The overall reform of the Austrian enforcement law ("GREx"). An approaching milestone after decades – Part 2

With the public announcement in the Austrian Federal Law Gazette of 14 May 2021, the overall reform of enforcement law ("GREx") has now successfully passed through all stages of the Austrian legislative process, with much political approval. It will enter into force on 1 July 2021. The main objective of this reform is to make the enforcement procedure more efficient. In addition to the concentration of jurisdiction mentioned in our first part, this is characterised by the collection of claims in packages.

1. The enforcement packages

Up to now, when filing an application to enforce monetary claims, the creditor needed to specify the specific claims or the respective objects of enforcement. However, the assets in question are often unknown. From 1 July 2021 on, this will be facilitated by so-called enforcement packages.

The creditor will then have the option of enforcing on individual objects or claims of enforcement, or to make use of the new enforcement packages. Likewise, they can waive certain objects. If, however, the creditor does not name any claims in the application for enforcement, the simple enforcement package will automatically be deemed to have been applied for.

1.1 The simple enforcement package

In case of enforcements against employed persons, creditors often apply for enforcement upon moveable goods pursuant to Section 249 GREx, enforcement on salary, and the creation of a list of realisable objects. Taking this into account, Section 19(2) GREx now combines these claims as a simple enforcement package.

1.2 The extended enforcement package

Contrary to the above, the extended enforcement package pursuant to Section 20 GREx requires an explicit application by the creditor. It supplements the simple enforcement package by all further cases of enforcement on receivables and enforcement on property rights. So, all enforcement claims on moveable property (Sections 249 to 345 GREx) and the creation of a list of realisable objects pursuant to Section 47 GREx are covered by such an application. However, there is no priority of the claims stipulated by law. This also applies to the two enforcement packages in relation to each other.

2.0 The enforcement administrator

The GREx also creates a new position – the enforcement administrator. The administrator is modelled on the forced administrator, where when applying for an extended enforcement package an administrator must be appointed by the court to carry out the enforcement.

The administrator's main tasks include the identification, selection, seizure and realisation of enforcement objects. This will make life easier for creditors, as they will no longer need to specify and designate the objects, which are often unknown to them at the time of application. These new regulations resemble the outsourcing of enforcement, especially since the administrator will largely take over the tasks of the bailiff and partly those of the court. The administrator's range of duties will therefore be more comprehensive than that of any other enforcement body. For example, he may be entitled to conclude instalment payment agreements with the debtor and will be free to choose the specific method of realisation.

In principle, any person who is independent of the parties, of good repute, reliable and competent in business may be appointed as an administrator. This may also be a legal person. The court will primarily select persons registered in the list of administrators. In any case, the administrator must have the necessary knowledge, including of enforcement law, to guarantee a speedy administration.

3.0 Other new procedural aspects

All enforcement proceedings on moveable property concerning monetary claims against a debtor are now to be combined. This concerns both the proceedings of the simple enforcement package and those of the extended enforcement package.

This will also benefit employers, as court decisions on the aggregation of emoluments, the increase and decrease of the subsistence minimum, will have an effect on all enforcement proceedings against a debtor due to the concentration of proceedings in one court, and the subsistence minimum will usually be calculated by the administrator.

Moreover, regarding enforcement on salaries, a new application for enforcement should no longer be necessary to seize new employment income in the event of a change of the debtor's employer. Instead, an application for information to be obtained from the umbrella organisation of social insurance institutions must be filed. This will considerably reduce administrative efforts for creditors and courts, particularly in view of the approximately 430,000 salary executions per year (as of 2019).

4.0 Summary

The reform of enforcement law comes with many facilitations for the creditor, particularly due to the concentration of proceedings against a debtor in one court, the reduction of necessary applications and the creation of the administrator, who takes over the determination of any objects unknown to the creditor. However, the administrator's activity also represents a cost burden for the creditor that cannot be estimated at present, as the creditor must bear the administrator's costs in advance. Likewise, the creditor must also bear the increase in court fees to compensate for the expected decline of enforcement applications in general, although in this respect the advantages of the bill will presumably far outweigh the disadvantages, especially if these costs can eventually be covered by the realisation of the debtor's assets. It remains to be seen how quickly these changes will become established among the authorities and to what extent the simplification and increase in efficiency of the enforcement proceedings sought by the GREx will eventually prove its worth in practice.

authors: Sarah Rosenthaler and Eva Wirleitner