Discontinuance of enforcement proceedings – what next?

Grounds for the ex officio discontinuation of enforcement proceedings

The legislator has provided, under the Code of Civil Procedure, for the possibility of discontinuing enforcement proceedings both ex officio and at the request of the creditor, but also at the request of the debtor. Partial discontinuation may occur in terms of the parties involved, where there are several entities on the debtor’s or creditor’s side, as well as in terms of the subject matter, where enforcement proceedings are discontinued in relation to the method of enforcement or a specific asset. In the context of ex officio discontinuation, reference should be made to the provisions of Article 824 of the Code of Civil Procedure, according to which enforcement proceedings may be discontinued ex officio in whole or in part in several specifically listed situations.

Lack of standing of judicial authorities to conduct enforcement

Where it transpires that enforcement does not fall within the remit of the judicial authorities, i.e. those authorities lack the legal standing to conduct enforcement, the enforcement proceedings are discontinued ex officio. This relates to the extremely important issue of the authorities’ jurisdiction to undertake actions in a specific area, and enforcement proceedings are no exception to this rule.

Lack of legal capacity of the Creditor or Debtor

Another situation in which enforcement proceedings are discontinued ex officio is where the debtor or creditor lacks legal capacity. The authorities conducting the proceedings should bear this issue in mind throughout the entire process, as once a lack of legal capacity on the part of either party is established during the proceedings, it is impossible to continue the enforcement proceedings correctly. If, in the event of a lack of legal capacity, this obstacle can be removed, the enforcement authority should set a deadline for the party to remedy the deficiency, and only after this deadline has expired will the authority be obliged to discontinue the proceedings ex officio.

From a subjective perspective, enforcement proceedings may be discontinued not only due to a party’s lack of legal capacity, but also where the debtor does not consent to them. This occurs where the debtor is a person enjoying diplomatic immunity in accordance with Article 1115 of the Code of Civil Procedure, which, in the context of enforcement proceedings, is referred to as enforcement immunity.

Ineffectiveness of enforcement in relation to costs

Another situation in which the enforcement authority discontinues enforcement proceedings ex officio is where it is clear that it is impossible to recover, through enforcement, a sum exceeding the costs of enforcement. This refers to a situation where the monetary claim pursued in enforcement proceedings cannot be satisfied from the debtor’s assets in excess of the costs of enforcement, including, in particular, enforcement expenses and fees. This ground may only be applied in the enforcement of monetary claims, excluding the enforcement of maintenance payments in accordance with Article 1086 § 5 of the Code of Civil Procedure.

Inaction on the part of the creditor

In terms of the subject matter, attention should be drawn to another ground for the ex officio discontinuation of enforcement proceedings, namely the inaction of the creditor themselves. The creditor’s active and proactive participation is necessary to ensure the proper conduct of enforcement proceedings, as it is the creditor’s claims that form the subject matter of the proceedings. This applies both to actions taken to continue the enforcement proceedings and to those necessary to resume suspended proceedings.

Basis for enforcement and the wrong debtor

The final grounds provided for in Article 824 of the Code of Civil Procedure as bases for the ex officio discontinuation of enforcement proceedings relate to both the subject matter and the parties involved. In terms of subject matter, the ground justifying the enforcement authority’s ex officio discontinuation of proceedings is the loss of enforceability of a final and binding enforcement order, i.e. the very basis for initiating enforcement proceedings. Furthermore, the discontinuation of enforcement proceedings ex officio will be necessary if enforcement has been directed against a person who, according to the enforcement clause, is not the debtor and who has objected to the enforcement, or if the conduct of enforcement is, for other reasons, in clear contradiction with the content of the enforcement order.

Grounds for discontinuing enforcement proceedings upon application

With regard to the discontinuation of enforcement proceedings upon application, the legislator provides for only two options, namely upon application by the creditor or upon application by the debtor, both of which are regulated in Article 825 of the Code of Civil Procedure. In accordance with the aforementioned provision, the enforcement authority is obliged to discontinue enforcement proceedings in whole or in part, upon the creditor’s application. However, where enforcement proceedings have been initiated ex officio or at the request of an authorised body, the creditor’s application for discontinuation of the proceedings requires the consent of the court or the authorised body which requested the initiation of enforcement.

Furthermore, just as the Act does not impose an obligation on the creditor to provide grounds for the application, the enforcement authority conducting the proceedings is not empowered to verify its validity. In this regard, a problematic issue appears to be a situation where there is more than one creditor. It is, however, recognised that in such a situation, if only one of the creditors decides to submit an application for the discontinuation of enforcement, this has effect only in relation to the applicant, thereby leaving the claims of the other creditors unchanged.

The debtor has also been granted the right to file an application for the discontinuation of enforcement proceedings, though this right is subject to certain conditions. The debtor retains this right only if, prior to the date of filing the application to initiate enforcement, the claim covered by the enforcement order had become time-barred, and the creditor has not demonstrated, using appropriate official or private documentation, that an event interrupting the limitation period occurred prior to that date.

Consequences of the discontinuation of enforcement proceedings

In accordance with Article 826 of the Code of Civil Procedure, the discontinuation of enforcement proceedings results in the annulment of the enforcement measures taken; however, this does not mean that the creditor is deprived of the possibility of re-initiating enforcement. In the context of the latter point, the legislator has emphasised that there must be no other grounds preventing the resumption of enforcement. Furthermore, the discontinuation of enforcement proceedings must not, in essence, infringe upon the interests of third parties.

Following the discontinuation of enforcement proceedings, immediately after the decision on the matter becomes final, the bailiff shall notify third parties whose rights and obligations were affected by the attachment of the lifting of the attachment. In the list set out in Article 826(2) of the Code of Civil Procedure, the legislator specifically identifies as third parties the custodian of the seized movable property, the employer, the bank, the debtor of the seized claim, or any other person who, by virtue of the seized right, is under an obligation towards the debtor. Furthermore, it is also the bailiff’s duty to take appropriate steps to satisfy the claims of the aforementioned third parties. However, it should be borne in mind that until the decision to discontinue enforcement proceedings becomes final, the measures taken in the course of those proceedings remain in force; therefore, a necessary condition for their annulment is a declaration of finality.

Before the enforcement proceedings are actually discontinued, in accordance with Article 827 of the Code of Civil Procedure, both the creditor and the debtor may be heard; nevertheless, matters relating to this remain largely at the discretion of the enforcement authority itself.

Can an appeal be lodged against a decision to discontinue enforcement proceedings?

Under Article 828 of the Code of Civil Procedure, the legislator grants the right to challenge a decision to discontinue enforcement proceedings by lodging a complaint in this regard. No list of grounds or conditions has been specified under which a complaint may be lodged against such a decision. In this respect, the legislator has allowed for a degree of discretion, permitting such an appeal to be lodged regardless of the reasons for which the enforcement proceedings were discontinued. Therefore, the discontinuation of enforcement proceedings is not a final decision, and it is possible to seek to appeal against its effects.