January 2024

Judgment of the Athens Court of First Instance on the Cancellation of the Seizure due to lack of proof of assignment of Servicing to the Servicer

The decision No 2554/2023 of the Athens Court of First Instance, which annulled a payment order and the report of forced seizure based on it, has been published. The judgment upheld a ground of appeal relating to a procedural defect in the enforcement order under which an auction of the guarantor's property was brought, which was raised in the context of a stage-by-stage challenge to the acts of enforcement. Specifically, the ground related to the failure to comply with the requirements of written proof for the issuance of the contested payment order, since no document was submitted together with the application for its issuance showing the assignment of the servicing of the claim under the contested credit agreement to the Servicer. 

The judgment thus held that: "However, the documents submitted by the defendant company before the Judge of the Athens Court of First Instance for the issuance of the payment order do not prove that the defendant company was legally entitled to act as the servicer of the disputed claim, which is the subject of the payment order and, consequently, that it had no authority to submit the relevant application on behalf of the foreign special purpose vehicle company.  ... or by reference to the contract of sale and transfer or to the publication of the contract or its annex or in any other way. [... ] Consequently, since the documents produced by the defendant before the Judge of the Athens Single Judge of the Athens Court of First Instance for the issue of the enforceable title, namely the payment order No 8986/2022, do not prove its legitimacy as servicer of the claim in dispute, and, consequently, its authority to submit the relevant application on behalf of the foreign special purpose vehicle and, by extension, that the conditions for the validity of the enforcement order under which the contested enforcement action is being brought are fulfilled, the relevant plea in law must be upheld as well-founded'.

Finally, with the adoption of the recent Law no. 5072/2023, it is now stipulated in paragraph 2 of Article 115 that "The forms for publication at the competent pawnbroker's office referred to in par. 7 of Article 14 and Para. 7 of Article 21 shall constitute full proof of the exceptional legitimacy of the Servicer, without the need to produce additional documents or to comply with any other wording". However, the issue raised by that decision remains relevant in that even the summary of the servicing agreement must prove that the servicing of the specific loan receivables has been assigned.