Enforcement without a judgment, to which a person seeking to collect a claim may resort without first obtaining a court decision, ranks among the collection methods most often preferred in practice. This route has a fragile point, however: the moment the debtor objects within the statutory period to the payment order that reaches them, the proceedings freeze where they stand. In order to carry the process forward, the creditor must now apply to a judicial forum, and one of those applications is the request for removal of the objection.
That route arises from Articles 68 and 68/a of the Enforcement and Bankruptcy Act No. 2004. If the creditor holds a written document of a particular character, or an instrument whose signature has been acknowledged by the debtor, the obstacle standing before the proceedings may be removed without entering upon ordinary proceedings. In this respect the institution differs from the action for annulment of the objection, which is subject to the general provisions; it is a mechanism whose examination is narrow, whose procedure is plain and whose outcome may be obtained sooner.
Below we address in turn the definition of the institution, the provisions on which it rests, the conditions for the application, which court conducts the examination and by what procedure, how the evidence is assessed, the possibilities of damages, the consequences produced by the decision given and the routes that may be pursued against that decision.
Nature of the Request for Removal of the Objection
It is a request addressed to the enforcement court with a view to setting in motion once more enforcement proceedings without a judgment that have been halted by the debtor’s objection, resting on documents alone and heard under a procedure of its own. If the creditor holds a written basis of the kind required by the Enforcement and Bankruptcy Act No. 2004, they may have the debtor’s objection rendered ineffective, and the proceedings continue from the point at which they stopped.
Statutory Basis: Articles 68 and 68/a of the Enforcement and Bankruptcy Act
There are two provisions that draw the statutory framework of the institution.
Of these, Art. 68/a of the Enforcement and Bankruptcy Act contains provisions affording the creditor the possibility of continuing on a provisional basis in proceedings founded on an ordinary written document and halted upon objection. Art. 68 of the Enforcement and Bankruptcy Act, for its part, applies to requests relying on documents regarded as strong evidence — private instruments whose signature has been acknowledged by the debtor, notarised papers, and documents produced by the competent authorities in accordance with the proper procedure.
Both provisions serve the same purpose: to eliminate the effect of the objection. The concern for speed and effectiveness that governs enforcement law has required these requests to be attached to a special procedural regime.
Documents Within the Scope of Article 68
Under the provision, the papers capable of forming the basis of the request may be listed as follows:
- Instruments drawn up or certified by a notary,
- Private instruments whose signature the debtor has acknowledged; for instance papers admitting the existence of the debt in written form,
- Account statements and credit documents produced by credit institutions,
- Records showing that the debt was admitted before a public official,
- Documents issued in accordance with the proper procedure by public offices or competent authorities; certificates of debt drawn up by the tax office are an example of this group.
Where the proceedings have been founded on one of these papers and have met with an objection within the time limit, the creditor is placed in a position to request the removal of the objection directly.
Function of the Institution
The aim is a single one: to bring enforcement proceedings without a judgment, suspended by reason of an objection, back into operation. If there exists in the creditor’s file a written basis meeting the criteria of Art. 68 or Art. 68/a, the effect of the objection may be neutralised within a short time.
The alternative, the action for annulment of the objection, is subject to the general provisions and may take a long time. Removal of the objection, being conducted under the simplified procedure, offers the creditor a more favourable option both in terms of the burden of costs and in terms of the cost in time.
Conditions for Final Removal of the Objection
An objection made to the payment order within the statutory period halts the proceedings. From that point two options appear before the creditor: to bring an action for annulment of the objection or to request removal of the objection. Pursuing the second route depends on the request for proceedings having been founded on the documents listed in Article 68 of the Enforcement and Bankruptcy Act No. 2004.
The statute has framed this possibility by limited cases. If even one of the following conditions is not met, the court dismisses the request.
The conditions required for a request for final removal to be entertained:
- There must be enforcement proceedings without a judgment conducted in accordance with the proper procedure, and the debtor must have objected. The proceedings commenced by the creditor must be valid, and the debtor must have made a valid objection within 7 days of receiving the payment order.
- The basis of the proceedings must be one of the documents listed in Art. 68(1) of the Enforcement and Bankruptcy Act. This group comprises private instruments whose signature has been acknowledged, notarial instruments, documents produced by public offices, papers of credit institutions and records of admission of debt before an official. If none of these is in the file, this route is not available.
- The request must be raised within a period of 6 months from service of the objection on the creditor. The period is preclusive; applications made after it has run are dismissed on procedural grounds.
- The creditor must have a legal interest. The continuation of the proceedings must afford the creditor a current benefit.
- No action for annulment of the objection must previously have been brought in respect of the same proceedings. It is not possible to pursue both routes simultaneously in respect of a single set of proceedings.
- The dispute must not previously have been determined by a final decision. If the same claim or the same proceedings have been decided in earlier litigation and that decision has become final, no fresh examination may be carried out.
- The claim forming the subject of the proceedings must be determinate and capable of calculation. If the existence and the amount of the claim are clear, the court may decide without needing any further calculation; claims whose amount is uncertain or which make a full trial necessary are not suited to this route.
The Procedure and the Allocation of the Burden of Proof
The request is examined before the Enforcement Court and under the simplified procedure. The court’s perspective is narrow: it assesses whether the document produced by the creditor meets the criteria of Art. 68 of the Enforcement and Bankruptcy Act and whether the debtor’s objection is unfounded. As a rule no broad debate on the evidence is entered upon and no witnesses are heard; the decision is given on the written papers in the file.
The court with jurisdiction and the procedure
Subject-matter jurisdiction lies with the Enforcement Court and the simplified procedure applies. The holding of a hearing is not compulsory; the judge may establish the judgment on the basis of the parties’ pleadings and the documents submitted alone. Should the judge see a need, however, a hearing may be held and evidence gathered.
The creditor’s obligation of proof
The burden of proof lies on the creditor. The creditor must establish both that the objection is not well founded and that the basis of the proceedings falls within the scope of Art. 68. That proof may be made only by written evidence; general means of proof such as witness testimony or the oath produce no result in these proceedings.
Papers regarded as written evidence
The documents that may be submitted to the file within the framework of Art. 68 of the Enforcement and Bankruptcy Act are the following:
- Documents drawn up or certified by a notary,
- Private instruments whose signature has been acknowledged by the debtor,
- Documents produced by public institutions in accordance with the proper procedure,
- Account statements and credit agreements of credit institutions,
- Records evidencing that the debt was admitted before a public official.
If the proceedings have been founded on one of these papers and the debtor has objected, the creditor may request the continuation of the proceedings by submitting the documents to the court.
Objection to the signature and examination by a court-appointed expert
If the underlying document is an instrument bearing the debtor’s signature and the debtor asserts that the signature is not theirs, the court takes up that assertion as a matter of priority. An examination by a court-appointed expert is carried out in order to clarify the objection to the signature; whether the signature on the instrument belongs to the debtor is investigated by a person expert in the field of graphology. If the examination shows that the signature belongs to the debtor, the objection is removed and the proceedings continue.
The debtor’s means of defence
The debtor may assert that the debt has been paid, that the debt relationship was never established, that the claim is time-barred under the statute of limitations, or that the basis of the proceedings is legally invalid. The debtor too, however, must support their defence with a written document; assertions not evidenced by documents are not taken into consideration. Apart from an objection to the signature, the debtor’s room for manoeuvre is confined to a written defence.
The court weighs the papers submitted by the parties and reaches a conclusion within a short time. Where the evidence is found sufficient, removal of the objection and continuation of the proceedings are ordered.
Award of Damages and Sanctions
The output of these proceedings is not confined to the fate of the enforcement. The court also weighs the parties’ conduct from the standpoint of the rule of good faith and, where the conditions are made out, awards damages. The obligation to pay damages may, depending on the circumstances, be imposed on the debtor as well as on the creditor. The legislature’s aim is to make subject to a sanction the person who needlessly occupies the other side with an unfounded objection or with unjustified proceedings, and to deter such conduct.
Compensation for Wrongful Denial of the Debt
Against a debtor who, despite knowing of the existence of the debt, objects solely in order to halt the proceedings, the creditor may claim compensation for wrongful denial of the debt.
The elements required for this compensation to be awarded:
- The creditor must have expressly claimed the compensation,
- The objection must be unjustified in character,
- The proceedings must conclude in favour of removal of the objection.
Where the conditions are met, the court orders the debtor to pay compensation amounting to at least 20% of the claim forming the subject of the proceedings, so as to make good the loss caused to the creditor by the unjustified objection.
Compensation for Bad Faith
As regards a creditor who commences proceedings in respect of a claim that does not in fact exist and whose request is dismissed on that ground, compensation for bad faith in favour of the debtor comes into play.
For that consequence to arise:
- The debtor must have expressly voiced the claim for compensation,
- The creditor’s want of justification in commencing the proceedings must be established,
- The request must have been dismissed.
In this case too the court awards compensation at a rate of at least 20% of the claim forming the subject of the proceedings. Separate proof of the creditor’s bad faith is not required.
Postponement and Lapse of the Compensation
The fact that damages have been awarded does not mean that collection will in every case be made at once. In the following two eventualities collection is held in abeyance:
- The creditor additionally bringing an action for the debt before a general court in respect of the same claim,
- The debtor subsequently bringing an action for a negative declaration — establishing that they are not indebted — or an action for restitution — recovery of the sum paid.
Until the outcome of these actions is known, the compensation cannot be collected. If the proceedings end in the debtor’s favour, the compensation previously awarded lapses.
The Decision and Its Effect on the Proceedings
After assessing the documents in the file, the court arrives at one of three outcomes: allowance of the request in its entirety, allowance of part of it and dismissal of the remainder, or dismissal of the request altogether.
The effect of the decision as regards enforcement
If the document relied on by the creditor is regarded as falling within the scope of Art. 68 and the objection is found to be unjustified, removal of the objection is ordered. That decision does not constitute res judicata in the substantive sense. Accordingly:
- If the request has been allowed, the debtor may bring an action for a negative declaration and assert that they are not indebted.
- If the request has been dismissed, the creditor retains the possibility of bringing an action for the debt before a general court.
Decisions of the enforcement court are enforceable without having become final; there is therefore no obstacle to the proceedings being continued before the appeal process is concluded.
The course of the proceedings following a decision of removal
With the allowance of the request the debtor’s objection becomes ineffective. Its practical implications are the following:
- The creditor may proceed to the attachment stage without any need for fresh service.
- The claim forming the subject of the proceedings, together with its ancillary items, is deemed to have become final.
- By contrast, an enforcement order must additionally be drawn up and served on the debtor for the litigation costs, the attorney’s fee and the heads of compensation awarded by the court; following that service, the expiry of the 7-day statutory period is awaited.
If the debtor brings an action for a negative declaration at this stage, enforcement of the compensation awarded is postponed until the action is concluded.
Where the request is allowed in part, the proceedings become final only in respect of the head of claim allowed and the ancillary items attaching to it; as regards the part dismissed, they remain halted.
Where a request for eviction is included
If the proceedings relate to a claim for rent and also include a request for eviction, the court may order the eviction of the leased property. Once the decision has been given, the creditor may apply directly to the enforcement office for the eviction to be carried out.
Becoming final and thereafter
If the decision is open to appeal, the parties may pursue that route within two weeks. Becoming final is not awaited, however, for the enforcement operations to be continued.
- A debtor against whom a decision has been given may seek protection by way of an action for a negative declaration or an action for restitution.
- A creditor whose request has been dismissed but who maintains the assertion of a claim may reassert their right by bringing an action for the debt before a general court.
Remedies Against the Decision
Although decisions of removal given by the enforcement court do not have the character of res judicata, they produce grave consequences as regards the proceedings. A right of application within the statutory period is afforded to the parties; it must not be overlooked, however, that these applications do not halt the proceedings of their own accord.
The route of appeal
The route available against the decision is determined by the value of the action:
- If the value of the action falls below the limit prescribed by the statute, the decision may be final,
- If it is above that limit, the route of appeal is open.
In decisions subject to appeal, the parties may apply within two weeks of the date of service. If the period is not used, the decision becomes final.
An important reminder: A decision on the removal of an objection may be carried out even before it becomes final. An appeal application alone therefore does not halt the proceedings. A debtor who wishes the proceedings to be halted must additionally request a stay of enforcement and deposit the security prescribed.
Routes available where the request is dismissed
If the request for removal is dismissed, the proceedings remain halted. The options the creditor may consider from this point are the following:
- Where there is an indication that the debtor is concealing assets, turning to protective measures such as preliminary attachment or an action for the avoidance of dispositions,
- Bringing an action for annulment of the objection and thereby carrying the claim before a general court.
The routes open to a debtor who maintains that they are not indebted notwithstanding that a decision has been given against them are the following:
- If a payment has been made by reason of the proceedings, seeking the return of the sum paid by way of an action for restitution,
- Bringing an action for a negative declaration and thereby having it established that no debt relationship exists.
According to the outcome of these processes, the compensation and attorney’s fees previously awarded either retain their validity or are set aside.
Independent Legal Assessment
Removal of the objection is an instrument that, used in the right file, saves the creditor months; in the wrong file it leads to the six-month preclusive period being squandered. The error most frequently encountered in practice is that of a creditor who assumes that the papers held meet the criteria of Art. 68 of the Enforcement and Bankruptcy Act, turns to this route, and then finds the process back at the beginning when the court regards the document as falling outside the scope. The choice must therefore be made before the proceedings are commenced.
On the debtor’s side, leaving the objection without reasons or relying on defences unsupported by written documents brings with it the risk of compensation for wrongful denial of the debt of up to 20% of the claim. What is decisive for both sides is whether the assertion can be established by written evidence.
The headings to which priority should be given in a specific dispute are the following:
- Determining at the outset whether the document underlying the proceedings can be assessed as falling within the scope of Art. 68
- Documenting the date of service of the objection and entering the six-month preclusive period in the calendar
- Making the choice between removal of the objection and annulment of the objection according to the degree of determinacy of the claim
- Expressly raising the claim for compensation in the pleadings, bearing in mind that compensation not claimed cannot be awarded
- Keeping the original of the instrument and signature specimens suitable for comparison to hand against the possibility of an objection to the signature
- Not neglecting, following a decision of allowance, to draw up a separate enforcement order for the litigation costs and the attorney’s fee
Independent Legal provides advisory services and conducts litigation in the whole range of enforcement law disputes, from the commencement of proceedings without a judgment through the removal of the objection to the subsequent processes of negative declaration and restitution.