Credit Control and Debt Collection – Part 4

We previously explored ways and means to acquire a declaration by virtue of which the credit is deemed as owed. However, this does not in itself guarantee payment. Indeed, our Code of Organization and Civil Procedure (Chapter 12 of the Laws of Malta) provides creditors with two distinct but interrelated tools: precautionary warrants and executive warrants, applicable at different stages of judicial proceedings.

On the one hand, precautionary warrants serve to safeguard the creditor’s rights during an ongoing legal case ossia pendente lite by cautioning the rights of the creditor to the debtor, whereas executive warrants enable the enforcement of a debt that has become legally enforceable through an executive title.

1. Precautionary Warrants: Securing the Claim

A precautionary measure is issued prior to bringing forward a judicial action with the intention of safeguarding the credit, before the underlying dispute has been resolved. Its purpose is not to expedite proceedings but rather to ensure that the debtor’s assets remain available to satisfy the debt. This prevents the debtor from dissipating assets or otherwise frustrating enforcement.

In line with Article 829 of Chapter 12, any person may, without a prior judgment, secure their rights by means of one or more precautionary acts. Article 830(1) of Chapter 12 provides an exhaustive list of eight precautionary warrants of which some are relevant when seeking to collect a debt.

Precautionary warrants are issued by the Court on application, which must, on pain of nullity, state the reason for the debt or claim and the amount sought if the obligation is monetary, as per Article 831(1) Chapter 12. In urgent cases, they may even be authorised verbally by a judge or magistrate and signed by the Registrar.

2. Revocation of Precautionary Warrants

Pursuant to Article 836 of the Chapter 12, a debtor may apply for their revocation of a precautionary warrant on six grounds, including lack of legal requisites, excessive amounts claimed, availability of adequate security, or where circumstances make it unreasonable or no longer justifiable to maintain the warrant.

3. Duration of Precautionary Warrants

By virtue of Article 838B COCP, precautionary warrants remain in force until the matter is decided definitively (becomes res judicata), unless earlier revoked or withdrawn. It is also important to note that certain warrants may then be transformed into executive warrants once a final judgment is obtained.

4. Executive Warrants

Once a claim is no longer open to challenge and the creditor has an executive title in hand, one can then file an executive warrant. Article 273 of Chapter 12, lists executive titles, including garnishee orders, which may be filed to recuperate a debt, including a warrant of seizure of movables or immovables or judicial sale by auction (subbasta).

In practice, an application is submitted to the Court specifying the debt, the remedy sought, and attaching the relevant executive title. If the Court accepts such warrant, the execution is then carried out by a court officer with the power to seize the assets involved.

Precautionary and executive warrants can be perceived as vital enforcement tools in Malta’s debt recovery regime. They provide security before judgment and guarantee enforcement afterwards, making them essential for effective debt collection.

Disclaimer

The content of this article is provided for general information purposes only and should not be construed as legal or professional advice