The Croatian new Civil Procedure Act

Lexology, January 30, 2013

1. Croatian new Civil Procedure Act

By the Act on Adoption of the Civil Procedure Act as of 8 October 1991, the Republic of Croatia took over the Civil Procedure Act from the former Yugoslav Republic and implemented it into its legal system. At the session of the Croatian Parliament that took place on 15 February 2013 the new comprehensive Act on Amendments of the Civil Procedure Act (“the Amendments”) was adopted. The Amendments, which comprise over 100 changes to the provisions of the Civil Procedure Act, came into force on 1 April 2013, some of which shall have retroactive effect by extending the application to the on-going procedures as well.

2. Extensive scope of changes

The Amendments aim at accelerating civil procedures, increasing the efficiency of the courts and reducing the procedural costs. Speeding up the civil procedure is planned to be achieved inter alia by shortening statutory terms for undertaking certain procedural actions. For example, a motion to restoring prior status (Art. 117) may be submitted by the party within 8 days as of the day when the cause for the omission ceased to exist. For comparison, the old Civil Procedure Act provided for the term of 15 days. After the expiration of two months as of the omission date, no motion in favour to restoring a prior status may be put forward (the old Civil Procedure Act provided for a three months term). From now on, all deadlines determined by the court may upon application of the party and due to reasonable cause be prolonged at maximum once (Art. 186g) whereas the prolonged deadline shall commence on the first day following the expiry of the deadline. Former Civil Procedure Act did not know such a limitation.

The Amendments impose certain formal obligations upon the parties at communicating with the court. The court writs shall be comprehensible and contain all the elements that are necessary for the conduct of further procedure (Art. 106), in particular: (i) name of the court; (ii) name, permanent or temporary residence of the parties, their legal representatives and proxies, if any; (iii) subject matter of a dispute; (iv) content of the given statement and; (v) signature of a party. The novelty is the obligation imposed upon the applicant to specify his/her Personal Identification Number (unique identification number to be provided from the Tax Authority). If some of the obligatory contents are missing, the submission is returned to the applicant for further correction which is to be remedied within 8 days.

Another amendment to the general provisions regulating the civil procedure is that a party who by ignorance, fails to exercise the rights under the Civil Procedure Act shall be informed by the court of the procedural actions he/she may take. However, pursuant to the Amendments, if the party to a dispute is a legal person or physical person performing registered business activity, the court shall not instruct such a party on the procedural actions which may be taken, if the litigation is related to its business activity (Art. 11). Such persons are required to take special caution in performing their business activities, what shall also apply in case of litigation.

The Amendments have extended the jurisdiction of the commercial courts to the cases related to the transport of passengers in the maritime and air disputes (Art. 34b Pt.7). The Amendments have also shortened terms set out for the parties to challenge the territorial or subject matter jurisdictions. The parties may object the competence of the court only until the respondent starts litigating on the merits. After this point of time, the court may declare its incompetence ex offo or upon objection of the respondent only if this possibility is explicitly provided for by the law (Art. 20 and 21).

Another novelty concerns composition of the court of appeals when deciding in appeal cases concerning disputes which values do not exceed HRK 100,000 (EUR 13,500) / in commercial disputes HRK 500,000 (EUR 67,500) (Art 43), in which cases the decision of the court of appeals shall be rendered by the single judge and not by the council as it was under the old law.

The Amendments give the courts discretionary right to recognise only those costs that are in the court’s opinion necessary for the conduct of the case. A party to a dispute may be exempted from the obligation to bear the litigation costs only if the conditions defined by the Free Legal Aid Act are met (Art. 172).

3. The civil procedure of the first instance

Once the claim has been filed, the respondent is eligible to submit a counterclaim with the same court (Art. 179) and the claimant is allowed to amend the claim (Art. 190) only until the conclusion of a preliminary procedure. As opposed to this restriction, the old Civil Procedure Act enabled such procedural actions to be taken until the conclusion of the main court hearing. In order to stimulate active participation of the parties, if the amendments to the claim are made at the court hearing to which the respondent has been duly invited but failed to attend and justify the absence, the court shall not adjourn the court hearing, but may decide on the amendments without taking in consideration the respondent’s statement on such a change.The Amendments do not recognise anymore the institute of temporary still-standing of a procedure which rule shall also extend the application to the on-going civil procedures.

Another change that should ease the procedure and the position of the claimant, especially in the commercial disputes is the rule on burden of proof, according to which if the claimant successfully proves that the respondent used the invoice (or another credible deed eligible for the accounting purposes) for reduction of the income and/or deduction of the taxes (e.g. VAT) the claim shall be deemed as justified, unless otherwise is proven by the respondent. In order to affirm this fact, the courts may request the official statement from the Ministry of Finance (Art. 221b).

In a dispute whose value does not exceed HRK 10,000 or HRK 50,000 in the commercial disputes, the court is authorised to determine the decisive facts upon discretion if it believes that the examination of evidences may cause disproportionate difficulties and expenses (Art. 223a).

4. Preliminary and main court hearing

The Amendments set time limits within which the respondent is obligated to submit the response to the claim, pursuant to which the response shall be submitted within the time limits to be determined by the court, but which may not be shorter than 30 nor longer than 45 days (Art. 284 and 285). Pursuant to the old Civil Procedure Act, the respondent was authorised to submit the response to the claim within time limit set out by the court, which could not have been shorter than 15 nor longer than 30 days as of the day of the receipt of the claim. Simultaneously by sending the invitation to the respondent to provide response to the claim, the court shall fix the term of the preliminary court hearing and inform the parties that in case all the statutory terms are met the preliminary procedure shall be concluded and the main court hearing held.

A response to the claim and a preliminary court hearing have gained on importance because the parties are obliged to bring out all the facts and evidences by the time the preliminary court hearing is concluded (Art. 286). On later procedural stages, the parties are eligible to present the court only such facts and evidences which they were excusably unable to present beforehand (Art. 299). The preliminary court hearing starts by presentation of the claim, after which the respondent gives statement of defence (Art. 287). At the preliminary court hearing, the court is obliged to examine evidences and ask questions with the purpose to clarify all the material facts and obtain all the explanations that are necessary for rendering the decision. The court may adjourn the preliminary court hearing only once (Art. 291) provided that the next court hearing is fixed by the same decision.

Immediately after closing the preliminary court hearing, the court shall fix the time of the main court hearing (Art. 293). With the purpose to economizing the procedure, if either the claimant or the respondent fails to appear at the main court hearing, the court hearing shall be held with the present party. If both parties fail to appear at the main court hearing or if they are present but unwilling to discuss the dispute it shall be presumed that the claimant withdrew the claim (Art 295).

5. Rendering, announcing and delivering the judgement

The judgment shall be rendered, announced, drawn up in writing and dispatched within the 45 days as of the day of the conclusion of the main court hearing, at latest (Art 335). The court hearing for the announcement of the judgement shall be fixed at the court hearing at which the main court hearing has been concluded. At the court hearing for the announcement, the parties shall receive a certified copy of the judgement containing the information on available legal remedies. Provided that the party has been duly informed of the day of the court hearing for the announcement of the judgement, the judgement shall be deemed validly delivered as at the day at which the court hearing has been held. From that point of time the deadlines for appealing the first instance decision shall commence. The parties who were duly informed on the time of the court hearing for the announcement of the judgement but failed to attend it, may obtain a certified copy of the judgment in the court premises. The Amendments provide for the obligation of the court to make available the judgement via Internet Court Bulletin Board within 8 days as of the announcement. In case the invitation to the court hearing for the announcement of the judgement has not been duly delivered to the party, the judgement shall be delivered to such a party pursuant to procedural provisions regulating ordinary delivery.

Second instance civil procedure

Pursuant to the Amendments, the ruling of the first instance court may be set aside and returned to the court of the first instance for a repeated trial only once (Art. 366a). If the court of appeal finds that the first instance ruling should be set aside again (for the second time), the court of appeals shall conduct the procedure by itself. The court of appeals may order introduction of new evidences. The court of appeals shall render decision without conducting a court hearing, but before rendering the final judgement the parties have to be invited to the session of the council of the court of appeals (Art. 373).

Pursuant to the Amendments, in case the court of appeals finds the appeal to be ungrounded, it is not obliged to provide particular explanations in favour of its decision, provided it shares the standpoints of the first instance court on the relevant facts and the applicable laws (Art. 375).

7. Special rules in specific types of procedure

In the procedure for the issuance of the payment order which is considered a special procedure, the claimant shall prove legal interest for instigation of this type of procedure (Art. 446). If the claimant fails to prove legal interest, the court shall reject the claimant’s application. The existence of legal interest is presumed if already before instigating such a procedure, the respondent objected the claim or if the respondent is outside Croatia.

In the disputes where the claim does not exceed HRK 10,000 (HRK 50,000 in commercial disputes) (Art. 457) the time limits within which the parties may present new facts have been additionally shortened. The Amendments impose the obligation to the claimant to present all the facts and evidences in the claim and the respondent in the response to the claim (Art. 461a). The parties may present new facts and evidences at later stage only if they were unable to present them earlier without their own fault.

A material change has been introduced in commercial litigations following the enforcement procedure where if there is a greater possibility of the claimant’s success in the dispute, the court shall upon claimant’s demand issue the decision on preliminary injunction ordering the banks to seize the assets of the respondent in the amount which equals the amount of the claim. Here it is to mention that similar institute existed years ago, which was shortly abolished due to occasional misuses by the claimants issuing false instruments of payment with the single purpose to block the respondent’s account.

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