An extremely important decision from the country's highest court was handed down just a few days ago. A decision that finally gives borrowers and their lawyers an additional weapon to cancel with their appeals, payment orders and auctions when they are carried out not by banks but by management companies, the so-called funds.
It is extremely difficult to explain in simple, understandable and few words what the funds have been doing wrong all this time and now with this decision of the Supreme Court their actions to auction properties can be annulled.
Everybody knows that the banks have sold the loans, especially the red loans, to foreign companies. These companies have given the right to manage these loans to CEPAL, INTRUM, etc., which are known to all of us and are based in Greece, also known as funds.
The legislative framework and the provisions invoked by the funds to represent the companies that have purchased the loans from the Greek banks are not the right one and therefore they are not entitled to actively exercise these actions even to represent them in court.
More specifically, there are two legislative frameworks for these companies, which apply in parallel. One is from 2003 and the other from 2015. The provisions of Law no. 4354/2015 relate exclusively to red loans, and this law was created during the period of the economic crisis in Greece. In this law a very specific, special legalization is created, under which funds are legalized to perform procedural acts instead of the beneficiary of the claim, i.e. the foreign company that has taken the loans from the Greek bank.
The delegation of management to the fund is made by a specific contract under the terms of article 2 §§ 1-3 of Law 4354/2015, on the basis of which the latter acquires the status of «non-beneficiary or non-debtor party» with solemn wording. In this case and with the existence of this agreement, the funds can proceed with any act even to file pleadings, attend the courts to claim the debts, apply for payment orders, proceed with enforcement acts and of course with auction acts on behalf of the companies they represent.
On the other hand, the provisions of Law no. 3156/2003 generally concern loan arrangements. In paragraph 14 of Article 10 of Law 3156/2003, it becomes clear that the companies provided for therein act as administrators on behalf of the companies holding the loans, (at that time there were no foreign companies but Greek banks). We are referring to a time before the financial crisis), without attributing to them the specific status of «non-beneficiary or non-accountable party», even if indirectly, so that as a non-beneficiary party, they can bring actions and other remedies before the courts for the rights of the foreign company.
Law 3156/2003 does not give the funds the legal capacity to bring any action, application or other legal remedy before any court, but only regulates the terms and manner in which debtors can settle their debts out of court, with the aim of collecting these claims from the debtors and on behalf of the companies holding the loans.
Therefore, during the hearing of the specific appeal, Intrum wished to appear in court on behalf of the foreign bank to which the loans had been transferred.
The SC held that Intrum's intervention is inadmissible in the absence of legal standing, because the only person entitled to exercise additional independent intervention in favour of the Greek Bank is the foreign company as the beneficiary of the claim at issue, i.e. the debt.
More specifically, INTRUM is the administrator of claims from loans of a Greek bank where the debts have become overdue and have been terminated by the bank. The bank, at some point, transferred those receivables to a foreign company which entrusted INTRUM with their management.
The CA held that INTRUM could not seek the discharge of the debt on behalf of the foreign company because the legal framework under which it was legalised, i.e. it was instructed by the foreign company to sell it, is based on Law no. 3156/2003 and does not confer on it the status of an exceptionally legalised party (non beneficiary) as is the case with the management companies of Law 4354/2015 in Article 2 § 4 thereof.
The provisions of Law 4354/2015 cannot be applied by analogy to the management companies of Law 3165/2003, because the management company of Law 3156/2003 undertakes the management of the claims without having been designated by law as a «non-beneficiary, exceptionally legal party’. This means in practice that it is not legally entitled to perform procedural acts on behalf of the company's principal, nor can the contract between them and the granting of power of attorney cover this lack of capacity.
What this means in practice for debtors:
It means that it increases the chances and possibilities to annul all procedural acts in which the funds have been represented and not the banks or foreign companies.
That is, payment orders, seizure reports and auction procedures, with appropriate objections each time. Appeals may be lodged in the case of first instance decisions rejecting the application if the time limit has been missed. Appeals may be lodged if the second instance has also been lost.
What needs to be made clear and understood is that the road is opening up again and anyone who has already gone down the legal route should speak directly to their lawyer to see how they can take advantage of the new circumstances. Those who have not taken legal action so far should consult a lawyer immediately, because this legal issue is very serious and important and is examined at every stage, in every procedure and even ex officio by the court.
Important also: This decision is not automatically applicable in all cases. It does not automatically apply automatically. It cannot be done otherwise. That is, the debtors will have to get involved in court each for their debt. Otherwise the auction will take place and the asset will be lost.
Another important thing: The Supreme Court is the highest Greek court. It is common for lower courts to follow its decisions in legal matters and adopt its legal assertions. However, this is not absolute. Judges from the Magistrate's Court to the Supreme Court can have their own legal judgment and issue a different decision. But the majority certainly identifies with the decisions of the Supreme Court.
By Anastasia Miliou, attorney at law
ANASTASIA CHR. APPLE
I'M GOING TO BE A LAWYER.
Ave. 403 Mesogeion Avenue, Agia Paraskevi, Agia Paraskevi
Tel. 6945-028153, 213-0338950
e-mail: natmil@otenet.gr
www.legalaction.gr, fb: Anastasia Miliou
Author of the article:
Attorney at Law & Attorney-at-Law & Attorney-at-Law
Ave. 403 Mesogeion Street, Agia Paraskevi, Agia Paraskevi, Attica
Tel. 6945-028153, 213-0338950
e-mail: natmil@otenet.gr, info@legalaction.gr
www.legalaction.gr
