AMENDMENTS ON THE LAW ON ENFORCEMENT AND SECURITY

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AMENDMENTS on THE LAW ON Enforcement and security

The amendments on the Law on Enforcement and Security of the Republic of Serbia, in theory, represent the correct step towards a more efficient, transparent and humane enforcement process, by treating enforcement issues that have emerged in practice and introducing significant innovations, such as the application of IT in certain segments enforcement proceedings. The leitmotif of the Amendments on the Law on Enforcement and Security is the increasing shift of responsibility from the courts to the Public Bailiff, who are experts in this process, which should speed up enforcement procedures and, on the other hand, relieve the courts and thus contribute to a more efficient work of the judiciary. Public Bailiff are also subject to the obligation to be proactive, because in many situations the proposal of the enforcement creditor is no longer required for actions to be taken by the Public Bailiff, as they must execute them ex officio.

The most significant novelties that have found their place in the Amendments on the Law on Enforcement and Security of the Republic of Serbia are:

  • ELECTRONIC MOTION FOR ENFORCEMENT – Possibility of submitting a motion for enforcement based on an authetic or enforceable document electronically, in accordance with the rulebook issued by the Minister (Article 67),
  • PROCEDURE FOR VOLUNTARY SETTLEMENT OF CLAIMS – Possibility to initiate a voluntary settlement of a debt claim, which is instituted before the Public Bailiff and causes the statute of limitations to lapse. The procedure ends with the voluntary settlement of the debt or after 60 days from the date of submission of the proposal for voluntary settlement have passed. This procedure does not constitute a condition for submitting a motion for enforcement, and in the case of successful settlement by voluntary means, the Public Bailiff is entitled to a fee for successful settlement of the claim. (Article 138a),
  • ELECTRONIC PUBLIC COMPETITION – A novelty that should resolve the lack of transparency in public tendering is the introduction of electronic public competition. Electronic bidding will be completely anonymous and will prevent any irregularities that have so far appeared in practice. From September 2020, electronic public bidding will be the only form of public bidding for the sale of real estate and movable property of enforcement debtors. In this regard, the guarantee for participation in the public bidding will be 15% of the estimated value of the real estate and must be lodged no later than two days before the start of the public bidding (Article 171a),
  • SHORTENED ENFORCEMENT PROCEEDINGS – Shortened enforcement proceedings may be used if both the creditor and debtor are subjects whose dispute resolution falls under the jurisdiction of the Commercial Court, in which case the court is obliged to reach a decision on enforcement within a shorter time.

Shortened enforcement proceedings may be conducted only on the basis of:

– Bill of exchange or check issued by a foreign or domestic person with protest, if needed to establish a claim.

– Unconditional bank guarantees,

– Unconditional letter of credit,

– Certified statements of the debtor authorizing the bank to transfer funds from his account to the account of the enforcement creditor,

Furthermore, the numerous amendments to the Law on Enforcement and Security of the Republic of Serbia, which eliminate the existing shortcomings of the enforcement procedure, include the following:

  • LIMITATION OF OBJECT AND INSTRUMENT OF ENFORCEMENT – A significant change leading to a more humane enforcement procedure is Article 56, which reads as follows: ,,While choosing between many objects and instruments of enforcement, Public Bailiff will, ex officio, choose those which are least disadvantageous to the debtor”, followed by Article 57, which stipulates that the enforcement debtor’s proposal is no longer required to limit the enforcement to only objects or instruments of enforcement, which are sufficient to settle the claim, and finally Article 58, according to which, Public Bailiff will ex officio or at the request of a participant in a proceeding modify a particular object or instrument of enforcement if there is a clear disproportion between the particular object or instrument of enforcement and the amount of the creditor’s claim.
  • LIMITATIONS ON ENFORCEMENT ON PAYMENTS AND PENSIONS- The humanization of the enforcement process continued in Article 257, which exempts from enforcement all kinds of income granted by the law governing financial support for families with children (which is broader than the previous formulation that exempted child allowance). Also, enforcement on salary, salary compensation or salary payments can be carried out up to half of the salary compensation ie. salary payments or up to a quarter of them if their amount is equal to or less than the minimum wage established in accordance with the law. The same article limits enforcement on the salary, ie. earnings that do not exceed the average net salary, according to the latest published data of the Republic authority in charge of statistics, to a maximum of one third of it. Enforcement on pension is allowed up to one-third of it, while for pensions whose amount doesn’t exceed the amount of the average pension, according to the latest published data of the Republican Pension and Disability Insurance Fund, enforcement is allowed up to a quarter of them. Enforcement on a pension not exceeding the minimum amount of a pension may be up to one tenth of it. On the other hand, in order to settle claims for legal support, enforcement can be carried out up to half of the salary or pension.
  • LIMITATION OF ENFOCRCEMENT ON REAL ESTATE IN THE CASE OF SMALL CLAIMS – Article 394 prescribes that enforcement cannot be ordered by selling the only real estate owned by the Enforcement debtor, in order to settle a claim that does not exceed EUR 5,000.00 in RSD equivalent on the day of filing.
  • ADDITIONAL CONDITIONS FOR SUBMITTING A MOTION FOR ENFORCEMENT AGAINST THE REPUBLIC OF SERBIA – The existing amendments introduced additional requirements if the Republic of Serbia, an Autonomous Province or a local government unit is indicated in the motion for enforcement. In such a case, the enforcement creditor is obliged to notify, in writing, the ministry responsible for finance of the intention to file a motion for enforcement not later than 30 days before the motion for enforcement is submitted, and must provide proof thereof with the motion for enforcement.
  • THE POSSIBILITY OF RETURNING THE CASE FOR A REFERRAL – Deletion of Article 26 will allow the case to be referred back to the first instance court on the basis of the complaint and the appeal,
  • RATIONALIZATION OF COSTS OF ENFORCEMENT PROCEEDINGS – It is impossible to accumulate costs for an enforcement debtor by requiring separate settlements of claims that could have been settled in the same enforcement proceedings, and in these cases the enforcement creditor is entitled only to the reimbursement of costs that would have been incurred to settle those costs if he had submitted only one motion for enforcement (Article 34),
  • ADDITIONAL CONDITION FOR THE MOTION FOR ENFORCEMENT – A neat motion for enforcement against a legal person, in addition to the existing requirements, now requires the seat of the enforcement debtor to be indicated. (Article 30),
  • ENFORCEMENT ON DEBTOR’S PROPERTY AS A WHOLE ON THE BASIS OF THE AUTHENTIC DOCUMENT – Article 60 has been amended so that enforcement on the entire property of the debtor for the purpose of settling a monetary claim is possible on the basis of a authentic document, whereas earlier it was possible only on the basis of an enforceable document. In case the enforcement creditor does not specify the instrument and object of the enforcement in the motion for enforcement, the Public Bailiff, after identifying the property of the enforcement debtor, will determine the instrument and object of enforcement.
  • PENALTIES FOR THIRD PARTIES WHO ARE OBSTRUCTING ENFORCEMENT PROCEEDINGS – Article 131 now prescribes the possibility of imposing fines on persons who do not participate in enforcement proceedings but interfere with or prevent enforcement, in order to avoid situations that have occurred in practice where third parties have obstructed the Public Bailiff’s access to the enforcement debtor’s property, and prevented him from listing or seizing the property.
  • OPTICAL AND TONE RECORDINGS AS A PART OF THE RECORD OF ENFORCEMENT ACTION – Article 142 allows Public Bailiffs to record, either acoustically or optically, enforcement actions, which forms part of the record of action taken,
  • TERMINATION OF RESTRICTIONS ON SALE OF IMMOVABLE PROPERTY BY DIRECT CONTRACT – The restriction that real estate cannot be sold below 70% of the appraised value of real estate by direct contract is abolished. (Article 186),
  • ENTRY INTO ENFORCEMENT PROCEEDINGS BEFORE THE ENFORCEMENT DEBTOR AND HIS DEBTOR – Article 279a enables the enforcement creditor to initiate enforcement proceedings against the debtor of his enforcement debtor, or to enter into already initiated enforcement proceedings of the enforcement debtor against his debtor.
  • BEGINNING OF ENFORCEMENT – Article 355 provides that enforcement shall commence 30 days after the enforcement debtor has received the enforcement order.
  • ABOLITION OF REASONS FOR EXEMPTION OF PUBLIC BAILIFF – Article 495 provides that filing a lawsuit against a Public Bailiff does not constitute a reason for his exclusion or exemption,
  • EXTENSION OF TIME LIMITS FOR DISCIPLINARY PROSECUTION OF PUBLIC BAILIFFS – Article 542 extends the time limits for initiating disciplinary proceedings against Public Bailiffs for a subjective period of 12 months, i.e. an objective period of 2 years from the date when a disciplinary violation was committed, and that the conduct of disciplinary proceedings becomes obsolete within 2 years from the initiation of disciplinary proceedings,

 

Finally, it is important to emphasize that with the entry into force of all envisaged amendments to the Law, the existing enforcement or security proceedings pending before a court, which under the new law are solely the responsibility of the Public Bailiff, will be continued before the Public Bailiff designated by the President of the court before which the proceedings are pending. The creditor will be obliged to pay to the Public Bailiff 25% of the advance prescribed by the Public Enforcement Tariff within 8 days from the submission of the decision on the advance, under threat of suspension of the procedure.

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