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What are the amendments concerning payments in the State of Emergency Act?

16 April 2020

The Amending and Supplementing Act of the State of Emergency Measures and Actions Act promulgated by a decision of the National Assembly of March 13, 2020 (the Act) was published in the State Gazette on April 9, 2020. The text of Art. 6 is among the amended ones: it concerns the monetary obligations and roused the general public resulting in massive public debate and disapproval.

As per the newly adopted version of the said article, for the duration of the state of emergency in the event of delay in payments by natural persons and legal entities, debtors under credit agreements and other forms of financing, including where claims have been acquired by other banks, financial institutions or third parties and under lease agreements, no interest for delay and penalties shall be charged, and the respective obligations may not be accelerated; also the agreement may not be cancelled due to default, and no possessions may be seized.

What does the adopted amendment mean exactly? Practically, compared to the original version, the legislator has narrowed the circle of persons and relations for which the unfavourable effects of delay do not apply. This amendment was necessary in order to curb the swarming cases of businesses not paying their suppliers and other counterparties, considering themselves protected by the earlier and broader in meaning version.

According to the new scope of Art. 6 of the Act, the relieves from the consequences of non-payment are applicable where the following cumulative conditions are met:

  • The debtor is natural person or legal entity;
  • The creditor is a bank, a financial institution carrying out one of the activities referred to in Art. 3 of the Credit Institutions Act, or a third party who has acquired the claim from a bank or a financial institution (e.g. the debt collecting agencies);
  • The debt derives from a concluded credit agreement, factoring, or other form of financing by a bank or a financial institution, and a lease agreement.

The relieves for the said debtors remain the same as in the previous version – no interest and penalties are to be accrued for delay, no acceleration may be declared and the agreement may not be cancelled on the grounds of the delay,  proceeding to seizure of possessions is not allowed.

Unfortunately, in the amendment of Art. 6 the legislator did not improve the precision of expression and there is still room left for divergent interpretation in applying the text in practice, which would need to be overcome through corrective interpretation. The not particularly suitable linguistic construction could raise questions such as whether the agreement could still be cancelled during the state of emergency if, in addition to the monetary obligation, the performance of another obligation was delayed. It is highly likely that imprecisions will generate various interpretations in practice by citizens and businesses. We specify that if performance of another obligation is delayed, the agreement may be cancelled.

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