On 26 May 2022, the Constitutional Court (hereinafter: “the Court”) adopted two decisions in which it annulled Article 65(3) and the second sentence of Article 169(3) of the Enforcement and Insurance Act (hereinafter: “ZIZ”).
In its judgment No. U-I-189/21-12, the Court held that Article 65(3) of the ZIZ infringes the constitutionally protected human right to private property under Article 33 of the Constitution where it relates to the execution of movable property. It gave the Legislator one year to remedy the unconstitutionality it found. The paragraph in question provided a limitation period of 30 days for the commencement of proceedings for a declaration that enforcement on movable property was not permissible.
The Court confirmed that, although the provision fulfilled the condition of the constitutionally permissible objective of faster and more effective enforcement, it found that the measure was not proportionate in the strict sense, as there was an imbalance between the interests and entitlements of the creditor and the third party to the enforcement proceedings. More specifically, the repealed provision did not enable sufficient realistic and effective protection to individuals who may be involved in a ‘foreign’ enforcement proceeding by the creditor’s interference with their movable property, but not with the debtor’s movable property. As a result, the positions of the creditor and of the potential third party were thus unbalanced. Furthermore, the Court pointed out that the time limit of 30 days was too short and that, upon its expiry, the third party would normally lose the possibility to protect its civil law rights against the impending loss due to the sale in a movable property enforcement. Moreover, the possibility to bring exclusion actions, which would not be limited by this time limit, would not substantially limit the interest in a swift and efficient enforcement of the creditor.
In its decision No. U-I-179/21-14, the Court annulled the second sentence of the third paragraph of Article 169 of the ZIZ, as it interfered with the constitutionally protected human right to justice under Article 25 of the Constitution. The sentence in question provides that there is no appeal against a decision of the court of first instance on an application by a debtor in execution for the recovery of a pecuniary claim by means of execution on immovable property to divert the execution to another remedy or to another subject-matter of the execution. The repealed sentence of Article 169 of the ZIZ did not allow an appeal, irrespective of whether it is an appeal by the debtor against the rejection of the application or an appeal by the creditor against the granting of the application.
In its decision, the Court held that the effect of this sentence, because of the very intensive narrowing effect of the contested statutory provision, which denies an appeal or other remedy altogether to a party who is dissatisfied with the decision of first instance and who would otherwise have a legal interest in the appeal, must be regarded as an interference with the human right to a remedy under Article 25 of the Constitution. While the Court confirmed that the interference in question was based on the constitutionally permissible objective of faster and more efficient enforcement, as well as on the necessity of the interference in order to achieve such an objective, it also pointed out that the second sentence of Article 169(3) of the ZIZ completely deprives the party of a remedy. The effect of the interference on the human right to a remedy is thus very significant. However, the benefits of the interference are limited in view of the unsuccessful nature of the appeal. Given that the benefits cannot outweigh such an intense interference, the Court annulled the contested provision of the ZIZ.