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MAP OF SPECIAL ENFORCEMENT PROCEEDINGS FOR SETTLEMENT OF CLAIMS IN RESPECT OF UTILITIES AND SIMILAR SERVICES UNDER THE 2011 ACT ON ENFORCEMENT AND SECURITY.

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Presentation on theme: "MAP OF SPECIAL ENFORCEMENT PROCEEDINGS FOR SETTLEMENT OF CLAIMS IN RESPECT OF UTILITIES AND SIMILAR SERVICES UNDER THE 2011 ACT ON ENFORCEMENT AND SECURITY."— Presentation transcript:

1 MAP OF SPECIAL ENFORCEMENT PROCEEDINGS FOR SETTLEMENT OF CLAIMS IN RESPECT OF UTILITIES AND SIMILAR SERVICES UNDER THE 2011 ACT ON ENFORCEMENT AND SECURITY This presentation shows all procedural steps in the enforcement procedure for settlement of claims that stem from utilities and similar services (the de jure map of the procedure). It also indicates at which steps, according to the bailiffs who regularly carry out this procedure, problems or delays usually occur or might occur, and provides brief explanations in this regard (the de facto map of the procedure). How to use this presentation To see the most important rules applying to each step, click on the arrow next to the step. To see a brief explanation of how and why delays and other problems occur, click on the black field indicating where those occur. For more information on how the divorce procedure look in practice, see a summary report on the research dealing with this topic, available on the following link: Court%20and%20Enforcement%20Procedures.pdf

2 The procedure for settlement of claims stemming from utilities and similar services is regulated by the Act on Enforcement and Security (hereinafter AES), which was adopted in Basic and commercial courts shall have substantive jurisdiction in enforcement and security proceedings pursuant to the law governing the jurisdiction of courts, with the exception of reviews of extraordinary legal remedies where court jurisdiction shall be determined in accordance with the law (Article 3, Paragraph 1). A motion to enforce based on an authentic document for the satisfaction of a pecuniary claim in respect of rendered utility and similar services shall be filed with the bailiff appointed for the area in which the enforcement creditor is headquartered (Article 252, Paragraph 1).

3 1. WARNING TO THE DEBTOR 2. FILING A MOTION TO ENFORCE 3. CONCLUSION OF THE BAILIFF 4A. OBJECTION AGAINST THE CONCLUSION OF THE BAILIFFT 4. SERVICE OF ENFORCEMENT RULINGS 5. REALIZATION OF THE ENFORCEMENT OBJECTIONS BY THIRD PARTIES PROCEDURE FOR OBTAINING STATEMENTS OF ASSETS FROM ENFORCEMENT DEBTORS 4B. DECISION ABOUT THE OBJECTION 6. CONCLUSION OF ENFORCEMENT STEPS THAT CAN BE MADE AT ANY STAGE OF ENFORCEMENT PROCEEDINGS (STEPS 2-6) 6B. COUNTER-ENFORCEMENT ENFORCEMENT PROCEEDINGS de jure WAYS OF ENFORCEMENT

4 1. WARNING TO THE DEBTOR 2. FILING A MOTION TO ENFORCE 3. CONCLUSION OF THE BAILIFF 4A. OBJECTION AGAINST THE CONCLUSION OF THE BAILIFFT 4. SERVICE OF ENFORCEMENT RULINGS 5. REALIZATION OF THE ENFORCEMENT OBJECTIONS BY THIRD PARTIES PROCEDURE FOR OBTAINING STATEMENTS OF ASSETS FROM ENFORCEMENT DEBTORS 4B. DECISION ABOUT THE OBJECTION 6. CONCLUSION OF ENFORCEMENT STEPS THAT CAN BE MADE AT ANY STAGE OF ENFORCEMENT PROCEEDINGS (STEPS 2-6) 6B. COUNTER-ENFORCEMENT ENFORCEMENT PROCEEDINGS de facto WAYS OF ENFORCEMENT problems and delays problems

5 STEP 1: WARNING TO THE DEBTOR Before filing a motion for enforcement, the creditor is obliged to warn the debtor to perform the obligation. Along with the motion to enforce under paragraph 1of this Article and in addition to attachments prescribed in Article 35 of this Law, the enforcement creditor shall also submit written proof that s/he had cautioned the enforcement debtor to fulfil his or her obligation prior to the submission of the motion to enforce (Article 252, Paragraph 2). STEP 2: FILING A MOTION TO ENFORCE A motion to enforce based on an authentic document for the satisfaction of a pecuniary claim in respect of rendered utility and similar services shall be filed with the bailiff appointed for the area in which the enforcement creditor is headquartered (Article 252, Paragraph 1). What Motion to Enforce must contain is specified in Article 35 of the AES. Besides that the enforcement creditor shall also submit written proof that s/he had cautioned the enforcement debtor to fulfil his or her obligation. The costs of proceedings connected with ordering and carrying out enforcement shall be borne by the enforcement debtor (Article 34, Paragraph 1). The enforcement creditor shall advance the costs of proceedings in accordance with the law and the regulation governing costs of proceedings. The enforcement creditor shall submit proof of advance payment together with the motion to enforce. The court or bailiff shall discontinue enforcement in the event the enforcement creditor failed to submit proof of advance payment, unless s/he has been exempted from such payment under the law or by the court (Article 34, Paragraph 2).

6 STEP 3: CONCLUSION OF THE BAILIFF The bailiff shall rule on the motion to enforce in a conclusion (Article 253, Paragraph 1). The bailiff shall dismiss an inadmissible or incomplete motion in a conclusion (Article 253, Paragraph 2). The bailiff shall reject a groundless motion in a conclusion (Article 253, Paragraph 3). If the authentic document is suitable for enforcement, that is, if the bailiff and enforcement debtor are specified, as well as subject, type, volume and time of fulfilment of obligation, the bailiff shall issue a conclusion ordering the enforcement debtor to settle the claim and pay any specified costs within eight days of receipt of the conclusion and shall order enforcement to settle such claims (Article 253, Paragraph 4). The bailiff shall issue the conclusion within eight days of receipt of the motion (Article 253, Paragraph 5). The conclusion shall be served on the enforcement creditor and the enforcement debtor within five days of its issuance (Article 7, Paragraph 1).

7 STEP 4: SERVICE OF ENFORCEMENT RULINGS A ruling upholding a motion to enforce shall be served on the enforcement creditor and the enforcement debtor, whereas a ruling rejecting a motion shall be served only on the enforcement creditor (Article 38, Paragraph 1). An enforcement ruling on a pecuniary claim shall also be served on an enforcement debtor of the enforcement debtor, while a ruling regarding enforcement against funds in the account of the enforcement debtor shall also be served on the enforced collection organisation (Article 38, Paragraph 2). An enforcement ruling against movable items and a conclusion on the vacation and surrender of immovable property shall be served on the enforcement debtor immediately before the initiation of the first enforcement action, unless otherwise provided for in AES (Article 38, Paragraph 3). If the enforcement debtor is a legal entity or entrepreneur, the ruling is served at the address of the headquarters of legal entity or entrepreneur registered in Business Registers Agency and other public registers (Article 29, Paragraph 1). Service of documents on an enforcement debtor who is a natural person shall be performed at the address of his or her permanent or temporary residence registered by the authority charged with keeping personal identity card records (Article 29, Paragraph 2). The enforcement creditor shall be required to submit to the court the address of the enforcement debtor that corresponds to the address in the records of a competent authority (Article 29, Paragraph 3). In the event service of documents could not have been performed pursuant to paragraphs 1 and 2 of this Article, service shall be performed by displaying the document on the notice board of the competent court within five workdays from the day of attempted service (Article 29, Paragraph 4). The court shall be required to display the document on notice board of the court the next working day following the expiry of the said term (Article 29, Paragraph 4). Service of a document shall be deemed performed upon the expiry of five workdays from the day of display of the document on the court notice board (Article 29, Paragraph 7).

8 STEP 4A: OBJECTION AGAINST THE CONCLUSION OF THE BAILIFF Both enforcement debtor and enforcement creditor can file an objection against the conclusion of bailiff. An objection may be filed within five workdays from the day of service of the ruling (Article 39, Paragraph 3). Enforcement creditor can file a complaint against the conclusion which rejects or denies the enforcement ruling. An enforcement debtor may file an objection against a conclusion under paragraph 4 of Article 253 of this Law on the following grounds : 1)The authentic document does not regard the enforcement debtor; 2)The obligation in the authentic document is not mature, i.e. the condition has not been fulfilled; 3)The obligation has been fulfilled or has otherwise been extinguished, either in its entirety or in part; 4)The statute of limitations on the claim has expired. Together with the objection, the enforcement debtor shall submit written documents substantiating the allegations in the objection. The objection of the enforcement debtor shall not stay the enforcement (Article 254, Paragraph 3).

9 STEP 4B: DECISION ABOUT THE OBJECTION Objections shall be ruled on by a panel of the court within whose jurisdiction the enforcement creditor is headquartered (Article 256, Paragraph 1). In the event an enforcement debtor or enforcement creditor files an objection, the bailiff shall forward the case files to the court, along with a draft decision on the objection, within five workdays from the day of receipt of the objection. In the event the draft decision is so written that it fully complies with the ruling that should be rendered, the court shall adopt the proposed draft decision on the objection by stamping the draft decision. The draft decision with the court stamp shall have the legal effect of an enforcement ruling (Article 256, Paragraph 2). The court shall rule on an objection within five workdays from the day the court received the objection (Article 49, Paragraph 6).

10 STEP 5: REALIZATION OF ENFORCEMENT Enforcement by a bailiff shall be initiated on a motion of the enforcement creditor (Article 70, Paragraph 1). The enforcement creditor shall submit the original or a certified copy of the enforcement ruling together with the motion to enforce (Article 70, Paragraph 2). Enforcement shall be conducted every day between and hours. Enforcement may be conducted outside the hours specified in paragraph 1 of this Article only in cases of evasion of an obligation or risks that would arise from a delay (Article 71). Enforcement method is specified in AES. A party to or a participant in a proceeding may file a submission with a court or bailiff seeking the elimination of irregularities committed in the course of or in connection with the implementation of the enforcement (Article 74, Paragraph 1). In the event the bailiff fails to comply with the request under paragraph 1 of this Article within five workdays, the party to or participant in the proceedings may report the matter to the relevant court. A request to eliminate irregularities shall not stay enforcement (Article 74, Paragraph 2). The court shall notify the ministry charged with judicial affairs (hereinafter: the Ministry) and the Chamber of Bailiffs (hereinafter: the Chamber) of the irregularities in the work of the bailiffs. Enforcement to settle pecuniary claims can be conducted on: movable assets, real estate, claim of enforcement debtor, wages and other regular pecuniary income, account of enforcement debtor, savings deposit, securities and shares in company.

11 STEP 6: CONCLUSION OF ENFORCEMENT Enforcement proceedings may be concluded by discontinuance or completion (Article 75). The court shall discontinue enforcement in the event : 1) An enforceable document has been revoked, modified, annulled, or otherwise rendered ineffective by a final or legally-binding decision; 2) A party has died intestate; 3) A party, who was a legal person, has been dissolved with no legal successor; 4) A claim has ceased to exist; 5) The object of enforcement has been destroyed; 6) There are no assets that may be the object of enforcement; 7) On other grounds provided for in the law. The enforcement debtor may, for other reasons provided for in this or another law, pay its outstanding debts along with the agreed or statutory default interest and the costs of enforcement accruing until the debts are paid at any stage of the enforcement proceedings until the first auction for the sale of the object of enforcement at the latest, or until the court awards the object to the enforcement creditor. Enforcement shall be discontinued ex officio in the event the enforcement debtor and enforcement creditor agree that the debt be paid in instalments and submit a court-certified agreement thereon. A decision to discontinue enforcement shall also invalidate the undertaken enforcement actions provided that this does not impinge on the acquired rights of third parties. A decision on the completion of enforcement proceedings shall be issued following the settlement of the enforcement creditor (Article 77).

12 STEP 6A: COUNTER-ENFORCEMENT After enforcement has been carried out, the enforcement debtor may file a motion for counter-enforcement with the court, requesting that the enforcement creditor return to him or her what s/he has acquired through enforcement and specifying the means of enforcement in the event : 1) The enforceable document has been revoked, modified, annulled, or otherwise rendered ineffective by a final or legally-binding decision; 2) The enforcement debtor had voluntarily settled the claim of the enforcement creditor during the enforcement proceedings; 3) The enforcement ruling or the ruling to conduct enforcement has been revoked or modified by a legally-binding decision; 4) The inadmissibility of enforcement has been determined by a legally-binding court decision(Article 78). The motion for counter-enforcement may be submitted within 15 days from the day of service of the decision on the enforcement debtor on the grounds specified in paragraph 1, items 1, 3 and 4 of this Article, and within 15 days from the day of conclusion of the enforcement proceedings on the grounds specified in paragraph 1, item 2, of this Article (Article 78, Paragraph 2). An enforcement debtor may not initiate litigation for the satisfaction of his or her claim prior to the expiry of the deadlines in paragraph 2 of this Article (Article 78, Paragraph 3). The motion for counter enforcement shall also be served on the bailiff in the event the enforcement had been conducted by an bailiff (Article 78, Paragraph 4). The provisions of this Law governing enforcement shall apply accordingly to counter-enforcement proceedings, unless otherwise prescribed by this Article. The court shall serve the counter-enforcement motion on the enforcement creditor and order him or her to respond to the motion within five workdays from day of receipt (Article 79, Paragraph 2). The court shall issue a counter-enforcement ruling ordering the enforcement creditor to return within five workdays to the enforcement debtor what s/he had acquired through enforcement and shall at the same time order enforcement for the collection of the claim (Article 79, Paragraph 3). An objection against the ruling under paragraph 3 of this Article shall stay enforcement only in the event the enforcement creditor deposits a guarantee in an amount not less than the amount of the claim at the time s/he files the objection (Article 79, Paragraph 4). A counter-enforcement motion shall not be upheld in the event it regards the return of an item that has undergone such factual or legal changes that restitution is no longer possible. In such cases, the enforcement debtors may claim their rights in litigation even before the expiry of the deadline for filing a counter-enforcement motion (Article 80, Paragraph 1 and 2).

13 OBJECTIONS BY THIRD PARTIES A person claiming a right precluding enforcement against an object of enforcement may file an objection with the judge at any time prior to the completion of the enforcement proceeding and request that enforcement against that object be declared inadmissible. In the event the enforcement is conducted by a bailiff, the judge shall also serve the objection on the bailiff (Article 50, Paragraph 1). The judge shall serve the objection on the enforcement debtor and the enforcement creditor and invite them to respond thereto within five workdays from the day of service (Article 50, Paragraph 2). The judge shall render a ruling dismissing the objection in the event the third party failed to prove probable that s/he has the right precluding enforcement against the object of enforcement (Article 50, Paragraph 3). The judge may render a ruling at any time during the proceedings instructing a third party s/he deems has probable grounds as to the right, which the enforcement creditor has either disputed or in respect of which s/he failed to respond, to initiate litigation and have the enforcement against the object declared inadmissible within 15 days from the day of service of the ruling against the enforcement creditor (Article 50, Paragraph 4). An enforcement debtor disputing the right of the third party must be included in the litigation under paragraph 4 of this Article (Article 50, Paragraph 5). No objection may be filed against a ruling under paragraph 4 of this Article. The judge shall forward the ruling under paragraphs 3 and 4 of this Article also to the bailiff in the event the enforcement is conducted by the bailiff (Article 50, Paragraph 8). The filing of an objection of the third party and the institution of proceedings under paragraphs 4 and 5 of this Article shall not preclude enforcement (Article 50, Paragraph 7).

14 PROCEDURE FOR OBTAINING STATEMENTS OF ASSETS FROM ENFORCEMENT DEBTORS An enforcement creditor, who has initiated enforcement or security proceedings, may file a request with a court with jurisdiction to order enforcement to obtain a statement on the assets of the enforcement debtor in the event the obligation of the enforcement debtor is of a pecuniary nature (Article 54, Paragraph 1). Such a request may be filed together with a motion to enforce or at any time during the proceedings prior to their completion (Article 54, Paragraph 2). Where enforcement is carried out by a bailiff, the enforcement creditor may authorise the bailiff to file a request for obtaining a statement of assets on his or her behalf (Article 54, Paragraph 3). The court shall issue a ruling ordering the enforcement debtor to appear before the court and give a statement of assets to the judge for the record or to submit a statement of assets in the required number of copies to the court within a deadline not exceeding five workdays. A separate objection against this ruling shall not be allowed (Article 55, Paragraph 1 and 2). The court shall serve the original or a copy of the statement of assets or the court record of the statement on the enforcement creditor (Article 57, Paragraph 1). Within five workdays from the day of receipt of the statement of assets or the record of the statement, the enforcement creditor may request that the statement be supplemented or that a new statement be given in the event the statement does not contain sufficient data to identify the assets listed therein, or in the event a public document or a legally certified document proves that the debtor had provided incomplete or inaccurate information and also proves probable that the claim against the enforcement debtor cannot be settled in full from the hitherto known assets of the enforcement debtor(Article 57, Paragraph 2). In this case, the court shall issue a new ruling ordering the enforcement debtor to submit to the court a supplement to the statement or give a new statement of assets (Article 57, Paragraph 3). It is stipulated in Article 58 of the AES what a statement of assets of the enforcement debtor shall contain.

15 ENFORCEMENT AGAINST MOVABLE ASSETS (page 1) The court in whose territory the movable assets are located shall have territorial jurisdiction to rule on motions to enforce against such movable assets and to conduct the enforcement (Article 81). Some assets shall be exempt from enforcement (as stipulated in Article 82). Enforcement against movable assets shall be conducted by performing the inventory, valuation and sale of movable assets and the satisfaction of the enforcement creditor from the proceeds of the sale (Article 83). 1. Notice of Inventory and Inventory Immediately prior to inventory, the enforcement debtor shall be served the enforcement ruling or a conclusion on the implementation of enforcement and requested to pay the amount of enforcement including interest and costs. In the event the decision could not have been served in the course of the inventory, service shall be effected by affixing the decision. The absence of the parties shall not prevent the conduct of the inventory. The absent party shall be informed of the performed inventory (Article 84). The enforcement creditor may file a motion for the conduct of another inventory within 45 days from the day s/he was notified of the unsuccessful inventory or from the day of the unsuccessful inventory s/he had attended. The bailiff may conduct another inventory in the absence of a motion of the enforcement creditor as well (Article 91, Paragraph 4). The court shall discontinue enforcement in the event the enforcement creditor failed to file a motion for another inventory within the set deadline or no items that may be subject to enforcement were found during the new inventory (Article 91, Paragraph 5). 2. Registration of Court Liens The enforcement creditor shall deliver the original or a certified copy of the inventory record or of the decision on the revision of the inventory to the organisation legally authorised to register liens on movable assets and rights that are entered in the register, along with the information stipulated by the AES (Article 88). CONTINUE

16 ENFORCEMENT AGAINST MOVABLE ASSETS (page 2) 3. Safekeeping of Inventoried Items On the motion of the enforcement creditor, the court or the bailiff may leave the inventoried items for safekeeping with the enforcement creditor or a third party s/he designates. The costs of safekeeping items shall be initially borne by the enforcement creditor and the enforcement debtor shall be under the obligation to reimburse him or her for these costs. The enforcement creditor shall be liable for any risk of destruction or damage of items left for safekeeping with the enforcement creditor or a third party, unless the destruction or damage occurs due to a force majeure or an accident. Cash, securities and other valuables shall be handed over to the court deposit or the bailiff for safekeeping. Other items of greater value shall also be handed over to the court deposit or the bailiff if they are suitable for such safekeeping (Article 89). 4. Valuation The valuation of items subject to an inventory shall take place at the same time as the inventory. The valuation shall be performed by the bailiff. The valuation of an item shall be made on the basis of its market price in the place of the inventory. The court or bailiff may decide to perform the valuation on the basis of written or oral information about prices obtained from the relevant organisations, institutions or legal or natural persons. The enforcement creditor and enforcement debtor may come to a mutual agreement regarding the value of an item (Article 92). A record shall be made of the inventory and valuation (Article 93). 5. Sale The sale of inventoried items shall be conducted after the enforcement ruling becomes legally binding, unless the enforcement debtor proposed or consented to the motion of the enforcement creditor to conduct the sale earlier, or in the event the items are perishable or there is a risk of considerable depreciation of the value of the inventoried items, and also in the event the enforcement creditor provided a guarantee for damages the enforcement debtor may sustain in the event the items are sold before the enforcement ruling becomes legally binding. No fewer than 15 days and no more than 30 days may pass between the day of inventory and the day of sale. The sale may be conducted before the expiry of the deadline in paragraph 2 of this Article with the consent of the enforcement debtor or in the event the items at issue are perishable or there is a risk of considerable depreciation of their value, or in the event the enforcement creditor deposited a guarantee for the damages s/he would be liable to compensate the enforcement debtor in the event the enforcement ruling is repealed (Article 95). Sale by public auction shall be advertised on the notice board and website of the competent court no later than eight days before the day of the auction (Article 96, Paragraph 6). In the event the item was not sold at the first auction, the court or bailiff shall declare the first sale unsuccessful and immediately schedule a new sale, which must be held no earlier than 15 days and no later than 30 days from that day (Article 97, Paragraph 2). Manner of sale is stipulated by the AES. 6. Satisfaction of enforcement creditor

17 ENFORCEMENT AGAINST IMMOVABLE ASSETS Enforcement against real estate shall be conducted by entry of the enforcement ruling or the conclusion of the bailiff on the implementation of enforcement in a public book, establishment of the value of the real estate, sale of the real estate and satisfaction of the enforcement creditors from the proceeds of the sale (Article 104). 1. Filing a motion on implementation of enforcement against real estate An enforcement creditor submitting a motion to enforce or to conduct enforcement against real estate shall also submit an excerpt from a public book as proof that the real estate are registered as the property of the enforcement debtor (Article 105, Paragraph 1). The bailiff may obtain the documents at the request of the creditor (Article 105, Paragraph 3) 2. Entry of Enforcement Rulings and Annotation of Public Sales An enforcement creditor shall acquire the right to enter a lien pursuant to a ruling or conclusion of the bailiff on the implementation of enforcement against the real estate of the enforcement debtor (Article 107, Paragraph 1). At the request of the enforcement creditor, the lien shall be the entered in a public book pursuant to the enforcement ruling or the conclusion of the bailiff on the implementation of enforcement and an annotation of the public sale or another appropriate form of entry provided for in regulations governing the entry of rights to real estate in public books shall be made (Article 107, Paragraph 2). 3. Valuation of real estate The bailiff shall determine the value of the real estate upon the adoption of the conclusion on the implementation of enforcement (Article 116). The value of the real estate shall be determined in a conclusion (Article 118). 4. Conclusion on Sale Following the determination of the value of real estate, the bailiff shall issue a conclusion on the sale of the real estate in defining the manner and conditions of sale, as well as the time and place of the sale and the period during the day when the real estate may be inspected in the event the sale is effected by public auction. The conclusion on the sale shall be posted on the notice board and website of the court and in another customary manner (Article 119, Paragraph 1). No fewer than 15 days or more than 30 days may elapse from the day of publication of the conclusion on the sale and the day of the sale. The conclusion on the sale shall be delivered to the parties, lien creditors, participants in the proceedings and persons with registered statutory pre-emption rights (Article 119, Paragraph 2 i3). CONTINUE

18 ENFORCEMENT AGAINST IMMOVABLE ASSETS (page 2) 5. Sale of real estate Immovable assets shall be sold by an oral public auction or direct agreement (Article 122, Paragraph 1). The enforcement creditor and the enforcement debtor may agree on sale by direct agreement and on the conditions of sale throughout the proceeding (Article 122, Paragraph 3). Manner of sale is stipulated in detail by the AES. 6. Award of real estate Upon the conclusion of the auction and any declaration of pre-emption rights, the court or bailiff shall declare the highest bidder and award the real estate to that bidder (Article 128, Paragraph 4). The bailiff shall issue a conclusion on the award of the real estate by public auction, which shall be posted on the notice board of the competent court and served on all persons on whom the conclusion on the sale is served and on all the participants in the auction (Article 128, Paragraph 5). The bailiff shall issue a conclusion on the award of the real estate sold by direct agreement, after establishing that the requirements for the validity of the sale have been fulfilled (Article 129, Paragraph 1). The conclusion on the award of the real estate shall be posted on the notice board of the competent court and served on all the persons on whom the conclusion on the sale is served and on the buyer (Article 129, Paragraph 2). 7. Payment of the Price The buyer shall be required to pay the price by the deadline set in the conclusion on the sale (Article 130). In the event the highest bidder fails to make the payment within the set deadline, the bailiff shall declare the sale to that bidder legally ineffective and invite the second-highest bidder to purchase the real estate. In the event that bidder also fails to make the payment within the specified deadline, the bailiff shall also apply these rules to the third-highest bidder (Article 130, Paragraph 3). In the event the three highest bidders all fail to pay the offered or sale price within the deadline, there shall be a new sale. 8. Satisfaction The court or bailiff shall commence satisfaction immediately after the sale and receipt of payment (Article 135).

19 ENFORCEMENT AGAINST A CLAIM OF THE ENFORCEMENT DEBTOR Enforcement against wages, pensions and wage compensations may not exceed two-thirds of the wage, pension or wage compensation. Enforcement against a minimum wage may not exceed one half of the minimum wage (Article 148). The enforcement of a claim shall be conducted by the attachment of the claim and the transfer of the claim for the purpose of collection or transfer in lieu of payment, unless otherwise provided for in the AES (Article 150, Paragraph 1). 1. Filing a motion on enforcement against a claim of the enforcement debtor The enforcement creditor may only request the attachment of a claim in the motion to enforce but shall then be under the duty to file a motion for satisfaction or for the transfer of the claim within 30 days from the day of service of the attachment order or of notice of the declaration by the debtor of the enforcement debtor. Enforcement shall be discontinued in the event the enforcement creditor failed to file the motion within the set deadline (Article 150, Paragraph 2 and 3). 2. Prohibition of Satisfaction and Disposition The bailiff shall render a conclusion on the attachment of the claim of the debtor prohibiting the debtor of the enforcement debtor from settling that claim with the enforcement debtor, and the enforcement debtor from collecting such a claim and disposing of it in favour of third parties or his or her debtor (attachment of a claim) (Article 152). An enforcement creditor shall acquire a lien on a claim upon the service of the ruling or conclusion on the attachment of the claim on the enforcement debtor (Article 154, Paragraph 1). An enforcement creditor in whose favour a claim has been attached shall perform all legal and factual actions to preserve the claim and ancillary rights (Article 156, Paragraph 1). 3. Transfer of Claims for the Purpose of Collection An enforcement creditor, to whom a claim was transferred for the purpose of collection, shall be entitled to: demand from a debtor of the enforcement debtor payment of the amount indicated in the conclusion on the transfer, provided that the amount has matured, perform all actions necessary for preserving and realising the transferred claim; exercise rights with respect to the pledge given as security for the claim; and to proceed against the guarantor of the debtor of the enforcement debtor in a manner appropriate to the type of guarantee (Article 166, Paragraph 1).

20 ENFORCEMENT AGAINST WAGES AND OTHER REGULAR PECUNIARY INCOME A conclusion on attachment of wages shall order attachment of a specific share of a wage and order the state authority, legal person or another employer paying the enforcement debtor wages to pay the attached amount to the enforcement creditor (Article 175, Paragraph 1). In the event the enforcement is being conducted by a bailiff, the employer shall pay the attached amount into the account of the bailiff. The bailiff shall transfer the attached amount into the account of the enforcement creditor within one day from the day of payment (Article 175, Paragraph 2). For the purposes of this Law, a wage shall include all income of an employed person arising out of employment, minus the taxes and contributions payable from the wages (Article 175, Paragraph 3). Enforcement against wages, pensions and wage compensations may not exceed two-thirds of the wage, pension or wage compensation. Enforcement against a minimum wage may not exceed one half of the minimum wage (Article 148).

21 ENFORCEMENT AGAINST THE ACCOUNTS OF ENFORCEMENT DEBTORS Enforcement against funds held in current accounts for the purpose of satisfying pecuniary claims against legal persons, entrepreneurs and natural persons involved in economic activities shall apply to all RSD funds in their current accounts and all foreign currency funds in their foreign currency accounts, except for those exempted from enforcement under the law (Article 183, Paragraph 1). 1. Filing a motion on enforcement against the accounts of enforcement debtors In addition to the information under Article 35 of the AES, enforcement creditors shall in their motions to enforce also specify the current account number, personal identity number and tax identification number of the enforcement debtor, as well as the number of their own current account, type of interest, rate of interest and manner of calculation for the period for which interest is calculated. In the event the Republic of Serbia, an autonomous province or a local self-government unit is designated as the enforcement debtor in the motion to enforce, enforcement creditors shall, in addition to the budget execution account, also specify the budget beneficiary, whose work gave rise to the claim (Article 184, Paragraph 1). In the event the enforcement debtor fails to supply this information at the request of the enforcement creditor, the enforcement creditor may file the motion without such information along with proof of having solicited it and the court or enforcement officer shall ask the enforced collection organisation to provide that information (Article 184, Paragraph 2). The enforced collection organisation shall deliver the information to the bailiff or a person who proves to have a justified interest therein without delay (Article 184, Paragraph 3). 2. Implementation of Enforcement An enforcement conclusion on the implementation of enforcement shall be delivered to the enforced collection organisation instructing it to transfer the pecuniary amount regarding which enforcement has been ordered from the account of the enforcement debtor to the account of the enforcement creditor (Article 185, Paragraph 1). Enforcement manner is stipulated in Article 185 of the AES. In the event an enforcement debtor does not have the requisite funds to satisfy his or her debt in the frozen accounts, and the means of enforcement has changed, the accounts shall remain frozen until the final satisfaction of his or her enforcement creditors (Article 185, Paragraph 7).

22 ENFORCEMENT AGAINST SAVINGS DEPOSITS AND CURRENT ACCOUNTS Enforcement for the purpose of collecting claims on savings deposits shall be effected by attachment and payment (Article 191, Paragraph 1). 1. Filing a motion on enforcement against savings deposits and current accounts Enforcement creditors proposing enforcement against savings deposits shall specify the number and name of the organisation where the enforcement debtor has a savings deposit and other information about the savings deposit. In the event an enforcement creditor does do not provide the required information on the savings deposit of the debtor, the court or bailiff shall request that information from the organisation holding the deposit, which the enforcement creditor is under the duty to specify in his motion (Article 191, Paragraphs 2 and 3). The organisation holding the deposit shall deliver the requested information to the court or bailiff without delay and may not notify the enforcement debtor that the information has been requested (Article 191, Paragraph 4). Attachment shall be deemed completed on the day of service of the ruling or conclusion on attachment to the organisation holding the savings deposit (Article 191, Paragraph 5). The bailiff shall deliver the ruling or conclusion on attachment to the enforcement debtor only after the organisation holding his savings deposit has notified the bailiff that the injunction has been implemented (Article 191, Paragraph 6). 2. Implementation of Enforcement An enforcement conclusion on the implementation of enforcement shall be delivered to the enforced collection organisation instructing it to transfer the pecuniary amount regarding which enforcement has been ordered from the account of the enforcement debtor to the account of the enforcement creditor (Article 185, Paragraph 1). Enforcement manner is stipulated in Article 185 of the AES.

23 ENFORCEMENT AGAINST SECURITIES AND STAKES IN COMPANIES Enforcement against shares and stakes in companies shall be implemented by entry and acquisition of lien, attachment, valuation, sale and satisfaction of the enforcement creditor (Article 193). ENFORCEMENT AGAINST SHARES 1. Filing an enforcement motion 2. Delivery of enforcement conclusion Enforcement rulings or conclusions on the implementation of enforcement against shares shall be delivered to the enforcement creditor, enforcement debtor, and the Central Registry of Securities (Article 194, Paragraph 2). The enforcement creditor shall acquire a lien on the shares that are the object of the enforcement when the ruling or conclusion on the implementation of enforcement is registered (Article 194, Paragraph 3). The attachment of the shares that are the object of the enforcement shall be effected by the entry of the enforcement ruling or conclusion on the implementation of enforcement against the shares in the Central Registry of Securities (Article 194, Paragraph 4). Enforcement debtors may not dispose of the attached shares from the moment of attachment (Article 194, Paragraph 5). 3. Valuation of shares The value of shares shall be determined by the bailiff (Article 195, Paragraph 1). In the event the shares are quoted on the stock exchange, their value shall be set at the average price of the shares on the stock exchange in the preceding 30 days, pursuant to stock exchange reports. In the event the shares are not quoted or their value cannot be determined in this manner, the court or bailiff may engage an expert to appraise their value (Article 195, Paragraph 2). 4. Sale of shares Shares traded in the stock exchange shall be enchased at the stock exchange. Shares quoted on the stock exchange shall be sold through an authorised participant in the securities market designated by the enforcement creditor or bailiff. Shares may be sold in a regulated market, comprising the exchange trading and over-the-counter trading, outside a regulated market, as well as in other ways provided for in the law governing trading in securities(Article 195, Paragraph 3 and 4). 5. Satisfaction of the creditor CONTINUE

24 ENFORCEMENT AGAINST SECURITIES AND STAKES IN COMPANIES (page 2) ENFORCEMENT AGAINST OTHER SECURITIES Enforcement against other securities shall be effected by attachment of claims on such securities and by transfer (Article 196). 1. Filing an enforcement motion 2. Attachment of Claims Attachment of claims based on securities, which are transferred by endorsement or are requisite in order to exercise such claims, shall be carried out by seizure of such securities from the enforcement debtor and their handover to the bailiff (Article 197, Paragraph 1). The legal actions required for preserving or exercising rights deriving from the securities shall be performed on behalf of the enforcement debtor by a person designated in the conclusion of the bailiff (Article 197, Paragraph 2). 3. Transfer for the purpose of collection A transfer of a claim based on securities, transferred by endorsement or requiring submission of the securities in order to exercise the claim, shall be deemed completed when the court or bailiff affixes a declaration of transfer to such securities and hands the securities with the declaration to the enforcement creditor (Article 198, Paragraph 1). CONTINUE

25 ENFORCEMENT AGAINST SECURITIES AND STAKES IN COMPANIES (page 3) ENFORCEMENT AGAINST STAKES IN COMPANIES 1. Filing an enforcement motion 2. Delivery of enforcement conclusion An enforcement conclusion on the implementation of enforcement against stakes in a company established as a limited liability company, partnership or limited liability partnership shall be served on the enforcement creditor, the enforcement debtor and the Business Registers Agency for the purpose of entry in the register of liens on moveable assets and rights entered in the register (Article 199, Paragraph 1). The enforcement creditor shall acquire a lien on the stakes that are the object of the enforcement when the ruling or conclusion on the implementation of enforcement is registered (Article 199, Paragraph 3). The attachment of the stake shall be conducted simultaneously with the registration (Article 199, Paragraph 4). The ruling or conclusion on the attachment shall be delivered to the company, which shall enter the lien in the book of company members the same day (Article 199, Paragraph 5). The Business Registers Agency shall annotate the initiation of enforcement proceedings through the compulsory sale of the stake at the same time it enters the lien on the stake (Article 199, Paragraph 6). 3. Valuation of stakes The valuation shall be performed by the bailiff. The valuation of stake shall be made on the basis of its market price in the place of the inventory. The bailiff may decide to perform the valuation on the basis of written or oral information about prices obtained from the relevant organisations, institutions or legal or natural persons. The enforcement creditor and enforcement debtor may come to a mutual agreement regarding the value of stake (Article 92). A record shall be made of the valuation (Article 93). 4. Sale of stakes Sale of stake is conducted according to rules stipulated by the AES on sale of movables. 5. Satisfaction of creditor

26 Enforcement modes ENFORCEMENT AGAINST MOVABLE ASSETSENFORCEMENT AGAINST IMMOVABLE ASSETSENFORCEMENT AGAINST A CLAIM OF THE ENFORCEMENT DEBTORENFORCEMENT AGAINST WAGES AND OTHER REGULAR PECUNIARY INCOMEENFORCEMENT AGAINST THE ACCOUNTS OF ENFORCEMENT DEBTORSENFORCEMENT AGAINST SAVINGS DEPOSITS ENFORCEMENT AGAINST SECURITIES AND STAKES IN COMPANIES

27 Distribution of enforcement cases Pursuant to the AES, an enforcement creditor can freely choose a bailiff. In other words, utility companies are not required to distribute cases to all bailiffs appointed for their territory. A number of bailiffs state that this rule causes serious irregularities. Some of them assert that managers of certain state-owned utility companies receive bribes from a small circle of bailiffs who, in return, exclusively deal with thousands of those companies’ cases. For instance, there are very few bailiffs from Belgrade who work on cases coming from the only, state-owned electric power company (Elektrodistribucija Beograd, i.e., Elektroprivreda Srbije). Similarly, none of the bailiffs from Novi Sad interviewed for the purpose of this research receives cases from Informatika, a city-owned company that receives payments for a number of services, including heating. As indicated above, the bailiffs believe bribery is a reason for such decisions of these companies’ management. CONTINUE

28 Distribution of enforcement cases (page 2) Furthermore, some of the bailiffs claim that their colleagues who work on thousands of cases coming from these companies often fail to operate in accordance with the law, particularly in respect to time limits envisaged by the AES. Specifically, one bailiff asserts that those bailiffs sometimes need five months to react to a motion to enforce, despite the fact that time limits set by the AES are much shorter and can be measured in days. Since neither effective control of the bailiffs’ work (let alone proper control over public utility companies’ management) nor appropriate sanctions for their illegal acts exist, such irregularities remain unpunished. A few of the interviewed bailiffs stated that a repeated failure to act in accordance with the AES should be a reason for bailiffs’ dismissal, which is not the case at the moment. Nevertheless, many big companies, both state-owned and private, such as Telekom (national phone operator), Telenor (private mobile phone operator) or Srbijagas (main gas company), distribute their cases evenly to all bailiffs appointed for the territory of their headquarters. The majority of the bailiffs believe cases should be distributed evenly to all bailiffs, perhaps through the Chamber of Bailiffs.

29 A step that might be necesarry in order to obtain the debtor’s address In addition to the first four steps presented in the de jure map, the only additional step that sometimes has to be taken before the realisation of enforcement is sending a letter to the police requiring the enforcement debtor’s registered address. Namely, enforcement creditors sometimes submit a motion to enforce with a wrong address of the debtor, usually because they are unaware of the fact that the debtor changed his or her address after the debt was made. In such situations, a bailiff has to write to the police and ask them to provide the information on the debtor’s registered residence. According to the bailiffs, in Belgrade and Novi Sad the police usually needs between a month and two months to respond, while in smaller cities and towns they normally respond quicker, sometimes in about a week. The police do not charge for this service, nor do the bailiffs. The bailiffs have different assessments as to how often they need this service. As stated by one bailiff from Belgrade, this service might be necessary in approximately 20% of all cases, while one of her colleagues from Novi Sad said the percentage of cases where this kind of police assistance is necessary might be considerably higher.

30 Problems concerning delivery of bailiff’s decisions to enforcement debtors According to the majority of the bailiffs, most important and most frequent problems arise with respect to delivery of bailiffs’ conclusions to enforcement debtors. As stated above, first problems that inevitably result in delays may occur if an enforcement debtor’s address has to be obtained from the police. Even when an enforcement debtor’s address registered with the police is known to the creditor and bailiff, delivery might be difficult or impossible, because of various reasons (e.g., because he or she does not actually live on that address, which is not unusual, because of mailmen’s negligence etc.). In such situations, bailiffs’ conclusions have to be displayed in a court. As common people do not regularly walk through courts and look at notice boards in these institutions, that is unlikely to result in debtors’ awareness of the conclusion. Hence, some bailiffs argue in favour of establishing an electronic, online notice board where every citizen would be able to check if there is any enforcement proceeding initiated against him or her. Taking into account that displaying conclusions on notice boards in courts requires a number of formalities, they believe an online system of notifications would save a lot of time and money and allow for more efficient enforcement proceedings. CONTINUE

31 Problems concerning delivery of bailiff’s decisions to enforcement debtors (page 2) As regards the number of cases where a conclusion has to be displayed in a court, the overwhelming majority of the interviewed bailiffs’ assess that that happens in approximately 30% of all cases. However, there are bailiffs who say that they have to display their conclusions in a court in approximately 60% of her cases, if not more. Therefore, it is clear that in a considerable number of cases delivery related problems cause significant delays, which might prolong proceedings for a couple of months (for instance, if an address had to be obtained from the police and the conclusion had to be displayed in the court). To address the described problems with delivery, bailiffs take various measures, some of which might affect the costs of the proceedings, although not greatly. Some have their own delivery services or use private, which they employ either when the first attempt made through the national postal service company failed or when they assume it is likely to fail), while some use the national company exclusively, mainly because they do not want to take responsibility for irregularities that might occur with respect to delivery.

32 Problems with obtaining debtors’ statements of assets Significant problems occur, at least in Belgrade, with respect to the procedure for obtaining statements of assets from enforcement debtors. In practice, such requests are usually filed after the bailiff tried to obtain information necessary for enforcement but could not find any regular income identifiable through the data base maintained by the Pension and Disability Insurance Fund (PIO) nor information on the enforcement debtor’s assets using other sources of information. Problems arise, specifically in Belgrade, when a court shall issue a ruling ordering an enforcement debtor to appear before the court and give a statement of assets to the judge or to submit a statement of assets to the court. According to the bailiffs from Belgrade, courts in this city, in particular the First Basic Court, are very slow and need a year or often considerably more to perform this duty. As to how often this procedure is initiated, practices of the interviewed bailiffs vary greatly. One of the Belgrade bailiffs claims that he initiates this procedure in 50% of his cases, some of his colleagues from Belgrade say “often” but cannot specify, while some state that they do it in 5% of their cases or “almost never”. Obviously, the illaudable practice of the Belgrade courts discourages bailiffs from using this procedure. The bailiffs from Vojvodina do not use this procedure at all, but not because courts in this part of the country operate similarly to those in Belgrade (the Belgrade bailiffs themselves confirmed that courts outside of Belgrade perform this duty much better). They explain that they do not use this procedure both because they usually find information on enforcement debtors’ assets in a different way, and because they do not believe that enforcement debtors would give complete and accurate information on their assets.

33 Problems surrounding different ways of enforcement Some ways of enforcement, if possible, are very efficient and do not require much time. Most notably, enforcement against wages and other regular pecuniary income, accounts of the enforcement debtor or savings deposits finishes quickly, in a matter of days. Once the time for realisation comes, the bailiff already knows if the debtor has regular income, an account or deposits savings and needs only a day to order the enforcement debtor’s employer, other legal entity or a bank to pay the amount specified by the bailiff to the enforcement creditor. If enforcement is to be conducted against an account or savings deposits the enforcement creditor will receive the payment in a couple of days. In case enforcement is conducted against wages or other regular income, the enforcement creditor will receive the payment on the day when the wage or other income is due. Other ways of enforcement might be much more difficult. Here we will briefly outline only the problems that might arise with respect to the other two most often used ways of enforcement – enforcement against moveable assets and enforcement against real estate. CONTINUE

34 Problems surrounding different ways of enforcement (page 2) As for the duration of enforcement conducted against moveable assets, the bailiffs’ assessments vary. Nevertheless, it appears that it takes between a month (in “perfect” circumstances) and three or four months. That duration mainly depends on whether the inventoried items were sold at the first auction or a new sale had to be scheduled. When a vehicle has to be sold, the time required for that may depend on how quickly the police will seize the vehicle from the enforcement debtor. As to their work, some of the bailiffs have the impression that it gets better. CONTINUE

35 Problems surrounding different ways of enforcement (page 3) When enforcement has to be conducted against real estate, its duration may vary greatly, and depends primarily on whether the property in question is registered, what is the state of relevant registries (“katastar”) and how those maintaining these registries work. In general, the situation in Vojvodina is significantly better than in the rest of the country, both because the number of unregistered objects is much lower, which means the registries are better, and because those who maintain them perform their enforcement proceedings- related duties better than their colleagues in other parts of the country. Hence, in Vojvodina the realisation of enforcement against real estate usually completes within the period of between three and six months, while in the rest of the country it may take much longer, particularly when the property in question is not registered. This, however, does not mean that enforcement in places other than Vojvodina cannot be completed within the above mentioned period of three to six months. It only means that problems which significantly prolong enforcement against real estate occur much more often outside Vojvodina. According to the bailiffs from Belgrade, problems with the registries and the slowness of those maintaining these are amongst the most important impediments in enforcement proceedings in general.


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