In modern times and business we witness\nvarious cases involving debtors’ intent to defraud\ncreditors, i.e. different attempts\nof debtors to avoid fulfilment of obligations towards creditors. Experience\nshowed that insolvent debtors often try to avoid debts towards creditors. Our\nlegislation does not provide the safest protection of creditors in these\nsituations however one of the actions used to prevent the debtor\u2019s fraudulent\naction (used even since ancient Rome) is challenging\ndebtor’s fraudulent action.<\/p>\n\n\n\n
Challenging\ndebtor’s fraudulent action is an action which to\nour legal practice was developed on the basis of the German legislation and actually\nwas introduced through the Austrian codification, and thus from the German\nlegal terminology. Even the Roman law was familiar with challenging the\ndebtor’s fraudulent action or Actio Pauliana.<\/p>\n\n\n\n
Challenging\ndebtor’s fraudulent action is\ngoverned by the Contract Law where every defrauded creditor of outstanding claim may file a legal claim before the\ncourt against the debtor’s fraudulent action if the same have been made with\nintent to defraud the creditor i.e. the creditor shall require the court to\ndetermine that the debtor’s action is without legal effect to the extent that\nis required to settle the debt towards the creditor. The creditor is entitled to\nexercise this right regardless of whether his financial claim arose before or\nafter the debtor\u2019s fraudulent action. Creditor as an initiator of Actio\nPauliana address his request against the third party, involved in the\nfraudulent transfer. In this situation the third party is an opponent to the\ncreditor’s legal claim.<\/p>\n\n\n\n
Challenging\ndebtor’s fraudulent action was known\neven in Roman law under the name Actio Pauliana. In fact, challenging the\ndebtor\u2019s fraudulent action i.e. Actio Pauliana entitle creditors that with an\nintention to collect its outstanding financial claims may, under certain\nconditions, rescind fraudulent transfer and other fraudulent actions of their\ninsolvent debtors. The purpose is to protect creditors from unscrupulous and\nnegligent debtors.<\/p>\n\n\n\n
Actio Pauliana as a\nlegal action appears in two situations: in the bankruptcy and out of the\nbankruptcy. The Law on Obligations regulates only those cases when bankruptcy is\nnot initiated. The purpose of Actio Pauliana with regard of out of the\nbankruptcy cases is to settle one of the defrauded creditors in a way to\ndeclare the fraudulent action as null and void but only for the amount\nnecessary for the settlement of the financial claims of that very creditor.<\/p>\n\n\n\n
Actio Pauliana may be directed towards:\ncontracts, quasi-contracts, unilateral declarations\nof intent, factual actions, omissions, simulated legal transactions and illegal\nactivities.<\/p>\n\n\n\n
When the debtor’s action includes two separate\nlegal documents, then for challenging of the entire debtor’s fraudulent action\nit would be sufficient that any of these legal documents can be challenged\n(modus acquirendi<\/em> and iustus titulus<\/em>).<\/p>\n\n\n\n Debtor’s fraudulent action is always\nindividual and related to a particular creditor and for a designated debt. However,\nif the creditor would like to collect several debts and in order to settle all it\nwould be sufficient to exercise Actio Pauliana for only one debtor’s action, the\ncreditor still has to submit legal claims for each debt regardless of challenging\nonly one debtor’s legal action.<\/p>\n\n\n\n For successful exercise of Actio Pauliana it is necessary to meet the\ngeneral and special requirements in a way that the general requirements have to\nbe cumulatively fulfilled while for the specific requirements it would be sufficient\nto fulfil any of the alternative requirements.<\/p>\n\n\n\n General\nrequirements for challenging maturity of creditor’s financial claims are: the\ndebtor’s <\/p>\n\n\n\n insolvency and the debtor’s fraudulent action\ntaken to\nthe detriment of the creditor.\nSpecial <\/p>\n\n\n\n requirements\nare contained in four types of Actio Pauliana: Actio Pauliana dolosa, Actio<\/em><\/p>\n\n\n\n Pauliana culposa, Actio Pauliana familliaria\nand Actio Quasi Pauliana.<\/em><\/p>\n\n\n\n Filing Action\nPauliana dolosa<\/em> is possible in cases where the debtor deliberately has taken legal action to the detriment of the creditor. In this sense, the Law of Obligations under Article\n281, paragraph 1, stipulates that “the debtor was aware” of the\ndamage caused to the creditor. Except for the debtor’s intention to damage the creditor\nthere should be other elements. First of all it should be based on the paid\ntransfer of the debtor’s property (contract for a fee) and\nexistence of awareness of the damage caused to the creditor at the time of\ntaking the action. The creditor must file Action\nPauliana dolosa<\/em> within one year of the legal action taken by the debtor, or\nfrom the date when was supposed to take the omitted action.<\/p>\n\n\n\n To file Action\nPauliana culposa <\/em>it is necessary that it relates to the paid transfer of\nthe debtor’s property (contract for a fee) to\nthe detriment of thecreditor, and\nthat at the time of fraudulent transfer the debtor was not aware that by doing\nso shall cause damage to the creditor but still could have known if acted\nprudently. The deadline for submitting Action\nPauliana culposa <\/em>is one year of the legal action taken by the debtor, or\nfrom the date when was supposed to take the omitted action.<\/p>\n\n\n\n The Law of Obligations has allowed to the\ncreditor an alternative use of the right dolosa or culposa, or even a\ncombination of these elements in the sense that the creditor can use it in a\nway that from one legal claim can take one and from the other legal claim can\ntake another element. In this case the Law of Obligations improved the position\nof creditors.<\/p>\n\n\n\n In cases where the debtor has taken a\nfraudulent transfer in favour of his marital partner or any other member of the\nimmediate family, it is reasonably supposed that such an action was taken to the detriment of the creditor\nespecially if there are no sufficient other assets from which the creditor\ncould be settled. This fraudulent action of the debtor may be challenged with Actio Pauliana familliaria<\/em> under certain\nconditions. As with the previous two, the first condition is that the opponent of\nchallenging (the third party) has acquired debtor’s property on the basis of the\npaid transfer of the debtor’s property (contract for a fee). The second\ncondition is that the debtor’s fraudulent action was made in favour of the\ndebtor’s marital partner or blood relativesin the direct line of descent, collateral\nrelative up to the fourth degree or in-laws to the\nsame degree.<\/p>\n\n\n\n Actio Quasi\nPauliana<\/em> understands challenging a fraudulent transfer of\ndebtor’s assets without payment but to the detriment of the creditor. If the\ndebtor with the fraudulent transfer without any payment is becoming insolvent\nand therefore unable to meet any obligations to the creditors, then it is\nassumed that the debtor and the third party were aware that it is an action to\nthe detriment of the creditor. This assumption cannot be challenged (iuris et de iure).<\/em><\/p>\n\n\n\n In order to be successful in Actio\nQuasi Pauliana<\/em> the creditor must prove the fraudulent transfer was made without\npayment and the legal claim has to be filed within three years of fraudulent\ntransfer, or from the date when was supposed to\ntake the omitted action.<\/p>\n\n\n\n A fraudulent transfer without any payment includes contract of gift,\nwaiving an inheritance, forgiveness of debt, interest-free loan, assumption of debt and the like. However, creditors\ncannot challenge three specific types of contract of gift such as the customary\nappropriate gifts, award gifts and gifts made out of gratitude.<\/p>\n\n\n\n Finally it is important to mention that there\nare certain dilemmas in exercising Actio Pauliana. The first dilemma is who should\nbe sued. There is no doubt that the third party should have the role of the defendant,\nbut it is questionable whether the debtor also has to be sued. Opinions on this\nissue are quite divided. Some believe that only the third party should be\nconsidered as the defendant, or his legal successors instead, and that the\ndebtor should not be sued because the debtor is already insolvent. However,\nothers are of opinion that in addition to suing the third party should also be\nsued the debtor, because in the condemnatory part of the legal claim, as a\nrule, there is a declaration of the debt, and determining the existence of a debt\nmay be addressed only to the debtor. <\/p>\n\n\n\n We\nbelieve that the second opinion is more accurate\nand that in addition to the third party should be sued the debtor, because in\nthe course of the court proceedings it should be necessary that the debtor\nbecomes aware that with the fraudulent action the creditor was damaged, but\nagain it can be established only if the debtor is also considered as the\ndefendant.<\/p>\n\n\n\n It often happens i.e. there are situations\nthat creditors choose wrong method of legal protection, in a way that: 1. They seek nullification of the contract entered by the debtor\nat the creditor’s expense; 2. They file a legal claim to challenge the debtor’s\nactions even though their settlement is possible or not even difficult since\ndespite the debtor’s transfer of some property to third party, there is still other\nproperty owned by the debtor; 3. They file a legal claim to challenge the\ndebtor’s action, even if there is no any financial claim against the debtor.<\/p>\n\n\n\n Actio Pauliana has extremely great importance, not only for creditors, but also for legal security in general which is already jeopardized in many ways. The purpose of Actio Pauliana is not to declare the debtor’s action as invalid towards all parties, but only towards the creditor that challenge the same but only to the extent necessary for settlement of that particular creditor.<\/p>\n\n\n\n Author: Zeljko Vlacic<\/p>\n\n\n\n E-mail: zeljko@afsajic.com<\/p>\n","protected":false},"excerpt":{"rendered":" In modern times and business we witness various cases involving debtors’ intent to defraud creditors, i.e. different attempts of debtors to avoid fulfilment of…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[91,89],"tags":[],"_links":{"self":[{"href":"https:\/\/advokatskafirmasajic.com\/blog\/wp-json\/wp\/v2\/posts\/835"}],"collection":[{"href":"https:\/\/advokatskafirmasajic.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advokatskafirmasajic.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advokatskafirmasajic.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/advokatskafirmasajic.com\/blog\/wp-json\/wp\/v2\/comments?post=835"}],"version-history":[{"count":1,"href":"https:\/\/advokatskafirmasajic.com\/blog\/wp-json\/wp\/v2\/posts\/835\/revisions"}],"predecessor-version":[{"id":836,"href":"https:\/\/advokatskafirmasajic.com\/blog\/wp-json\/wp\/v2\/posts\/835\/revisions\/836"}],"wp:attachment":[{"href":"https:\/\/advokatskafirmasajic.com\/blog\/wp-json\/wp\/v2\/media?parent=835"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advokatskafirmasajic.com\/blog\/wp-json\/wp\/v2\/categories?post=835"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advokatskafirmasajic.com\/blog\/wp-json\/wp\/v2\/tags?post=835"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nThe creditor is not obliged to prove awareness\nof the debtor and the third party about the damage cause\nto the creditor. The burden of proof is on the opposite side. Actio Pauliana familliaria<\/em> must be filed\nwithin three years of the legal action taken by the debtor, or from the date\nwhen was supposed to take the omitted action.<\/p>\n\n\n\n