Termination of enforcement proceedings due to the loss of the possibility of execution

One of the grounds for termination of enforcement proceedings under subparagraph 4 of Article 47 of the Law of the Republic of Kazakhstan “On Enforcement Proceedings and Status of legal executives” is the loss of the possibility of execution of the executive document binding the debtor to perform certain actions (refrain from (…) of certain actions).

In our view, the loss of the possibility of execution of the executive document occurs when the debtor actually has no way to enforce the judgment in the circumstances, which occurred in the absence of his willful misconduct.
This is confirmed by judicial practice.

This is confirmed by judicial practice.

So, on January 23, 2013 Specialized Inter-district Economic Court of Astana issued a decision under which the claim requirements of claimant were satisfied and the defendant was obliged to perform the contract of purchase and sale of used tubular products.

After the court decision the defendant unilaterally terminated the contract, and then asked for the higher courts to cancel the trial court’s decision on the grounds that the contract, the fulfillment of which was made obligatory by the court, has been already terminated, and therefore, according to the defendant, the given the judicial act is impossible to be executed.

However, the appellate court and the court of cassation, and the supervisory board of the Supreme Court of the Republic of Kazakhstan (review proceedings were started in respect of the case) left the decision of the Economic Court unchanged due to the fact that the contract was terminated by the defendant after the decision of the court of first instance, and according to para. 2, Art. 345 of the Civil Procedure Code of the Republic of Kazakhstan the appeal court may set only those new facts within the declared claim and examine only the new evidence which the party for valid reasons did not present to the court of first instance due to valid reasons. In this case, it is clear that the termination of contract by the defendant after the decision of the court of the first instance was rightly left beyond consideration of the case on appeal. The cassation commission has made the similar decision using para. 2, Art. 383-13 of the Civil Procedure Code of the Republic of Kazakhstan, regulating the limits of the case on appeal.

However, at the stage of execution of the court decision the defendant provided to the legal executive a petition for termination of enforcement of the judgment by reason of the loss of the possibility of execution of the executive document that obliges the debtor to perform certain actions (to refrain from certain actions), explaining his demands by the fact that the contract of sale , which was induced to be fulfilled by the court, was unilaterally terminated by the defendant and therefore enforcement of the judgment is not possible (it is impossible to induce the fulfillment of terminated contract).

Disagreeing with the decision of the legal executive which ruled to dismiss the petition alleged, the defendant (the debtor) appealed to the court concerning the actions of the legal executive with the assistance of the plaintiff (claimant) as an interested party.

However, the district court and court of appeal, and the cassation court, refused the debtor in regard of the appeal, as its conclusions fully agreed with the arguments of the legal executive and the creditor, stating in its conclusions the following two absolutely right things:

– The fact of unilateral termination of the contract is not the basis for termination of enforcement proceedings, since by virtue of paragraphs 3 art. 7 of the Civil Code of the Republic of Kazakhstan the rights and obligations of the parties within the framework of enforcement proceedings arise from the requirements of the judicial act and the executive document, rather than a contract (in other words, the debtor is obliged to fulfill the court’s decision, which was not terminated);

– The loss of the possibility of execution of the executive document occurs when the debtor actually has no way to enforce the judgment in the circumstances, which occurred in the absence of his willful misconduct.

The correct application of the provisions of the loss of the possibility of execution of the executive document binding the debtor to perform certain actions (to refrain from certain actions) as grounds for termination of enforcement proceedings is supported by Russian judicial practice (there is a similar provision in Russian legislation too).