The problem of the plurality of arrests in enforcement proceedings as an obstacle to the implementation of decisions
As a final stage in judicial proceedings, enforcement proceedings in a simplified form are always perceived as actions for the removal of funds and other assets from the debtor. Although the decision may relate to the debtor's obligation to take certain actions, the absolute majority of decisions relate to the recovery of funds from the debtor.
In itself, the notion of enforcement may also be one of the types of enforcement or one of the measures for the enforcement of a judgment (Article 10 of the Law of Ukraine "On Enforcement Proceedings (hereinafter - the Law)"). At the same time Art. 48 of the Law determines that the enforcement is a triad of consistent actions consisting in the seizure of property, its seizure and enforcement.
The main action from this triad is the seizure of the debtor's property, since after the seizure of property, his ultimate realization becomes only a matter of time. In fact, the art. 56 of the Law, the procedure for arresting the property of the debtor in the enforcement proceedings does not cause any difficulty. An executor makes a decision to impose an arrest on the basis of which the registration of the encumbrance of property is carried out or on the basis of which the relevant authorities (institutions) actually register the arrest of the property. On the basis of the decision on the arrest of funds by the banking institutions, the arrest of the debtor's funds on his accounts is carried out. The arrest of a movable property of a debtor that is not subject to state registration shall be imposed by the executor upon his description by means of a resolution on the description and seizure of the property.
Practical aspects
However, as practice shows, recently, after passing this initial stage, the further recourse to the debtor's property is impossible for a long period.
In some cases, such a lock may last for years. This is not about cases where the debtor actively opposes the executor (stops enforcement proceedings or hides the property) or when third parties try to recognize their right to arrest the property. We are talking about a more commonplace situation in which the debtor carries out a number of enforcement proceedings under various decisions. At present, the Law (in current and previous versions) makes it possible to enforce several execution proceedings against one debtor.
Execution proceedings can be carried out both simultaneously (summary enforcement proceedings) and in a certain time sequence. If the decision relates to the collection of funds, then the Law unequivocally obliges the executor to seize the detected funds and property of the debtor. Within the framework of the consolidated enforcement proceedings, the arrest is imposed, taking into account the amount of the penalty for all enforcement documents. However, in the case of seizure of the debtor's property, several executors will have the right to levy a debtor's property only on the part of the executor who seized the first one.
In fact, there are no provisions on the priority of the first arrest in the Law. We have only the relevant provisions in the Law "On Enforcement of Claims of Creditors and Registration of Encumbrances" (Article 14 - the priority of registered encumbrances is determined in the order of their registration), in the Law "On State Registration of Real Rights to Real Estate and their Encumbrances" (Article 18 - applications are considered in order of priority of their receipt) and in the Civil Code (Article 1072 - the bank deducts funds from the client's account on settlement documents according to the priority of the respective encumbrances). That is, the current legislation makes it possible to impose several arrests (encumbrances) on certain debtor property in the order of their receipt.
However, it should be noted that the right first to levy on the arrested property applies only to the debtor's funds. This question is separately defined in the same article. 1072 of the Central Committee. In case of simultaneous receipt to the bank of a settlement document submitted in accordance with the terms of encumbrance, the subject of which are the property rights to cash held in a bank account, and another settlement document, on the basis of which the write-off of funds is carried out, the bank shall debit the funds from the client's account in advance on the settlement document provided in accordance with the terms of such encumbrance.
More understandably, this rule is repeated in clause 9.9 of the Instruction on cashless settlements in Ukraine in the national currency approved by the NBU Board of Directors dated January 21, 2004, No. 22. If a bank receives a payment claim under a different executing document than the one for enforcement of which an attachment has been imposed, and there is no other means (except for those arrested) on this account, the bank will return such settlement document without execution. In addition, Clause 9.8 of the specified Instruction determines that if during the validity of the instrument of seizure of funds to the Bank during the operational day other documents on the seizure of funds have been received, it shall execute them in the order of receipt.
No direct restrictions
Although it should be noted that neither the Law, nor the Law "On Securing the Claims of Creditors and the Registration of Constraints" nor the Law "On State Registration of Real Rights to Real Estate and its Encumbrances" have no direct limitations on the possibility of foreclosure of property that was burdened (arrested) by other performers. However, considering that foreclosure of such property implies its realization (in some cases, the transfer to the collector), the issue arises when removing the encumbrance for the possibility of the buyer registering the ownership of the newly purchased object.
Art. 12 of the Law "On ensuring the claims of creditors and registration of encumbrances" states that satisfaction of the rights or claims of several encumbrances in favor of which the encumbrances of the same movable property are established is carried out in accordance with the priority determined in accordance with the procedure established by this Law. As already noted (Article 14 of the said Law), the priority of registered encumbrances is determined in the order of their registration, with the exceptions established by this Law. Registered encumbrances have a higher priority over unregistered encumbrances.
Similar provisions are contained in the Law "On state registration of real rights to immovable property and their encumbrances". As already noted in Art. 18 of the Law, applications are considered in order of priority of their receipt. At the same time, the order of consideration of applications for one real estate property is applied when considering applications for state registration as property rights and other property rights, as well as encumbrances of such rights.
Although this Law does not contain a direct rule as to the priority of satisfying the requirements of the encumbrances, however, issued in compliance with its requirements, the Procedure for state registration of real rights to immovable property and their encumbrances, approved by the Cabinet of Ministers from January 25, 2015, №1217, in paragraph 35 determines that state registration of encumbrances imposed during enforcement of decisions in accordance with the law, state registration of the termination of a mortgage in connection with the acquisition (transfer) of the public auction (auctions) of the immovable property which is the subject of the mortgage, and also holding for registration of rights on the basis of court decisions is done by the state registrar by law, without application by the applicant.
That is, if the registration of the encumbrance was carried out at the request of the executor (which in this case acts as the applicant), the cessation of the encumbrance is also carried out on the basis of the statement of the executor, who registered such encumbrance, except for the cases set forth in paragraph 35 of this Procedure.
What we have as a result
Given the rules of law that we have today? The unsuccessful construction of the notion of consolidated executive proceedings, which is in force in the Law, completely permits a situation where several performers are simultaneously carrying on a single debtor. Regarding state executives, it is again unsuccessful, but the Instruction on the organization of compulsory execution of decisions determines the procedure for the transfer of all executive proceedings for work within a consolidated one-state executor. However, there are currently no rules that could coordinate the activities of private performers when working with one debtor.
In the case of several open executive proceedings per one debtor, which are carried out simultaneously by several performers (both public and private), each executor sequests the debtor's property (funds) and registers the corresponding encumbrances. However, the actual opportunity to levy property and debtor funds will be only those performer who first arrested and registered the encumbrance. All other performers only need patience and wait until the first performer completes the enforcement and will not remove the burden. Then the priority of the penalty will be transferred to the executor who has arrested the second, and so on in turns.
Today, there is a situation where a single debtor is being prosecuted both by the state and by the private executor. This is accompanied by the problem of the simultaneous implementation of several enforcement proceedings by state executives, ignoring the requirements of the Law on consolidation in the consolidated. In fact, we are witnessing the enforcement of enforcement proceedings against one debtor at the same time by several state and several private executives, each of which imposes a separate arrest on the debtor's property.
If we take the ideal situation when state and private operators start the enforcement process at the same time, the collector and executor who first opened the enforcement proceedings will have the priority to recover, since he will be able to first arrest the debtor's property. However, this is an ideal situation. Realities indicate that the opening of enforcement proceedings does not yet mean the commencement of the enforcement procedure. For the most part, this applies to cases of public executives. For example, a state executor, having opened an enforcement proceeding, has not taken steps to identify the debtor's property (assets) for which it is possible to recover a fine, or it was not timely to send an order to seize funds to the bank (or not at all, because of the lack of marks). In this case, the priority is not the one who first opened the enforcement proceedings, but the one who first found the debtor's property and seized him.
However, this is not a complicated situation - the inaction of one performer does not actually interfere with the actions of another performer. Significantly harder when the first performer found the debtor's property (funds), he imposed an arrest on them, but in the future he did not levy them for a number of reasons - as subjective (banal inaction, prolonged illness or vacation), and objective (stop court seizure). In this case, no other executor can take measures to recover the arrested property (funds) until they are carried out by the first performer. Sometimes this situation can last for years.
The situation with the existence of pre-completed executive actions against the debtor is completely unfortunate. Most cases of completion of enforcement proceedings result in the detention of the arrest imposed by the executor on the debtor's funds and property. For example, we can consider the widespread case where the executor arrested the car of the debtor, announced it wanted, and a year later completed the enforcement proceedings in connection with the fact that the car was not found. Then the other performer opened the enforcement proceedings against another decision, also arrested the car, announced it wanted, but this time the car was found. However, the executor in the new enforcement proceedings will not be able to charge a debtor for a detected car, since he was previously arrested by another executor under another decision. The patience of the situation is that even the previous performer will not be able to enforce the same car, because he has completed the execution and he can not carry out any executive action. Thus, we have detected the debtor's property, but we can not actually charge it.
In fact, the latter of the situations described is most often encountered in a plurality of enforcement proceedings against various decisions, which are simultaneously carried out by several public and private executives in the event of pre-completed enforcement proceedings that impose arrears on the property and debtor funds. In other words, the chaos of the resolutions on arrest. This is especially true of the problem of having arrests on the debtor's accounts. At the time of the arrest in the first proceeding, there were no funds, but due to the restoration of the debtor's activities, funds appeared during the implementation of the "tenth" or "twentieth" proceedings.
Is there an exit?
The only way out of this situation is to reopen the enforcement proceedings that imposed the first arrests (of course, if there were any grounds for doing so), or attempt to initiate a payer in the first enforcement proceedings to re-submit the enforcement order to execution (again, in case of availability of grounds for re-presentation, and often in case of the desire to recover, to re-submit the execution document to execution).
However, taking into account cases of transfer of executive documents from state executives to private ones (which are currently carried out through the execution of executive orders and which are subject to arrest while collecting executive fees), as well as the impossibility of bringing enforcement proceedings against one debtor between public and private executives, the proposed solution will only be acceptable for individual cases.
In the case of funds and real estate, the fight for the right of first arrest between the performers is heard in the rustling of regulations and the knocking of the keyboard during the registration of encumbrances, then movable property often becomes the object of open "thefts" between performers.
Arrest of movable property which is not subject to state registration is supplemented by a description. If the executor did not remove the property while leaving the debtor or third parties in storage, then nothing prevents the next performer from coming back and seizing his property. If the first performer delays the transfer of this property for realization, this may be done by the next (more sophisticated) performer. If the first performer did not list the property in the register of encumbrances (and will do it as the next performer), then he would not even have any legitimate chance to levy such property. Often, such situations arise in cases of foreclosure of the debtor's vehicles, when the first performer "forgot" to register the encumbrance during the imposition of his arrest.
The need to terminate this "war" between the performers has been over for a long time. After all, in fact, the public interest in the implementation of a decision is actually not, and the private interest of each particular collector. Unfortunately, there is no unanimity in the legal community to solve this problem.
First of all, it is proposed to solve the problem with consolidated enforcement proceedings. The most fundamental proposals relate to the transfer of all enforcement proceedings against one debtor to the state executor, who first opened the enforcement proceedings. However, such an option would simply eradicate the institution of private performers, since the debtor would always "form" a friendly creditor, even for a small amount, and, accordingly, make the transfer of all other proceedings to himself in one of the ICE.
More compromise is the so-called "Lithuanian" option, when in the case of finding several enforcement proceedings against one and the same debtor in several performers, the priority of collection is given to the executor who first discovered the debtor's property and approached the claimant. Other performers may join their enforcement proceedings before executing a performer who has a priority. The latter is obliged to take into account in its proceedings one more or more recoverers, as well as expenses and remuneration of colleagues. In this case, 75% of the remuneration gets a "priority" performer, and 25% - the performer who joined the proceedings. In this way, the order and proportionality for all collectors is not violated, regardless of whether one performer or more conducts their business. However, such accession may not occur if the debtor's property is sufficient to satisfy all recoverers, whose enforcement proceedings are held by different performers.
The automated enforcement system that exists in Ukraine technically allows for the introduction of such a system, but given the recent problems with the work of the system, there is a lot of skepticism about the possibility of introducing a "Lithuanian" model in Ukraine.
However, it should be noted that the proposed models of consolidated executive proceedings do not solve the problem of arrests after completed enforcement proceedings. Therefore, the search for solutions to a complex solution is possible in the form of a departure from the notion of consolidated enforcement proceedings.
In this case, the possible option is to determine the order by which the foreclosure of the property of the debtor is carried out by the executor who first registered the encumbrance in accordance with the provisions of the Laws of Ukraine "On Securing the Claims of Creditors and Registration of Encumbrances" and "On the State Registration of Real Property Rights to Real Estate and their encumbrances ", taking into account the priority and priority of the encumbrances determined by these laws. In the case of execution of a decision that was previously executed by another performer and on which he registered the encumbrances on the debtor's property, the enforcement of such property is carried out by the executor who is currently executing the decision.
Today we have only problems and ideas for their solution. However, the critical number of issues raised already requires a prompt decision.
Posted by Aleksey Solomko
Source: Legal Practice
(translated using google translate)