It has been more than two years since the introduction of private bailiffs system in Ukraine. So it has been enough time to assess the results of the implemented reform. Apparently, certain legal issues remain unresolved. Significant number of court decisions remains unenforced in Ukraine. At the same time, number of enforced court decisions has increased from 5% to 18% for the first year following introduction of private bailiff service (i.e. in 2017). These statistics were provided by Pavlo Petrenko, Minister of Justice, in his interview to Interfax – Ukraine, which was published on the official website of the Ministry of Justice of Ukraine. An article by Serhii Shkliar, Deputy Minister of Justice, related to issues of bailiff service was published on the official website of the Ministry of Justice of Ukraine in May 2018. The article provides that only 83% of all the enforcement documents completed by private bailiffs in 2017 were fully enforced.
Though the idea of a mixed system of court decision enforcement has been criticized and concerns have been raised that private bailiffs might turn into collectors, today we can state that the biggest concerns have not come true. However, progress achieved in enforcing court decisions due to this reform is significant and impressive. Unfortunately, as of the date of this article (January 2019), no statistical data on percentage of closed enforcement proceedings as a result of enforcement was published in 2018; there is no statistical data on the number of decisions enforced by private bailiffs, as well. However, based on my observations as an attorney, positive trend of 2017 remains in place.
Cooperation with private bailiffs is usually more efficient comparing to cooperation with the state bailiffs service. It sometimes so happen that actions a state bailiff performs for months, a private one completes in a day and a recoverer and his/her representative can receive a report by e-mail by the evening. Such immediacy is a pleasant surprise and encourages to turn to a private bailiff next time for court decisions enforcement rather that state bailiffs service.
The results of private bailiffs institute introduction are so considerable that this reform is one of the most successful reforms carried out in Ukraine. It is thanks to this reform that we managed not only to get the issue of judicial protection effectiveness rolling, but also to create a new prestigious legal profession.
Competitive environment of the market contributes to constant self-improvement of private bailiffs, search for and introduction of efficient procedures, quality service provision and quick restoration of violated rights. In addition, pursuant to chain reaction laws, legal consciousness of citizens undergoes positive changes. We can observe an increase in percentage of voluntary court decisions execution. Since in the face of inevitability of court decision enforcement, proceedings delaying becomes a disadvantage for a debtor.
Surely, there is a number of imperfections, the elimination of which would increase an efficiency of private bailiffs activity. However, taking into account positive changes induced by this institute, they are not even to be called shortcomings, but rather necessary and promising directions of further improvement of the system.
Firstly, unlike state bailiffs, the private ones cannot form working groups.‑ Part 1 Art. 25 of the Law of Ukraine «On Enforcement Proceedings» stipulates that should there be circumstances complicating the decision enforcement, or in case of enforcing consolidated enforcement proceedings, enforcement groups may be formed in the bodies of state bailiffs service. As regards private bailiffs, the current legislation of Ukraine provides for no such option. Despite the fact that the expediency of forming enforcement groups arises rather not often, my colleagues and I have already faced forced sale of many assets of a debtor located in almost all regions of Ukraine. A private bailiff would not be physically able to even inventory all the assets in less than a month.
In continuation of the described situation, it should be noted that it is impossible in the private bailiffs’ system to give assignments when, for example, you need to contact a colleague to conduct enforcement activities in another region. At the same time, para. 2 part 5 Art. 24 of the Law of Ukraine «On Enforcement Proceedings» provides for such an option for the state bailiffs service.
Secondly, there is a significant difference in the administrative appeal of actions of a private bailiff and state bailiff. While an illegal order of a state bailiff may be appealed to head of a state bailiffs service department and canceled by him/her, an order decision of a private bailiff may be canceled only by court. At the same time, court proceedings are longer than the administrative proceedings.
Of course, the activity of a private bailiff is not unsupervised. Should he/she violate statutory regulations, he/she may be prosecuted by the Disciplinary Commission of Private Bailiffs. However, a relevant disciplinary commission has no authority to cancel unlawful decisions of a private bailiff.
Thus, as regards the appeal against actions and inaction of a person enforcing a court decision, parties to enforcement proceedings enforced by a private bailiff are in a less fortunate position than parties to proceedings enforced by the state bailiffs service.
Furthermore, there is no information exchange system between state and private bailiffs in Ukraine. As a result, private and state bailiffs often perform identical actions aimed at tracing and selling property of the same debtor. For example, if the same car was traced by both state and private bailiffs, they may simultaneously order an appraisal of such a car. It results in additional extra costs to be reimbursed by the debtor. Moreover, if state bailiffs service is handling several enforcement proceedings, filing by a recoverer of another enforcement document puts him/her in a disadvantage, since recoverers’ claims are satisfied in the order of priority. In this case, it is more advantageous for a recoverer to apply to a private bailiff, who is handling only one enforcement document concerning such a debtor.
There is also a controversial practice of paying an enforcement fee by a debtor if the enforcement document was first transferred to the state bailiffs service and then to a private bailiff. In accordance with part 2 Art. 27 of the Law of Ukraine «On Enforcement Proceedings», enforcement fee of 10% of the amount to be collected by enforcement or returned is charged by a state bailiff, or of the value of debtor’s property to be transferred to a recoverer under an enforcement document, the child support debt.
According to part 8 Art. 27 of the Law of Ukraine «On Enforcement Proceedings», when transferring an enforcement document from the state bailiffs service to a private bailiff, no enforcement fee shall be charged, unless it was charged at the time of the transfer. However, in practice, state bailiffs make an order not to transfer an enforcement document to a private bailiff (which would exempt a debtor from enforcement fee), but an order to return the enforcement document to a recoverer upon his/her application. After a private bailiff has enforced a court decision, debtor will have to pay the remuneration to a private bailiff and enforcement fee (de facto a double amount of 10% of the recovered amount).
However, the security of private bailiffs is currently of the highest concern. Quite often, private bailiffs face threats or even physical assault. In particular, in December 2018, private bailiffs Kateryna Shmidt posted on a Facebook that her office and she personally had been attacked by a group of unknown persons of about 10 people. By using physical force, threats and moral coercion, they demanded that the private bailiff immediately perform enforcement actions aimed at lifting the attachment from debtors’ property and funds under a document that was absent from the Register of Court Decisions. According to Kateryna Shmidt, an information attack on disseminating false information on the Internet with the aim to harm her business reputation and humiliate honour and dignity was exerted on her as an instrument of pressure and influence.
The private bailiff was attacked on 04/10/2018 in Novomoskovsk, Dnipropertovsk Region, while she was leaving the debtor’s place of registration, by ruling dated 16/10/2018 in case No. 183/6175/18 contained in the Unified State Register of Court Decisions. An unknown man threatened to physically assault her, took an ax and swung at the private bailiff. Fortunately, nobody got hurt.
Of course, it is quite common when private bailiffs face pressure and even physical assault. Currently, no effective system of protecting persons enforcing court decisions is in place in Ukraine. It appears that this issue cannot be fully resolved at the legislative level. The Criminal Code of Ukraine already contains Art. 343 (interference with the activity of an employee of the state bailiffs service, a private bailiff), Art. 347 (deliberate destruction or damage to property of an employee of a state bailiffs service or a private bailiff) and Art. 350 (threat or violence against an official). However, the fact that these articles exist does not make the bailiff’s profession any safer. Ideas are expressed about the necessity to develop an association and private bailiffs’ self-governance, as well as to establish a common organization that would have the resources to respond promptly to situations threatening the life and health of bailiffs. Unfortunately, the police do not perform such functions efficiently.
Summing up the foregoing, it may be argued that «fresh blood» in the court decision enforcement system ensured motivation function and turned the system around. Further steps are necessary to support “equilibrium” of the legal status, and powers of private and state bailiffs, develop an information exchange system and ensure safety when performing professional functions.
Igor Bagnyuk, associate, dispute resolution, exclusively for «Yurydychna Gazeta».