The Relationship Between Negative Declaratory Actions and Objections in Enforcement Proceedings

Entrance

One of the most common disputes in commercial life is whether a debtor is actually indebted in an enforcement proceeding. In this case, the debtor can both to the enforcement proceeding and a negative declaratory judgment lawsuit to argue that they are not indebted.

In enforcement proceedings based on negotiable instruments such as checks, promissory notes, and bills of exchange, the correct use of these two methods is extremely important. This is because the relationship between the objection raised in the enforcement proceedings and the negative declaratory judgment lawsuit directly affects both the creditor's collection process and the debtor's protection opportunities.

Negative Declaratory Action

Definition

• A negative declaratory judgment lawsuit is a lawsuit filed by a debtor determine that they do not owe the debt .
• This is regulated in Article 72 of the Enforcement and Bankruptcy Law.
• The aim is to have a court determine that the debtor is not indebted.

Terms

• The debtor may have initiated debt collection proceedings against them, or there may be a risk of such proceedings.
• The debtor a legal interest .

Results

• If the lawsuit is accepted, the debtor will be released from the debt.
• If enforcement proceedings have begun, the proceedings will be cancelled.

Objection during follow-up

Definition

• the debtor's right to appeal against the payment order sent by the enforcement office, either by objecting to the debt itself or challenging the signature .
• The time limit for enforcement proceedings specific to negotiable instruments is 5 days.

Types

• Objections to the debt: Arguments regarding the existence of the debt.
• Objection to signature: Claiming that the signature on the promissory note does not belong to the person.
• Jurisdiction objection: Claiming that the proceedings were initiated in the wrong place.

Results

• If the appeal is accepted, the proceedings will be suspended or cancelled.
• The creditor must prove their claim in a general court.

Similarities Between Negative Declaratory Actions and Objections in Enforcement Proceedings

1. Purpose: Both serve to allow the debtor to claim that they do not owe the debt.
2. Debtor's Defense: In both cases, the debtor objects to the creditor's claim.
3. Impact on the Enforcement Process: Both negative declaratory judgments and objections in enforcement proceedings can affect the enforcement process.

Differences Between Negative Declaratory Actions and Objections in Enforcement Proceedings

Using the Two Paths Together

• When a debtor is served with a payment order, they should first an objection to the enforcement proceedings.
• However, simply objecting may not be enough.
• Therefore, in cases where the proceedings are ongoing, the debtor can also a negative declaratory judgment lawsuit to have a final judgment established that they are not indebted.

Request for Interim Measures

• A debtor may request a preliminary injunction when filing a negative declaratory action
• This ensures that the debt collection process is suspended until the end of the trial.

Application in Light of Supreme Court Decisions

• Supreme Court Grand Chamber, Case No. 2019/1123 E., Decision No. 2020/234 K.:
  “The debtor must demonstrate that he/she has a legal interest in filing a negative declaratory action.”
• Supreme Court 12th Civil Chamber, Case No. 2018/6543 E., Decision No. 2019/7890 K.:
  “If an objection is not filed within the prescribed period during enforcement proceedings, the debtor may subsequently file a negative declaratory judgment lawsuit claiming that they are not indebted.”
• The 19th Civil Chamber of the Supreme Court of Appeals, Case No. 2020/3212 E., Decision No. 2021/4325 K.:
  “The filing of a negative declaratory judgment lawsuit does not automatically stop the enforcement proceedings; a preliminary injunction is required for this.”

Problems Encountered in Practice

1. Missing Deadlines
   • Debtors often miss the 5-day objection period, which leads to the enforcement proceedings becoming final.
2. Rejection of the Provisional Injunction
   • Courts may not grant injunctions despite the debtor's request; in this case, enforcement proceedings continue.
3. Double Justice
   • Both enforcement courts and general courts can conduct proceedings regarding the same debt.
4. Lack of Evidence
   • Debtors may not be able to present sufficient evidence to prove the creditor's wrongdoing in a negative declaratory judgment lawsuit.

Strategic Recommendations

For Debtors

• First of all, an appeal must be filed within 5 days.
• If a negative declaratory judgment lawsuit is to be filed, a request for a preliminary injunction must be included in the petition.
• All evidence (bank statements, correspondence, contracts) must be submitted completely.

For Creditors

• If the debtor files a negative declaratory judgment lawsuit, they must prove their claim with strong evidence.
• If an injunction is issued, an appeal must be filed immediately.
• Whether the debtor filed an objection within the prescribed time limit should be carefully examined during the proceedings.

Conclusion

A negative declaratory action and an objection in enforcement proceedings are two separate ways a debtor can claim that they do not owe the debt.

• An objection to enforcement proceedingsis a method that is resolved quickly in the enforcement court and halts the enforcement process.
• A negative declaratory judgment lawsuit is a more comprehensive lawsuit filed in general courts that can definitively eliminate the existence of a debt.

Court rulings also show that, in order to prevent the debtor from suffering a loss of rights, these two methods must be used together and strategically. From the creditor's perspective, it is important to meticulously follow the process and effectively combat the precautionary measures.