A payment order is the document served on the debtor by the enforcement office after it establishes that the creditor’s request for enforcement proceedings regarding its receivable meets the legal requirements.
1 Objection to the Payment Order in Proceedings by Way of General Attachment
An objection to a payment order is the legal act by which, pursuant to Article 62 of the Enforcement and Bankruptcy Law No. 2004 (the “EBL”), the person named as debtor in the request for enforcement and in the payment order, and on whom the payment order has been served in that capacity, raises an objection — without being required to state any reason — by a written or oral declaration to the enforcement office within seven days of service of the payment order, with the result that the enforcement proceedings are automatically stayed. A person on whom a payment order has been served as debtor may object to the debt or to the signature contained in the order, provided that they have capacity to be a party to enforcement proceedings, in other words capacity to exercise civil rights.
The objection does not necessarily have to be made in person at the enforcement office where the proceedings are being conducted. In this respect, it should be noted that an objection may also be made through correspondence. Indeed, according to settled case law of the Court of Cassation, the debtor may also send the objection petition to the enforcement office by post or telegram. Although objections are mostly made in writing, an oral objection is also possible.
The objection to the payment order must be made within the seven-day objection period. The enforcement officer examines ex officio whether the objection has been made in time, since the period for objecting to the debt is a peremptory period, not a limitation period. The objection period starts to run from the service of the payment order. Service may also have been made on the debtor or their attorney by electronic notification. In that case, pursuant to Article 7/a of the Notification Law, service is deemed to have been made at the end of the fifth day following the day on which the document reaches the recipient’s electronic notification address.
1.1 Objection to the Debt
An objection by the person named as debtor in the payment order asserting that they are not indebted is called an objection to the debt. In line with this definition, even a simple statement such as “I object” by the alleged debtor is sufficient. On the other hand, debtors are sometimes found, alongside statements such as “I have no such debt”, to acknowledge the debt and request payment in instalments, ask for additional time or make a declaration of assets. Since such statements indicate the absence of an intention to object, the objection should then be deemed invalid.
It should be noted that, although the alleged debtor’s failure to state reasons when objecting to the payment order does not render the objection invalid, an objection made in this manner narrows the defences available to the person concerned before the enforcement court. Pursuant to Article 63 of the EBL, “The objecting debtor may not change or extend the grounds of objection at the hearing on the removal of the objection, except for those understood from the text of the instrument relied on by the creditor.” Under this provision, a person who objects to the payment order without stating reasons may only rely, before the enforcement court, on grounds of objection that can be understood from the text of the instrument.
All objections of a debtor on whom a payment order has been served, other than an objection to the signature, are deemed objections to the debt.
Partial Objection to the Debt
A partial objection exists where the debtor objects to only part of the debt. For a partial objection to be valid, in addition to the other requirements for an objection to the payment order explained above, the amount of the debt objected to must be separately and clearly specified in the objection. Where this requirement is not met and it cannot be understood to what part of the debt the objection relates, the payment order is deemed not to have been objected to at all and becomes final for the entire debt.
Objection to Interest
Where the payment order served also includes a claim for interest, it is important that the person named as debtor separately specify, together with the objection to the principal debt, the objection to the interest claim, which is ancillary to the debt.
Objection to the Jurisdiction of the Enforcement Office
Pursuant to Article 50 of the EBL, “In proceedings for a monetary debt or a security debt, the provisions of the Code of Civil Procedure on jurisdiction apply by analogy. However, the enforcement office of the place where the contract on which the proceedings are based was concluded is also competent.” Since enforcement proceedings without judgment by way of general attachment relate to monetary or security debts, the generally competent enforcement office for such proceedings is, under the Code of Civil Procedure No. 6100 (the “CCP”), the enforcement office at the debtor’s domicile on the date the proceedings are initiated.
Where the enforcement proceedings have been initiated before an enforcement office lacking jurisdiction, the person named as debtor in the payment order may, within seven days of service, object to the jurisdiction of the enforcement office by also indicating the competent enforcement office. If the debtor objects only to the jurisdiction of the enforcement office and, upon the creditor’s request for removal of the objection, the enforcement court rules that the enforcement office has jurisdiction, the enforcement proceedings become final. This is because, once seven days have passed since service of the payment order, the debtor no longer has the opportunity to raise other grounds of objection, and by raising only an objection to jurisdiction within those seven days the debtor is deemed to have acknowledged the other claims; the proceedings continuing before the enforcement office found competent by court decision therefore become final.
1.2 Objection to the Signature
Pursuant to Article 60/2-3 of the EBL, where the creditor relies on an ordinary (private) instrument in the request for enforcement, the alleged debtor may object that the signature on the instrument is not theirs. Under this provision, unless the person named as debtor in the payment order separately and clearly states such an objection, the signature on the instrument is deemed to be theirs for the purposes of the enforcement proceedings. It follows that, where only the debt is objected to and no separate objection to the signature is raised, the alleged debtor is deemed to have acknowledged that the signature on the instrument is theirs. Since an objection to the signature must be made explicitly, an objection by the debtor such as “the instrument is forged, I never gave this person an instrument” cannot be regarded as an objection to the signature.
The same provision also requires the alleged debtor, in addition to the objection to the signature, to “declare within the same period any objection they may have to all or part of the debt or to the creditor’s right to pursue enforcement”.
Such an objection is not possible for official (notarised) instruments. Where the proceedings are based on an official instrument and the person named as debtor claims that the signature on it is not theirs, the available remedy is to bring an action for a negative declaratory judgment before the civil courts under Article 72 of the EBL and Article 208 of the CCP.
1.3 Belated Objection
A belated objection is an additional remedy available where the seven-day statutory objection period has expired but the person named as debtor in the payment order was unable to submit the objection in time for reasons beyond their control. To make a belated objection, the debtor must have been unable to object within the period (i) without fault and (ii) due to an impediment. The institution of belated objection should not be confused with defective service, since, unlike in the case of belated objection, the objection period has not yet started to run where service is defective. A belated objection must be filed with the enforcement court of the place where the enforcement office is located within three days of the removal of the impediment and, in any event, before the attached assets of the person concerned have been sold.
In the application to the enforcement court, the person making a belated objection sets out both the circumstance that prevented a timely objection and the objection itself. A belated objection does not automatically stay the proceedings; the enforcement court will first decide whether the proceedings should be stayed.
Leaving aside the exception of belated objection, an objection by the debtor within the seven-day period automatically stays the enforcement proceedings. Proceedings stayed by an objection cannot be continued until the objection is set aside. In the case of a partial objection, the enforcement proceedings may continue with respect to the amount accepted by the debtor.
2 Setting Aside the Objection
For proceedings stayed following a duly made objection to continue, the creditor may resort to (i) an action for annulment of the objection before the civil courts or (ii) a request for removal of the objection before the enforcement courts.
2.1 Annulment of the Objection
Pursuant to Article 67 of the Enforcement and Bankruptcy Law, a creditor whose request for enforcement has been objected to may, within one year of service of the objection, bring an action for annulment of the objection in order to have the enforcement proceedings stayed by the objection continued. In such an action, the plaintiff creditor asserts that the receivable objected to by the debtor exists and requests annulment of the debtor’s objection and, if it so wishes, an award of enforcement denial compensation.
A creditor who misses the peremptory period (one year from service of the objection) provided for the annulment action loses the enforcement proceedings without judgment, without prejudice to its right to sue for the receivable under the general provisions. It should be noted that, once the proceedings without judgment have lapsed, the creditor cannot sue for the receivable under the general provisions and then request, on the basis of the resulting judgment, the continuation of the lapsed proceedings; in that case, the creditor may only initiate enforcement proceedings based on a judgment.
As regards the burden of proof, it should be noted that in this action the burden of proof lies with the plaintiff, and the plaintiff creditor must prove the existence of its receivable.
At the end of the action for annulment of the objection, the court will either dismiss or accept the action:
- If the court concludes that the receivable pursued by the creditor does not exist, the action for annulment of the objection is dismissed and, in addition, if the court finds, upon the debtor’s request, that the creditor initiated the proceedings in bad faith, the creditor is ordered under Article 67/2 of the EBL to pay compensation for bad faith. The amount of compensation may not be less than twenty percent of the amount dismissed. With the decision dismissing the action, it is established with res judicata effect that the receivable pursued does not exist, and no action for the same receivable may be brought against the debtor.
- If the court accepts the action for annulment of the objection, the stayed enforcement proceedings continue and, where the creditor has explicitly requested enforcement denial compensation in its statement of claim, the debtor is ordered to pay such compensation. For enforcement denial compensation to be awarded, in addition to the creditor’s request, the debtor’s objection to the payment order must also be unjustified. Whether the debtor’s objection was justified essentially depends on whether the receivable is liquid. A receivable is liquid where all the elements necessary to determine its actual amount are known, or can be known, by the debtor. Pursuant to Article 67/2 of the EBL, enforcement denial compensation may not be less than twenty percent of the receivable accepted.
It is important to recall here that the decision annulling the objection need not be final for the creditor who wins the action to request continuation of the enforcement proceedings without judgment. On the other hand, pursuant to Article 36 of the EBL, the debtor who objected to the proceedings may appeal the annulment decision and request a stay of enforcement by providing security.
2.2 Removal of the Objection
If the creditor holds the documents listed in Articles 68 and 68/a of the EBL, it may, in addition to bringing an action for annulment of the objection, also apply for removal of the objection. To do so, the creditor must apply to the enforcement court for removal of the objection within a peremptory period of six months from the date on which the objection was served on it. In essence, the provision of the removal procedure alongside the annulment action stems from the aim of ensuring the speed and simplicity sought by enforcement without judgment. Indeed, the fact that an action for annulment of the objection takes longer than the removal procedure, and that the creditor’s recovery of its receivable is consequently delayed, is a possibility that should not be overlooked.
Final Removal of the Objection
If the person named as debtor has objected to the debt, the creditor may apply for the final removal of the objection. Following the enforcement court’s assessment:
- If the request is rejected, the proceedings do not continue. If the rejection is based on grounds relating to the merits, the creditor is ordered, upon the debtor’s request, to pay compensation of not less than twenty percent of the receivable.
- If the request is accepted, the objection is removed and the proceedings continue. If the acceptance is based on grounds relating to the merits, the debtor is ordered, upon the creditor’s request, to pay compensation of not less than twenty percent of the receivable.
Provisional Removal of the Objection
If the person named as debtor has objected to the signature, the creditor may apply for the provisional removal of the objection. In that case, the court will examine whether the signature on the ordinary instrument subject to the proceedings belongs to the debtor. Following the enforcement court’s assessment:
- If the request is rejected, the proceedings do not continue. Upon the debtor’s request, the creditor is ordered to pay compensation of not less than twenty percent of the receivable.
- If the request is accepted, the court rules on the provisional removal of the objection and the proceedings continue. Upon the creditor’s request, the debtor is ordered to pay compensation of not less than twenty percent of the receivable. In addition, the enforcement court imposes on the debtor an administrative fine of ten percent of the receivable. To prevent the provisional removal from becoming final, the debtor may bring an action for release from the debt within seven days of service of the provisional removal decision. Otherwise, the provisional attachment imposed by the provisional removal decision becomes final.
3 Objection Procedure in Attachment Proceedings Specific to Negotiable Instruments
The person named as debtor in the payment order must submit their objections to the payment order issued under Article 168 of the EBL in writing to the enforcement court within five days of its service. It should be underlined that, under Article 169 of the EBL, in attachment proceedings specific to negotiable instruments, an objection to the debt or to the signature does not stay any enforcement step other than the sale. However, under Articles 169/a-2 and 170/2 of the EBL, the enforcement court is empowered, at its discretion and if it considers the objection to be serious, to order the provisional stay of the proceedings as an interim measure until a decision on the merits of the objection is rendered.
3.1 Objection to the Debt in Proceedings Specific to Negotiable Instruments
All objections other than an objection to the signature are regarded as objections to the debt, and pursuant to Article 168/5 of the EBL the person named as debtor in the payment order submits their objections that they are not indebted, together with the grounds, by written petition to the enforcement court within five days of service of the payment order.
Article 169/a-1 of the EBL provides: “The judge shall accept the objection if, following the hearing, it is proven by an official document or a document whose signature has been acknowledged that the debt does not exist, has been extinguished or has been deferred.” Accordingly, objections that the debt does not exist, has been deferred or has been extinguished can only be proven by an official document or a document whose signature has been acknowledged by the creditor. If the creditor denies the signature on the document submitted by the alleged debtor, following its assessment the enforcement court will proceed as follows:
- If it concludes that the signature belongs to the creditor, it accepts the objection of the person named as debtor and imposes on the creditor a fine of ten percent of the amount stated in the document. As also stated in Article 169/a-3 of the EBL, if the creditor or its attorney fails to appear at the hearing to which they were summoned, provided that this consequence was stated in the summons, the enforcement court provisionally stays the proceedings for the part of the receivable objected to. In that case, the creditor applies to the enforcement court within six months of the stay decision to prove that the signature on the document submitted by the alleged debtor is not its own; if it proves this, the enforcement court orders the continuation of the proceedings and also imposes on the debtor a fine of ten percent of the amount stated in the document.
An objection of limitation raised by the person named as debtor is, as also provided in Article 169/a-4 of the EBL, examined by reference to the date on the instrument. If the creditor claims that the limitation period has been interrupted or suspended, it must prove this only by an official document or a document whose signature has been acknowledged by the debtor. Following its assessment, the court will proceed as follows:
- If it finds the objection of the person named as debtor justified, it accepts the objection; the proceedings are stayed and, once the decision becomes final, the proceedings are cancelled. It should be noted that it is the proceedings, not the instrument itself, that are cancelled. Where the objection is accepted on grounds relating to the merits, the creditor found to have acted in bad faith or with gross negligence is ordered, upon the debtor’s request, to pay compensation of not less than twenty percent of the receivable pursued.
- If it concludes that the debtor’s objection is unjustified, it rejects the objection and the proceedings continue. If the proceedings had previously been provisionally stayed, the debtor is ordered, upon the creditor’s request, to pay compensation of not less than twenty percent of the receivable pursued.
3.2 Objection to the Signature in Proceedings Specific to Negotiable Instruments
Pursuant to Article 168/4 of the EBL, the alleged debtor submits their objection that the signature on the instrument subject to the proceedings is not theirs separately and explicitly, by written petition to the enforcement court, within five days of service of the payment order. Otherwise, the signature is deemed to belong to the person named as debtor.
Following its assessment of the objection to the signature, the court will proceed as follows:
- If it concludes that the signature does not belong to the debtor, it accepts the objection and, upon acceptance, the proceedings are stayed. In such a case, under Article 170/3 of the EBL, the creditor’s right to bring an action under the general provisions is reserved. If the court finds that the creditor acted in bad faith or with gross negligence in initiating proceedings on the instrument, the creditor is ordered to pay compensation of not less than twenty percent of the receivable pursued and a fine of ten percent.
- If it concludes that the signature belongs to the debtor, it rejects the objection; any provisional stay ordered earlier under Article 170/2 of the EBL is lifted and the proceedings continue. In addition, if the proceedings had been provisionally stayed following the objection, the enforcement court imposes on the debtor denial compensation of not less than twenty percent of the receivable pursued and a fine of ten percent.
3.3 Complaint in Proceedings Specific to Negotiable Instruments
Articles 16, 17 and 18 of the EBL govern the complaint procedure in general. Article 16 of the EBL reads: “Except for matters whose resolution the law leaves to the court, a complaint may be filed with the enforcement court against acts of the enforcement and bankruptcy offices on the ground that they are contrary to law or not appropriate to the circumstances. The complaint shall be made within seven days of the date on which such acts became known. A complaint may be filed at any time on the ground that a right has not been performed or has been delayed without reason.” A complaint is not an action, but a legal remedy available to the parties to the enforcement proceedings or to other persons with a legal interest. A complaint filed with the enforcement court does not stay the enforcement proceedings.
The complaint procedure is also supported by specific provisions of the EBL in respect of proceedings specific to negotiable instruments. Pursuant to Article 168 of the EBL, where a creditor holding a negotiable instrument applies to the enforcement office, the enforcement officer must examine whether the document submitted qualifies as a negotiable instrument and whether it has fallen due. Accordingly, if the debtor on whom the payment order has been served claims that the instrument on which the proceedings are based does not qualify as a negotiable instrument, they must file a complaint with the enforcement court within five days.
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