September 2021

Decision of the Athens Magistrates' Court of First Instance to consider an action based on a bonded loan as not having been brought

The decision of the Athens Court of First Instance in favour of our client, No. 2377/2021, was recently published. The latter ruled on a claim by a banking institution against the primary debtor, a limited liability company (active in the field of real estate management) and against a guarantor - a natural person, for an alleged debt of the former against the latter under a contract for the issue of a joint bond loan of approximately 1,100,000 euros. According to the assumptions of the judgment, which endorsed the claims of the second defendant, the action was deemed to have never been brought against the first debtor - the company, since, at the time of its service, the company was not managed (the term of office of the board of directors of the latter had expired, in particular, after the expiry of its agreed term, without being renewed) and there was no statutory representative body to receive the court document. The plaintiff banking institution did not appoint an interim administration before the legal action was brought, in accordance with Article 69 of the Civil Code, with the consequent invalidity of the service of process. Furthermore, it is submitted that the relationship between the first debtor company and the guarantor - a natural person - is a relationship of forced homologation. In order to avoid fragmentation of the procedural unity and the risk of conflicting judgments, the action was deemed not to have been brought against the natural person personally involved - the guarantor. Although there is no question in this case of a compulsory joint action by the principal and the guarantor, the Court of First Instance gives that reasoning on the basis of the analogous application of Article 76(1)(b) of the Brussels Convention. 3 of the Code of Civil Procedure, according to which 'The absent parties shall be called upon to participate in any subsequent procedural act'. It is, of course, not possible to speak of a direct application of that provision, since in the new ordinary procedure there is no summons to the parties, given that a preparatory period has been observed, but service of the action. In the final conclusion of the judgment, the failure to serve service or irregular service (as in the present case) amounts to a failure to summon all the parties, a failure which renders the action inadmissible even for the guarantor, a natural person, who, it would appear, was correctly served with the statement of claim.