the validity and enforceability of said commercial invoice in the Dominican Republic.
Typically, the parties would simply rely on the documents presented by the exporter, including its own form of commercial invoice, without any knowledge as to its efficiency in the scenario or circumstances mentioned above. There is no bad faith on the part of the importer, but simply lack of familiarity with the legal obstacles of collecting a claim for owed monies in the Dominican Republic under its current legal regime, which has failed to remain updated as to present-day transactions involving parties in different jurisdictions.
The associated risks and how to mitigate them
When a letter of credit payment method or any other type of draft or bill of exchange is used for the export sale, the above situation presents little risks especially with the payee, on whom demand for payment is drawn on, being almost always a bank or other acceptable credit institution.
In other cases where the exporter relies solely on the information provided under its invoice to collect payment, the risks are considerable, usually resulting in overall failure to collect any sums against the importer in the Dominican Republic, or, even if achieving collection, doing so in a less efficient manner. This picture is even more surprisingly seen in commercial relationships dating from several years, where the local purchaser has regularly complied with its payment terms, but upon a distressful situation of the economy or its business failing, has resorted to legal technicalities, and often, frivolous defenses to deny the existence of any debts when the exporter finally decides to initiate judicial actions to collect payment.
If an exporter has not taken the time to improve its invoicing documentation to mitigate these risks, it will unlikely have its day in court in the Dominican Republic. Of course, filing a lawsuit for money owed doesn’t guarantee you will get paid, but the likelihood of payment increases if you invest in enhancing your credit documentation. An enforceable instrument in such fashion would also allow pressuring the local importer in complying with its payment obligations in less time than ordinarily required, as the debt documentation would also allow for prejudgment liens or other cautionary measures to be placed on local assets.
Assuring to certain extent that the documentation evidencing the debt will be enforceable in the Dominican Republic is vital to the transaction, as typically, the local importer will have its main assets, if not all, in said territory. Expecting to file lawsuits or take any other action outside the Dominican Republic to collect payment may prove worthless if the debtor has not assets in said jurisdiction, and, although a foreign judgment may be enforced in the Dominican Republic following additional judicial proceedings, the whole process will result time-consuming and inefficient, specially where the opportunity to collect may be lost to other creditors of the local importer.
The legal hindrances in the Dominican Republic
The main obstacle for a lawsuit for money owed resides in the provisions set forth in Article 1341 of the Dominican Civil Code under which, any claim of this nature for an amount higher than RD$30.00 (less than a US Dollar) must be documented in writing, i.e. by a document signed by the debtor. Declarations from witnesses to support the existence of a claim for money owed are inadmissible in civil claims under these provisions, which when combined with the general principle on the burden of proof provided by Article 1315 of the same Code, and according to which the obligation of proof lies with the person claiming fulfilment of an obligation, severally hinders the position of an exporter which has relied solely on producing invoices which are not validly executed by an importer as evidence of their acceptance.
The aforementioned rules do not necessarily apply in commercial actions, provided appointed lawyers have opted for such proceedings to file a lawsuit for money owed; an option which should generally be available as importers are deemed merchants under the Dominican Code of Commerce. Said Code provides the freedom of evidence principle or rules of evidence by all means, which should improve the position of an exporter in these cases. In a civil claim, the creditor may also rely on the provisions of Article 1347 to surpass the rules of Article 1341, provided the evidence supporting the claim emanates from the debtor, a seldom occurrence.
Under these exceptional rules, in addition to signed documentation, correspondence between the parties may be accepted as evidence, as well as records of the parties, to the extent accessible. Testimony from witnesses may also serve as evidence, provided the judge believes they should be admissible.
Having to resort to all these means of evidence surely results cumbersome. Imagine having to travel to a different jurisdiction to serve as witness and provide testimony as to the existence of a claim against a local purchaser for an amount that would not necessarily justify the expense, and with no assurance that the claim will be successful at the end of the day.
A practical solution
Quiroz Santroni has taken in mind the issues and risks detailed above and in doing so, has thought of the solution in the most practical and cost-efficient way possible to address and mitigate the same offering a package of services at flat rates which have been deemed as advantageous to the client when weighing in the risks which are sought to be allayed. The benefits in the approach recommended by Quiroz Santroni are numerous and should be utterly considered by any person intending to start or continue exporting to Dominican buyers on a regular basis or even on a single occasion if the amounts involved are significant and worth the investment in mitigating risks in its recovery. Be sure accordingly to contact us for a detailed description of the services, the benefits deriving from the same, and the reasonable fees and costs currently offered by Quiroz Santroni.