A long-standing burden on the courts in the Slovak
Republic is the large number of old enforcement proceedings.
Old enforcement proceedings are referred proceedings that
commenced before April 1 2017, when a large amendment of the
Code of Enforcement Procedure entered into force. While the new
rules from this date give bailiffs strict limits for the new
enforcement proceedings – two-and-a-half years for
debtors who are legal entities and five years for debtors who
are natural persons – no such limits existed for the
old enforcement proceedings. This fact, plus the fact that old
enforcement procedures could not be terminated for insolvency
of a debtor without the creditor's consent, explains why there
are still 2.6 million old enforcement procedures in the courts.
These old enforcement procedures formally continue even though
the debtor is, in most cases, insolvent and no assets are being
recovered from them. If these cases continue to be completed at
their present rate without state intervention, the old
enforcement procedures would remain in the legal system for
another 12+ years. To end this unsustainable situation, the
government proposed an act on the termination of the certain
enforcement procedures (Act) aimed specifically at the old
enforcement proceedings, which will enter force on January 1
2020.
The Act lays down a clear cut-off period of five years for
all the old enforcement procedures, in other words, those that
commenced before April 1 2017. Many of these enforcement
procedures will terminate on the date that the Act enters
force, January 1 2020, because by this date they will already
have long exceeded the five-year limit from their commencement
date. In such cases, bailiffs will have to notify the creditor
of the automatic termination of their old enforcement procedure
no later than six months from the Act's entry into force. In
the case of other old enforcement procedures that will be
terminated gradually after January 1 2020, the bailiff will
have to notify the creditor concerned within a shorter period:
three months from the termination of the enforcement procedure.
Under these rules, all the old enforcement procedures will be
terminated no later than March 31 2022.
Some old enforcement procedures will be exempted from
mandatory termination such as enforcement procedures for
alimony payments, because termination could create unfair
conditions for mothers with dependent children, and receivables
resulting from operational programmes or EU funds, because of
the rules governing the use of such funds. There will also be
no mandatory termination of enforcement procedures in which the
bailiff is enforcing a non-monetary performance such as the
demolition of a building. Another important point is that an
old enforcement procedure will not be terminated if the bailiff
has recovered EUR15 ($16) or more from a debtor within the 18
months before the date when it would (otherwise) expire. This
rule reflects the government's intention to apply mandatory
termination only to those procedures where there has been no
satisfaction of the creditors and the case is merely an
administrative burden on the courts.
The Act also lays down strict regulations on the calculation
and apportionment of costs in old enforcement procedures
subject to mandatory termination. In such cases, bailiffs will
be entitled to retain any fees deducted from any part of the
receivable seized before the termination of the enforcement
procedure plus a flat-rate fee of EUR35. The creditor must pay
this flat-rate fee to the bailiff. Bailiffs will not be
entitled to any other fees from the old enforcement
procedure.
It is important to note that the Act does not constitute an
amnesty in enforcement procedures because it does not
extinguish creditors' claims in the cases concerned. If any
property of the debtor is discovered after the mandatory
termination of the enforcement procedure, the creditor can
start a new enforcement procedure against the debtor, but in
this case, it will be subject to the new Code of Enforcement
Procedure effective from April 1 2017. This includes mechanisms
designed to ensure that enforcement procedures are completed
more quickly, including the previously mentioned deadlines of
two-and-a-half and five years if a creditor's claim cannot be
recovered. The Act is mainly of benefit to the courts, which
will be able to cast off the burden of numerous old, insolvent
enforcement procedures and attend to other more serious cases.
The termination of the old enforcement procedures will probably
also cause creditors to review the enforceability of their
claims, as they will have to make a commercial decision whether
to stop an old enforcement procedure for a flat-rate fee of
EUR35, or to continue it with an unclear outcome, but subject
to the new rules for enforcement procedures, under which the
minimum fee that the creditor must pay to the bailiff is
EUR60.
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Daniel Futej |
Daniel Grigel |