Since former Of Counsel of Taylor Wessing Bratislava Lucia Zitnanska was appointed Slovak Minister of Justice in April 2016, the legislative changes prepared by her department have primarily been driven by the practical need to improve the enforceability of law and increase the importance of e-communication tools. To those ends, two major reforms concerning debt enforcement will enter into force in the first half of 2017.
Introduction of a New Alternative to Proceedings for a Payment Order
The ratio of issued payment orders to the total number of initiated payment order proceedings has been steadily decreasing over the last decade. Rather than reforming the existing payment order procedure, the legislature opted to create an alternative to it. The so-called collection procedure is expected to be simpler, swifter, cheaper.
The District Court Banska Bystrica shall have exclusive jurisdiction in collection procedure matters. The court clerk’s responsibility will be to assess – within ten working days – whether the claim for payment of a euro amount is to be “reasonably assumed” on the grounds of information and documents attached to the application filed by electronic means. The claimant will however not be obliged to state reasons or to link the evidence together. If service to the natural person defendant’s address stated by the claimant fails, searching for his/her address in the available registers will be the obligation of the court; service into obligatory electronic mailboxes will be used vis-à-vis Slovak companies. The defendant must file a materially substantiated opposition within 15 days after delivery of the payment order (detailed substantiation will be required if the defendant claims VAT repayment on the basis of the claimant’s invoice in dispute). An insufficiently substantiated opposition will be refused by the court clerk. Any complaint filed against this decision will be finally decided by the first instance court.
In order to motivate the creditors, the court fees have been set at 50% of the rate of the proceedings for a payment order – thus, at 3% of the principal. Standard electronic application forms will be used in communication between the court and the parties wherever possible. The Act on Collection Procedure has already been adopted by parliament and will enter into force on February 1, 2017.
The Major Amendment of the Slovak Execution Code
One of the key points of the amendment is the establishment of an enforcement court with exclusive jurisdiction in enforcement matters (District Court Banska Bystrica). The court will communicate with executors and keep files strictly by electronic means, including judicial decisions.
A significantly new approach to the appointment of the executors will be implemented. Executors will be selected on a random electronic basis and according to the principle of territoriality - meaning that new executions shall be divided proportionally among executors in each administrative region. In this way, the possibility of a creditor developing a “business relationship” with an executor resulting from a repeated assignment of cases will be lessened. Though opposed by large institutional creditors, random selection is required due to the proposed extension of competences of executors, even though the downside of this measure certainly will be to decrease the competition motivation between executors.
Each subsequent execution concerning the same debtor will be assigned to the executor who was randomly appointed at the opening of the first execution, which will lead to an elimination of repeated actions by various executors and thus to cost savings.
The legislature is also entrusting executors with more decision-making powers (to eliminate delays in execution), laying down a new set of common rules on determining the costs of execution (i.e., flat-rate costs) and granting access to a wider range of information for the public through the Central register of executions. On the other hand, the accountability and disciplinary responsibility of executors (for example, for repeated violations of obligations) will be stricter.
The Slovak Chamber of Executors considers the (at this stage government-approved) amendment to the Execution Code a significant step forward, with the power to create better conditions for law enforcement and enhance transparency in executions. The amendment has still to make it through “final voting rounds” at the National Council of Slovakia. If adopted, it will enter into force on April 1, 2017.
By Andrej Leontiev and Radovan Pala, Partners, Taylor Wessing
This article was originally published in Issue 3.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.