December 2022

Decision of the Athens Court of Appeal on the Suspension of Execution Proceedings before the Auction due to Lack of Servicer Legalization

The Athens Court of Appeals issued the injunction decision no. 6206/2022, which suspended the auction of properties owned by our clients on the same day. Just half an hour before the auction took place, the appellate court presumed the validity of the appeal filed by our clients against the first instance decision which, wrongly, dismissed their appeal against the enforcement proceedings and, therefore, accepted the application for suspension under the new article 938 para. Despite the late submission of the relevant application, the latter was filed only two (2) working days before the auction day and not five (5) working days, as required by law in Article 938 para. 3 of the CCP, the same was deemed admissible. In particular, a request for the restoration of the property to its previous state (pursuant to Article 152 of the CCP) was submitted together with the appeal - application for suspension and was granted, which requested, on the merits, the shortening of the preparatory period for the exercise of the suspension remedy due to force majeure in the observance of the statutory deadline. That is because the decision at first instance and subsequently challenged on appeal was issued only five (5) working days before the auction, whereas we only became aware of its content, following our direct and repeated requests, only three (3) working days before the date of the auction and, as a matter of fact, it was impossible to comply with the five-day time-limit for lodging the application for suspension with the Court of Appeal. In practice, it is very often the case that decisions on appeals against enforcement are issued literally at the last minute, leaving extremely limited scope for the alleged debtors to react in the event that their appeal is rejected. That practice requires the alleged debtor to be fully alert, given the strictness of the case-law, which requires the latter to make the application for suspension of enforcement even on the same day as the judgment at first instance, if that is the last day for lodging an appeal within the time-limit. The reason that was presumed by the Court of Appeal to be valid was the lack of active legal capacity of the management company under the Act. 4354/2015 (Servicer) to expedite enforcement when the transfer of the loan claim had taken place under Law no. 3156/2003 on securitisation of receivables, because the latter does not confer this right on the Servicer. In this regard, we have already written quite a bit (see here, here and here) and many decisions have been issued, mainly by Courts of Appeal, accepting the inability of Servicers to carry out seizures and enforcement actions in general. Recently, the issue was even referred to the Supreme Court's plenary session as controversial so that it can be finally resolved for the sake of legal certainty.