February 2024

Judgment of the Athens Trial Court of Appeal on the Final Cancellation of a Payment Order Due to Lack of documentary evidence of the active legitimization of the applicant bank company

Judgment  Νο. 298/2024 of the Athens Court of Appeal has been published, whereby the Court dismissed the appeal of a banking institution against our principals and upheld the first-instance decision. According to this decision, the Payment Order, by which our principals were obliged to pay the applicant the equivalent amount of 557,534.32 Swiss francs in euros at the official exchange rate on the day of payment, was annulled.

 Initially, a stay of execution was filed to annul the Payment Order, which was accepted by the Court of First Instance, leading to the annulment of the contested enforceable title due to lack of documentary evidence of the active legitimization of the applicant for its issuance. Subsequently, the opposing party appealed against the first-instance decision. However, the Court of Appeal, following the acceptance of our arguments, with the aforementioned decision, rejected the appeal of the opposing party in substance, upheld the first-instance decision, and now finally annulled the Payment Order issued against our principals.

In the present case, the applicant, a banking institution, exposed in its application for the issuance of the Payment Order that during the term of the loan agreement with our principals, it transferred every claim arising from the specific contract to a foreign special-purpose company, and subsequently, the latter transferred the claim back to the applicant due to the sale of the specific claim. However, as ruled by the Court of Appeal, the applicant did not prove, for the issuance of the Payment Order, the transfer of the claim to itself, and consequently, its active legitimization as the beneficiary of the claim for the issuance of the enforceable title.

More specifically, during the issuance of the Payment Order, the applicant did not invoke or provide any contract for the assignment of the claim from the foreign special-purpose company, which contract was critical as the last valid one at the time of the issuance of the Payment Order. Instead, it only presented a table of transferred claims, among which was the contested one. Moreover, it was acknowledged in the discussed decision that: "Indeed, as accepted by the Court of First Instance with the appealed decision, the fact that the registration of the contract in the public records of the Mortgage Office is sufficient for the assignment to take effect does not negate the obligation of written proof of the latter (assignment), as well as of the claim {...}. Therefore, the Court of First Instance did not err in accepting the same, rejecting the sole ground of appeal as unfounded."

More specifically, during the issuance of the Payment Order, the applicant did not invoke or provide any contract for the assignment of the claim from the foreign special-purpose company, which contract was critical as the last valid one at the time of the issuance of the Payment Order. Instead, it only presented a table of transferred claims, among which was the contested one. Moreover, it was acknowledged in the discussed decision that: "Indeed, as accepted by the Court of First Instance with the appealed decision, the fact that the registration of the contract in the public records of the Mortgage Office is sufficient for the assignment to take effect does not negate the obligation of written proof of the latter (assignment), as well as of the claim {...}. Therefore, the Court of First Instance did not err in accepting the same, rejecting the sole ground of appeal as unfounded."

In conclusion, the individual seeking the issuance of a Payment Order must prove in writing, already at that time (and the submission during the trial of any subsequent stay of execution is not sufficient), that they are actively authorized as the beneficiary of the claim to request the issuance of an enforceable title.

For more see here