Problematic Issues of Exercising the Powers of a Public and Private Actor in the Consolidated Enforcement Proceedings

Author: Attorney, Managing Partner of JSC Colares Especially for the Dzerkalo Suddiv of Ukraine portal The process of enforcing judgments has been a problematic issue for Ukraine for a long time. The judgment of the European Court of Human Rights in the Yuriy Nikolayevich Ivanov v. Ukraine case, which became a pilot one and identified the systemic problem of failure to enforce the judgments of national courts, has confirmed the existence of the problem. Next, the ECHR resorted to more radical action and adjudicated in the Burmich v. Ukraine case, combining approximately 12,000 petitions into one case and transmitting them to the Committee of Ministers of the Council of Europe for execution. Therefore, the reform of the enforcement proceedings is of great importance for our state since it is aimed at protecting human rights. It is designed to address the issue of realizing the right to a fair trial, to peaceful enjoyment of property, and the right to effective counsel. In the course of the reform, many introductions were made regarding the timing and grounds for carrying out certain actions in the enforcement proceedings, the institution of private actors and new electronic registries has been introduced. In the enforcement process, clear limitations for private actors have been set regarding the categories of cases they can’t participate in. These are cases with the state as the debtor, cases on state or communal property, on enforcement of judgments of the ECHR, with a child, an incompetent or incapacitated person as the debtor, etc. Also, there are restrictions for private actors in cases where there is a conflict of interest. Both the public and private actors can have all other decisions under enforcement. Article 19 of the Law of Ukraine On Enforcement Proceedings (hereinafter referred to as the Law) establishes that the right to choose the presentation of an enforcement document by a public or private actor belongs to the recoverer. The dispositiveness of this rule should have made it clear about the subject of enforcement because the recoverer chooses the actor at his/her own discretion. However, if there are several enforcement documents against one debtor, there can be problems of lack of proper regulation of the consolidated enforcement proceedings at the legislative level. The recoverer has the right to choose a state enforcement body only if the place of residence, the property of the debtor, or his/her place of work is within the jurisdiction of several territorial bodies. As for the private actor, he/she commences the enforcement proceedings if the place of residence or the property of the debtor is in his/her district. In accordance with the Law, the public actor, who was the first to commence the enforcement proceedings for the implementation of several judgments on the recovery of funds from one debtor, exercises it within the consolidated enforcement proceedings. Similarly, the implementation of several judgments on the recovery of funds from one debtor is carried out by the private actor as part of the consolidated enforcement proceedings. However, the provisions of the Law stipulate that both the public and the private actors cannot be subjects in one consolidated enforcement proceeding simultaneously. These provisions are quite problematic, especially when some recoverers with enforcement documents against one debtor decide to apply to the public actor, and others to the private. In this case, in accordance with Article 30 of the Law, each of the actors must commence his/her consolidated enforcement proceedings against one debtor. In accordance with paragraph 14, Section 4 of the Instruction on the Organization of Enforcement of Decisions approved by Order No. 512/5 of the Ministry of Justice of Ukraine from April 2, 2012 (hereinafter referred to as the Instruction), if a state enforcement body has several enforcement proceedings commenced to recover funds from one debtor, they are combined into consolidated enforcement proceedings and carried out by the public actor who has commenced the first enforcement proceeding. But paragraph 15 of Section 4 of the Instruction stipulates that the consolidated enforcement proceedings are carried out by the private actor in the order defined by paragraph 14, Section 4. So, in this case, the provisions of the Instruction contradict the Law and refer to the paragraph providing that the actor who was the first to commence the enforcement proceedings against one debtor must carry out consolidated enforcement proceedings. These provisions also level the principle of dispositivity of the choice of the actor at the discretion of the recoverer. In the event that two consolidated enforcement proceedings are commenced by a public and private actor against one debtor, the issue of arrest of the debtor’s property arises. In accordance with Article 56 of the Law, the decision on the arrest of the debtor’s property (funds) is made by the actor when commencing the enforcement proceedings. However, since there cannot be public and private actors in the same enforcement proceedings, and the arrest of the property is superimposed on the total amount of arrears in the consolidated enforcement proceedings, situations may arise where the assets of the debtor may not be sufficient for another consolidated enforcement proceeding. In this case, the one who was the first to commence the consolidated enforcement proceedings and to issue a decree on the property arrest will be in a better position. Also, even if the recoverers decided to transfer the open enforcement proceedings against one debtor from the public to the private actor, such mechanism is not legally envisioned. According to the law, if the recoverer decides to transfer the enforcement document from the public to the private actor, the proceedings are closed, along with the removal of the property arrest, which enables the debtor to hide his/her property. The next issue that arises within the consolidated enforcement proceedings is the satisfaction of claims of recoverers as to the debt. In the event that the assets of the debtor are not sufficient to satisfy the claims of the recoverers, the legislator provided for the priority. It is determined taking into account social significance and observing an equitable balance between private and public interests. However, if within one consolidated proceedings, the sale of the property has already taken place and the claims of the recoverers have been satisfied, whereas within the other proceedings, the execution is in progress and the order of payment is not observed, can this situation be a violation of rights of the recoverers in connection with the conflict of norms of the Law? This issue can be resolved by amending the Law. It is necessary to envisage the possibility of participation of both public and private actors in one consolidated enforcement proceeding. This will allow to combine all enforcement documents into one consolidated enforcement proceeding, to observe the requirements of priority, and to avoid confusion with the arrest and sale of the debtor’s property. These are problematic issues that cause great concern, as they call the process of enforcement of judgments into question. Any complications in the enforcement process jeopardize the rights of the recoverers and may become an obstacle in satisfying the claims of the recoverers. Summarizing the above, it can be noted that any reform designed to improve and perfect the realization of human rights is a positive development. In general, the new system of enforcing judgments can resolve a number of problems that have existed before. However, the reform process is rather complicated and requires improving the legislative base and correcting mistakes made in the reform process. Amendments to the Law and the Instruction will be able to remove conflicts and inconsistencies in the process of enforcement proceedings.