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Slovak Republic: Tightening enforcement legislation

Enforcement places a significant strain on the finances of liable parties, and as such the legislation on enforcement should offer not only a legal basis for effective enforcement, but it should also ensure reasonable protection for the liable parties.

Under the previous law, enforcement agents were allowed to retain the funds they collected and use them during an interim period for their own gain, because the law did not lay down any rules or any specific time limits for when they had to send the funds to the claimants. The latest amendment to the Code of Enforcement Procedure now specifically requires enforcement agents to deposit the funds they collect into a separate enforcement agent's bank account. They are further required to send those funds without delay to the account of the claimant, and in any event they must send the money within 14 days of receipt. Another new duty is what is called an enforcement agent's final settlement statement in the event enforcement proceedings are suspended or completed upon collection of the debt. Under the previous law, it was not uncommon for the parties in enforcement proceedings to be unaware of the fact that the proceedings had ended. The amendment has also given the liable party the right to a free annual settlement statement and the enforcement agent must send the settlement statement for the enforcement proceedings within 30 days of receiving the request. The liable party must pay for any subsequent copies of the settlement statement.

Daniel FutejDaniel GrigelZuzana Steklácová
The amendment also introduced a new system for allowances by laying down a sorting order, which the former Code of Enforcement Procedure did not provide for at all. Previously, enforcement agents were allowed to deduct their anticipated expenses from all funds collected and it was only after that amount was paid that the deductions were made from the amount due, which caused the debtor significant delays in payment of their debt. Under the new Code of Enforcement Procedure, an enforcement agent must first make allowances for the costs of the enforcement proceedings, up to a maximum of 24% of the entire amount collected. Of the remaining 76% of the collected debt, first the principal is set off, and only after the principal is paid off can the collected debt be set off against the appurtenances of the claim, and then finally against the claimant's costs. The previous legislation allowed enforcement agents to make deductions either according to the Civil Code (first from the principal and then the interest) or according to the Commercial Code (first from the interest and only then from the principal), which was beneficial to both the claimant and the enforcement agent. In terms of collecting maintenance payments, a separate rule was adopted on how to set off claims and now collected funds will be applied first to regular maintenance payments.

One of the most significant changes is in how enforcement agents will be selected; that will now be through a proper selection procedure. Before the amendment, any person with a legal education, experience and having passed the relevant exam could become an enforcement agent. Now, the selection procedure for enforcement agents will be announced by the Justice Ministry of the Slovak Republic for each specific regional court district. However, the Code of Enforcement Procedure does not make it obligatory to conduct a selection process. Essentially, it is the prerogative of the Justice Ministry to determine whether the current situation requires additional enforcement agents, and where additional enforcement agents are required, it will announce the selection procedure at least 60 days in advance. Similar to last year's amendment to the advocacy act, which extended the internship period for trainee lawyers, this amendment extends the mandatory internship for enforcement agents from three years to five years.

Until now, any disciplinary action against enforcement agents was an internal matter for the chamber, but under the amendment any application for disciplinary proceedings will be decided in the first instance by a disciplinary board created through a random selection process from the database of nominees to the chamber, the Conference of Enforcement Agents and the Justice Ministry. In the second instance, rulings in disciplinary proceedings will be decided directly by the court on the basis of an application for legal relief filed within 15 days of receipt of the decision of the disciplinary board. The amendment to the Code of Enforcement Procedure also introduced a detailed governance of the disciplinary proceedings, elaborating on the terms and deadlines of disciplinary proceedings against enforcement agents.

It does seem that this amendment is not the end of the changes to enforcement law, as even now the Justice Ministry is preparing another amendment to the Code of Enforcement Procedure. One of the contemplated changes will apply to how enforcement proceedings are assigned, and they are thinking of assigning enforcement proceedings based on region.

Other planned changes see the creation of a specialised enforcement division in the court and a central register of enforcements that would contain all enforcement proceedings that are under way, similar to the system now in place in the Czech Republic.

Daniel Futej, Daniel Grigel and Zuzana Steklácová

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