You open your company’s mail and, among the regular business correspondence, find an enforcement order. Whether you expected it or it came as a complete surprise, one thing is certain – this is not a document that should be set aside for later.
It is not uncommon for the responsible person within a company to decide to deal with it “when they have the time,” forward it to the accounting department to determine what it is about, or assume that it is simply a mistake that will resolve itself.
However, enforcement proceedings are governed by strict procedural rules and statutory deadlines. The applicable deadlines and the procedure are governed by the Law on Enforcement and Security Interest, which is why it is essential to act within the statutory time limits. Delaying your response may therefore have serious consequences.
That does not mean, of course, that every enforcement order automatically means the creditor is right or that the debtor has no opportunity to protect its rights. On the contrary. The key is to determine immediately what type of enforcement is involved and what legal options are available.
First, Determine the Basis of the Enforcement
The first question should not be how much is allegedly owed, but rather on what legal basis the enforcement has been initiated.
Is it based on:
- a final court judgment;
- a notarized instrument;
- a bill of exchange; or
- an authentic document, such as an invoice?
The answer to this question determines the course of the proceedings and the legal remedies available to the enforcement debtor. For example, a company that receives an enforcement order based on a final court judgment is not in the same procedural position as a company against which enforcement has been initiated on the basis of an authentic document.
For that reason, the focus should not be on whether the debt is “large” or “small,” but on identifying the legal basis upon which the enforcement was initiated.
In most cases, reading only the first page of the enforcement order is not sufficient. The entire documentation should be reviewed carefully to understand the legal grounds on which the creditor is seeking compulsory enforcement.
Do Not Ignore the Deadlines
One of the most common mistakes made by businesses is delaying action after receiving an enforcement order.
The order may arrive during the holiday season, the employees responsible for handling such matters may be out of the office, the document may end up archived, or the company may decide to wait until the director returns from a business trip.
However, the statutory deadlines in enforcement proceedings do not wait for a company to organize its internal procedures. Every business should therefore have a clearly defined process for handling court documents and other official correspondence, ensuring that no important document goes unnoticed or is forwarded to the appropriate person only after the applicable deadline has expired.
Is It Possible to Challenge the Enforcement?
Many business owners believe that once they receive an enforcement order, there is nothing more they can do. Others assume that simply stating that the debt does not exist will be enough to prevent the enforcement from proceeding.
Neither assumption is entirely correct.
The possibility of challenging the enforcement depends on the type of enforcement and the legal basis on which it was initiated. In certain situations, the law provides for appropriate legal remedies. However, these must be filed within the prescribed deadline and supported by legally relevant grounds.
For that reason, it is not advisable to make uninformed decisions or rely on templates found on the internet. A course of action that is appropriate in one case may be entirely unsuitable in another.
Before Taking Any Action, Review Your Documentation
When a company receives an enforcement order, its first instinct is often to contact the creditor immediately, attempt to dispute the claim verbally, or file an objection with the public enforcement officer. Before taking any action, however, it is advisable to gather all relevant documentation.
This includes the contract, invoices, delivery notes, handover records, email correspondence, proof of payment, any complaints that may have been submitted, and any other documents relevant to understanding the legal relationship between the parties.
Quite often, these documents provide the answer to whether the claim is in fact well-founded or whether there are legitimate grounds to challenge it.
What If the Debt Is Actually Owed?
Some claims are, in fact, well-founded.
If, after reviewing the documentation, it becomes clear that the obligation exists and has become due, it may be more reasonable to consider how to settle the debt than to pursue proceedings that will only increase the costs.
Naturally, every case requires an individual assessment. In some situations, there may be room for negotiations between the parties; in others, a settlement agreement may be appropriate; and in some cases, voluntarily fulfilling the obligation without further delay may be the most practical solution.
The important thing is that such a decision should be made only after carefully assessing all the relevant circumstances. Although the applicable deadlines are short and the matter should not be ignored, there is generally no reason for hasty or ill-considered action.
What Happens If You Do Nothing?
Ignoring an enforcement order is rarely a good strategy.
If the legal remedies provided by law are not exercised within the prescribed deadlines, the enforcement proceedings will continue in accordance with the rules governing enforcement. For that reason, inaction is almost never the right approach.
Even if a company believes that the claim is unfounded, it is important to assess its legal position promptly and take the appropriate steps within the statutory deadlines.
When Is the Right Time to Involve a Lawyer?
One of the most common mistakes is consulting a lawyer only after all the relevant deadlines have expired. It is far more beneficial to seek legal advice immediately upon receiving the enforcement order.
This makes it possible to determine whether the enforcement has been initiated in accordance with the law, what legal remedies are available to the enforcement debtor, what the prospects of success are, and which strategy is the most appropriate under the circumstances.
In many cases, the first few days after receiving the enforcement order determine whether the company will be able to protect its rights in the most effective manner.
The First Four Steps After Receiving an Enforcement Order
✓ Determine the legal instrument on which the enforcement is based.
✓ Record the date on which the enforcement order was received and verify all applicable deadlines.
✓ Gather all business documentation relating to the claim.
✓ Before making any decisions, consult a lawyer or another qualified legal professional.
Frequently Asked Questions
Does receiving an enforcement order mean that the company’s bank account will be frozen immediately?
Not necessarily. The course of the proceedings depends on the legal basis of the enforcement, the nature of the claim, and the specific circumstances of the case. That is precisely why the enforcement order should be carefully reviewed as soon as it is received.
Can I contact the creditor and try to reach an agreement?
Yes. The initiation of enforcement proceedings does not prevent the parties from reaching an agreement on how the obligation will be settled. In certain cases, it may be possible to agree on deferred payment, payment by instalments, or another method of satisfying the claim. Such decisions, however, should only be made after the legal situation has been properly assessed.
Is it sufficient for the accounting department to handle the enforcement order?
Not always. The accounting department may play an important role in gathering documentation and reviewing the company’s records. However, enforcement proceedings also raise legal issues that require an analysis of the legal instrument on which the enforcement is based, the applicable deadlines, and the available legal remedies. For that reason, it is often necessary to involve a legal adviser or a lawyer.
What if we believe that the debt does not exist?
That does not mean the enforcement order should be ignored. On the contrary, it is necessary to determine the legal basis on which the enforcement has been initiated, gather the relevant documentation, and assess whether there are legal grounds to challenge the claim. Every case requires an individual assessment.
Conclusion
Receiving an enforcement order does not mean that all opportunities to protect your rights have been lost. It does, however, mean that there is no longer any room for delay.
The priority is to determine the legal basis of the enforcement, review the available documentation, and act within the statutory deadlines.
A timely legal assessment of the specific circumstances will often make it possible to choose the most appropriate business and legal strategy, whether that involves challenging the claim, negotiating with the creditor, or voluntarily fulfilling the obligation.