Objection to Debt and Removal of Objection (EBL) — Process and Consequences

A debtor's objection to a payment order in enforcement proceedings is the most fundamental legal defence tool that causes the proceedings to stop. Upon the debtor's objection, the creditor must resort to either an action for annulment of objection or removal of objection in order to continue the proceedings. The Enforcement and Bankruptcy Law No. 2004 (EBL) regulates the process of objection to debt and removal of objection in detail under Articles 62-72. This article comprehensively examines types of objection, differences between objection to debt and objection to signature, action for annulment of objection, definitive and provisional removal of objection, wrongful enforcement compensation and action for release from debt.

What Is Objection to Debt and How Is It Made?

Objection to debt is the debtor's assertion against the payment order sent to them in enforcement proceedings that the debt does not exist, its amount is incorrect, it is not yet due, or that the debt cannot be claimed for other legal reasons. Objection to debt is regulated under EBL Art. 62 and must be made within 7 days of service of the payment order in non-judgment enforcement through general attachment.

The objection to debt is made in writing or verbally to the enforcement office conducting the proceedings. In case of verbal objection, the enforcement officer prepares a report. No grounds need to be stated for the objection to be valid; the debtor may make a valid objection by simply stating "I have no debt." However, in partial objection, the amount objected to must be clearly stated (EBL Art. 62/4); otherwise, the objection is deemed not to have been made.

The grounds that may be raised in objection to debt are not limited. The debtor may raise the following grounds for objection: that the debt never arose, that the debt has been fully or partially paid (satisfaction), that the debt has become time-barred, that the debt is not yet due (has not matured), that there is an opportunity for set-off, that the contract is invalid, that the debt has been extinguished (release, novation, merger, etc.), and jurisdictional objection.

Jurisdictional objection differs in nature from objection to debt but is raised together in practice. The debtor may raise a jurisdictional objection by claiming that the enforcement office lacks jurisdiction (EBL Art. 50). In a jurisdictional objection, the debtor must clearly indicate the competent enforcement office; otherwise, the jurisdictional objection is deemed invalid.

What Is Objection to Signature and How Does It Differ from Objection to Debt?

Objection to signature is the debtor's claim that the signature on the ordinary promissory note forming the basis of the proceedings does not belong to them (EBL Art. 62/5). Objection to signature is only relevant in proceedings based on ordinary promissory notes; objection to signature is not possible for instruments drawn up or certified by a notary public.

The main differences between objection to signature and objection to debt are as follows: First, objection to signature must be made explicitly and separately; the debtor must clearly state in the objection petition that the signature does not belong to them. If objection to signature is not explicitly made, the debtor is deemed to have accepted the signature on the instrument. Second, in objection to signature, the burden of proof is distributed differently at the stage of removal of objection. Third, if the objection to signature is rejected, the debtor is sentenced to compensation of at least 20% of the claim.

The debtor may raise objection to debt and objection to signature together. For example, the debtor may object to both signature and debt by stating "the signature on the instrument does not belong to me; moreover, I have no such debt." In this case, the objection to signature is examined first; if the signature is found to belong to the debtor, the objection to debt is evaluated.

Do Proceedings Stop as a Result of Objection?

Yes, the enforcement proceedings automatically stop upon the debtor's objection made within the time limit (EBL Art. 66). The stoppage of proceedings means that the creditor cannot continue with attachment, sale and other enforcement actions. The objection provides temporary legal protection, and the objection must be eliminated for the creditor to continue the proceedings.

There are two ways to continue proceedings that have stopped due to objection: action for annulment of objection (EBL Art. 67) and removal of objection (EBL Art. 68-68/a). These two procedures have different conditions, time limits and consequences. The creditor must evaluate which procedure is appropriate for their situation and make their choice.

Provisional attachment orders made before the objection do not lapse with the objection. The provisional attachment remains valid until it becomes a definitive attachment. However, since the proceedings have stopped due to the objection, the conversion of provisional attachment to definitive attachment is only possible upon elimination of the objection.

What Is an Action for Annulment of Objection and What Are Its Conditions? (EBL Art. 67)

An action for annulment of objection is a performance action in which the creditor proves in general courts that the debtor's objection is unjustified, aims to eliminate the objection and continue the proceedings (EBL Art. 67). This action must be filed within 1 year of service of the objection on the creditor; otherwise, the proceedings lapse but the right to the claim does not expire.

The conditions for an action for annulment of objection are: the existence of valid enforcement proceedings, the debtor having objected within the time limit, the action being filed within 1 year of service of the objection, and the action being filed in the competent court. The competent court is determined according to the type of claim: the commercial court of first instance for commercial claims, the consumer court for consumer transactions, the labour court for employment law claims, and the civil court of first instance for other claims.

In an action for annulment of objection, the burden of proof lies, as a rule, with the creditor. The creditor may prove the existence and amount of the claim with all types of evidence: written documents (contracts, invoices, delivery notes), bank records, witness testimony, expert reports, site inspections and oath evidence may be used.

The court may render three different decisions as a result of the proceedings: First, it may decide to annul the objection; in this case, the proceedings continue from where they left off and the creditor may request attachment. Second, partial acceptance of the action; the court may decide that part of the claim has been proven and order partial annulment of the objection. Third, rejection of the action; in this case, the objection remains valid and the proceedings remain stopped.

What Is Wrongful Enforcement Compensation and When Is It Awarded? (EBL Art. 67/2)

Wrongful enforcement compensation is the compensation, in an amount not less than twenty percent (20%) of the claim, that the debtor must pay to the creditor when it is determined in an action for annulment of objection that the debtor's objection was unjustified (EBL Art. 67/2). Wrongful enforcement compensation has a deterrent function and aims to prevent unjustified objections.

The following conditions must coexist for wrongful enforcement compensation to be awarded: the creditor must have filed an action for annulment of objection (requesting wrongful enforcement compensation through the removal of objection procedure is evaluated separately), the action must have been decided in favour of the creditor, the claim must be liquid (specific or determinable), and the creditor must have requested wrongful enforcement compensation in the statement of claim or during the proceedings.

Liquidity (specificity) requirement: A claim being liquid means that the amount of the claim is specific or can be determined through a simple calculation. Invoice receivables, instrument receivables, credit card debts, bank loans and rent receivables are generally accepted as liquid claims. However, compensation claims, tort claims and claims requiring complex calculations may not be considered liquid.

The Court of Cassation has developed extensive case law on wrongful enforcement compensation. According to the Court of Cassation, wrongful enforcement compensation is not awarded for non-liquid claims. Additionally, if part of the claim is liquid and part is not, wrongful enforcement compensation may only be awarded for the liquid portion.

What Is Bad Faith Compensation? (EBL Art. 67/2, Art. 72)

Bad faith compensation is the compensation, in an amount not less than twenty percent (20%) of the claim, that the debtor may claim from the creditor when it is determined that the creditor initiated enforcement proceedings unjustly or persisted in the proceedings knowing or when they should have known that they had no claim.

For bad faith compensation to be awarded, the debtor must explicitly request it. If the action for annulment of objection is rejected and the debtor has requested bad faith compensation in the proceedings, the court evaluates whether the creditor acted in bad faith. If the creditor's bad faith is established, bad faith compensation of at least 20% of the claim is awarded.

Bad faith compensation and wrongful enforcement compensation are counterparts: wrongful enforcement compensation targets the debtor who made an unjustified objection, while bad faith compensation targets the creditor who initiated unjust proceedings. Both types of compensation guide the parties toward acting honestly and aim to deter unjustified applications.

What Is Removal of Objection and What Are Its Types? (EBL Art. 68-68/a)

Removal of objection is the legal procedure in which the creditor, when in possession of one of the documents listed in EBL Art. 68, applies to the enforcement court requesting the removal of the debtor's objection and continuation of the proceedings. Removal of objection offers a faster solution than an action for annulment of objection but requires the existence of specific documents. Removal of objection is divided into two types: definitive removal and provisional removal.

Definitive Removal of Objection (EBL Art. 68): The creditor may request definitive removal of objection when in possession of one of the following documents: an ordinary promissory note with an acknowledged signature, a promissory note with a signature certified by a notary public, documents issued by official departments or competent authorities within their authority and in accordance with procedure, an acknowledgment of debt made by the debtor before official departments or officers, and documents issued by credit institutions and their account summaries (those not objected to by the debtor within the time limit).

In definitive removal of objection, the creditor must apply to the enforcement court within 6 months of service of the objection. This period is of a preclusive nature; if the period is missed, the creditor cannot resort to this procedure but may file an action for annulment of objection (within the 1-year period). The enforcement court examines the application through a hearing and renders its decision.

If definitive removal of objection is ordered, the debtor is sentenced to compensation of at least 20% of the claim amount (EBL Art. 68/7). The debtor may file an appeal against this decision, but the appeal does not automatically suspend enforcement actions; the debtor must provide security for suspension of enforcement.

Provisional Removal of Objection (EBL Art. 68/a): Provisional removal of objection is only relevant in proceedings based on ordinary promissory notes and in cases where the debtor has objected to the signature. The creditor may request provisional removal of objection from the enforcement court by claiming that the debtor's objection to the signature is unjustified.

The enforcement court evaluates whether the signature on the instrument belongs to the debtor by having a signature examination conducted. An expert report is obtained for the signature examination; the expert compares the signature on the instrument with signature samples that are definitively the debtor's handiwork. If the court concludes that the signature belongs to the debtor, it orders provisional removal of objection.

The provisional removal decision, unlike the definitive removal decision, grants the debtor an additional defence right: the debtor may file an action for release from debt within 7 days of service of the provisional removal decision (EBL Art. 69). An action for release from debt is an action filed in general courts in which the debtor proves that no debt exists.

What Is an Action for Release from Debt? (EBL Art. 69)

An action for release from debt is an action filed by the debtor in general courts following a provisional removal of objection decision, aiming to prove that no debt exists (EBL Art. 69). This action may only be filed against a provisional removal decision; an action for release from debt cannot be filed against a definitive removal decision.

The period for filing an action for release from debt is 7 days from service of the provisional removal decision on the debtor. This period is of a preclusive nature; if the action is not filed within 7 days, the provisional removal decision becomes final and the proceedings continue. The debtor must deposit security of no less than fifteen percent (15%) of the claim when filing the action (EBL Art. 69/2).

In an action for release from debt, the burden of proof lies with the debtor. The debtor may prove that no debt exists, that the debt has been paid, has become time-barred, or that the instrument is without consideration, with all types of evidence. If the court decides to accept the action, the proceedings are cancelled and the debtor may claim compensation. If the action is rejected, the debtor is sentenced to compensation of at least 20% of the claim.

Differences Between Action for Annulment of Objection and Removal of Objection

Although the action for annulment of objection and removal of objection serve the same purpose (eliminating the objection and continuing the proceedings), they differ from each other in many respects.

Which procedure the creditor chooses depends on the documents in their possession, the amount of the claim and time pressure. If the creditor possesses one of the documents listed in EBL Art. 68, the removal of objection procedure will yield faster results. Otherwise, an action for annulment of objection must be filed.

Points the Debtor Should Pay Attention to During the Objection Process

The most critical point the debtor should pay attention to during the objection process is compliance with the objection period. If the 7-day period in non-judgment enforcement through general attachment or the 5-day period in proceedings for negotiable instruments is missed, the proceedings become final and attachment may be applied to the debtor's assets.

Whether the objection is to the debt or to the signature must be clearly stated in the objection petition. If objection to the signature is not made explicitly and separately, the debtor is deemed to have accepted the signature on the instrument. This aggravates the debtor's burden of proof in the future.

In partial objection, the amount objected to must be clearly specified. Indefinite partial objections (such as "I object to part of my debt") are deemed invalid and the debtor is treated as if no objection was made (EBL Art. 62/4).

It is recommended that the debtor also prepare the evidence in their possession together with the objection. Having receipts, bank statements or other written documents proving that the debt has been paid is critically important for the debtor to be able to mount a defence in the action for annulment of objection or at the removal of objection stage.

Points the Creditor Should Pay Attention to During the Objection Process

The most important point the creditor should pay attention to during the objection process is correctly determining the date of service of the objection and complying with time limits. The 1-year period for the action for annulment of objection and the 6-month period for removal of objection are of a preclusive nature.

It is of great importance for the creditor to correctly evaluate the documents in their possession and select the appropriate legal procedure. A creditor who possesses one of the documents listed in EBL Art. 68 may resort to both removal of objection and annulment of objection; however, removal of objection will yield faster results.

The creditor must clearly state the request for wrongful enforcement compensation in the statement of claim or during the proceedings. Compensation that has not been requested is not awarded by the court ex officio. Additionally, the liquidity condition of the claim must be observed; requests for wrongful enforcement compensation will be rejected for non-liquid claims.

The creditor cannot use the action for annulment of objection and the removal of objection procedure simultaneously. A creditor who chooses one cannot resort to the other. However, if the removal of objection request is rejected, the creditor may file an action for annulment of objection if the time conditions are met.

Removal and Annulment of Objection Practice in Light of Court of Cassation Precedents

The Court of Cassation has developed a comprehensive body of precedent on removal and annulment of objection. According to the Court of Cassation's settled case law, for wrongful enforcement compensation to be awarded, the claim must be liquid; compensation is not awarded in cases where the court determines the claim as a result of proceedings.

The Court of Cassation states that the documents listed in EBL Art. 68 are numerus clausus (exhaustive). Removal of objection requests based on documents other than those listed are rejected. For example, removal of objection cannot be requested based on a written document other than an ordinary promissory note (correspondence not containing an acknowledgment of debt, etc.).

In partial objection, the Court of Cassation requires the debtor to clearly state the amount objected to and treats indefinite partial objections as if no objection was made. This case law clearly demonstrates that the debtor must be careful in partial objection.

In examining objections to signature, the Court of Cassation acts sensitively regarding the competence of the signature expert and orders the reversal of decisions based on insufficient examination. It emphasises that the signature examination must be conducted by comparing the signature with multiple signature samples that are the debtor's handiwork.

Final note: This content is for general informational purposes and does not constitute legal advice. It is recommended that you seek professional support from a lawyer for your specific legal issues.