Adopted amendments to the Law on Enforcement and Security

On 26 July 2019, the National Assembly of the Republic of the Serbia adopted Bill amending and modifying the Law on Enforcement and Security (“Law”), published in the Official Gazette No. 54/2019 dated 26 July, 2019, effective eight days after publishing in the Official Gazette on 03 August, 2019. Provisions of the Law shall be applicable on 01. January, 2020.

Amendments to the Law now make it clear that the decision on a motion for the enforcement for settling claims from utilities and other similar activities is made by public enforcement officer. Public enforcement officer now also decides on motions for the enforcement against Republic of Serbia, the Autonomous Province or local government. It was introduced provision which prescribes that a decision adopting the appeal on an enforcement debtor could now be appealed, whereas so far the decision was final. What is also a significant change with the provision of service of enforcement debtor is that a bulletin board of the court is being replaced by an electronic bulletin board. The novelty is the introduction of two new means of enforcement, the joint sale of real estate and movable property and the monetization of other property rights of the enforcement debtor. New added provision now provides that enforcement on other property rights can be enforced on patent, trademark and other similar rights. One of the most important novelty is that the only real estate of a natural person cannot be sold for settling claims from utilities and related services if the amount of claim is less than 5.000,00 euros in RSD equivalent at the middle exchange rate of NBS on the day of submission of the motion for the enforcement. The Law also deleted a provision requiring litigation started by an enforcement debtor’s lawsuit for establishing inadmissible enforcement to be ruled by the rules for the disputes of small value, since in practice this provision has proved to be absurd. What is also a significant change is that the decision on enforcement can only be challenged for the reasons prescribed in the Law, and the evidence must be enclosed at the same time. The Law also amended the restriction for enforcement, so that the enforcement can now be implemented on up to half the salary instead of up to two-thirds of the salary. This measure protects enforcement debtor from the situation that the enforcement jeopardizes his basic needs. The Law also intensified anti-corruption measures and amended provision prescribing who cannot be a buyer in the enforcement procedure. The procedure of electronic public bidding for the sale of real estate of the enforcement debtor is also being introduced. This is certainly the most significant change, as it creates space for preventing previous abuse of public bidding in enforcement procedures, and allows real estate subjected to the public bidding to be sold at more realistic price instead of at very low price, which was the practice resulted from abuse. The public bidding procedure has now been changed, it has been adopted procedure from 2011 law, as it has been proved to be much better in practice. With the changes of the Law public bidding is now considered to be unsuccessful if no bidder accepts the price equal to the initial price of the real estate, also the guarantee amount has been increased from 10% to 15% of the estimated value of the real estate, which now must be paid no later than 48 hours before the public bidding. The new provision was also introduced prescribing that the costs of proceedings could not be multiplied, which means that if the enforcement creditor initiated multiple enforcement proceedings on different grounds that could be also initiated in one proceeding, in that case he would be reimbursed for only one proceeding costs. This change is significant for the legislator because of reduction of budgetary expenditures, in proceedings in which Republic of Serbia, Autonomous Province and local government appear as enforcement debtor. Certainly one of the interesting novelties is the obligation of the enforcement creditor in procedures in which enforcement debtor is an indirect beneficiary of budgetary means to notify the Ministry of Finance of his intention to lodge motion for the enforcement, no later than 30 days before the submitting a motion for the enforcement. One of the major changes introduced is prescription of summary enforcement proceedings, to facilitate and expedite the settlement of a creditor holding a qualified authentic document against a qualified enforcement debtor, but only in cases where enforcement creditor and debtor are the entities whose dispute lies with the Commercial court and only based on four prescribed authentic documents. With the amendments the Law also extends the deadline for enforcement debtor to voluntary fulfill the obligation from 8 to 30 day from the moment of receiving the enforcement decision.

By extending the authority of public enforcement officers to decide on motion for the enforcement the legislator intended to relieve the courts in enforcement matter, which should lead to more efficient decision-making by the courts in other enforcement proceedings. For the practice, the most significant change could be with regard to the public sale of real estate. The legislator has notice that in the practice certain groups in a violent or other unlawful manner prevent others from participating in public bidding, so the legislator wanted to solve the problem by introducing the electronic public bidding. In this way, both enforcement creditors and enforcement debtors are protected.  The legislator also used the amendments to clarify certain terms, as well as to harmonize certain provisions with practice, also some omissions were corrected, such as to indicate for legal persons the seat of a legal person as an identifying information. This enables better implementation of the Law in practice. In addition, the purpose of the amendments is to protect the enforcement debtor in the enforcement proceedings from an enforcement creditor who initiates multiple enforcement proceedings for obtaining higher proceedings costs, for claims for which only one enforcement actions could be initiated. By reinforcing the application of the principle of proportion in practice, as one of the most important principle of procedure, the Law further protects enforcement debtor. In addition, different interpretation in practice of certain provisions have been eliminated by amendments to this Law, which will significantly contribute to legal certainty in the enforcement procedures. As a special anti-corruption measure, the legislator very clearly prescribed that no public enforcement officer can participate in public bidding for the sale of real estate, in the same provision it is also precisely specified the circle of persons who as well cannot participate.

Amendments to the Law were made after its three-year implementation during which it was established that certain ambiguities could not be eliminated by the clarification of the norms, but it was necessary to amend them. The objective of the legislator is with these amendments to solve problems that have emerged in practice through the implementation of the Law, to improve the norms, clarify them and to eliminate contradictory norms. Amendments to the Law will be applicable from January 1, 2020. What is also significant is that enforcement and security proceedings will commence before the application of the Law will be completed under the rules of currently applicable regulations.

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