Discontinuation of enforcement proceedings without creditors having to cover costs
On 1 January 2022, an amendment to the Enforcement Procedure Code entered into force, aiming to resolve the problem of multiple executions and to modify the rights of the parties to the proceedings. However, the final effect of the new regulation is much greater: e.g., it changes the rules for off-setting the recovered performance, limits enforcement proceedings concerning movable items, and allows the discontinuation of low-value or futile enforcement proceedings. The possibility to discontinue futile enforcement proceedings may also be beneficial for creditors, as they would otherwise have to cover the costs of the enforcement proceedings should they file a petition to discontinue them.
Under the new rules, enforcement proceedings may be discontinued if within the preceding six years the debts were not sufficiently settled to recover at least the costs of the enforcement proceedings, and if no immovable item is subject to the enforcement proceedings. The relevant bailiff shall then call on the creditor to indicate within 30 days whether they agree with the discontinuation of the enforcement proceedings. If the creditor agrees or if the 30-day period expires without any notification, the enforcement proceedings are discontinued. This makes the situation easier for the creditor: if enforcement proceedings are discontinued in this way, the costs of the futile enforcement proceedings are determined in the amount of the minimum remuneration and a lump-sum compensation of cash expenses, under a special legal regulation. These costs are then covered from the advance payment for the costs of enforcement proceedings. If the costs of the enforcement proceedings exceed the amount of the advance payment made, the bailiff's right to the costs of enforcement proceedings in excess of the amount of the advance payment ceases to exist.
If the creditor disagrees with the discontinuation of the enforcement proceedings, the bailiff shall call upon them to make an advance payment of CZK 500 within 30 days of receiving the bailiff’s call to continue the enforcement proceedings. In exceptional cases, this creditor’s obligation may be waived, in particular if their circumstances so warrant; this is also the case for enforcement proceedings concerning alimony for minors or compensation for damage caused to an injured party by an on-the-job accident or occupational disease. By depositing the advance payment or by its waiver, the deadline for conducting enforcement proceedings may be extended no more than twice, always by three years. This means that enforcement proceedings in which not even the costs of the enforcement proceedings are recovered should not last more than 12 years from the registration date of the enforcement proceedings. However, if partial performance sufficient to cover the costs of the enforcement proceedings is recovered, the six-year period shall start again from the beginning.
The above changes are not the only ones brought on by the amendment to the Enforcement Procedure Code. We will inform you further in the next editions of the Update.