Practical problems in system of enforcements in the context of debtor and creditor relations

Making a court decision in a civil proceeding does not automatically mean the realization of a right on which the court has decided. Accordingly, there is also time limit for performance as an important part of the verdict disposition, within which the affected party should make a deed. In solving their claims through court proceedings, many are aware that for a variety of reasons a certain number of court decisions will never be implemented, which implies that parties who went to court to protect their subjective right will not have this right fulfilled and consumed. This is a cold reality that arises out of the debtor’s insolvency and cannot be avoided.

However, the State (at least the one that pleads for rule of law) should establish an effective system of enforcement of court decisions that provides the parties the highest possible degree of implementation within realistic boundaries. Issues of debtor’s insolvency and ineffectiveness of the enforcement system are two completely separate issues. Therefore, creditors should be provided with the most efficient system for realizing their rights, which implies a system that encourages the full transparency of the debtor’s assets, stimulation of urgency and efficiency in proceedings. Ratio of enforceability of court decisions, in the context of parties who wish to protect their rights through court proceedings, is an important prerequisite of the assessment whether a particular society carries out the value of the rule of law.

Since 2003, in Bosnia and Herzegovina (BiH as both entities) there are enforcement laws that have undergone minimal changes to date. In the life-cycle of a procedural law, fifteen years with almost no change is too long a period. Although they are comprehensive laws, rich practice has shown a number of deficiencies that need sorting. These are practical problems that determines the enforcement system as ineffective in its entirety.

BiH’s system of enforcement in relation to the debtor-creditor relations is not at an adequate level due to: the actual impossibility of enforcement on the bank accounts of a natural persons, inefficient enforcement on movable property, the lack of private bailiffs, excessive duration of enforcement proceedings, difficult access to information about the debtor’s property, speculative pricing on real estate value on public auctions, etc.

Enforcement on bank accounts of natural persons

In BiH, there is no centralized database of bank accounts of natural persons leading to actual impossibility of enforcement on this object. First of all, during preparation of enforcement motion, enforcement creditor is not be able to obtain information on bank accounts of natural persons because of banking secrecy. The creditor has possibility to seek judicial assistance, i.e. that the court should order the banks to deliever information on the existence of the accounts of natural persons, provided that the creditor can prove probability of existence of such data.

The whole process is unnecessary and ineffective because it requires extensive communication between the creditor, court and the banker. Even if the creditor proves the probability of existence of a bank account at a particular bank (which is in itself impossible with regard to banking secrecy), the court would have to order 24 banks to deliever need information due to the lack of a single database. To be fair, absence of a centralized base is not a flaw of the enforcement law, but it can be considered as a defficiency of the system as an entire. The solution to this problem is very simple and consists of creating a unique database of accounts of individuals to which access could be given to parties in court proceedings or at least a court.

Enforcement on movable property and bailiffs

Attorneys, judges and business community in BiH reached consensus on inefficiency of enforcement on movable property. There are several factors that introduce creation of this negative perception. Firstly, the position of a court bailiff as a central actor of enforcement on movable property is highly questionable. A court bailiff is a regular court employee and as such is not subject to a valid evaluation, since there are no clear criteria for measuring the efficiency of the work of a court bailiff. There are no clearly set goals before the bailiffs.

On the other hand, regardless of the results, court executives receive the same salary which is the reason of lack of a financial interest in achieving better results in this type of enforcement which can be extremely complicated and dangerous at times. The result of the current system is that bailiffs usually do not invest enough effort to find debtors at the address, or to list all the movable property found at the address of the debtor’s residence. Secondly, listed movable property is left in custody within the debtors’ premises until the sale process ends. From the moment of creating a list to the moment of seizure a lot of time may lapse leading to a likelihood that the listed property will be not be in the same condition.

The character of movable property should also be considered as it can be easily hidden, sold or destroyed. Much stronger effect would have momentary seizure of movable property at the moment of the listing. However, it is clear that the state has no resources to safely store and keep this property. Thirdly, the sale of movable items is carried out on the basis of an assessment by a court bailiff who is not an authorized appraiser. The valuation does not contain photographs that could, together with the information about the movable property, serve the interested buyers to gain insight into the subject of the sale and eventually offer a certain amount of money. The simplest solution would be the establishment of private enforcement bailiffs who would be able to respond to the challenges of enforcement of movable property (effective seizure of movable property, expert valuation and sales of movable property) with the appropriate level of knowledge, expertise and capacity.

Excessive length of enforcement proceedings

Long lasting enforcement procedures become the very purpose of themselves. In BiH, the issue of lengthy enforcement proceedings should be simply a matter of project planning for human and other resources. Enforcement proceedings require judicial decision-making, gathering information on the assets of the debtors and conducting on-site operations (e.g. seizures). All of the above can be provided only with a financial background that will enable a sufficient number of recruited staff, as well as some other material prerequisites such as electronic management of court cases and electronic communication with parties.

Current enforcement system is organized so that the whole procedure is entirely within the jurisdiction of the court, starting from ordering the enforcement, carrying and closing out the enforcement. In order to achieve desired efficiency and reasonable length of enforcement proceedings, an electronic enforcement system should be introduced to eliminate the need for written communication between the parties and the court. At present, the ineffective court bailiffs’ services should be replaced by a private court bailiff institute, which would have the capacity to employ enough staff to carry out enforcement actions on the field in order to gain efficiency. Precisely because of the shortage of staff in the court bailiffs’ services, the situation on the ground is such that there are huge delays in the execution of all planned deprivations at the addresses of the debtors. Finally, in order to ensure that the length of court proceedings reaches a reasonable measure, it is necessary to employ an appropriate number of judges who will be able to resolve the required number of cases annually. Given the limited financial resources in the field of justice, consideration should also be given to the transfer of certain competencies to the notaries, as was done in the Republic of Croatia.

Access to information on the debtor’s assets

Enforcement in BiH is construed around the active role of the creditor. Creditor is entitled to dispose of an enforceable motion from the beginning until the end of the enforcement proceeding. In order to have information on the assets of the debtor, the creditor’s success depends on the practice and goodwill of the tax authorities, administrations, banks, registries and other institutions. In addition to the general right of access to information (which is usually usually oposed to protection of personal data), the creditor has no statutory ground for him to provide safe and timely access to information.

Contrary to the enforcement legislation in both entities of BiH, the Law on Enforcement Procedure of the Brcko District (small town in BiH with special jurisdiction) stipulates the obligation of the pension fund, tax administration, police and the banks to provide the creditor with timely delivery of the information contained in their records regarding the debtor. Unclear practice of public authorities and banks when accessing information and the assets of enforced persons is another practical problem that reduces the effectiveness of the enforcement system in BiH. Simply by prescribing the obligation to provide information to a enforcement creditor, a much higher level of enforceability of court decisions can be achieved.

Legal uncertainty in determining the real estate price at court auction

Enforcement laws in BiH are not in line with the new practices in the Council of Europe member states and the signatures of the European Convention on Human Rights and Fundamental Freedoms when it comes to the right to a home under Article 8 of the said Convention. In BiH, real estate sale is an option for every case, irrespective of the amount of debts. Theoretically, a debtor’s real estate could be seized for 100 KM debt. Without clear legal rules, the courts are not in a position to assess in each case whether enforcement on real estate is justified by debt amount. Another legal disadvantage is the lack of clearer rules on setting price on the auctions in the Federation of Bosnia and Herzegovina since on the third sale the real estate could be sold without limitation on price.

In practice, this means that the court is left with a large space for interpreting and deciding on the amount of the final property price, which should take into account the protection of the rights and interests of both parties. Enforcement on real estate can deprive someone out of valuable property, so there is a need for extra sensibility in laying down clearer rules that will reduce the space for ignorance, speculation and mistakes. This can be achieved by prescribing the thresholds in relation to the value of the claim and the price that real estate could achieve in a public auction.

Final remarks

Practitioners who are encountering their day-to-day work with enforcement procedures have consensus on the critical points that require reforms. In BiH, the current enforcement system exists since 2003, meaning it existed in the period before, during and after the financial crisis. It is the right time for legislators to hear problems encountered by practitioners on a daily basis and resolutely initiate reforms on the enforcement system. Whatever model is chosen, legislators must strive for solutions that will protect the interests of creditors through fast and efficient enforcement proceedings as well as the interests of debtors through the protection of their property needed to meet basic living needs and generally the protection of human rights and fundamental freedoms.

It should be emphasized in particular that effective enforcement and settlement of claims is one of the basic conditions for attracting foreign investment since capital investors clearly avoid those systems that can not provide an adequate level of protection. The enforcement proceedings are directly in contact with at least three convention rights: the right to property, the right to a fair trial and the right to a home. If it wants to be part of the European legal order, BiH must fulfill clear requirements that arise out of these rights without delay.


Petar Mrkonjić is the Managing Director at EOS MATRIX Ltd. Sarajevo, Bosnia and Herzegovina. He graduated Law from the University of Sarajevo and completed his LL.M degree in 2016. His previous experiences are related to the Center for Public Law where he is still active. Some of his publications are related to the EU General Data Protection Regulation with a view to the compatibility of the BiH personal data protection system with the new European framework (Center for public Law, 2018),  Implementation of the Results of the 2018 General Elections for the delegates of the House of Peoples of the FBiH Parliament (Center for public Law, 2018) and other.