Banks will no longer block new amounts credited to the debtor’s accounts after a competent court decides upon the suspension of the enforcement proceedings, following recent decision of the High Court of Cassation and Justice of Romania
- Decision of the High Court under an appeal in the interest of law
The High Court of Cassation and Justice of Romania (the High Court) recently ruled[1] that after the suspension of the enforcement proceedings, the third-party garnishee must not continue to block the new amounts credited to the debtor’s account(s) after such suspension becomes effective.
The Decision has been issued under a case for an appeal in the interest of law, and aims to unify the divergent practices among the courts of Romania. The full Decision, including thus also the rationale of the High Court, has not been published yet, and will be mandatory for all Romanian courts only after its publication in the Official Gazette of Romania.
- Brief overview of Romanian garnishment proceedings and current legal context
Garnishment (in Romanian, poprire) is widely used during enforcement proceedings, being an efficient and quick tool used to block the debtor’s accounts opened with a financial institution (the third-party garnishee) and the monies standing and/or credited therein.
Currently, after the third-party garnishee receives the notice establishing the garnishment, all amounts credited to the accounts will be blocked. In the absence of clear, express legal provisions under the Romanian Code of Civil Procedure[2], practice became divergent among courts when it came to the suspension of enforcement proceedings and its effect on the garnishment procedure. Some courts considered that the third-party garnishee must continue to block all amounts credited to the garnished accounts, even after the suspension, while others suspended also the garnishment process, allowing thus the debtor to use the new monies credited after the suspension of the enforcement.
- Changes brought by the Decision
Although at this time the full rationale of the High Court is not available, pursuant to the Decision, it is no longer mandatory for a third-party garnishee to block the amounts credited to the debtor’s accounts subject to garnishment after the suspension of the enforcement proceedings. This will lead to a dual regime applicable to the monies standing to such accounts, as follows:
- funds credited prior to the suspension becoming effective will continue to be blocked, as it was currently the case; and
- funds credited after the suspension becomes effective will no longer be blocked and the debtor should be able to use them freely.
Further implications will surely derive from the underlying rationale under the Decision.
[1] Decision no. 11 / 16 April 2018 of the High Court of Cassation and Justice issued in the file no. 3547/1/2017 (the Decision).
[2] The relevant article in the Romanian Code of Civil Procedure is article 784.
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