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Slovak Republic: Termination of old enforcement proceedings

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.

Daniel FutejDaniel Grigel

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