How to collect a debt in Serbia?

Writ of execution is regulated in the Law on Enforcement and Security (further in the text: LES). Issues left unregulated by this law are mentioned in the Civil Procedure Law (further: CPL).

LES defines the writ of execution as a court granted an order in which public bailiffs put in force a judgment of recovery of outstanding debts. Since there are different types of outstanding debts, this text will deal with financial claims.

When is the writ of execution initiated?

Besides enforcement, the Serbian legal system recognizes extra-judicial and judicial proceedings. These are three different proceedings defined by different acts. However, there is a certain connection between them, especially between judicial proceedings and enforcement.

Example:

Let’s say that the sales contract has been signed. The seller is liable for providing goods to the buyer who is liable for paying the amount of 50,000 RSD within the following 10 days. The seller provided the goods as promised, but the buyer did not pay the sum. That is why the seller, as a plaintiff, can initiate a lawsuit and request from the court to compel the buyer to pay the sum with the additional fee. If the lawsuit is well-grounded, the court decides that the buyer must pay the debt with the additional and the lawsuit fee. However, the buyer did not make the payment not even after the decision. At that point, the decision becomes enforceable and the seller can submit a motion for enforcement proceeding to collect the debt. In this proceeding, the seller is an enforcement creditor and the buyer is an enforcement debtor.

It is not necessary to file this motion. The seller, may or may not initiate the proceeding, but if he decides on doing it – he is bound by the amount stated in the writ of execution, i.e. he cannot demand more than it is stated in the court’s decision.

In this case, clearly, the prerequisite for initiating debt collection was judicial proceedings brought in court, the verdict, and the writ of execution. Bearing that in mind, for starting the enforcement proceedings it is necessary that:

The enforcement creditor has the proof of debt,
The enforcement debtor has not fulfilled his duty towards the enforcement creditor,
The enforcement creditor has the writ of execution based on which the motion for the enforcement proceedings can be filed,
The enforcement creditor has filed a motion for commencing the enforcement proceedings.

The difference between voluntary and enforcement payment

If the debtor fulfills his duty and pays the owed amount to the creditor, there is no reason for commencing the enforcement proceedings.

That is why we should differentiate between two situations where there is no need for commencing the enforcement proceedings:

All payments are made on time

If the debtor pays an arranged amount within the period stated in the contract, it means that he/she fulfilled his/her duty towards the creditor. If we imagine that the buyer had paid the arranged amount of 50,000 RSD within the 10 days of the received goods, the seller would not have needed to file a lawsuit to the court, which means that there would not have been the enforcement proceedings at all.

Fulfilling the duty within the declaratory action timeframe (the deadline for the voluntary fulfillment of the duty).

Imagine that the buyer had not made the payment within 10 days and the seller had filed a lawsuit in which he demanded from the court the payment from the buyer and he won the lawsuit. In the verdict, the deadline would be stated. That is a declaratory action. The buyer decided to pay up within the stated timeframe, so the seller did not have an interest in filing the motion for the enforcement proceedings.

So, if the debtor fulfills the duty within any stated timeframe, he voluntarily fulfilled his duty and there is no need for filing the motion for the enforcement proceedings.

If the debtor pays only a part of the debt, the creditor may file judicial, and finally the enforcement proceedings, for collecting the remaining part of the debt.

What is a writ of execution?

The law stipulates many writs of execution based on which the enforcement proceedings are initiated:

The enforceable judicial decision or court settlement, stating consideration, act, omission, or sufferance;
The final decision rendered in misdemeanor or administrative proceedings and settlement in administrative proceedings, stating entitlement to the collection of a payable, unless a specific law provides otherwise;
The administrative settlement,e. the settlement regulated in the administrative proceedings containing a financial obligation
Extract from the Pledge Register and extract from Financial Leasing Register
Mortgage contract and pledge statement, only if is submitted containing terms and in the form stipulated by the Law regulating the mortgage, and is recorded in the cadaster of immovable property as the executive extrajudicial mortgage.
Reorganization plan in the bankruptcy procedure, confirmed by a court ruling;
Notary documents having the power of the writ of execution. In that sense, the Law on Notary Public Office stipulates that the notary document is enforceable only if it contains a declaratory action where both parties agree and a statement from the duty-bound party in which he/she agrees that if needed, the document can be used as a writ of execution.
Agreement on the resolution of a dispute through mediation, which fulfills the conditions stipulated by the law regulating mediation in dispute resolution
The decision of the Constitutional Court upholding the applicant’s claim for damages in the constitutional appeal;
A document designated as a writ of execution by the present Law or other law

When does the writ of execution become enforceable?

The Law stipulates that the judicial verdict, as well as the other judicial and administrative verdicts, must be enforceable to be considered as the writ of execution.

Before we define these decisions thoroughly, we need to explain the difference between the legally enforceable and legally binding. The decision is binding if it cannot be disputed by the Court, i.e. no complaints can be made. So, the decision becomes legally binding if: the verdict has been made by the court of appeal, the person denies its right to complain, the complaint has been withdrawn, or the deadline for appeal has expired.

Likewise, the Law defines the points when the decisions become enforceable.

The verdict defining action or payment has become binding or the voluntary deadline has passed (in cases where the defendant is bound to deposit a certain amount into the plaintiff’s account).
If a verdict contains a notice of fulfillment, it becomes enforceable when the condition comes into action.
The verdict regarding prohibition or refraining is binding if it is not stated differently (e.g. the defendant is prohibited to step into the plaintiff’s land).
The decision of the first instance court becomes enforceable if:

-the appeal deadline has passed and no appeal had been made,

-the party has been informed and the appeal is not applicable,

-the party has been informed and the appeal does not postpone the enforcement,

-all parties deny the right to appeal,

-the party has been informed about the decision and the appeal is overruled or denied.

The decision of the appellate court becomes enforceable when the party is informed about it.
The verdict in the judicial proceedings is enforceable when it becomes binding (party can no longer appeal or the appeal is not allowed), there are no legal predicaments, or the law does not stipulate differently.
The judicial or administrative settlement and the notary document of the settlement become enforceable when the settlement debt arises.

On the party’s motion, the court, notary, or any other first instance organ, files an enforceable document which declares that the decision has become enforceable.

What is a credible document?

The Law defines the credible documents that can be used when making a writ of execution in cases of financial collection claim.

These are the following:

Bill of exchange or check issued by a domestic or foreign entity, with protest if necessary for the establishment of the claim;
Extract from the Central Securities Depository of the balance of the account of the legal holder of bonds or money market instruments (treasury bills, treasury bonds, and commercial papers) and the decision on their issue;
Invoice (bill) issued by a domestic or foreign entity, accompanied by the bill of lading or other written proof that the enforcement debtor was notified of the obligation created;
Extract from company ledger as proof of the provision of utility or similar services;
Calculation or extract from company ledger regarding public media service tax claims;
Official document constituting an enforceable monetary obligation;
Bank guarantee;
Letter of credit;
Certified statement of the enforcement debtor authorizing the bank to transfer funds from his account into the account of the enforcement creditor;
Calculation of interest with proof of basis for maturity and the amount of claim;
Interim or final payment certificates concerning construction work completed;
Calculation of the amount of fee and reimbursement of an attorney.

To credible document become suitable for rendering the writ of execution, it needs to contain:

information on the enforcement creditor, the enforcement debtor
the subject, type, scope and maturity of the enforcement debtor’s obligation

Besides, the enforcement creditor must enclose with the credible document a written proof that he/she granted the enforcement debtor an additional period for fulfillment of the obligation.

Enforcement motion

The enforcement motion is filed by the enforcement creditor alone or his/her lawyer, based on the enforceable or credible document. So, the enforcement motion is the initial action in the enforcement proceedings.

That is why it is important to emphasize that the court and the bailiff are bound by the enforceable and credible document when deciding on the enforcement motion. However, the court is not entitled to question the legal matter or the rightfulness of the enforceable document.

Enforcement motion based on an enforceable document

The law defines the elements that motion must contain.

the identification data of the enforcement creditor and the enforcement debtor
- full name, residence, unique citizen’s registration number,
- Business name and residence, unique citizen’s registration number, tax identification number for a legal person
- Business name and residence, a relevant identification number for a foreign legal person.
- Business name, or full name, the unique citizen’s registration number, and Registration number, and tax identification number for a sole trader or a natural person performing the business activity.
The enforceable document
The enforcement creditor’s claim
One instrument or one subject or more instruments and subjects of enforcement or a motion to determine the enforcement on total assets of the debtor.
Other data necessary for the implementation of enforcement.
Statement from the determined public bailiff who will put enforcement into action.

The motion based on the enforceable document is filed in 4 copies with the enforceable document. The enclosed enforceable document can be original, certified copy or transcript, but it must contain the certificate of enforceability.

The law provides additional rules if the enforcement motion is filed in the court that already decided in first instance about the collection of the enforcement creditor. In that case, the enforcement creditor does not need to enclose the enforceable document – it is enough just to file an enforcement motion. However, if he encloses the enforceable document it need not have the certificate of enforceability.

Enforcement motion based on the credible document

The law specifies the following elements this motion must contain:

the identification data of the enforcement creditor and the enforcement debtor –
- full name, residence, unique citizen’s registration number,
- Business name and residence, unique citizen’s registration number, tax identification number for a legal person
- Business name and residence, a relevant identification number for a foreign legal person.
- Business name, or full name, the unique citizen’s registration number, and Registration number, and tax identification number for a sole trader or a natural person performing the business activity.
The credible document
The enforcement creditor’s claim
One instrument or one subject or more instruments and subjects of enforcement or a motion to determine the enforcement on total assets of the debtor.
Other data necessary for the implementation of enforcement.
A request for the court to compel the enforcement debtor to settle the monetary claim of the enforcement creditor, together with assessed costs of proceedings, within the term of eight days, and in disputes relating to bills of exchange, within the term of five days from the serving of the writ,
A request to determine enforcement for settlement of the enforcement creditor’s monetary claim and costs of proceedings,
Statement from the determined public bailiff who will put enforcement into action.

The enforcement creditor shall enclose the credible document with the motion, in original, certified copy or transcript.

Regardless of the enforceable or credible document, the court passes the ruling on the motion for enforcement based on the enforceable or credible document within eight days from the day of receipt of the motion. It is a short deadline because the writ of execution is urgent. That is why the deadline for actions taken by the court or the public bailiff cannot be longer than eight days. In practice, however, the court does not act according to the deadline.

Who delivers the Writ of Execution?

Public bailiff delivers the writ of execution based on the enforceable or credible document to collect the debt from the provision of utility or similar services.

If the motion states the Republic of Serbia, autonomous province or local government as the enforceable debtor, public bailiff decides on the writ.

In these cases, the creditor must contact Chamber of Public Bailiffs to get assigned a public bailiff.

In all other cases, the court decides on the enforceable motion based on the enforceable or credible document. It is later put into action by the creditor’s public bailiff.

The course of proceedings

After the court delivers the writ of execution, the writ is sent to the public bailiff who delivers one copy to the debtor and one copy to the creditor with the advance payment bill enclosed.

When the creditor pays the advance payment and the deadline for the appeal has passed, the public bailiff implements the enforcement within limits set by the writ of execution.

The enforcement can be implemented with the money transfer from the debtor’s account to the creditor’s account, inventory list, and selling all movables, real estates, and so on.

When the claim is met, the public bailiff closes the proceedings and sends the request to the creditor with the claim of compensation for successful enforcement.

When the creditor pays the compensation, he/she informs the bailiff about it and demands from the bailiff to issue a binding decision under which the debtor is obliged to pay all expenses to the creditor (advance payment, compensation, lawyer’s fee, etc.). When the debtor pays those expenses or they are forcibly collected, the enforcement proceeding is finally closed.

The proceedings’ cost

First and foremost, the proceedings’ cost is comprised of expenses of the public bailiff and the lawyer’s fee according to the price list of the BAR Association of Serbia.

Bailiff’s expenses:

The public creditor is obligated to pay an advance which serves for preparation, running and archiving the lawsuit, taking action and real expenses of the proceeding, or security interest.

The bailiff is entitled to compensation for the successful enforcement proceeding or security interest.

If the claim has been partly met, collected, or secured, the compensation is defined by the amount of procured claim.

Lawyer’s expenses:

If the creditor is represented by a lawyer during the debt collection, all expenses for the lawyer’s work are covered by the creditor.

Lawyer’s expenses cover: writing up the enforcement motion, claim for debt collection, expenses for other papers, as well as the real expenses the lawyer has had during the proceedings (e.g. postage fee, transport) according to the lawyer’s bills. The lawyer’s expenses are calculated according to the BAR Association of Serbia.

Who pays the expenses of the enforcement proceeding?

All expenses (the expenses of the public bailiff and the lawyer) pays the creditor, but he/she has the right to claim the refund from the debtor.

Date: 06.07.2020.