Changes to Civil Code to accelerate collateral execution

TIRANA, March 6- – The Albanian government approved this week some changes to the Civil Code which increase the efficiency of the justice system and ease procedures for citizens. The changes, which need a qualified majority of 84 votes and as a result consensus by the opposition, target reforming the treatment of inheritance cases in courts by shifting the process to notaries public, and facilitate execution of collateral to help banks stop the rising bad loans.
“I am convinced this package aims at making the work of these institutions more flexible, removing an undeserved volume of work from courts by transferring it to notaries public while the changes to the collateral execution provide the best solution,” said Prime Minister Berisha
The changes also comes as a request by the Albanian Association of Banks to curb the rising trend of bad loans, currently at 22 percent, by increasing the efficiency of collateral execution. The process of collateral execution is reformed by lowering the price floor from 75 percent of the collateral to 50 percent, based on EU examples.
The reform also foresees the acceleration of execution orders which will automatically be issued after the court decision without the need for a written request.
The Albanian Association of Banks had earlier warned legal steps that would require changes to the Civil Procedure Code are needed to accelerate the execution of collateral, one of the key barriers which has led to bad loans jumping to a record 22 percent and accounting for around 1 billion euros. Seyhan Pencabligil, the Chairman of the Albanian Association of Banks and CEO of BKT, the country’s second biggest commercial bank, says two steps are necessary for an efficient execution of collateral.
The first measure involves the reduction of the collateral price up to 50 percent of the original price in the second auction or the introduction of a third auction under which the price of the collateral will be set based on market prices. The liberalization of the bailiff offices and the tariffs being determined by the market is another measure banks suggest. Both measures would require changes to the Civil Procedure Code which need a qualified majority of 3/5 of votes in Parliament.
Ongoing political conflicts between the majority and the opposition this time over the deadlock in the Fier regional council, continue preventing the establishment of the Administrative Courts. Five months after the approval of the law in Parliament both the ruling Democrats and the opposition Socialists have failed to make some changes to the Supreme Court law needing a qualified majority of votes in order to complete the full legal infrastructure on the establishment of these courts ensuring the independent legal review of administrative decisions.