In Finland enforcement is divided into what are known as separate and general enforcement.
Separate enforcement refers to the recovery of judgment debts. Where necessary, individual debts imposed in a court judgment or on other grounds arising from the Enforcement Code (ulosottokaari) are collected by way of enforcement. No such grounds are needed for collecting taxes, public payments or other public receivables (e.g. fines).
General enforcement refers to personal or corporate debt restructuring and bankruptcy. These kinds of proceedings generally encompass all debts and assets of the debtor. Only separate enforcement, i.e. the recovery of judgment debts, will be discussed here.
In practice, the most important form of enforcement in civil and commercial matters is the enforcement of a judgment debt. The process includes the distraint of the assets of the debtor, the sale of assets, if necessary, and the payment of the accrued funds to the creditor. Assets are distrained up to the amount that is necessary to pay the debt to the creditor. In cases where enforcement has been requested by several creditors or the distrained assets are subject to collateral rights, the funds are divided among the creditors in order of priority.
Another important form of enforcement is eviction. Eviction involves forcing a tenant to vacate a property upon the termination of the tenancy. Obligations to transfer certain assets to another, obligations to do something as well as injunctions against doing something and obligations to allow another to do something can also be enforced. These kinds of obligations and injunctions are usually enforced by means of coercive measures or penalty payments, depending on the circumstances. Court-ordered seizures or other precautionary measures can also be enforced. Only the enforcement of judgment debts will be discussed in more detail below.
Enforcement authorities also have the power to enforce family law judgments, such as orders to return a child under the Hague Convention on the Civil Aspects of International Child Abduction.
In Finland enforcement is the responsibility of bailiffs. Practical enforcement work is usually carried out by deputy bailiffs. Bailiffs are impartial and independent enforcement authorities employed by the State, and they have an obligation to observe the rules of proper conduct. They must carry out their duties promptly, efficiently and expediently without causing unnecessary distress to the debtor or third parties. Bailiffs have considerable powers, including the right to search for debtors’ assets.
Enforcement requires that the creditor has a court judgment establishing the debt or that there are other grounds for enforcement. However, there is usually no need for a specific enforcement order.
In civil and commercial matters, enforcement is usually based on a judgment or ruling of a general court of law. General courts of law include district courts (käräjäoikeus) as courts of first instance and Courts of Appeal (hovioikeus) and the Supreme Court (korkein oikeus) as appellate courts. An arbitral award can also provide grounds for enforcement. In practice, one of the most important grounds for enforcement is a maintenance order confirmed by a municipal authority. On the other hand, Finland does not recognise contracts between private parties as grounds for enforcement.
A judgment issued by a foreign court or similar documents only qualify as grounds for enforcement in Finland if this has been expressly provided for in law. In practice, this mostly involves provisions laid down in Community law.
Creditors must apply for enforcement from their local enforcement authorities and append the grounds for enforcement to the application. Applications can be for full enforcement or limited enforcement (see section 3.1.). Creditors can also ask enforcement authorities to monitor a debt for a period of two years if it is not possible to collect the debt immediately. There is no need to hire a lawyer or a legal adviser. Although applications are made to local enforcement authorities, bailiffs operate nationwide.
The fees collected by the State for enforcement are usually charged to the debtor. The creditor will be liable to pay a disbursement fee on the disbursed amount. If collection fails, the creditor will have to pay a small handling fee.
The validity of the creditor’s claim is examined by a court in a civil procedure before a judgment is issued to serve as grounds for enforcement. In practice, the majority of rulings are default judgments. A default judgment is based on the failure of the other party to respond to the summons or to attend court. A default judgment is given without a detailed examination of the validity of the claim. This allows creditors with uncontested claims to establish grounds for enforcement quickly and easily. For more information, see “Simplified and accelerated procedures – Finland”.
Bailiffs have a duty to enforce courts’ judgments or other grounds for enforcement and cannot question their validity. Instead, bailiffs must check that the debt has not ceased to exist since the court’s judgment was given, due to payment or the expiry of a statute of limitations.
In principle, all types of assets belonging to the debtor that have monetary value can be distrained. In practice, funds from the debtor’s bank account, tax refunds, wages, salaries, pensions or other regular income can be garnished. In addition, other movable assets or effects and immovable property can be distrained. However, if the creditor has applied for limited enforcement, only assets ascertainable from registers that do not require liquidation can be distrained.
On the other hand, the law prohibits certain types of assets from being distrained, based on social and other grounds. Various social benefits, for example, cannot be garnished. Debtors also enjoy a so-called separation advantage, which means that a debtor’s ordinary household effects or professional tools, for example, cannot be distrained.
To guarantee a reasonable livelihood to debtors and their families, the garnishment of wages, salaries and pensions is subject to quantitative restrictions. As a general rule, no more than one third of a debtor’s net wage or salary can be garnished. The debtor is always guaranteed a protected portion of his or her income.
If distrained assets need to be liquidated, they are usually sold at a public auction.
Once assets have been distrained, the debtor may not destroy or dispose of the distrained assets or make other decisions concerning the same to the detriment of the creditor. Any action taken in violation of this injunction has no legal power. However, a third party may enjoy bona fide protection in some cases. Handling distrained assets is a criminal offence.
Bailiffs enjoy extensive access to information not only from the debtor but also from third parties, such as banks. Once a bank has been informed of a debtor’s funds having been frozen, the bank must not release funds from the debtor’s bank account to anyone except the bailiff. Paying a receivable or wages or salaries in violation of this injunction is a criminal offence.
A court judgment or other grounds for enforcement cannot be enforced if the right conferred by the same has subsequently lapsed due to the debt having been paid or the statute of limitations having expired. Judgments usually carry a statute of limitations of five years, which the creditor can interrupt.
Time limits have been set for the enforceability of certain kinds of debts in Finland. This applies to cases where a natural person has been ordered to repay a monetary debt. The objective is to prevent enforcement proceedings from continuing for unreasonably long periods of time. These kinds of debts are usually enforceable for a period of 15 years or in some cases 20 years.
Enforcement measures as such do not usually have specific time limits. Bailiffs have an obligation to carry out their duties expeditiously and without unnecessary delay.
Bailiffs’ enforcement measures and decisions can be appealed by anyone whose interests are affected by said measure or decision. Appeals are handled by general courts of law with district courts acting as courts of first instance. Appeals must be filed within three weeks of the date on which the decision is issued or the date on which the interested party receives notice of the decision.
Filing an appeal does not usually suspend the enforcement process, unless the court rules otherwise. If the appeal is granted, the court will overrule or amend the bailiff’s decision. In some cases bailiffs can also correct any obvious errors in their decisions themselves.
If resolving an argument or claim presented in connection with enforcement requires taking oral evidence, the matter may need to be decided in a civil proceeding in a court of law (enforcement dispute).
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