In 2018, no less than 2’967’555 payment orders were issued in Switzerland by the Debt Collection Offices according to the Federal Statistical Office. A payment order is a summons issued to an alleged debtor to either pay his or her debt within 20 days, or object to said summons within 10 days otherwise the alleged creditor may apply for seizure and a forced sale of assets.
In practice, payment orders might be used in a vexatious kind of litigation as the Debt Collection Office does not examine the merits of the alleged claim before serving a payment order. While such a practice is considered routine for lawyers, receiving an unjustified payment order may prove upsetting for many people. And indeed, a payment order is a powerful tool used to apply pressure on an alleged debtor as, once it is served, it will appear in the Debt Collection Registry of this person for 5 years, even if the alleged debtor opposed the order and the alleged creditor did not take any steps towards further enforcement. Almost anyone can search the Debt Collection Registry and an unjustified payment order can have detrimental consequences on the credit history of the alleged debtor, his ability to rent or acquire real-estate, or get a job.
Before summarizing the few legal remedies available to an alleged debtor, it must be noted that the target of an unjustified payment order must object to the payment order within 10 days of getting served. The objection will stay the enforcement proceedings and will force the alleged creditor to take his claim to court if he or she wants to proceed further. However, the objection will not result in the payment order to be set aside or nullified. After service of an unjustified payment order, the alleged debtor will need to take (costly) steps to protect his or her paying reputation.
As a first countermeasure and after the end of a 3-months period, the alleged debtor may request from the Debt Collection Office that the payment order not be shown to third parties. The Debt Collection Office will meet this request unless the alleged creditor provides evidence within 20 days that he or she has taken steps toward further enforcement (Art. 8a, para 3 Debt Collection and Bankruptcy Act). Should the alleged creditor bring evidence of enforcement steps later, then the payment order will appear again in the Debt Collection Registry. While this new legal remedy was introduced on 1 January 2019 as an effort from Swiss legislators to set limits to vexatious creditors, it is not totally satisfactory since unjustified payment orders are visible for at least 3 months and 20 days in the Registry and do not allow the alleged debtor to settle the case once for all.
A second countermeasure is to request from the alleged creditor that he or she discloses all of the evidence related to the alleged debt and lists all of his or her claims against the alleged debtor (Art. 73 Debt Collection and Bankruptcy Act). Should the alleged creditor fail to bring any evidence or bring evidence of highly speculative nature, the alleged debtor may elect to apply for a cancellation of the payment order before the Debt Collection Supervisory Authority. However, it must be more than obvious that the alleged creditor is acting in an arbitrary way, otherwise the application for cancellation will be rejected.
All other countermeasures available for the alleged debtor are court proceedings meant to establish that the debt does not exist, has been fully settled or is not yet due (Art. 85 and 85a Debt Collection and Bankruptcy Act or 88 Rules of Civil Procedure). Depending on his or her case, the debtor will initiate litigation in summary or ordinary proceedings. As for every court proceeding, the alleged debtor will need to pay court fees in advance and will incur lawyer fees, which unjustly burdens the target of an unjustified order.
Finally, the last legal remedy available to the alleged debtor is found in criminal law and more specifically in Art. 181 of the Swiss Criminal Code. This article dictates that any person who, by the use of force or threat of serious detriment or other restriction to another’s freedom to act, compels another to carry out an act is liable to a jail sentence not exceeding three years or to a monetary penalty. Serving a totally unjustified order might qualify as such an offense and the Federal Tribunal upheld this ruling several times. However, the criminal proceedings will not cancel or set aside the unjustified payment order.
To conclude the new legal possibility offered to the alleged debtor to request from the Debt Collection Office that the payment order not be shown in the Debt Collection Registry might be the most effective and economical way to proceed against an unjustified order to pay. Indeed it will force the alleged creditor to initiate court litigation at his or her own costs should he or she want to bring the claim further. One can then hope that court and lawyer fees may have a dissuasive effect on the vexatious creditor.
The content of this publication does not constitute legal, business or tax advice and shall not be used or construed as such.