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Enforcement of judgements - Czech Republic

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TABLE OF CONTENTS

1. What does “enforcement in civil and commercial matters” mean? 1.
1.1. Definition 1.1.
1.2. Inventory of coercive measures which may compel the defendant to do something, to refrain from doing something or to pay something 1.2.
2. What are the conditions under which an execution title or decision may be issued? 2.
2.1. Judicial enforcement of decisions 2.1.
2.2. Execution by the judicial executor 2.2.
3. Object and nature of execution measures 3.
3.1. What types of assets may be subject to execution 3.1.
3.2. What are the effects of enforcement measures 3.2.
3.3. What is the validity of execution measures? 3.3.
4. Is there a possibility of appeal? 4.

 

1. What does “enforcement in civil and commercial matters” mean?

1.1. Definition

Enforcement of a decision means that fulfilment of the obligation imposed by a court decision that has acquired legal effect (i.e. if it is not a provisionally enforceable judgment) can be enforced, even against the will of the person on whom fulfilment or a certain act has been imposed. Enforcement may also be based on a decision by an authority other than a court where the law so permits – for instance, an administrative authority may issue a decision in matters arising from civil law relationships.

The enforcement of decisions is governed by §§ 251 to 351a of Part Six of Act No 99/1963 (Code of Civil Procedure), as amended. The general provisions on enforcement do not apply to decisions on the upbringing of minors, given the different (i.e. non-property) nature of the obligation enforced in the event of failure to comply with a court decision imposing the handing over of minors from the care of one natural person to another.

A creditor whose claim is not satisfied by a debtor can obtain compensatory satisfaction either by the means available under Part Six of the Code of Civil Procedure, as amended, or through compulsory auction under §§ 36 to 61 of Act No 26/2000 on public auctions (compulsory pecuniary satisfaction) or by the means available under Act No 120/2001 on Judicial Executors and Action in Execution (Code of Execution), as amended (compulsory pecuniary or non-pecuniary satisfaction).

The specific individual means provided for in Part Six of the Code of Civil Procedure are described in detail below.

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Of key significance for execution is the appropriate legal title attesting that the creditor’s claim is justified (execution title).

Execution titles are:

  • enforceable court decisions granting a right, imposing an obligation or affecting property;
  • enforceable decisions by the courts or other law enforcement agencies in criminal proceedings, granting a right, imposing an obligation or affecting property;
  • enforceable court decisions in administrative proceedings;
  • enforceable decisions by arbitration commissions and settlements approved by them;
  • enforceable decisions by state notaries and agreements approved by them;
  • notarial and executorial deeds with consent to enforceability drawn up in accordance with specific Acts;
  • enforceable decisions by public administrative authorities, including payment notices, statements of arrears in respect of taxation and duty, and other decisions and enforceable settlements;
  • enforceable decisions and statements of arrears in matters of sickness insurance and social security;
  • decisions by institutions of the European Communities;
  • other enforceable decisions, approved settlements and documents whose judicial enforcement is permitted by law.

Enforceable court findings in enforcement proceedings may simply be findings imposing fulfilment of some kind on the debtor. This may consist in the obligation to give something, e.g. to pay a certain sum of money or hand over a certain thing, or to do something, e.g. to carry out certain work or perform a certain operation, remove an unauthorised building, or to allow something to be done, e.g. not to interfere with the entitled party in the exercise of his/her rights corresponding to an easement, or to refrain from something, e.g. prevent kept animals from intruding on a neighbour’s property.

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Action that is binding on the obligated party must also be considered as fulfilment (cf. § 251 of the Code of Civil Procedure - if the obligated party does not voluntarily comply with the obligation imposed by an enforceable decision, the entitled party may lodge a motion for judicial enforcement).

1.2. Inventory of coercive measures which may compel the defendant to do something, to refrain from doing something or to pay something

Depending on the nature of the object of fulfilment to be attained by enforcement of the decision, there are two categories of enforcement methods (or means of execution) – satisfaction of rights to pecuniary fulfilment and satisfaction of rights to non- pecuniary fulfilment.

Enforcement of decisions imposing payment of a sum of money can be carried out by means of attachment of wages/salary and other income, compulsory debit, the sale of movable and immovable assets, the sale of a business, and the creation of a judicial lien on immovable property.

In much simplified terms, in the case of compulsory debiting or a judicial lien, the court orders that if a third party has incurred a debt to the obligated party (the debtor), that third party must give satisfaction to the person entitled under the court decision in place of the debtor.

Under § 313(1) of the Code of Civil Procedure, in a decision enforcement order the court forbids the obligated party to dispose of his debt in any way. The court forbids the obligated party’s debtor to pay the debt to the obligated party, to offset it or otherwise dispose of it once he receives the enforcement order. Under § 314a(1) of the Code of Civil Procedure a decision is enforced once the resolution ordering enforcement has taken legal effect by the debtor of the obligated party paying the entitled party to the extent specified by the enforcement order. The implication is that the obligated party (creditor) loses entitlement to the claim he has on his debtor (the obligated party’s debtor) and the debt has to be paid to the entitled party.

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A decision imposing any other obligation than payment of a sum of money is enforced according to the nature of the obligation imposed. This may involve eviction, seizure of assets, division of common property, or compulsory performance of work and action.

In the case of a secured claim a decision can be enforced by the sale of the security, through the sale of movable and immovable assets, bulk assets, groups of assets and residential or non-residential premises under ownership that have been given as security in accordance with specific legislation, or by compulsory debiting of a money claim given as security or by recovery against other property rights given as security.

2. What are the conditions under which an execution title or decision may be issued?

In the Czech Republic a creditor can choose whether to obtain satisfaction of his claim by means of judicial enforcement of a decision (i.e. by a judicial enforcement agent) through proceedings under §§ 251 to 351a of the Code of Civil Procedure, or by means of execution by the judicial executor under Act No 120/2001 on Judicial Executors and Action in Execution (Execution Act), as amended.

The judicial executor also acts in accordance with the Code of Civil Procedure, especially as regards the provisions governing individual methods of enforcing decisions, using the means laid down in Part Six of the Code.

The judicial executor is entitled to perform executory action, by which is meant compulsory enforcement of execution titles.

A creditor need not be represented by a lawyer when lodging a motion for enforcement of a decision.

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Enforcement can generally be ordered only if the decision designates the entitled party and the obligated party, defines the extent and content of the obligation for fulfilment of which the motion for enforcement was lodged, and specifies the time limits for fulfilment of the obligation.

2.1. Judicial enforcement of decisions

Enforcement proceedings are governed by the “disposition principle”, i.e. they may be initiated only on a motion by the entitled party. If the obligated party does not voluntarily comply with the requirement imposed by the enforceable decision, the entitled party may lodge a motion for judicial enforcement of the decision. Enforcement of a decision can be ordered and carried out only in the ways set out in the Code of Civil Procedure.

The decision always takes the form of a judicial resolution. When enforcing the decision the procedure may not be suspended and observance of the time limits may not be waived. There is no question here of the possibility of renewing the procedure.

Unless the law provides otherwise, the court competent to order and effect enforcement is, in principle, the ordinary court of the obligated party, i.e. the district court in whose jurisdiction the obligated party resides. However, instead of the ordinary court of the obligated party, the court competent for enforcement if it involves the sale of a business (or part thereof) for instance, is the court in whose jurisdiction the business (or part thereof) is located or, if enforcement affects immovable property but does not involve the sale of a business, the court in whose jurisdiction the property is located.

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Court proceedings in the Czech Republic are subject to payment of court fees. Court fees are payable for the proceedings or for individual stages of proceedings. The question of court fees is regulated by Act No 549/1991 on court fees, as amended. In duly justified cases, the Act allows for exemption from court fees. In the case of fees for proceedings, the obligation to pay arises when the action is lodged or another motion submitted for the commencement of proceedings.

Fees:

For a motion for an order to enforce a decision

  • to obtain pecuniary satisfaction for amounts up to and including 15 000 CZK CZK 300
  • to obtain pecuniary satisfaction for amounts above 15 000 CZK 2 % of the amount, with a maximum of CZK 50 000
  • other cases CZK 1 000
2.2. Execution by the judicial executor

Execution is performed by the executor nominated by the entitled party in the motion for execution and authorised to perform execution by the court decision. Acts by the executor are considered as acts of the court.

Execution proceedings commence on presentation of a motion. Execution can be ordered only on a motion by the entitled party or by anyone who can prove that the entitlement concerned passed over to or was transferred to him (§ 256(1) of the Code of Civil Procedure). The entitled party may lodge a motion for an execution warrant if the obligated party does not voluntarily comply with the requirement which the execution title imposes on him (see above for execution titles). Execution proceedings begin on the day when the motion for an execution warrant is received by the executor or the competent executory court together with the designation of the executor.

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However, the executor may commence execution only if the court has authorised him. Execution proceedings cannot be suspended unless the law provides otherwise, e.g. the Insolvency and Composition Act as amended (under § 14 a declaration of insolvency has, inter alia, the following affects: proceedings in which an insolvent debtor is a party regarding claims on assets that are part of the insolvent debtor’s assets or claims which ought to be satisfied from those assets, are suspended unless they are criminal proceedings (in this case, however, no decision on compensation for damages can be taken), proceedings relating to the maintenance of minors, or proceedings for enforcement of a decision; except in the case of  proceedings on claims against an insolvent debtor which have to be submitted and proved (§ 20), proceedings may continue on a motion by the administrator or other parties to the proceedings, and the administrator becomes a party to the proceedings in place of the insolvent debtor).

Here again, it is not possible to waive observance of the time limits or lodge a motion for renewal of execution proceedings.

A warrant of execution has the same effect as an enforcement order under the Code of Civil Procedure. No appeal is permissible against an execution warrant. Execution is carried out on the basis of the warrant once the judicial resolution ordering execution has taken legal effect.

The judicial executor is entitled to a fee for execution action, reimbursement of cash expenses, reimbursement for time lost in performing execution and reimbursement for serving documents/instruments. The manner in which reimbursement is determined is laid down in Ministry of Justice Regulation No 330/2001. Reimbursement for execution action may or may not be laid down by contract. Non-contractual reimbursement is fixed either as a percentage of the satisfaction achieved or at a fixed rate for cases involving non-pecuniary execution.

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3. Object and nature of execution measures

3.1. What types of assets may be subject to execution
  • bank accounts - yes
  • tangible movable assets - yes
  • registered means of transport - yes
  • immovable assets - yes
  • other - e.g. affecting other property rights pledged as security, e.g. rights to a share in a business or registered trade mark
  • types of goods or financial claims which are not the object of execution measures:

Enforcement may not apply to assets whose sale is prohibited by specific provisions or which are not subject to enforcement of a decision under specific provisions.

Enforcement of a decision may not be applied to possessions which are absolutely essential for the debtor’s own and his/her family’s material needs or for the purposes of his/her work, as well as other things whose sale would be contrary to morality, e.g. common items of clothing, normal household furniture and equipment, wedding rings and other objects of a similar nature, health care requisites and other items which the debtor needs because of illness or physical handicap etc.

The principal may not be deducted from a debtor’s monthly wage; the methods of paying it are laid down in a Czech Government decree.

Enforcement does not apply to claims for compensation to be paid by an insurance company under an insurance contract if compensation is to be used for reconstruction or repair of a building.

Similarly, enforcement does not apply to one-off pecuniary social care benefits and state social support benefits paid in accordance with the specific legislation.

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3.2. What are the effects of enforcement measures

Vis-à-vis a debtor who fails to comply with the measure – is the decision on his asset still valid, is he subject to sanctions?

If the court decision does not specify the time limit for compliance, the obligation imposed must be fulfilled within three days or, in the case of eviction, within fifteen days from the time when the decision takes legal effect.

Depending on the nature of the object of fulfilment (see above for individual types of pecuniary or non-pecuniary fulfilment) to be attained by the enforcement decision, the enforcement methods vary.

Nevertheless as a general rule, after the order for enforcement of the decision has been given the court handles its implementation. Individual operations in enforcing the decision may be performed by a court employee (enforcement agent) if the law or a specific legal provision allows or if the presiding judge has authorised him to do so; in doing so, he follows the instructions of the presiding judge.

If the enforcement agent needs to lodge an action or another motion for the commencement of proceedings before a court or some other body in connection with the operations to enforce the decision, he acts in the name of the State.

The extent of the judicial executor’s rights is similar. Unless the Act on Judicial Executors provides otherwise, an executor is entitled to perform all the operations which the Code of Civil Procedure and other legal provisions otherwise entrust to a judge, enforcement officer or other court employee for the enforcement of court decisions.

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An execution warrant has the effect of an enforcement order under the Code of Civil Procedure. Under an execution warrant, execution is carried out by virtue of the legal force of the resolution on the execution warrant. In principle, the provisions of the Code of Civil Procedure are applied accordingly for execution proceedings.

Vis-à-vis third parties – what are obligations of the bank regarding the disclosure of information as well as the attachment of accounts, what are the sanctions for contempt of the execution measure?

In an order for enforcement by means of compulsory debiting of the debtor’s account, the court orders the financial institution not to pay any sums of money from the obligated party’s account, not to effect any offsetting or to dispose of it in any way up to the amount of the enforced claim and related accessions, from the moment it receives the resolution. 

The court delivers the resolution on the enforcement order to the entitled party, the obligated party and the financial institution. It is delivered direct to the financial institution. The resolution may not be delivered to the obligated party before the financial institution.

The Code of Execution (§ 44(4) and (7)) also regulates the prohibition on disposal of the obligated party’s property.

From the moment when the resolution on the enforcement order is delivered to the financial institution, the obligated party loses the right to withdraw money from his account, to use such money for payment or to dispose of it in any other way up to the amount of the enforced claim and related accessions.

If the financial institution does not act as required by the relevant provisions of the Code of Civil Procedure the entitled party may claim from the financial institution payment of the amount to which he would have been entitled if it had acted correctly, even if the obligated party’s account does not hold enough funds.

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On application by the party whose right to payment of a sum of money is recognised by the decision, the court will ask the person who is required to pay whether and from whom he receives a wage or any other regular income and, where appropriate, with which bank, branch of a foreign bank or savings and credit cooperative he has his accounts and the numbers of those accounts.

The party questioned is required to answer the court within one week from delivery of the inquiry. If he does not comply or if he gives incorrect or incomplete details in his reply, the court may impose a procedural fine of up to CZK 50 000.

Under Act No 21/1992 on banks, as amended, it is not considered a breach of the confidentiality obligation for information obtained in connection with the application of banking supervision to be supplied, in compliance with the conditions laid down by law, to public bodies and other persons in the Czech Republic, if that information is supplied for them to perform their duties.

3.3. What is the validity of execution measures?

See above.

4. Is there a possibility of appeal?

Yes, an appeal can be lodged against a resolution for enforcement in accordance with the general provisions of the Code of Civil Procedure on remedial measures.

A party to proceedings may challenge a district court or regional court decision delivered in proceedings at first instance, if this is not prohibited by law.

Appeal is not admissible against a judgment giving a decision on pecuniary satisfaction not exceeding CZK 2 000, excluding related accessions; this does not apply to judgments of recognition and judgments by default. An appeal solely against the grounds of a decision is not admissible.

An appeal must be lodged with the court against whose decision the appeal is directed within fifteen days of delivery of the written copy of the decision. If an amended resolution is issued regarding the findings of the decision, the time limit begins to run again from the time when the amended resolution takes legal effect.

If a person entitled lodges an admissible appeal in good time, the decision does not take legal effect until a court delivers a legally effective decision on the appeal.

As regards appeals in the case of execution performed by the judicial executor, under § 44(10) of the Act on Execution an appeal against the judicial resolution on the execution warrant is admissible, but it cannot challenge any facts other than those material for the execution warrant; the court will disregard any others and confirm the execution warrant. If the appeal does not contain facts material to the execution warrant or any facts at all, the court will reject the appeal by a resolution. Under § 47(3) of the Act no legal remedy is admissible against an execution warrant.

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Last update: 06-06-2006

 
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