Dimov&Tashev Law Firm

May 30, 2012 | Proposed legislative changes in Enforcement procedure

On March 28th, 2012 the Act for amendment and supplement of the Civil Procedure Code (AASCPC) has been passed by the National Assembly on first reading. The proposed changes are in line with the European Union law.


The changes in Article 411 of the Civil Procedural Code (CPC) allow the creditor to apply for a writ of execution before the district court as per (a) debtor's permanent address or registered office or (b) settlement location (i.e. the place where the obligation should be settled).


With a view to frequent cases where district courts issued writs of execution under Article 410 of CPC for claimed amounts exceeding BGN 25,000.00, as well as given the lack of a debtor protective mechanism (by means of appealing the so issued writ of execution), Article 413 of CPC is supposed to introduce the possibility for appeal of the execution orders even in cases where the requirements of Article 410 CPC have not been met.


In order to prevent abuse of rights on behalf of the enforcement agent, the proposed changes in Article 455 of CPC would set a one-week deadline within which the amounts collected by the enforcement agent should be transferred to the creditor's or joint creditors' accounts.


Another important draft change is related to the notice of sale and publication thereof in the official website of the District Court (Article 487, Para 2 CPC) with the purpose of ensuring visibility of sales announced by the enforcement agents.


Proposed changes in Article 73 of CPC relate to shortcomings in the regulation of fees and expenses charged by the enforcement agents, as well as following analysis of statistical information collected by the Ministry of Justice showing that after 2007 growth rates of fees charged by the private enforcement agents (PEA) and the state enforcement agents (SEA) exceed the rate of collected and recovered amounts under writs of execution. According to the proposed draft bill, in some cases the proportionate fees charged would amount to more than half the incurred debt, whereas in some cases they even exceed it. These circumstances cannot be established by the debtor at the time a writ of execution is issued. The existing legislation is not consistent with the need for justification and reciprocity of enforcement costs and directly contradicts to section 111. 3 of Recommendation No 17 of the 2003 of the Council of Europe about enforcement of judgments whereby the cost of enforcement must be reasonable, statutory determined and must be known in advance to the parties in the proceedings. Therefore Article 73 of CPC envisages the proportional fee rate on enforcement cases to decrease alongside the increasing material interest (amount subject to enforcement), whereas the fee would not exceed a maximum amount specified in the tariff approved by the Council of Ministers.  


In order not to prejudice a bona fide debtor, Article 79 CPC would stipulate that no charges are levied on the amount repaid by the debtor within the period for voluntary payment.