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New Croatian Corona-Related Measures for the Enforcement Proceedings

New Croatian Corona-Related Measures for the Enforcement Proceedings

Corona effects are visible in all segments of the justice systems and they severely affect legal relationships in many countries in the world. Following the suspension of the court activities, especially at the fist-instance level where hearing is a regular stage of the proceedings, and ordering mandatory use of the annual leave for the judges, court officials and other personnel, the most recent intervention in the Croatian system concerns special part of the enforcement proceedings. It is motivated by the need to preserve the basic conditions of the increasing number of unemployed, and persons without or with lowered income, yet it applies to all natural persons without any distinction. Although this is a national measure it equally affects the enforcement of foreign judgments, including those which concern the legal matters covered by this project, as is evident from our recent post.

The Amendments to the Implementation of Enforcement against Money Act (Narodne novine 47/20), which entered into force on 17 April 2020, have enabled the stay of the enforcement proceedings which are aimed against natural persons’ money in the course of the “special circumstances”. This is done by introducing two new articles into the Act, 25a and 25b. The former article in its paragraph 1 defines “special circumstances” as an event or particular state which could not have been foreseen and controlled, and which at the same time endangers life and health of citizens, property of greater value, considerably deteriorates the environment, disrupts economic activity or causes significant economic damage. This was designed to capture the situation in which Croatia, and the very large part of the world, found itself due to the spreading of the Corona virus. To avoid retroactivity or other complex legal issues, the Act states that the period of “special circumstances” commences on the day the Act enters into force, i.e. 17 April 2020 and lasts for three subsequent months. The Government is authorised also to extend this period for another three months should the circumstances so require.

The common requirements for the special regime to be implemented under the said provisions in the course of the “special circumstances” are: (1) the enforcement debtor is a natural person, (2), the enforcement is sought against money, and (3) the claim does not fall under the several exceptions, including the maintenance of the child and the employee’s wages.

The Financial Agency (Financijska agencija – FINA) is the body competent to carry out and coordinate enforcement against pecuniary assets, along with participation of the Croatian National Bank (Hrvatska narodna banka – HNB) and commercial banks. Two different situations may be distinguished when it comes to the Financial Agency’s actions. First, when the proceedings are already pending on 17 April 2020, the Financial Agency shall stay the implementation of the enforcement proceedings and ask the banks to unfreeze the debtor’s accounts (unless the condition is met for transfer of money seised prior to special circumstances). The other situation concerns the new proceeding commenced as of that date, when the Financial Agency shall receive the claims and enter them in the records, but shall not send them to the banks for enforcement against the debtor’s accounts or take any other step in the proceedings.

In the course of the “special circumstances”, counting of most enforcement proceedings deadlines, such as related to freezing of the accounts, is discontinued. Likewise, the statutory interests cease to run.

After the “special circumstances” end, the Financial Agency shall proceed as regularly and time periods shall continue to run.

di Ivana Kunda

20 April 2020