Objecting to a Payment Order — Time Limit, Procedure and Consequences

In ordinary attachment proceedings the period for objecting to a payment order is seven days; in bill-of-exchange and other types of proceedings both the period and the authority to which the objection is made differ. We examine the procedure for objecting, objections to the debt and to the signature, and the consequences for the enforcement proceedings.

The payment order sent to the debtor is one of the basic steps in enforcement proceedings. By objecting within the time limit, the debtor can bring the proceedings to a halt. Enforcement and Bankruptcy Law no. 2004 regulates in detail the right to object to a payment order and the consequences of doing so. This article examines the types of payment order, the period for objecting, the procedure, the differences between an objection to the debt and an objection to the signature, the action to set aside an objection, the lifting of an objection, and the consequences as to damages.

What Is a Payment Order and What Types Are There?

The period and the authority for making an application vary with the type of proceedings. In ordinary attachment proceedings without a judgment, the debtor faces payment or objection within seven days of service of the payment order. In the attachment procedure specific to bills of exchange, there are five days for objections to the debt and the signature and for certain complaints, and ten days for payment.

In proceedings based on a judgment the debtor must as a rule comply with the judgment within the period stated in the enforcement order; the route of objecting to the debt available in proceedings without a judgment does not exist. Applications such as limitation of the judgment, postponement of enforcement, discharge and grant of time are subject to special provisions. Payment orders for rent and for public claims also carry different periods, so the heading and the basis of the document must be examined.

A payment order in ordinary attachment proceedings must state the claim and its accessories, the underlying document, and the warnings as to payment and objection. A payment order specific to a bill of exchange states the type of instrument and the special routes of application; proceedings based on a judgment carry an enforcement order relating to the execution of the judgment. Because proceedings for rent claims, eviction and the realisation of a pledge also involve special forms and warnings, the period should not be calculated merely by looking at the heading “payment order”.

How Many Days Are There to Object to a Payment Order?

In ordinary attachment proceedings without a judgment, the debtor may object to the enforcement office within seven days of due service of the payment order (Enforcement and Bankruptcy Law art. 62). If the period is missed the proceedings become final; but where there was an impediment without fault, the conditions and the special three-day period for a late objection under art. 65 may be examined.

Where service was irregular, under art. 32 of the Notification Law the date of knowledge stated by the addressee may be treated as the date of service; correction of that date is sought by way of complaint. Where service was never effected or irregularity is alleged, the date of finality should not be fixed without examining the service documents in the file.

In the attachment procedure specific to bills of exchange, an objection to the debt or to the signature is as a rule made to the enforcement court within five days; the period for payment is ten days. In proceedings based on a judgment there is no route of objecting to the debt as in ordinary proceedings without a judgment. If the last day of the period falls on an official holiday, art. 19 of the Enforcement and Bankruptcy Law applies.

How Is an Objection to a Payment Order Made?

In ordinary attachment proceedings the objection is made orally or in writing to the enforcement office conducting the proceedings. Under art. 62 it may be submitted to any enforcement office and forwarded to the office conducting the proceedings; the necessary costs must be paid. If only part of the debt is objected to, the amount must be clearly stated, and if the signature on an ordinary document is denied, that must be stated separately and expressly.

An objection to the enforcement office's venue must be made together with the objection to the debt within the seven-day period, and the office alleged to have venue must be identified. Irregular service is not disregarded in every case; under art. 32 of the Notification Law the date of knowledge may be treated as the date of service, and correction of that date is sought by way of complaint. A late objection is subject to the requirement of an impediment without fault and the special three-day period in art. 65.

In bill-of-exchange proceedings an objection to the debt or to the signature is made to the enforcement court within five days and does not automatically halt all enforcement steps as it does in ordinary attachment proceedings.

The objection petition must state the debtor's identity details, the file number of the proceedings, the subject of the objection (whether it is to the debt or to the signature) and any grounds relied on. The objection may be made by attending the enforcement office in person or electronically through the UYAP system. Where the objection is made orally, the enforcement director draws up a record which takes the place of an objection petition.

In ordinary attachment proceedings it is as a rule not obligatory to give reasons for an objection; but a denial of signature, an objection to venue and a partial objection must be written clearly and specifically. Where only part of the debt is objected to and the disputed amount is not stated, the objection may have no effect as to that part. The date and registration number of the application should be kept, and where it is forwarded through another enforcement office, the costs must be paid within the period.

What Is the Difference Between an Objection to the Debt and an Objection to the Signature?

An objection to the debt raises defences that the debt never arose, has been discharged, is time-barred or is of a different amount; an objection to the signature asserts that the signature on the ordinary document underlying the proceedings is not the debtor's. If the signature on an ordinary document is not expressly denied, it is deemed admitted for the purposes of the proceedings.

The evidential force of a document drawn up by a notary and that of an instrument whose signature has been certified by a notary are not the same concept. It cannot be said that an official document or a certified signature can never be challenged; an allegation of forgery is raised by the special procedure in the Code of Civil Procedure. The enforcement court's narrow review must be distinguished from an action for forgery in the ordinary courts.

In the provisional lifting of an objection to the signature, expert examination and signature specimens suitable for comparison are used. The judicial fine and damages attached to an unjustified objection to the signature are subject to the statutory conditions; they do not apply automatically on every dismissal.

In an objection to the debt the debtor may assert that the debt never arose, has been paid, is time-barred, is capable of set-off, or is not yet due. In an objection to the debt the burden of proof in the action to set aside the objection lies on the creditor, who must prove the existence and amount of the claim.

Does an Objection Halt the Proceedings?

Yes: on a timely objection by the debtor the enforcement proceedings are automatically halted (Enforcement and Bankruptcy Law art. 66). This means the creditor cannot proceed with attachment and sale; to continue, the creditor must apply to have the objection lifted or set aside. The halting of the proceedings is an important protective mechanism for the debtor. Once the objection is made, the enforcement office may take no step to attach the debtor's property, may not attach their salary and may not freeze their bank accounts. Orders of provisional attachment made before the objection, however, remain valid.

There are two routes by which the creditor may continue halted proceedings: an action to set aside the objection (art. 67) or an application to have the objection lifted (art. 68). Unless the creditor takes one of these routes, the proceedings remain halted. The creditor may bring an action to set aside the objection within 1 year of service of the objection, or apply to have the objection lifted within 6 months.

The halting of the proceedings is the consequence of a timely objection in ordinary attachment proceedings. An objection to the debt or to the signature in bill-of-exchange proceedings does not automatically halt steps other than the sale; the court may order a provisional stay on the statutory conditions. Provisional attachment applied before the objection is not the same as definitive attachment, and the effect of the objection on a provisional attachment is examined together with the relevant order and the applicable periods.

How Is an Action to Set Aside an Objection Brought and What Are Its Conditions?

An action to set aside an objection is an action for performance brought by the creditor in the court of general jurisdiction in order to continue proceedings halted by an objection. If the one-year period in art. 67 is missed, the possibility of continuing those proceedings by that route comes to an end; if the substantive claim exists, it may form the subject of a separate action within the general limitation period.

Jurisdiction in an action to set aside an objection is determined by the legal relationship underlying the claim. The competent court may differ in commercial, consumer, employment, tenancy and general debt relationships. Venue is examined under art. 50 of the Enforcement and Bankruptcy Law, the general and special venue rules of the Code of Civil Procedure and any valid venue agreement; it is not confined to the defendant's place of residence.

Whether compulsory mediation applies according to the nature of the dispute must also be checked before proceedings are brought. Special provisions may apply to commercial monetary claims, consumer disputes, employee or employer claims and the tenancy disputes listed in the statute; mediation is not compulsory in every action to set aside an objection for one and the same reason.

In the action the creditor proves the arising and the amount of the claim. Whether invoices, delivery notes, bank records, commercial books, witnesses or expert evidence may be used is determined by the Code of Civil Procedure's rules on proof by document and on evidence and by whether the transaction is commercial or a consumer transaction; it should not be said that a creditor may prove any legal transaction by witnesses without limitation.

A finding in an action to set aside an objection that the debtor's objection was unjustified does not on its own give rise to damages for denial in enforcement in every file. In addition to the conditions of a request and of unjustifiedness in art. 67/2, the claim must be determinable by the debtor, that is, liquid; the amount awarded may not be less than the minimum of twenty per cent laid down in the statute.

How Does the Lifting of an Objection Work?

If the creditor relies on a document of the kind listed in art. 68, they may ask the enforcement court to lift the objection definitively within six months of the objection being served on them. An ordinary document whose signature has been admitted, an instrument whose signature has been certified by a notary, and the official documents or credit institution documents specified in the statute are subject to a narrow and special review; not every invoice or unilateral account record opens this route.

Where the signature is expressly denied, the provisional lifting procedure and signature examination in art. 68/a apply. The enforcement court's decision does not constitute res judicata in the substantive sense; the debtor or the creditor may bring proceedings in the ordinary courts on the statutory conditions.

On an order lifting the objection, the proceedings continue. Damages under art. 68/7 require a request by the party and the statutory conditions; the lifting of a debtor's objection does not in every case automatically give rise to twenty per cent damages.

Definitive lifting rests on a document of the limited kind specified in art. 68; provisional lifting rests on the express denial of a signature on an ordinary document. The enforcement court does not examine the whole underlying relationship with unlimited evidence as an ordinary court would. After provisional lifting, an action for release from the debt, and after definitive lifting, the routes of a negative declaratory action or an action for recovery, may arise with their own periods and conditions.

What Are Damages for Denial in Enforcement and Damages for Bad Faith?

Where an action to set aside an objection succeeds for the creditor, the debtor's objection was unjustified and the claim is liquid, damages for denial in enforcement of not less than twenty per cent of the claim arise on the creditor's request. The liquidity of a claim relates to its being determinate or determinable by the debtor alone; not every invoice or bank claim is automatically liquid.

Where the proceedings were unjustified and the creditor acted in bad faith, damages for bad faith may be awarded on the debtor's request. The mere dismissal of the action does not prove bad faith. Damages in the route of lifting an objection are likewise subject to the special conditions as to request and decision in arts. 68 and 68/a.

What Should Be Borne in Mind When Objecting to a Payment Order?

The most critical matter is observing the time limit; if the 7-day period is missed, the proceedings become final and the debtor's property may be attached. It is vital that the debtor calculate the period correctly, check the date of service and object in time.

The objection petition must clearly state whether the objection is to the debt or to the signature. If an objection to the signature is not made separately and expressly, the debtor is deemed to have accepted the signature on the instrument (art. 62/5). The debtor must therefore identify the type of objection correctly.

In a partial objection the amount objected to must be clearly stated. Vague objections such as “I object to part of my debt” are treated as invalid and the debtor is regarded as not having objected at all (art. 62/4). A precise figure must therefore be given in a partial objection.

It will be useful for the debtor to set out their reasons in as much detail as possible when objecting, in order to prepare a defence for any subsequent action to set aside the objection. Documenting the date of service of the payment order and the date of the objection (the registration number of the objection petition, the UYAP record and the like) also makes proof easier in any dispute.

If the objection is made through a representative, the authority to represent and the power of attorney must be shown in the file. The consequence of not submitting the power of attorney at the outset should not be expressed as “the objection is definitively invalid” without considering the subsequent completion of the act of representation and the provisions on defects in enforcement procedure. In an electronic application, the secure signature and UYAP authorisation are also checked.

Irregular service and late objection must not be confused. The first concerns the unlawfulness of the act of service and the date of knowledge; the second, an impediment without fault and the special period following the removal of that impediment. The content of the objection does not in every case exhaust all substantive defences in any later action; but specific statements as to the signature, venue and partial debt must be made in time.

How Is the Practice on Objections to Payment Orders Shaped by the Case Law?

The type of payment order, the validity of service, the authority to which the objection is made and the scope of the intention to object are assessed together. In ordinary attachment proceedings a timely objection to the debt made to the enforcement office halts the proceedings; in an objection to venue the office alleged to have venue must be identified, in a partial objection the amount objected to must be clearly stated, and a denial of the signature on an ordinary document must be written separately.

Irregular service, late objection and applications in bill-of-exchange proceedings are subject to different institutions and periods. The type of application and its period must be determined by examining the service documents and the basis of the proceedings.

Official sources: Enforcement and Bankruptcy Law no. 2004, Notification Law no. 7201, Code of Civil Procedure no. 6100