Serbia: The new Law on Enforcement and Security

Dispute Resolution

Publisher: Bojović & Partners

The Serbian Parliament adopted the new Law on Enforcement and Security (“Official Gazette of the Republic of Serbia” no. 106/2015) (“Law”) at the end of 2015. However, most of the provisions of the Law begin to apply on 1 July 2016. 

The Law has introduced numerous novelties as compared to the previous legal framework. According to the legislator, the Law should achieve a balance between the speed of procedure and the harmonization of the court practice, while accelerating proceedings and removing uncertainties which emerged in practice.

The appeal has been reinstated into the enforcement procedure as an available legal remedy. The higher courts and the Commercial Appellate Court, as the second instance courts, are competent to decide upon appeals. The Law clearly prescribes that the second instance courts, deciding on an appeal, may not set aside a first instance decision, but have to actually decide on merits. This solution seems sound and should do away with long lasting enforcement proceedings. Although the second instance courts should contribute to the harmonization of the court practice, these courts have not dealt with the enforcement procedure so far. Also, the legislator did not provide additional funds for the implementation of the Law, and the number of employees who are dealing with enforcement cases in the second instance courts has not yet been increased. Consequently, it could be expected that the second instance courts, which are already overloaded, will not comply with the prescribed time limits for deciding on appeals. 

The concepts like restitution in integrum, expert testimony, postponement of the enforcement and others, which the previous law did not prescribe, are also reinstated into the enforcement procedure. The result of this reinstatement in some cases may be slowing down of the enforcement proceedings, taking into account experience regarding these concepts when they were applicable in the past.

Pursuant to the Law, the public bailiffs exclusively conduct the enforcement, except in a few situations, in which the court has exclusive jurisdiction. This should accelerate the enforcement proceedings, as practice proved that the public bailiffs are much faster and more efficient than the courts in conducting enforcement. As the public bailiffs have broader powers, the Law prescribes stricter conditions for appointment of the public bailiffs and provides for stricter control of their work. 

In comparison with the previous law, the position of a third party in the enforcement proceedings is improved. The third party now has the right to initiate a counter-enforcement which is a remedy that entitles the third party to commence enforcement against a creditor, upon completion of the enforcement initiated by the creditor, if conditions prescribed by the Law are met. 

As for the enforcement on real estate property, the Law introduced the concept of legal fiction of an annotation of registration of the enforcement with the Cadastre. According to this legal fiction, if the Cadastre fails to register the annotation of the enforcement within 72 hours of the receipt of request for registration, it would be considered that such annotation is registered. This rule should eliminate untimely acting of the Cadastre in this matter and better protect the creditor’s interests. 

Unlike the previous law, the Law prescribes that Notary Public documents with capacity of an enforceable instrument represent enforceable instruments. In practice, the courts tend to deny motions for enforcement based on Notary Public documents with capacity of the enforceable instrument, and this novelty should eliminate such court conduct. 

The enforcement creditors and debtors are better protected when it comes to the sale of movable and immovable property through a public auction in the enforcement proceedings. The Law stipulates that the property cannot be sold below 70% of the estimated value at the first public auction, and below 50% of the estimated value at the second public auction. These thresholds for sale are higher in comparison with the previous law.