1 What does enforcement mean in civil and commercial matters?
Enforcement in civil and commercial matters means using the debtor’s assets to satisfy the claim set out in the enforcement instrument, or obliging the debtor to deliver a person or to perform or refrain from performing a certain operation.
2 What are the conditions under which an enforceable title or decision may be issued?
2.1 The procedure
A court decision is enforced:
1) After its entry into force
A court judgment enters into force when it can no longer be contested in any manner other than by the review procedure. If a court judgment is contested lawfully, the entry into force of the judgment is suspended. If it is partially contested, the uncontested part of the judgment enters into force. A court judgment that has entered into force is binding on the parties to the proceedings to the extent to which the claim filed in the action or counteraction is resolved on the basis of the circumstances behind the action, unless otherwise provided for by law.
A judgment is enforced on the basis of an application by the claimant.
2) Prior to its entry into force if the court has declared that it is subject to immediate enforcement.
A court judgment that is declared to be subject to immediate enforcement is enforced before it enters into force. The court declares that the judgment is subject to immediate enforcement either in the judgment itself or through a ruling.
The court judgment is enforced on the basis of an enforcement instrument.
Enforcement instruments in civil and commercial matters may include the following:
- court judgments and rulings in civil matters which have entered into force or are subject to immediate enforcement;
- decisions recognised or subject to enforcement without recognition by courts of foreign states;
- decisions of arbitration tribunals permanently operating in Estonia and decisions of other arbitration tribunals which are declared to be subject to enforcement;
- decisions made by a labour dispute committee, lease committee or motor insurance committee which have entered into force.
An exhaustive list of enforcement instruments is provided in Section 2 of the Code of Enforcement Procedure (Täitemenetluse seadustik).
If the enforcement instrument is not executed voluntarily, an enforcement procedure can be initiated.
Under the Code of Enforcement Procedure, claims arising from the enforcement instruments provided by law are enforced. The enforcement of enforcement instruments is organised by bailiffs (kohtutäitur), unless otherwise prescribed by law.
- A bailiff conducts enforcement proceedings based on an application by a claimant and an enforcement instrument. The bailiff conducts enforcement proceedings regardless of any application by a claimant if a decision on payment of the bailiff’s fee or on ordering payment of the enforcement costs is the enforcement instrument, and in other cases provided by law.
- An enforcement file setting out the enforcement actions and notices sent in chronological order is opened for an enforcement matter. The documents received in the enforcement matter and issued by a bailiff, or copies of these documents, are recorded in the enforcement file.
- If the conditions for starting enforcement proceedings are complied with, the bailiff delivers an enforcement notice to the debtor.
- The bailiff delivers the enforcement notice to the debtor, and delivers to participants in the enforcement proceedings a statement of the seizure of property, an auction report, his or her decisions on complaints filed against his or her actions, and other documents provided for by law.
- If no term is specified by law or a court decision for voluntary compliance with an enforcement instrument, the term is to be set by the bailiff. The term may not be shorter than ten days or longer than thirty days, unless otherwise prescribed in the Code. With the consent of the claimant, the bailiff may set a term of over thirty days for voluntary compliance with an enforcement instrument.
A bailiff is required to immediately take all measures permitted by law in order to enforce an enforcement instrument, collect information necessary for enforcement proceedings and explain to participants in enforcement proceedings their rights and obligations.
- A bailiff may postpone an enforcement action on the basis of an application by the claimant or a corresponding court decision.
- On the basis of an application by a debtor, a court may suspend enforcement proceedings or extend or defer enforcement if it would be unfair on the debtor to continue with the proceedings. In these cases, the interests of the claimant and other circumstances are taken into account, including the debtor’s family and economic situation.
Some or all of the costs involved in the enforcement procedure may be awarded by the court.
2.2 The main conditions
Required conditions for enforcing an enforcement instrument:
- A court decision which has entered into force or a decision of a labour dispute committee, lease committee or motor insurance committee which has entered into force and which bears a notation on entry into force is accepted for enforcement. A notation on entry into force is not appended to a decision subject to immediate enforcement.
- In enforcement proceedings with respect to the property of a spouse, the assumption is made, to the benefit of the claimant, that movable property in the possession of the spouse who is a debtor or in the joint possession of the spouses is in the ownership of the spouse who is a debtor. The bailiff may seize and sell the movable property in question.
- Making a claim for payment on the joint property of spouses is permitted with the consent of the spouse who is not a debtor if there is an enforcement instrument requiring both spouses to perform the obligation.
- In order to make a claim for payment on property owned by a partnership, an enforcement instrument applying to all partners is required.
- If a debtor dies during enforcement proceedings, the proceedings continue in respect of the debtor’s estate, unless otherwise prescribed by law.
- If the falling due of a claim contained in an enforcement instrument depends on the expiry of a term, the fulfilment of a condition or the arrival of a due date, the enforcement acts may be commenced after the expiry of the term, fulfilment of the condition or arrival of the due date.
- If enforcement proceedings depend on the security of a claimant, the proceedings may only start if it has been certified in a written document that the security has been provided and a copy of the document has been delivered to the debtor or is delivered to the debtor together with the enforcement notice.
- If the execution of an enforcement instrument depends on the claimant simultaneously performing an obligation to the debtor, the bailiff may not commence enforcement proceedings until the claimant’s obligation has been performed or, if the claimant or bailiff has made an offer to the debtor for the claimant to carry out the obligation, until the debtor has unjustifiably refused to accept the performance or has delayed acceptance of the performance for other reasons.
- If a claimant needs a right of succession certificate or another document for compulsory enforcement, the claimant, instead of the debtor, may request that a notary or an administrative agency issue it. In this case, the claimant must submit the enforcement instrument.
3 Object and nature of enforcement measures
3.1 What types of assets can be subject to enforcement?
A claim for payment can be made on movable and immovable property and on proprietary rights.
3.2 What are the effects of enforcement measures?
Ways of making claims for payment on property:
- Seizure of property – when payment is claimed with respect to property, the property is seized and sold. The claimant’s claim is satisfied using the money received from the sale of the property. Property is not seized if it is apparent that the money received from selling the items seized will only cover the enforcement costs. Money that is raised from the debtor’s assets through compulsory enforcement and is paid into the bailiff’s official bank account is transferred by the bailiff to the claimant within ten working days after the receipt of the money.
When a financial claim is filed against the state or a local government, a claim for monetary payment is made. If the claim for monetary payment has not succeeded within a reasonable period of time, the claim for payment should be made with respect to things.
On the basis of an application by the claimant and the debtor, the bailiff may sell seized things in a manner other than by oral or electronic auction if the auction has failed or if it seems that the thing cannot be sold at auction, or if the revenue that the thing is likely to fetch at auction is significantly lower than the revenue that would be received if it were sold by other means.
1.1.1 Making a claim for payment with respect to movable property
- The bailiff sells seized movable property at a public electronic or oral auction.
- The amount remaining after enforcement costs are covered and the claims are satisfied is returned to the debtor.
- Ownership regarding a thing sold at auction is created when the thing is transferred on the basis of the auction report.
1.1.2 Making a claim for payment with respect to immovable property
- In order to fulfil a claim made by a claimant, a claim for payment may be made with respect to immovable property if the debtor is entered in the land register as the owner of the immovable property or the debtor is a universal successor of the owner entered in the land register.
- Making a claim for payment with respect to immovable property also includes objects to which a mortgage extends.
- In order to seize the immovable property, the bailiff records the immovable property and its accessories and other objects to which a mortgage extends, prohibits their disposal and has a notation concerning prohibition on the use of the immovable property entered in the land register.
- Seized immovable property remains in the possession of the debtor, and the debtor can administer and use it within the limits of regular management, unless the immovable property is placed under compulsory administration.
- Once the property has been seized, the debtor may not dispose of it. If the seizure also extends to movable property, this may be disposed of within the limits of regular management.
- Any disposal in violation of the ban on disposal is void, unless otherwise provided for by law.
- If disposal of ownership, a limited real right or a proprietary right is prohibited, a notation concerning the prohibition is entered in the relevant register pursuant to the procedure provided by law. A notation concerning prohibition prohibits entries from being made in the register to the relevant extent without an application by or the consent of a bailiff.
- Making a claim for payment on the debtor’s account – A claim for payment may be made on the debtor’s account. A credit institution issues information to the bailiff concerning the existence or absence of the account. The account is seized on the basis of an instrument of seizure to the extent indicated in the instrument.
2.1 Effect - Money corresponding to the amount seized on the basis of the instrument of seizure is transferred from the debtor’s account to the bailiff’s official bank account if the enforcement instrument is a ruling on securing an action concerning anything other than a claim for child support made during court proceedings. If there is not enough money in the debtor’s account at the time it is seized, any money paid into the account after it is seized is also deemed to have been seized until the outstanding amount is paid off. Money paid into the account after it is seized is transferred to the bailiff’s official bank account until the instrument of seizure has been enforced. If a bailiff has sent an instrument of seizure concerning the debtor’s account to a credit institution for enforcement, the instrument of seizure is also deemed to be in force with respect to any accounts opened by the debtor in the future.
- Ordering compulsory administration - When claiming payment for immovable property, compulsory administration of the immovable property may be ordered. An entry concerning compulsory administration and the compulsory administrator is made in the land register on the basis of the court ruling.
3.1 Effect - A compulsory administrator has the right to take possession of immovable property on the basis of the ruling appointing him or her as administrator of the immovable property. In the event of compulsory administration, the claim should be satisfied using the funds received from the compulsory administration.
- Making a claim for payment on securities - In order to seize securities listed in Section 2 of the Estonian Central Register of Securities Act (Eesti väärtpaberite keskturu seadus), the bailiff sends the registrar an order to make a notation concerning the prohibition on the disposal of rights and obligations.
4.1 Effect - A security is seized as of the moment when it is frozen in the register. The bailiff sells securities in line with the provisions on making claims for payment on movable property. The bailiff has the right to register a registered security in the name of the purchaser and to submit the necessary applications for this in place of the debtor. The bailiff must present a bill of exchange, a cheque or a bond for payment if this is possible depending on the security.
- Making a claim for payment on a share of a private limited company - If a share of a private limited company is not entered in the Estonian Central Register of Securities, the share is deemed to have been seized pursuant to the procedure provided for the seizure of movable property. The bailiff informs the management board of the private limited company of the seizure.
5.1 Effect - The bailiff sells shares of a private limited company in line with the provisions regarding making claims for payment on movable property. The bailiff who sells the shares must send a notice concerning the transfer of the shares, in the form established by the Minister of Justice, to the registrar of the commercial register within two days as of the auction.
3.3 What is the validity of such measures?
The limitation period for claims recognised by a court judgment that has entered into force and for claims arising from a court settlement or another enforcement instrument is ten years.
- Enforcement proceedings initiated before the death of the debtor continue in respect of the estate of the debtor, unless otherwise prescribed by law.
- Before the expiry of the term for renouncing an estate or accepting succession, enforcement proceedings based on a claim against the estate may be conducted only in respect of the estate. In that case, a claim for payment may not be made against the estate on the basis of the personal obligations of the successor.
- If an enforcement instrument also applies to the legal successor of the claimant or debtor, the bailiff accepts the enforcement instrument if the legal succession has been proven to the bailiff by a court decision, an extract from a public register or a notarised document. The same applies to the enforcement of a court decision in respect of the owner of the disputed thing if the thing has changed hands since the court decision was made.
4 Is there a possibility of appeal against the decision granting such a measure?
A participant in enforcement proceedings may file a complaint with a bailiff against a decision or the actions of the bailiff when executing an enforcement instrument or refusing to perform an enforcement action, within ten days as of the day on which the complainant becomes or should have become aware of the decision or action, unless otherwise provided by law.
A participant in proceedings may file an appeal against a decision made by a bailiff regarding a complaint with the county court whose jurisdiction covers the bailiff’s office within ten days of the delivery of the decision. No appeal against a decision or the actions of a bailiff may be filed with a court unless a complaint has been filed with the bailiff beforehand.
An appeal against a ruling by a judge may be filed in enforcement proceedings, unless otherwise provided by law.
A debtor may file an action against a claimant on the basis of an enforcement instrument for compulsory enforcement to be declared inadmissible, in particular on the grounds that the claim has been satisfied, postponed or set off. The fact that the action has been satisfied does not affect the validity or legal force of the enforcement instrument.
A third party who has a right regarding an object of compulsory enforcement that prevents compulsory enforcement, especially the right of ownership or a restricted real right, may file a claim for the property to be released from seizure or for compulsory enforcement to be declared inadmissible for other reasons with the court whose jurisdiction covers the location of the compulsory enforcement.
Bailiffs – contact details can be found here.