Psarakis LL.M. (mult.), PgCert
(repuplished from Euro2day.gr)
Last Friday, a judge of the Athens Court of First Instance said the following in relation to the now famous decision of the Supreme Court (see here): 'I disagree with this decision but I cannot ignore that it exists and I cannot ignore that it will prevail in the end'. This is the general picture in the Athens Court of First Instance; several judges have a different opinion but it is difficult to "turn a blind eye" to a Supreme Court decision. After all, this is the main purpose of our Supreme Court: "The Supreme Court, through its decisions, ensures the unity of jurisprudence (in the interpretation and application of the laws), which is followed by its lower courts, and therefore the uniform treatment of similar cases" (from the court's website, www.areiospagos.gr). As regards the issues raised, we would like to clarify the following, so that borrowers can also understand the position:
1. Every day in courtrooms throughout Greece the specific question is raised: can Servicers of loans transferred under the 2003 law proceed with enforcement actions, foreclosures and auctions? When about 3 years ago we started to develop the relevant arguments in our pleadings, we did not believe even ourselves that such a view could be consolidated for the following reason: it would indeed be disastrous in terms of the consequence in terms of collection of claims arising from "red loans"; and of course judges do not decide in a vacuum, but also judge based on the possible consequences of their decisions. To date, however, in addition to the aforementioned Supreme Court decision, there have, to our knowledge, been 10 appellate court decisions - i.e., issued in addition to the four we wrote about in August 2022 - that refuse to accept the legalization of Servicers.
2. As we wrote last August (see here), Servicers will try to overturn this case law that has been rapidly building up against them in recent times. Indeed, in early September 2022, a relevant opinion by two professors was delivered into the hands of the Servicers, which supports the view that the Servicers are legal, contrary to the above decisions. Copies of this opinion have already begun to flood the court files in the relevant cases. The outcome, however, continues to be positive for borrowers and the climate does not seem to be simply reversed, especially after the Supreme Court's decision above. Other times, moreover, opinions of professors have been compelled which, in the end, did not change the course of the case law. Thus, all the newspaper reports in the last three days speak of pressure on the government to change the legislative framework, as we had, moreover, argued would be the 3rd Servicers' alternative. What the legislators will apparently seek to do, in order to extend the application of the regulation to all cases, pending in court or not, is to adopt an "interpretative" provision that will authentically clarify the meaning of the contested provisions.
3. Borrowers who have not exercised the remedies provided for cannot benefit from this latest case law. Therefore, if the relevant deadlines for challenging the aggressive actions of the Servicers in court have passed, this case law development is of no relevance to them.
4. Indeed, it is not logical that a claim exists but the creditor cannot collect it. So the issue is not whether or not the claim can be litigated, because it obviously can, but who is entitled to claim it, the Fund or the Servicer. It is a procedural issue - for some it is a formality - but it creates huge problems; and for the Funds to carry out seizures etc. on their own (as a solution to the problem) seems simple at first glance, but it requires, among other things, the establishment by each Fund of separate branches for the management of claims in Greece (practically impossible).
5. The mistake of the credit system, which in cooperation with the Funds proceeded with the sale of "red loans", was that it decided to make use of the 2003 law. This was the paradox, which we also pointed out here in May 2021. It was indeed curious how so many weeks of discussions in the House of Representatives could result in almost zero use of the 2015 law and thus simply transfer all the loans under the 2003 law. The banks were of course aware of the issues that would likely arise from this hermaphroditic construction but knowingly took the risk. In the above opinion, which was prepared on behalf of the Servicers, this is explicitly stated. 4354/2015 'special' conditions'; and when reference is made to 'special' conditions, they mean in particular the prior attempt to reach a compromise with the debtor as a necessary condition for a 'red' loan to be transferred under the 2015 law (as stated in the relevant explanatory memorandum of the law "the regulation aims to prevent the surprise of debtors, who are given the opportunity to settle their debt before the claim against them is assigned... "). So the Servicers themselves accept that the 2003 Act facilitated transfers by circumventing the safeguards of the 2015 Act; and that for us is the big issue: that for "red" loans the 2003 Act should not be allowed to be used as it constitutes a circumvention of the 2015 Act's protections.
6. The 2003 law, which has been 90% used by banks to sell "red" loans, as we have pointed out many times (see here), is not related to red loans but to the financing of companies through the sale of receivables. Hence the fact that even then no provision was made for Servicers there to conduct auctions etc. There was no such issue and therefore only a 'soft' management of claims through mainly out-of-court actions and harassment was introduced.
7. In closing, I would like to mention this: in the first days of September we knew that the Servicers, and the credit system in general, had taken the first indications and especially the first appellate decisions very seriously. However, in their responses to questions, mainly from journalists, they seemed reassured, hoping that the climate would change, including with the production of the above-mentioned opinion. This no longer seems possible. The responsibility, however, is ultimately theirs because they chose to circumvent the 2015 law by pulling out of their 'drawers' an older piece of legislation that had been passed with a completely different targeting. And if the 2003 Act is simply amended to give the necessary powers to the Servicers, it will be like saying "what's done is done"; thousands of debtors were caught off guard after their claims were transferred under the 2003 Act without giving them a chance to settle, but now somehow we have to save the day.