December 2023

Judgment of the Athens Court of First Instance on the Annulment of a Payment Order due to the Invalidity of a Termination Notice

The decision of the Athens Single Judge Court of First Instance No. 12197/2023 was published, which accepted our appeal and annulled a payment order that had been issued, following an application by the bank. 

By virtue of that judgment, it was held that the termination of the interest-bearing loan agreement at issue was invalid and, as a result, the payment order had been issued in respect of a claim which had not yet fallen due, with the result that it was annulled. The court reached that judgment on the invalidity of the notice of termination on the ground that the latter was not signed by the bank's legal representatives but by ordinary employees of the bank. In fact, no power of attorney from the bank to those employees was produced, nor was it shown that the bank had authorised their actions in good time, that is to say, before the filing of the application for a payment order.

Although the signing of the complaint by third parties (e.g. employees, lawyers, etc.) is a common practice of banks, it is noted that the complaint is invalid when the power of attorney of the signatory is not proven or is not approved by the complainant itself before the filing of the application for the payment order, since the approval is only for the future and is not retroactive.

Moreover, according to the judgment cited, the bank is required to prove, in particular, the following: '[...] the defendant bank [...] the bank [...] must prove that it has not ] did not produce any document showing the representative authority of those employees, that is to say, whether they acted as substitutes for the board of directors or as third-party agents under a delegation of authority, or the subsequent approval of the complaint by the defendant's legal representatives, nor did it in any way state that it approved the complaint, and such approval does not constitute an instruction given by the complainant bank to serve the complaint. Nor was the articles of association of the lending bank produced which would show (a) whether the board of directors may delegate the exercise of all or part of the powers of management and representation of the bank to one or more persons, whether or not members of the board of directors, employees of the bank or third parties, specifying also the extent of the powers delegated; (b) the manner in which the persons to whom the above powers are delegated bind the Bank, as officers of the Bank, to the full extent of the powers delegated to them; (c) whether, on the basis of the aforementioned Statutes and the relevant decision of the Board of Directors, the Bank is bound by the Bank's Articles of Association and the relevant decision of the Board of Directors, the Bank may be subject to any of the following conditions Σ. of the bank, it has appointed proxies, representatives and agents of the bank, employees of the bank, who must be named therein, to whom it has given specific instructions and authority to carry out in its (the bank's) name and on its (the bank's) behalf the actions specifically described, including the termination of the loan agreements; and (d) whether those persons include the aforementioned employees who, in this case, terminated the loan agreement at issue, acting as agents of the legal person of the defendant Bank. Moreover, in issuing the contested order for payment, the Judge of the Athens Single Judge Court of First Instance did not indicate how the abovementioned employees were authorised to terminate the loan agreement at issue. Therefore, the aforementioned termination of the disputed loan agreement was invalid and no effect was produced by it [...]'.