INTRODUCTION

The seventh amendment to the Law on Enforcement Proceedings (Law) in the Federation of Bosnia and Herzegovina (FBiH) has been adopted and published in the  Official Gazette of FBiH no. 46/16 on 15 June 2016. It entered into force the following day, i.e.16 June 2016.

The amendments are related to:

  • exemption from the enforcement of securities and shares owned by FBiH, its cantons, cities, and municipalities;
  • setting the minimum threshold of the budget position of the FBiH and its cantons, cities, and municipalities for payments under the final and binding decisions;
  • restriction of selling of real property without limitation of the lowest price at the third auction.

OVERVIEW OF THE AMENDMENTS

Exemption from enforcement

Under the latest amendment, the Law exempts the legal entities' shares and securities owned by FBiH, cantons, cities and municipalities from enforcement, which prevents the courts from continuing ongoing enforcement proceedings over such assets and prohibits initiation of new enforcement proceedings over such assets. Therefore, the enforcement proceedings initiated over aforementioned assets will be terminated, if the enforcement creditor does not change the asset to be enforced.

Budget planning for enforcement of court judgments

The amendment reintroduces an obligation for FBiH, cantons, cities and municipalities to plan into their budgets an amount of at least 0.3% of their total budget for their settlement through enforcement  proceedings if final and binding court  decisions have been issued against them. The similar provision was in force until 2012 when it was deleted from the law, and these governmental bodies were not obliged to plan into their budgets the positions for settlement of final and binding court decisions, preventing thousands of creditors from achieving the settlement of their claims due to the very extensive protection of the FBiH, cantons, cities and municipalities (exemption from enforcement now includes not only governmental  authorities'  real  property  and movables used for performance of their functions, but also their shares and securities).

Third public auction

Before the latest amendments to the Law, it was possible to sell the debtor's real property at its third public auction without any limitation on its minimum price compared to the property's appraised value. The new amendment regulates that the sale of the property without limitation of the minimum price is allowed only with prior approval for such sale from the FBiH Tax Authority. If the FBiH Tax Authority declines to approve the sale, in that case, the FBiH Tax Authority has to provide to the court the real sale price of the property, for which the property can be sold at the third auction. It is still unclear which potential  consequences  can  be  expected  in  practice  and  what  their  extent  might  be (e.g. implementation mechanism of the third public auction, method of property value assessment, cost allocation, authorization to file a request, and so forth).