This article analyzes a legal collision related to the enforcement of judicial acts on securing claims within enforcement proceedings. It examines the problem of the correlation between the termination of enforcement proceedings and the continued effect of interim (security) measures, as well as the limits of the powers of enforcement officers to modify such measures. Based on the provisions of the Civil Procedure Code of the Republic of Kazakhstan, the Law of the Republic of Kazakhstan “On Enforcement Proceedings and the Status of Enforcement Officers,” and judicial practice, the article substantiates the necessity of legislative clarification of this legal institution.

1. Introduction

The Law of the Republic of Kazakhstan “On Enforcement Proceedings and the Status of Enforcement Officers” was adopted on April 2, 2010 and has been amended repeatedly in order to improve the effectiveness of the enforcement of judicial acts and the protection of the rights of participants in enforcement proceedings. Until October 31, 2015, the Law on Enforcement Proceedings did not regulate the possibility of initiating enforcement proceedings on the basis of a ruling on securing a claim. By the Law of the Republic of Kazakhstan “On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Improving the System of Administration of Justice” dated October 31, 2015, it was introduced that court rulings on securing a claim or on отмена securing a claim constitute enforcement documents. The same regulatory act supplemented Article 63 of the Law on Enforcement Proceedings with paragraph 4, according to which, when enforcing a ruling on securing a claim, the enforcement officer, depending on the claims asserted, imposes a seizure on all property or on a part thereof proportionate to the claimed amount.

Since 2015, no amendments have been adopted to the Law on Enforcement Proceedings regulating the legal relations of the parties to enforcement proceedings when enforcing judicial acts on securing a claim or cancelling security measures. Despite this, in practice a significant number of issues continue to arise directly related to the application of this provision. Due to the absence of clear and detailed regulation at the legislative level, many nuances and unresolved aspects remain, which are effectively transferred to the courts for resolution, resulting in heterogeneous law enforcement practice.

In this article, it is proposed to highlight two problems that the IPLC team encounters in law enforcement practice arising within enforcement proceedings: (1) the correlation between the principle of proportionality of security measures and the procedure for terminating enforcement proceedings when enforcing judicial acts on securing a claim; (2) the limits of the discretionary powers of the enforcement officer.

2. Regulatory Framework for the Enforcement of Security Measures

A court ruling on securing a claim is a judicial act subject to immediate enforcement by imposing a seizure on the debtor’s property or funds (Articles 155, 156, 158 of the Civil Procedure Code of the Republic of Kazakhstan).

Upon receipt of such a ruling, the enforcement officer, by virtue of paragraph 1 of Article 37 and subparagraph 4-1 of paragraph 1 of Article 9 of the Law on Enforcement Proceedings, is obliged to initiate enforcement proceedings and, guided by paragraph 4 of Article 63 of the Law, issue a resolution imposing a seizure on all property or a part thereof proportionate to the asserted claims.

After the actual enforcement of the seizure resolution by the relevant state authorities or financial institutions, the enforcement document is deemed fully executed.

By virtue of subparagraph 7) of paragraph 1 of Article 47 of the Law on Enforcement Proceedings, in this case the enforcement proceedings are subject to termination.

3. The Problem of Collision of Norms When Terminating Enforcement Proceedings and the Effect of Security Measures

Paragraph 2 of Article 47 of the Law on Enforcement Proceedings establishes that upon termination of enforcement proceedings, measures of compulsory enforcement are subject to cancellation simultaneously.

Such measures, according to Chapter 5 of the Law on Enforcement Proceedings, include, inter alia, security measures expressed in the seizure of the debtor’s property and bank accounts.

A literal interpretation of this provision, as prescribed by Article 6 of the Civil Code of the Republic of Kazakhstan, leads to the conclusion that after the termination of enforcement proceedings the enforcement officer is obliged to lift all previously imposed seizures, including seizures imposed by way of securing a claim.

Meanwhile, such a legal construction effectively nullifies the legal nature of security measures, the purpose of which is to preserve the property status of the parties until the dispute is resolved on the merits.

In this regard, it appears justified to conclude that there is a gap in the legislation of Kazakhstan, expressed in the absence of a direct rule to the effect that: “termination of enforcement proceedings initiated for the enforcement of a court ruling on securing a claim does not entail termination of the effect of the security measures themselves, which remain in force until cancelled by the court.”

4. The Problem of Applying the Principle of Proportionality in Practice

The principle of proportionality of security measures is of key importance in the mechanism of securing a claim, as it is aimed at achieving a balance between the claimant’s interest in preserving a real possibility of enforcing a future judicial act and the debtor’s rights to freely conduct business activities and dispose of property. Security measures, by their nature, are temporary and preventive and should not transform into an instrument of excessive restriction of the debtor’s property rights or de facto satisfaction of claims prior to resolution of the dispute on the merits. Failure to observe the principle of proportionality leads to a violation of the fundamental principles of civil and administrative proceedings, including the principles of fairness, reasonableness, and the inadmissibility of excessive state interference in private-law relations, which in turn necessitates strict procedural control over the application and modification of security measures exclusively through judicial procedure.

Recently, judicial practice has developed a tendency to place responsibility for compliance with the principle of proportionality on enforcement officers when enforcing rulings on securing claims.

The following example is illustrative.

By a ruling of a specialized interdistrict economic court, a motion of the Claimant against the Debtor to secure the claim within the amount of the claim was granted. The ruling was sent for enforcement.

One day after the ruling was issued, a private enforcement officer initiated enforcement proceedings and issued a resolution imposing seizures on funds within the amount of the claim.

Seven days after the initiation of enforcement proceedings, the private enforcement officer issued a resolution terminating the enforcement proceedings due to the execution of the resolution imposing seizure on funds within the amount of the claim.

Two days after the termination of enforcement proceedings, the Debtor applied to the private enforcement officer with a request to lift seizures from two accounts, leaving the seizure on one account on which the final balance of funds was sufficient to satisfy the claim. In substantiation, the Debtor indicated that the seizure had been imposed on three accounts opened with a second-tier bank. At the time of the seizure, the total amount of funds in the accounts was insufficient to satisfy the claim; however, in the period after initiation of enforcement proceedings and prior to filing the application to lift the seizures, funds were credited to the three accounts, as a result of which the total amount of funds in the three accounts exceeded the amount of the claim.

The private enforcement officer refused to satisfy the Debtor’s application and refused to lift the seizures from the two accounts, citing the termination of enforcement proceedings in accordance with Article 47 of the Law of the Republic of Kazakhstan “On Enforcement Proceedings.”

Thereafter, the Debtor filed an administrative claim with the specialized interdistrict administrative court seeking recognition as unlawful of the actions of the private enforcement officer expressed in the refusal to partially lift seizures from bank accounts, substantiating the claim by the disproportionality of the security measures to the amount of recovery. By a decision of the specialized interdistrict administrative court, the administrative claim was granted. In the reasoning part, the court indicated that the private enforcement officer violated the requirements of paragraph 4 of Article 63 [1], paragraph 3 of Article 126 [2] of the Law on Enforcement Proceedings, Article 7 of the Administrative Procedural and Procedural Code of the Republic of Kazakhstan [3], and concluded that the actions consisting in the refusal to partially lift the seizure of funds sufficient to satisfy the claim in the civil case should be recognized as unlawful. By a resolution of the judicial panel for administrative cases, the decision of the court of first instance was upheld.

Thus, the adopted judicial acts essentially impose on the enforcement officer the function of modifying security measures, which does not correspond to the current procedural regulation.

5. Limits of the Powers of the Enforcement Officer

Articles 62 and 63 of the Law on Enforcement Proceedings regulate in detail the procedure for imposing a seizure on the debtor’s property. At the same time, the Law on Enforcement Proceedings does not contain a rule obliging the enforcement officer to lift a seizure from other accounts or property upon discovering the sufficiency of funds on one of them.

When performing enforcement actions, the enforcement officer is obliged to act strictly within the limits of the law. When enforcing a ruling on securing a claim, the enforcement officer is not entitled to change the content of the judicial act, replace security measures, or act by analogy of law in the absence of a direct provision.

Powers to replace, modify, and cancel security measures are directly attributed to the competence of the court, as follows from Article 159 of the Civil Procedure Code of the Republic of Kazakhstan and the Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan “On the Adoption of Security Measures in Civil Cases” dated January 12, 2009 No. 2. Replacement of a security measure is permitted exclusively by a judicial act upon proof of the disproportionality of the previously adopted measure.

Consequently, imposing on the enforcement officer the duty to independently modify security measures contradicts the principles of legality and the procedural delineation of powers between the court and the enforcement authority.

6. Legislative Gap and the Need for Its Elimination

An analysis of the provisions of the Law on Enforcement Proceedings and the established judicial practice makes it possible to state the existence of legal uncertainty on the following issues:

• should a security measure remain in force after the termination of enforcement proceedings?

• is the enforcement officer entitled to independently modify the scope of the seizure/security measure?

In our view, the absence of direct legislative regulation forms contradictory practice, shifts the burden of judicial discretion onto enforcement officers, and creates risks of violation of the rights of the parties to enforcement proceedings.

Thus, in our opinion, based on the results of the analysis of the practice of application of the Law on Enforcement Proceedings, it is possible to state the following conclusions:

1) According to the Law on Enforcement Proceedings, enforcement of a court ruling on securing a claim formally ends with the imposition of a seizure and entails termination of enforcement proceedings; however, the security itself, by its legal nature, must remain in force until cancelled by the court, and current legislation does not grant enforcement officers the authority to independently modify or partially lift security measures imposed on the basis of the relevant judicial act without the issuance of a new judicial act.

2) At the same time, the established judicial practice imposing on enforcement officers the duty to apply the principle of proportionality in respect of existing security measures effectively substitutes a judicial function with an enforcement one, which contradicts the Civil Procedure Code of the Republic of Kazakhstan.

3) It appears advisable to supplement the Law of the Republic of Kazakhstan “On Enforcement Proceedings and the Status of Enforcement Officers” with a provision stipulating that termination of enforcement proceedings initiated for the enforcement of a ruling on securing a claim does not terminate the effect of security measures. Cancellation or modification of security measures imposed by an enforcement officer on the basis of a court ruling on securing a claim is permissible exclusively by a judicial act.

Notes:

[1] “When enforcing a ruling on securing a claim, the enforcement officer, depending on the claims asserted, imposes a seizure on all property or a part thereof proportionate to the claimed requirement.”

[2] “The enforcement officer is obliged not to allow, in his or her activities, infringement of the rights and lawful interests of individuals and legal entities.”

[3] Principle of legality of administrative judicial proceedings.