Paulian action (Latin “actio Pauliana”, German “Paulianische Anfechtungsklage”)

It is not uncommon for a debtor to reduce their assets, which they have to use to meet their obligations, in the period from the conclusion of a contract until the due date of their contractual obligations. The reduction in assets can also cause them to become insolvent and thus jeopardize the other party’s ability to collect its claims.

In such a case, the creditor can contest legal actions by which he is directly or indirectly harmed (Paulian action).

Article 280, par. 1 of the Law of Contract and Torts provides that any creditor whose claim is due for payment, regardless of the time it arose, may contest the legal action brought by his/her debtor against him/her. Pursuant to par. 2, the legal action is deemed to be performed against the creditors if, as a result of its performance, the debtor does not have sufficient funds to settle the claim.

Thus, Article 281, par. 1 of the Law of Contract and Torts provides that a disposition against payment can be contested if the debtor knew or could have known at the time of disposition that the disposition made would harm his/her creditors and if the third party with whom or in whose favour the legal action was performed, knew or could have known about it. Pursuant to paragraph 3 of the same Article, in case of dispositions free of charge and legal actions equivalent thereto, it is presumed that the debtor knew that the disposition made would cause harm to the creditors, and for contesting it it is not necessary that the third party knew or could have known this.

In the matter in which this law firm represented the plaintiff in the court proceedings “Paulian action”, in the judgment of the District Court in Sarajevo, file number 65 0 Ps 831343 20 Ps of 7 December, 2021, the lawsuit was adopted, which established, among other things, that the real estate purchase agreement drawn up by the notary has no legal effect against the plaintiff in the part relating to the settlement of the plaintiff’s claim from the enforcement order of the District Court in Sarajevo in the amount of BAM 62,009.72 with statutory interest on arrears running from 30 October, 2019, until payment, and in the amount of BAM 1,449.60 for the costs determined by the enforcement order. Consequently, the defendant is obliged to accept and suffer the plaintiff settling his/her claim in the enforcement proceedings by selling the real estate that was the subject of the real estate purchase agreement, as well as to reimburse the plaintiff the costs of the litigation in the amount of BAM 7,058.58 within 30 days.

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