Bills of Exchange in Enforcement Proceeding

Recent amendments to the Enforcement Procedure and the Interim Protection Act facilitate repayment in enforcement proceedings.

Introduction

Bills of exchange are mostly regulated by the sector specific act of 1946 (based on provisions of three 1930's Geneva conventions). Provisions of other acts (eg, Obligation Code; Obligacijski zakonik) are used secondarily if the Bill of Exchange Act (Zakon o menici) does not contain applicable provisions.

In practice, besides as a credit or payment instrument, the bill of exchange is mainly used as a security instrument. Most likely it will take on an even larger role in commercial practice due to the latest amendments of the Enforcement Procedure and Interim Protection Act (Zakon o spremembah in dopolnitvah Zakona o izvrabi in zavarovanju, Official Gazette no. 51/2010; the ZIZ-H), which entered into force on 15 July 2010.

Two types of enforcement proceedings

Until the abovementioned amendments, a bill of exchange was – like invoices, excerpts from business records, calculations of interest, checks, etc. – listed as an "authentic document" on a basis of which enforcement proceeding could commence. The main characteristic of such proceeding, where a proposal can still be filed either electronically or in hard copy, is that the debtor is given time for voluntary repayment and the creditor cannot be repaid before the writ of execution becomes final.

In addition, the ZIZ-H provides an exception relating to the bill of exchange whereby in commercial disputes a creditor is entitled to repayment before the writ of execution becomes final. The act defines specifics relating to the proposal: a creditor has to file a proposal with the district court where the debtor has its registered seat, in hard copy, accompanied by the original bill of exchange. If the proposal is filed by the attorney-in-fact, it is sufficient to state that the power of attorney was given and its scope. The proposal must include information about:

the creditor and debtor; the bill of exchange; the debtor's obligation; the means of execution (whereby the court has to acquire information on eg the debtor's bank and bank account number or other information on the debtor's securities ex officio); and all data necessary for the enforcement to be performed. In addition, in its proposal the creditor must request the court to ask the debtor to pay the claim (principal, interest and costs) within three days after receipt of the writ of execution.

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