Forced collection of a claim against the Greek State

Critical points:

- The case involved a first level dispute between an electrical and equipment supply company and its client, a company active in the construction of photovoltaic parks. For the supply of electrical equipment, two cheques had been delivered to the supplying company, which when presented for payment at the bank were cancelled due to a lack of funds in the client's account. Following the issue of a payment order, a seizure was imposed on the client company in the hands of the credit institutions and the Greek State, against which the latter had a claim for a tax refund.

- The correct handling of the case resulted, after several legal battles, in the recovery of the supplier's claim from the Greek State and, in particular, from an account held by the State in a credit institution in Greece. 

- The State, on the one hand, delayed in bringing its opposition and, on the other hand, did not proceed to file an application for suspension of enforcement, despite the fact that in exceptional cases that possibility is provided for by law. As a result, it was left exposed to the enforcement procedure. At the same time, the pressure on the bank for the speedy return of the money resulted in the completion of the execution before the State took any further action to abort it.  

Background

A public limited company active in the field of electrical equipment and hardware supplied its client, another public limited company active in the construction of photovoltaic parks, and the latter provided it with post-dated cheques in lieu of payment of the price for the purchase of the equipment. After sealing a cheque, the supplier proceeded to issue a payment order and to impose seizures against its client and in the hands of both the banks and the Greek State. The competent Tax Authority submitted a third party statement, in which it stated that the photovoltaic manufacturing company had a claim for a VAT refund, but a tax audit was pending. The competent Magistrate was convinced that the above statement had a positive content and proceeded to issue the relevant certificate, by virtue of which the supplying company could accelerate enforcement against the State for the collection of its claim. Seizure notices were subsequently issued to all the main commercial banks, as well as to the Bank of Greece, and one of them made a positive declaration, stating that there was a deposit of the Hellenic State in its favour sufficient to satisfy the claim in question, but made the payment of the amount conditional on the granting of authorisation by the competent Court of First Instance. Subsequently, the State lodged an objection to the cheque for payment, without, however, seeking at the same time the suspension of the enforcement proceedings which were already in progress. When the judgment of the Court of First Instance authorising the withdrawal of the amount seized from the bank account held by the State was now issued, the latter applied for the withdrawal of that judgment by way of an application for an interim order, which was, however, dismissed by the court, with the result that the supplier was able to take over the amount seized from the bank.

Strategy

The key points for the successful outcome of the case were as follows:

- The fact that it was chosen to impose a seizure in favour of the Greek State, as it was found that the client's accounts with the credit institutions had a zero balance. 

- The most crucial point of the case was the decision of the competent judge that the declaration submitted by the State was positive, despite the reservation expressed by the competent tax authority as to the conduct of a future tax audit. Thus, the judge proceeded to issue a writ of summons and the enforcement proceedings against the State commenced. 

- Subsequently, after the seizure and the positive declaration of one of the banks, permission was required from the Single Judge of the Court of First Instance in the proceedings for interim measures. However, as provided for in the case-law, it is not necessary for the application to be directed against the defendant, in this case the State, with the result that the State did not appear in the proceedings. The State's subsequent application for revocation was not the correct remedy to be sought and was rejected on formal grounds.

- The State significantly delayed in bringing its opposition to the enforcement proceedings and failed to file an application for a stay of execution which was being accelerated. On the other hand, the supplier company acted promptly and succeeded in recovering the amount seized. 

Outcome

The supplier company, after the issuance of the decision allowing the withdrawal of the seized amount from the account held by the State, contacted the bank for the return of the amount in question. However, the bank delayed, with the result that the State had time to submit an application for the withdrawal of the decision authorising the withdrawal and, in that connection, an application for an interim order. However, that application by the State was rejected by the court, since, according to the case-law, that decision could not be revoked, but an appeal should have been lodged against it. 

Following the rejection of the interim order, the supplier tried to speed up the process of reimbursement of the amount, which was being delayed by the bank. Thus, an application for a writ of execution was prepared, this time against the bank, in order to initiate enforcement proceedings against it. When the bank became aware of the fact that enforcement proceedings were to be accelerated against it, it immediately released the seized money and delivered it to the supplier on the same day. 

Conclusion

The traditional objects of enforcement for the satisfaction of monetary claims are the seizure either of the debtor's real estate or of deposits held by the debtor in banking institutions. However, often over-indebted debtors do not have such visible assets, so that alternative means of enforcement must be sought to satisfy the claim. In the present case, the satisfaction of the supplier's claim was achieved by the attachment of a claim held by the debtor company against the tax office for the amount of the tax refund. The procedural manipulations in the case and at the same time the failures of the opposing party resulted in the eventual return of the seized amount to the supplier company.