Civil asset recovery – jurisdictional issues

Parallel proceedings

Is there any restriction on civil proceedings progressing in parallel with, or in advance of, criminal proceedings concerning the same subject matter?

There are no limitations for parallel progression of civil and criminal proceedings. Elements of civil legal liability are certainly broader than the elements of criminal legal liability. The civil court is bound by the judgment of a criminal court, and the responsibility determined by a criminal court cannot be reduced or annulled by the judgment of a civil court. Likewise, someone who is released in a criminal proceeding can be sentenced for damages and civil liability in a civil proceeding. If proceedings progress in parallel, the criminal court shall issue a procedural decision by which it shall question the victim of fraud and ascertain property claim, and the realisation of the request and claim shall instruct the civil proceeding.

Forum

In which court should proceedings be brought?

The competent court is the civil court of general jurisdiction or commercial court, depending on who the litigants are and whether natural persons or a legal entity. Likewise, it depends on the claim amount as to whether a basic civil court of general jurisdiction or a High Court of general jurisdiction is deemed competent.

Limitation

What are the time limits for starting civil court proceedings?

The initiation of civil proceedings is limited by the statute of limitations applicable to the underlying claim. However, there is no procedural statute of limitations restricting civil court proceedings, as such.

As a rule, claims that arise out of a breach of contract become time-barred after 10 years unless otherwise prescribed by law. Some specific contractual claims become time-barred after five years, commercial claims after three years and damages claims after three or five years.

Jurisdiction

In what circumstances does the civil court have jurisdiction? How can a defendant challenge jurisdiction?

Commercial courts have jurisdiction in commercial and business matters between legal entities or entrepreneurs.

Civil courts mainly have jurisdiction for contentious civil matters, court orders in non-contentious matters and court orders in matters of debt collection and bankruptcy law, as well as arbitration.

The court examines ex officio whether the procedural requirements of a claim are satisfied when it receives a court claim. A party has a right to object to the jurisdiction of the court before and at the preliminary hearing. The court must decide on any objection immediately in a written decision, or the main decision in the later stage of the hearing with a final judgment.

Civil asset recovery – procedure

Admissibility of evidence

What rules apply to the admissibility of evidence in civil proceedings?

Provisions of the Civil Procedure Code regulate the admissibility of evidence. The court rules on the admissibility by taking into consideration each item of the evidence individually and afterwards jointly putting all the evidence together in one logical and legal whole.

Witnesses

What powers are available to compel witnesses to give evidence?

If the witness who is duly summoned does not come and does not justify his or her absences, or if he or she leaves the place where he or she is to testify without authorisation or justified reason, the court may order that this witness is to be brought by force and bear the enforcement expenses. The court can also fine the witness in the amount of 10,000 to 150,000 Serbian dinars. If the witness comes to the scheduled hearing but refuses to give his or her statement without a valid reason, the court can fine the witness in the amount of 10,000 to 150,000 Serbian dinars, and if he or she still refuses, the court can fine the witness again. Concerning physical evidence, under articles 241 and 242 of the Civil procedure Code, the court may request from the defendant and a third party any documents, evidence, or both, in his or her possession. A court order can be enforceable in terms of physical enforceability with the assistance of court bailiffs, according to the Law on Enforcement and Security. Likewise, the court may fine any person who does not present a document upon court order.

Publicly available information

What sources of information about assets are publicly available?

Many open public registries do not require permission to check and use data, such as the register of companies (the Business Entities Register), the intellectual property register, the civil registry, the real-estate cadastre, mortgage registers and the Register of Pledges. There are registers where data is public but cannot be accessed directly except through authorised persons, such as the register of shares where all data can be accessed through an authorised broker. Additionally, there is a register of addresses and identification numbers of natural persons, and a vehicle register, which is managed by the police, who will present that data at the request of the authorities.

Cooperation with law enforcement agencies

Can information and evidence be obtained from law enforcement and regulatory agencies for use in civil proceedings?

All evidence, including evidence obtained by law enforcement, can be used in civil proceedings without exception. This raises the question of whether law enforcement agencies are willing to cooperate with private persons and exchange evidence. Cooperation is successful if it does not interfere with the pre-investigation, investigation or criminal proceeding. From the moment that the prosecutor takes over the case from the police department and issues the indictment, the counsel of the victims can obtain all evidence without exception. Assessment of whether cooperation would interfere with proceedings and the stages of proceedings falls solely to the law enforcement authorities.

Third-party disclosure

How can information be obtained from third parties not suspected of wrongdoing?

In general, under articles 241 and 242 of the Civil Procedure Code, documents in their possession may be requested from defendants and third parties. Those decisions can be enforceable. The court may fine a person who does not present a document at the court’s request.

 Bank secrecy in the legal system

Bank secrecy rules are regulated by the Law on Banks (Official Herald of RS, Nos. 107/2005, 91/2010 and 14/2015). The Law on Banks defines bank secrets under article 46 and prescribes that they shall be considered as business secrets and that the following shall be considered as bank secrets:

  • data that is known to a bank and refers to personal data, financial status and transactions, as well as ownership or business relations of the clients of that bank or another bank;
  • data on balance and transactions on individual deposit accounts; and
  • other data that the bank has become aware of in the course of performing business activities with clients.

 

The Law on Banks prescribes that the following shall not be considered as a bank secret:

  • public data and data accessible from other sources to interested persons with legitimate interest;
  • consolidated data based on the identity of an individual client is not disclosed;
  • data on bank shareholders and the amount of their participation in the bank share capital, and data on other persons holding a share in the bank and the data on that share, regardless of whether they are bank clients; and
  • data related to a client fulfilling its obligations towards the bank in good time.

 

The Law on Banks prescribes several exceptions to the obligation to guard bank secrets. The obligation to guard bank secrets shall not apply if the data is disclosed as follows:

  • based on the decision or request of the competent court;
  • for the needs of the Ministry of Internal Affairs, which is the authority responsible for combating organised crime and preventing money laundering, according to the regulations;
  • in connection with property proceedings, based on a request by the guardian of the property or the consular representative offices of foreign states, upon submission of written documents that prove the legitimate interest of these persons;
  • in the case of execution by the competent authority regarding the property of the bank’s client;
  • to regulatory authorities to perform activities within their field of competence;
  • to a person established by banks to collect data on the total amount and type of, and timeliness in fulfilling, obligations of individuals and legal entities that are clients of the bank;
  • to a competent authority concerning supervising payment system operations of legal entities and individuals conducting their activities, in compliance with payment system regulation;
  • to the tax administration under regulations on activities within its field of competence;
  • to the authority competent for the supervision of foreign currency operations;
  • upon the request of the organisation for deposit insurance, in compliance with the law that governs deposit insurance; or
  • to a foreign regulatory authority under the conditions stipulated in the memorandum of understanding concluded between the foreign regulatory authority and the National Bank of Serbia.

 

Except for the provisions specified above, a bank has the right to disclose data that represents bank secrets to the investigative judge, public prosecutor and courts or other public and legal authoritative bodies, solely for the protection of its rights in compliance with the law.

Civil asset recovery – remedies and relief

Non-compliance with court orders

How do courts punish failure to comply with court orders?

Under articles 241 and 242 of the Civil Procedure Code, the court may request from the defendant and a third party any documents in their possession. A court order can be enforceable in terms of physical enforceability with the assistance of court bailiffs, according to the law that regulates enforcement procedure. Likewise, the court may fine any person who does not present a document upon a court order. The latest amendments to the Criminal Code have made non-compliance with a court decision a criminal offence punishable by a prison sentence.

Obtaining evidence from other jurisdictions

How can information be obtained through courts in other jurisdictions to assist in the civil proceedings?

Rogatory rules are the governing rules in respect of international legal assistance and aid. A letter rogatory, or letter of request, is a formal request from a court to a foreign court for some type of judicial assistance. The most common remedies sought by letters rogatory are the service of process and taking of evidence.

Serbian courts seek international aid and assistance by international agreements or treaties on assistance and aid that Serbia has entered into with other countries.

Unless otherwise stipulated by an international agreement, requests of a domestic court for legal aid are submitted to foreign courts through diplomatic channels. The applications and attachments must be written in the language of the relevant country or officially translated into that language.

Assisting courts in other jurisdictions

What assistance will the civil court give in connection with civil asset recovery proceedings in other jurisdictions?

Under the Civil Procedure Code, Serbian courts are obliged to secure and provide legal aid to foreign courts in cases determined by international agreements and where there is reciprocity in providing legal aid. If there is doubt concerning reciprocity, the Ministry of Justice shall give an expert opinion.

Courts provide legal aid to foreign courts in compliance with Serbia’s national laws. An action requested by a foreign court may also be performed as the foreign court requires and under foreign proceeding regulations, but only if this is not contrary to the laws of Serbia.

The Civil Procedure Code prescribes that if it is not otherwise stipulated by an international agreement, courts shall proceed upon the request of a foreign court for legal aid only if those requests are submitted through diplomatic channels and if the application and attachments are in the Serbian language or officially translated into Serbian.

Causes of action

What are the main causes of action in civil asset recovery cases, and do they include proprietary claims?

The main causes in civil asset recovery cases are fraud, fraudulent transfer, breach of contract, debts, statutory causes, proprietary claims, damage cases including loss of profit, directors’ and officers’ misappropriation of company funds, and fraudulent misrepresentation including the sale of the company at an inflated or underestimated price.

Remedies

What remedies are available in a civil recovery action?

In a civil recovery action, restitution, damages, an account of profits, actio pauliana and monetary compensation (if restitution is not possible) are available.

Judgment without full trial

Can a victim obtain a judgment without the need for a full trial?

If the court finds that the basis of the lawsuit is uncontested it may issue a partial judgment by which it decides on the merits of the claim. If the defendant does not respond to the lawsuit, the court then renders a judgment on the grounds of absence. If the defendant does not appear at the preparatory hearing, the court may render a judgment adopting the claim owing to non-appearance. However, even the judgment cannot be executed automatically because the defendant has a right to appeal.

Post-judgment relief

What post-judgment relief is available to successful claimants?

The successful claimant of a monetary claim can launch debt collection proceedings from all the debtor’s accounts and assets. In the enforcement procedure, it is possible to seek and gain a temporary measure.

Temporary measures in legislation are regulated in both criminal and civil proceedings by the Law on Enforcement and Security (Official Herald of RS, Nos. 106/2015, 106/2016, 113/2017 – authentic interpretation, and No. 54/2019).

A temporary measure may be ordered before, or in the course of, a court (both in civil and criminal proceedings as well as in an enforcement proceeding) or administrative proceeding, as well as after the termination of such a proceeding, until the enforcement proceeding is conducted.

Enforcement

What methods of enforcement are available?

The enforcement procedure is regulated by the Law on Enforcement and Security (Official Herald of RS, Nos. 106/2015, 106/2016, 113/2017 – authentic interpretation and No. 54/2019).

An enforcement procedure is initiated by a motion of enforcement submitted by the enforcement creditor before a competent court (before first instance courts of general jurisdiction or commercial courts considering parties in the proceeding). The execution procedure may be initiated by submitting a motion for enforcement based on executive titles (eg, final and enforceable court judgments, decisions and settlements) or authentic documents (eg, invoices, bills, bills of exchange or cheques, business book excerpts and bank guarantees).

When submitting a motion for enforcement, a judgment creditor must propose the means and object by which the enforcement proceeding shall be conducted. The court may, during the enforcement proceeding, at the request of the judgment creditor or debtor, designate a means or object of enforcement other than that proposed or determined.

Objects of an enforcement proceeding are things and rights on which enforcement of a claim may be carried out (eg, money, funds in bank accounts, movable and immovable property) and how enforcement proceedings may be conducted are enforcement actions used to enforce a claim under the law (eg, sale of chattels, sale of immovable property and transfer of monetary claim).

This kind of procedure is urgent and the court acts rapidly in proceedings for enforcement. The court shall decide on a motion of enforcement within eight days of filing a motion to the court.

If the motion for enforcement is based on authentic documents, when the court issues the decision on enforcement, the judgment debtor may challenge this decision by objecting within eight days of receipt of the enforcement decision.

If the motion for enforcement is based on executive titles when the court issues the decision on enforcement, the judgment debtor may challenge this decision by appealing within eight days from the receipt of the enforcement decision.

Objection and appeal postpone the enforcement procedure only when it is prescribed by the law.

 Enforcement of foreign executive title

If the enforcement creditor’s motion to enforce is based on a foreign executive title, he or she must submit the original or a certified copy, translated into the language that is in official use in the court, together with proof of the finality and enforceability under the law of the country of the executive title.

A foreign executive title previously recognised by the domestic court under the law shall be enforced in the same manner and procedure as applicable to the enforcement of domestic executive titles. An enforcement creditor may initiate an enforcement procedure before a competent court in Serbia based on of a foreign executive title that has not previously been recognised by the domestic court. When the motion to enforce has been filed based on a foreign executive title that has not been recognised, the court shall decide on the recognition of that document as a preliminary matter.

Funding and costs

What funding arrangements are available to parties contemplating or involved in litigation and do the courts have any powers to manage the overall cost of that litigation?

Parties finance cases in a dispute themselves. The source of financing of parties varies. Besides their funds, it is possible for parties to sell or transfer in whole or in part their claim from the litigation, or to obtain funds for conducting litigation, which is less common. More commonly, parties that cannot pay for a lawyer sign a success fee agreement no higher than 30 per cent of the claim, and thus finance the dispute. Companies that finance disputes as their main business activity are not active in the legal market. Apart from a possible contracting success fee and an hourly fee, there is an official lawyer’s tariff. When the court renders a judgment and obliges the losing party to reimburse the costs of the successful party, the fee amount is determined solely by the current lawyer’s tariff, which is very low compared with an hourly fee and success fee.

Law stated date

Correct on:

Give the date on which the above content is accurate

31 July 2020.

Non-compliance with court orders

How do courts punish failure to comply with court orders?

Under articles 241 and 242 of the Civil Procedure Code, the court may request from the defendant and a third party any documents in their possession. A court order can be enforceable in terms of physical enforceability with the assistance of court bailiffs, according to the law that regulates enforcement procedure. Likewise, the court may fine any person who does not present a document upon a court order. The latest amendments to the Criminal Code have made non-compliance with a court decision a criminal offence punishable by a prison sentence.