Population: 1,332,893

Economy Overview:

Estonia, as a new member of the World Trade Organization and the European Union, has transitioned effectively to a modern market economy with strong ties to the West, including the pegging of its currency to the euro. The economy benefits from strong electronics and telecommunications sectors and is greatly influenced by developments in Finland, Sweden, and Germany, three major trading partners. The current account deficit remains high; however, the state budget enjoyed a surplus of $130 million in 2003.

General Business Practices

a) The main language used for business transactions is Estonian. Contracts and agreements with foreign countries are mostly drawn up in English. Still, Russian, Finnish and German have been used in number of business transactions. In court proceedings mostly Estonian is used. b) Business transactions within Estonia are normally paid in Estonian kroons (EEK). Estonian kroon is made up of 100 cents (8 EEK = 1 DEM). When the transactions are made with foreign companies, USD, DEM, FIM and EUR are quite common currencies which are used. c) Assignments forwarded should ensure that correspondence is in English language. Any supportive documentation should be translated into English with such translation sworn before a notary public and legalized in the Ministry of Foreign Affairs if court proceedings are likely to be required.

Collections

A. Backround of Industry

1. We predict that 1 out of 4 invoices are not paid in full on the due date.
2. Debt collection is handled by both debt collection agencies and law offices. As debt collection agencies work mostly with a premium fee (i.e. no collection – no fee), it is becoming more common that most of the debt collection work is done by the debt collection agencies. Lawyers from law offices work mostly on a hourly charge and therefore deal with big and legally complex debt cases or represent creditors in court.
3. Collection of consumer debts is handled mostly by debt collection agencies, due to the reason that the debt sums are quite often small.

B. Licensing/Bonding Requirements

There are no licensing requirements in Estonia.

C. General Procedures

1. When an debt collection agency receives an order to collect from the creditor, the first action is to send a demand for payment to the debtor. In the payment demand the debtor is requested to accept the debt (also interest, damages, collection fees) and to liquidate the debt within 7-10 days. Debtor is commonly given an option to pay straight to the creditor or to the trust account of the debt collection agency. If the debtor will not agree with the claim, he is asked to make a written objection to the creditors claim. After 3-4 days the debt collection agency will contact the debtor to find out, whether and when the debtor is ready to pay the debt. If the debtor fails to meet the payment demand and is unwilling to co-operate with a debt collection agency by telephone or other communication means, most commonly a debt collection agency will send a warning of bankruptcy or a notice of the filing a lawsuit (depending of the specific case).
If the debtor still is not interested to settle the debt and the credit investigations reveal that the debtor owns assets, debt collection agency will, with the written agreement with creditor, file a suit or a bankruptcy application to court.
The way of action may be a little bit different in debt collection agencies, especially concerning the number of letters issued to the debtor and having the door-knock service or not. Until now it seems that quite a lot of debt collection agencies are not very happy going to court, so they try to get an out of court solution.
2. As mentioned before, lawyers prefer to take bigger o