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The improvement of efficiency and speeding up of enforcement proceedings were among the top priorities emphasized as justification for the enactment of the new Law on Enforcement and Security (Official Gazette of the Republic of Serbia, No. 106/2015 and 106/2016, hereinafter referred to as: “the Law”). Among the provisions intended to serve those goals was the rule set up by the Article 26 of the Law, providing that when deciding on objections and appeals, the court may not remand the first instance ruling and return the case for reconsideration.

Despite the clear and unambiguous wording, the Article 26 caused incoherent case law and the Supreme Court of Cassation was required to resolve the following issue:

Whether the higher court, as the court of second instance, is entitled to remand a ruling and return a case to the first instance court for reconsideration when deciding on an appeal of the enforcement creditor against the ruling by which the enforcement creditor’s motion to enforce has been rejected or dismissed?

The Civil Department of the Supreme Court of Cassation, at its session held on 23 January 2017, gave the following ruling thereon:

When deciding on an objection or an appeal, the court is not entitled to remand a first instance ruling and return a case for reconsideration, but rather to affirm the ruling and reject the appeal, to reverse the ruling by substituting its own decision, or to annul the ruling without referring the case for reconsideration.

The Civil Department of the Supreme Court of Cassation held that the provision prohibiting courts to remand the first instance rulings and return cases for reconsideration applies not only to rulings on enforcement, but also to other decision of the courts of first instance, e.g. rejections or dismissals of the motions and emphasized that rule prescribed by the Article 26 of the Law, due to its imperative character, linguistic clarity and lack of conflict with other provisions is to be interpreted based on its literal reading.

However, even though it looks that sticking to the ordinary meaning of the legal text and the ruling of the Supreme Court of Cassation might save one from ensuing conundrum, things are not that simple. For example, a case might happen where judge dismisses motion for enforcement, the enforcement creditor files an objection, the panel of judges considers the objection to be justified and thus a ruling on enforcement should be rendered.

The Commercial Disputes Department of the Commercial Appellate Court, at its session held on 7/8 November 2016, held that the panel of judges cannot reverse the ruling on rejection of the motion for enforcement by substituting its own ruling on enforcement, since that would deprive the enforcement debtor of his right to file an objection against such ruling to the panel.

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The Commercial Appellate Court considered the Article 26 of the Law inoperable in such cases and suggested the panels, instead of reversing the rulings on rejection of the motions for enforcement by substituting its own rulings on enforcement, to remand the rulings and return cases for reconsideration by a judge, since only that would allow the enforcement debtors to exercise their right to file the objections.

As a conclusion, notwithstanding the linguistic clarity of the Article 26 of the Law, we do lack the answer on how is that Article to be implemented in different situations. This is even more the case due the different viewpoints of the Commercial Disputes Department of the Commercial Appellate Court and the Civil Department of the Supreme Court of Cassation. While the former insist that the implementation is impossible in several scenarios, the latter offers different solution for the case in which the second instance court is not able to conclude reliably whether an appeal is well founded and doubts whether it is possible to return the case for reconsideration. The second instance court should, first, consider on whom is the burden of proof and, if that is not sufficient, also hear the parties and participants in accordance with the Article 14 of the Law, in order to reach the decision.

It is, thus, questionable, whether the Law managed to improve the efficiency and sped up enforcement proceedings by obliging the second instance courts (or the first instance court panels in case of objections) not to return a case for reconsideration when reversing the ruling. This is even more the case since efficiency should rather be a means to achieve goals than a goal in itself.

On the other hand, the appeals were reintroduced in the enforcement proceedings for the purpose of uniform application of the law in court proceedings, both in front of general jurisdiction and commercial courts. Having in mind the different viewpoints of the Commercial Disputes Department of the Commercial Appellate Court and the Civil Department of the Supreme Court of Cassation, that goal is yet to be achieved and would probably require changes to the wording of the statute itself. Those changes would have to provide explicit answers to the following questions:

•  how to proceed when the motion for enforcement is dismissed and the second instance court or the panel of the first instance court deciding upon the objection, considers the objection justifiable to the extent that the enforcement ruling is to be reached, and

• should the same legal remedies also be available to the enforcement debtor in case when the panel reversed the ruling on rejection of the motion for enforcement by substituting its own ruling on enforcement.

If you have any questions regarding the above, please contact Živković Samardžić Dispute Resolution Senior Associate Marko Trišić (marko.trisic@zslaw.rs), or any of your regular contacts at Živković Samardžić.

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Click here to read this insight in Serbian.

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