November 2024

Decision of the Athens Multi-Member Court of First Instance on the Compromised Cancellation of a Lawsuit Hearing

The decision no. 3119/2024 of the Athens Multi-Member Court of First Instance was published, which declared the discussion of the lawsuit void following the out-of-court settlement between the parties.

In this case, our client, a hotel-based joint-stock company, had filed a lawsuit against the bank that had long financed its operations (through the provision of amortizing loans and credit lines serviced by an open account), the fund that acquired the relevant claims after purchasing them from the aforementioned bank, as well as the servicer tasked with managing these claims. The purpose of the lawsuit was to contest the validity of the loan contract termination carried out by the new claim holder through its management company and to challenge the amount of the debt, which had been calculated based on abusive contractual terms.

The lawsuit was filed as part of the company’s broader effort to negotiate a debt restructuring agreement with the servicer, tailored to its financial capabilities, in order to maintain its viability.

Following the discussion of the lawsuit – i.e., after the submission of pleadings during the ordinary procedure – and before the issuance of a decision, the parties successfully entered into a restructuring agreement. Under this agreement, the parties undertook the obligation to submit a statement withdrawing the request for a decision on the lawsuit or to waive the right to appeal any decision that might be issued on it. To this end, the attorneys of the parties submitted parallel statements to the court, declaring their intention not to seek a decision on the lawsuit. The plaintiff also submitted the signed restructuring agreement, which included the aforementioned waiver clause.

Since, under Article 308 of the Greek Code of Civil Procedure, "an agreement between the parties not to issue a decision after the discussion does not produce legal effects," the aforementioned parallel statements by the parties could not achieve the desired outcome.

For this reason, the court adopted the view that "the plaintiff and the defendant are entitled to withdraw, or more precisely to revoke, the material act of submitting their pleadings, already filed under Article 237 of the Code of Civil Procedure, so that this withdrawal results in the cancellation of the discussion of the case, given that they no longer properly appear before the court."

Moreover, according to the court, the fact that at the stage when the statements were submitted, there was no longer any pending procedural communication between the parties and the court does not pose a problem. To further substantiate this position, the court invoked an argument of greater to lesser importance, stating that "to the extent it is accepted that the court should be informed about an act terminating the case, which took place after the discussion and before the issuance of the decision – especially considering the permissibility of a withdrawal agreement – the same can apply in this case (i.e., where simultaneous parallel statements of withdrawal of the pleadings submitted by the parties, who had previously filed pleadings, are filed after the discussion of the case and before deliberation and issuance of a decision)."

In this way, as the court notes, "the unnecessary engagement of the court with the case and the issuance of a decision that would become inactive, e.g., if a judicial settlement is reached or a withdrawal is attempted for the first time at the appellate level, is avoided."

Thus, in this case, the court accepted that "the said parallel statements by the parties, expressing their mutual intent not to issue a decision, constitute a declaration of withdrawal from the progression of the case discussion and a revocation of the pleadings filed by these parties, resulting in the lack of proper representation by the parties," and declared the discussion of the lawsuit void.

With this reasoning, the court facilitated the parties in their effort to comply with the content of the settlement agreement, which was reached at a point in time that did not allow them to terminate the trial (since the plaintiff’s withdrawal was no longer possible under Article 294 of the Code of Civil Procedure, and any agreement between the parties not to issue a decision would be invalid under Article 308 of the Code of Civil Procedure).