Damir Site: “You have procedures in place to avoid enforcement of a court decision”

Aug 15, 2018 | Property rights protection

A court decision is worthless if it is not executed. Therefore, the reform of the enforcement system is no less important than all innovations connected with access to high-quality justice. Thanks to the implementation of the motivation of state enforcement officers and the launch of the private enforcement system, the situation has significantly changed over the past year.

This is still not enough to reach the indicators of European countries. In an interview with Censor.net, the international expert of the EU Pravo-Justice Project Damir Site told us about how the system of enforcement of court decisions in European countries works and what needs to be changed in Ukraine.

– Until 2017, only 6% of court decisions were executed in Ukraine. Over the past year, their number has tripled. This was made possible thanks to the introduction of the institute of PEOs. At the same time, among large lenders, such as banks, and among ordinary citizens who are trying to collect debts, there are those who believe that the reform of the enforcement proceedings is stalled. How do we reach the level of performance of European countries, where up to 70% of decisions are executed?

– Increased number of enforced decisions should always be viewed as positive changes. Because the rule of law is based on the fact that court decisions should not be just an illusion. If the court decision is not executed, it is the biggest problem that society may face. For example, you mentioned banks. But, after all, banks are not the only lenders. Take a situation where one of the parents of a child does not pay child support. But the person to whom alimony must be paid also acts as a creditor. The child is growing up, and the family needs money now, and not when this child is 20 years old. Or, let’s say, people work in a company, and their salaries are delayed. They need money now, and not 10 years later. Therefore, the fact that the percentage has grown is good, but there is always room for improvement.

Private enforcement officers started their work in the end of last year. This had an obvious effect on the percentage of executed decisions, and perhaps on the percentage of how much money was actually received. In addition, the changes that are occurring indicate that debtor discipline is improving. People start paying. Because there is the possibility that someone will enforce the receipt of money.

As for Europe. The high number of executed decisions does not depend only on the work of PEOs. They have the tools that the state gives them. In fact, higher rates in Europe are due to the fact that enforcement proceedings are actually implemented and not only by judicial methods.

– What do you mean?

– The judicial process includes the plaintiff and the defendant, from whom they demand to recover certain funds, and it is necessary to make a court decision. As part of the process, the plaintiff says that the debtor must pay, and the latter claims that he/she should not. Based on the outcome of the court review, the judge decides that the debtor must pay. Further, this decision is transferred to the enforcement officers and there is no longer a question of whether a person should pay or not.

You have laid down in the procedure itself methods for how to avoid the execution of a court decision, procedural loopholes.

– Which ones, for instance?

– Execution of the decision consists of several stages. If at each stage it can be suspended, it turns out that we postpone the execution again and again. While disputing the decision in appeal and cassation, a person demands that each institution makes a different decision. In Europe, the ability of a debtor to challenge a judgment is severely limited. If the judge in the decision ruled that the debtor should pay 1000 euros, then from the moment of the decision, this money is already the property of the claimant. If he/she did not pay, it would appear as if the claimant’s property is illegally owned by the debtor. That is, in fact, the money was stolen from the lender.

Therefore, we do not ask whether we should pay or not. The question we pose is different: at the expense of what part of the debtor’s property can this claim be satisfied? This may be part of his salary, funds in a bank account, or some kind of property. The question is how much and from what to pay, and not to stop legal review at each stage.

– Are there really no mechanisms to stop the payment?

– There must be good reasons for this. But these arguments should not challenge the judgment itself. If the judge decided that you have to pay, then no one in the world can change this fact. Because otherwise it turns out that there is no court. If everyone can question the court’s decision, it turns out that the courts do not exist.

– But anyone has the right to challenge the decision of the court, if one does not agree with it.

– When we talk about the stages of legal proceedings per se, the debtor has all the procedural options. But when the decision is not appealable, it should not be called into question.

There is another interesting point. In Ukraine, enforcement usually refers only to court decisions. In Europe, enforcement proceedings can be initiated on various types of documents. For example, with regard to utility companies. They should not even go to court to collect debts from consumers; they immediately turn to the enforcement officers. Because a client resides in this apartment, uses the services – and there is no need to prove it in court.

Of course, such enforcement procedures for utility debt can always be appealed in court. But first the enforcement is initiated, then a complaint is filed, and it is stopped.

– According to what algorithm should the state enforcement service work so that its employees are interested in executing more court decisions? How to motivate them?

– Theoretically, we can say that every civil servant should be well trained, have all the necessary tools. And, of course, there must be a motivating salary. This applies equally to state enforcement officers, prosecutors, educators. They should all have such support so that they would be interested in quality work. The state should be aware of this, determining the size of their salaries. These are all obvious things. Is it worth discussing them?

– Damir, you work as a PEO in Serbia. And you can judge also from the perspective of your own experience. Do private and state enforcement officers compete with each other in European countries?

– In states with a mixed system, they are usually not competitors; each has one’s own jurisdiction, one’s own sphere of work. So, for example, in some countries taxes are never collected by PEOs, because the state has decided so.

In the countries with Anglo-Saxon legal system, such as the UK and Scotland, PEOs start collecting sums above 6,000 pounds. Smaller sums are considered less important. But the plaintiff can ask the court, even if the amount of his/her claim is less, to transfer this decision to the PEO. And more than 80% of plaintiffs use this opportunity. That is, they are not exactly competitors, they have different spheres of activity.

– Why do they transfer cases? Are the state enforcement officers ineffective?

– That depends. For example, they are effective in the Scandinavian countries, in Germany, Austria. There are only state enforcement services. But we are talking about countries where people still understand that they need to pay. And the debts are not necessarily collected in cash, they can be removed from bank accounts, it is easy to do. For example, in Serbia salaries are quite high, so there are no problems with the collection.

– The issue of operational certification of private performers by the Ministry of Justice has not been resolved, over the year there were registered about one hundred. Is there a need to speed up this process and how?

– The number of people in this profession should grow. For Ukraine, one hundred people per year is very slow. The authorities should be interested in the fact that this figure has changed, because such specialists are engaged in the execution of court decisions, and therefore represent the state.

– You are involved in the reform of the enforcement service, you actively communicate with colleagues. In your opinion, are they independent from political or some other pressure?

– They remain independent as long as they are governed by the law. And if the argument that they present is the law in relation to everything they do, then they are independent.

I started working as a PEO in 2012. At first, the police in my hometown did not understand my motivation either, and asked who was behind me and what connections I had. I honestly answered them that the most powerful force in Serbia was behind me – this is the law. I repeat: at the moment when the court decision becomes illusory, the society begins to collapse.

– It appears then that we have 80% of illusory cases, because they are not executed.

– Yes, I agree. But the evolution of society is something that cannot be stopped. And the statistics that we have now are not final indicators. They can and should change.

The biggest problem that Ukrainian colleagues face is the writ of execution. I usually use a somewhat harsh comparison with the work of a butcher. If he wants to cut meat quickly, smoothly and carefully, he must have a sharp knife. Otherwise there will be only torment. Therefore, what is needed is a better-designed writ of execution that will not leave so many loopholes or opportunities for the debtor.

Currently, enforcement proceeding consists of stages. Usually there are at least three of them. Although depending on the method of execution there may be four or more. This applies to such things as selling property or accessing bank accounts. If at each of these stages the debtor can appeal against the actions of the contractor. You can imagine how this delays the process. It is necessary to limit the ability of the debtor to appeal the enforcement proceedings at each stage and reduce the number of these stages.

You cannot turn the enforcement proceedings into consideration of the claim. Otherwise, it turns out that the decision of the court itself is disputed.

And secondly, enforcement officers should be able to obtain information about the assets of the debtor as quickly as possible. You need access to the registers of salaries, real estate and all that they need to know about. Such data should be obtained by them immediately. For example, if the plaintiff comes to my office, then I literally in one click of the mouse know most of the data about the debtor.

The enforcement officer should not treat the debtor as a child, babysit him/her. He/she should stir the person and make him/her pay. Enforcement proceedings are a mandatory process. The debtor has an opportunity to stop it at any time. To do this, you just need to pay, thereby fulfill the decision of the court.

– In Serbia, are the registries scattered with separate access or are they all focused on a single platform?

– Previously, we used to have a lot of scattered registries. Over time, they all were consolidated. There are few remaining separate, but the Ministry of Justice of Serbia is working to combine all data.

– Do you consult with the debtor what exactly you can sell from his/her assets?

– No. People will not pay by themselves. They will pay only if they are obliged to do so. Do not be afraid to make decisions.

I will give an example from life. Have you ever been to Belgrade?

– No, why?

– If you have, then you would have noticed the fare in public transport. For example, in Belgrade, local residents did not want to pay for travel on buses, because there were no permanent overseers. Buses are usually clogged, they are very old. There is no money in the city budget to buy new ones. And people just thought that they didn’t need to pay for it.

When the inspectors-controllers began to work on the routes, they were beaten up. Then the people rebelled. People were indignant: why do we need these inspectors in buses. Because for 50 years they have become accustomed not to pay for travel.

The same is with enforcement proceedings. If people are not forced to pay, they will drag out time, so that it would be impossible to collect debt at all later due to statute of limitations.

– Is it often that people withhold income and property?

– Yes, there are such cases.

– Do you discover them?

– In such situations, you need to include a private detective, the enforcement officers are not wizards.

– How much do PEOs earn in European countries? Is it some kind of fixed percentage of the amount specified in the decision?

– There are several types of fees and rewards. It all depends on the country. For example, in Serbia, the higher the amount in the lawsuit, the lower the percentage of payment.

– If you were offered a job as a PEO in Ukraine, would you agree?

– Yes. This is a good job – a job in which you are part of the rule of law. The only problem is that I am not a citizen of Ukraine, therefore they will not take me (smiles, - author).

– The Ministry of Justice plans within 5 years to reach the level of execution of court decisions 50-70% due to the fact that the number of PEOs will increase to 2,000. Do you think this can be done in such a time frame? Or is it necessary to pay attention to state performers who are still not very effective? Perhaps one should increase their number?

– It is realistic, if both PEOs and state services will adhere to a clearly expressed political will. To do this, all participants in the process should take it seriously. And again it is necessary to change the legislation, eliminating the obstacles that prevent the execution of court decisions.

Over a period of 5 years, you can do a lot of things. This is not so difficult, but you need to take responsibility for achieving goals.

European standards suggest that there should be one enforcement officers per 25,000 of the population. This includes the total number: both public and private. So, 2,000 is enough to reach the European level of execution of judgments.

Tetyana Bodnya for Censor.net

Photo credit: Natalia Sharomova, Censor.net