Recently, judgments Nos. 708/2026 and 709/2026 of the Single-Member Court of First Instance of Athens (special procedure for property disputes) were published. By these judgments, the Court, after upholding the relevant objection to enforcement (Article 933 of the Greek Code of Civil Procedure) and the additional grounds raised therein, annulled the seizure imposed against our clients. The annulment concerned both the seizure affecting the bare ownership right of one of our clients and the seizure affecting the usufruct right of the other client over the same property.
The noteworthy aspect of the case lies in the Court’s acceptance of one of the grounds raised in our additional statement of objection, which concerned the claim arising from an amortizing loan agreement guaranteed by the Hellenic State, on the basis of which enforcement proceedings had been initiated against our clients. In particular, the Court accepted that the claim in question, amounting to approximately EUR 1,000,000, had become entirely time-barred.
More specifically, as argued in our additional grounds of objection seeking the annulment of the seizure report, all instalments of the amortizing loan had become subject to the five-year limitation period provided for in Article 250(15) of the Greek Civil Code.
The interesting element in this case, however, lies in the fact that although the loan agreement had indeed been terminated, such termination took place after the expiry of the fixed-term loan agreement, thereby rendering the termination devoid of legal effect and preventing the extension of the limitation period of the instalments to twenty years. In other words, the subsequent termination of the loan agreement did not produce any legal consequences, since all instalments of the loan had already fallen due.
In its reasoning, the Single-Member Court of First Instance of Athens held, inter alia: “[…] However, the above termination, which took place after the expiry on 03.03.2015 of the above fixed-term loan agreement, did not produce its legal effects. According to Article 341 of the Civil Code, where a specific date has been agreed for the performance of an obligation, the debtor falls into default merely upon the lapse of that date. Consequently, for the debtor to be placed in default, it suffices that the agreed date has passed – in this case 3 March 2015 – without the need for termination of the contract in order for the debtor to fall into default, as explained in the legal reasoning set out above. Accordingly, all instalments of the loan in question, the last of which was payable on 03.03.2015, had become subject in their entirety to the five-year limitation period provided for in Article 250(15) of the Civil Code, which was completed even for the last instalment on 31.12.2020, given that the creditor did not activate, prior to the expiry of the aforementioned five-year period, Clause 12 of the loan agreement, which granted it the right to terminate the agreement and to declare immediately due and payable the outstanding capital that had not yet fallen due. Therefore, at the time when the order for payment was issued, the condition of termination of the loan agreement prior to its expiry had not been fulfilled. On the contrary, in the present case the agreement expired by the mere lapse of the agreed term of the loan and by the debtor’s default resulting from the non-payment of the periodic instalments. Those instalments therefore retained their autonomous character and were subject to the five-year limitation period of Article 250(15) of the Civil Code. Consequently, the claim of the respondent creditor, for the satisfaction of which the enforcement proceedings were initiated against the applicant, has become time-barred […]”.
For further analysis of the limitation of loan claims and the challenge of enforcement measures, see indicatively here, here and here.
