This content is from: Local Insights

Slovak Republic: Enforcement proceedings rules

Daniel FutejDaniel Grigel

Changes to rules governing enforcement proceedings in Slovakia will come into force on April 1 2017. The new rules will only apply to enforcement proceedings commenced on or after that date.

The law introduces a single enforcement court in Slovakia – the District Court of Banská Bystrica as opposed to the 54 district courts presently having jurisdiction. The court will communicate with both enforcement agents and creditors via electronic means only through electronic forms. Another important change relates to the present regulation under which the claimant (the owner of the debt) directly selects an enforcement agent. The amended act provides for the random selection of an enforcement agent by the state's information system. Enforcement cases will be distributed equally among the enforcement agents in a given region. Although the creditor will not be able to appeal the random assignment of an enforcement agent in court, if the enforcement agent repeatedly or substantially breaches their duties, the creditor will be able to petition the enforcement court to replace them with a different enforcement agent. The court may or may not allow the change.

We believe random selection of enforcement agents may be discriminatory because, as has been repeatedly upheld by the case-law of Slovak courts, at present enforcement agents in Slovakia act partly as freelance professionals or entrepreneurs.

The amended act also introduces the authority of the court to give instructions to the enforcement agent or impose deadlines for certain acts in cases where unnecessary delays occur. Failure to abide by the court's instructions will result in the court being able to remove the enforcement agent from the case and appoint a new one; and this would also be considered severe professional misconduct on the part of the enforcement agent. The enforcement agent must notify the claimant of their findings by submitting an initial report within three months of commencement of the enforcement and then every 180 days. The enforcement agent must also take account of the claimant's instructions in the identification of the debtor's assets.

Another interesting addition to the legislation is the precisely defined order in which the enforcement agent can set off their costs against the assets collected from the debtor and the limits as regards the percentage of those costs being set off. Although the enforcement agent's costs have first priority over any recovered funds, these are limited to 24% and the enforcement agent will have to turn over the remaining 76% to the claimant.

While the existing legislation allowed for an instalment plan between the claimant and the debtor solely on the consent of the claimant, the amended act requires only that the enforcement agent agrees to instalments. These instalment plans are limited to cases where the amount recovered by the enforcement agent does not exceed €2,000 ($2,100), and the debtor is limited to a maximum of 10 monthly instalments of at least €50.

The provisions regarding temporary deferment of enforcement have also changed and now the enforcement agent, and not the court, will decide on temporary deferment. The act enumerates the reasons for deferment of enforcement. Considering the fact that once the debtor submits an application for deferment the enforcement is suspended until the decision to permit or deny deferment is issued, the debtor will only be allowed to apply for deferment of enforcement once over a period of three months.

Under the new rules, the agent is required to discontinue enforcement proceedings if they have been unable to recover a claim within 30 months from commencement of enforcement from a debtor who is a legal person, or within five years from commencement where the debtor is a natural person.

The amendment also introduces flat fees for enforcement agents, where the flat fee and flat rate for reimbursement of expenses is known in advance allowing the claimant to know right from the start of enforcement how much the enforcement will cost.

Daniel Futej and Daniel Grigel

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