Chapter five
Rights of the creditors of the parties
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SCHOOL OF LAW A THESIS SUBMITTED IN THE, CHALLENGES OF CASE MANAGEMENT IN SOMALILAND HIGH COURT
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- Preservation measures
- Exercise of debtors right or oblique action
Rights of the creditors of the partiesThis being said, because of this general right, the creditor is interested in the use his debtor does of his contractual freedom. The risk is that either because of negligence or incapacity, the debtor loses a right which would increase his solvency, or that he diminishes his estate by concluding other contracts, eventually with the intention of defrauding his creditor, or finally that he becomes bankrupt. Preservation measuresAs the possessor of a potential right, the creditor, who yet has to be paid has an interest in seeing that the debtor does not lose an endangered right. Article 1992 of the Civil Code entitles him to act in their common interest by petitioning a preservation measure to secure his debtor's right. This provision entitles the creditor to take any preservatory measures aimed at preserving the patrimony of the debtor from being extinguished. But he could act of his own accord if this is the only way of preventing an imminent loss. The scope is endless. The creditor only has to show he has an outstanding right vis-a vis the debtor, to be allowed by the judge to take any preservation measure, at the debtor's final cost of course, or to obtain the refund of his expenses if he acted of his own initiative. Exercise of debtor's right or oblique actionOne clear instance where the creditor may be entitled to take preservatory measures is through an action called an oblique action or otherwise called exercise of the debtor's rights. One stage further is where the creditor seeks to avoid the impoverishment of his debtor, there again because such impoverishment diminishes the scope of the security offered to the creditor. The origin of the impoverishment is indifferent, provided the risk is there; it may be that the debtor is unaware of the risk, incompetent, absent or simply negligent. The oblique action is the necessary consequence of the principle incorporated under Article 1988(1) of the Civil Code, "the debtor's property is the common pledge of his creditors." This general right of the creditor would be exposed to too many causes of loss or diminutions if the debtor could without any consequence let his patrimony perish. By lack of care or by negligence he would bring about his insolvency, or at least would accept a creeping impoverishment, which at the end would affect his creditors. The law thus affords creditors a means of preserving the debtor's patrimony, a kind of supervision. The action is based upon the psychological observation that a debtor on the verge of insolvency often becomes discouraged and fails to manage him patrimony with the customary prudence. The oblique action's chief purpose is to prevent the debtor from negligently allowing his valuable rights to extinguish. In cases of oblique actions, creditors do not act in their own name, directly, against the debtors of their debtor. The conditions of the action are nevertheless relatively strict to avoid any creditor intervening into his debtor's personal affairs on the flimsiest pretext. The creditor must first refer to the court and may not act of his own accord, contrary to simple preservation measures. The second condition is that the risk of impoverishment of the debtor is real and here again the burden of proof is on the creditor. Furthermore, he must prove that the impoverishment is such that it jeopardizes the payment of the debt: a proportion will therefore have to be demonstrated between the alleged impoverishment and the outstanding debt. These requirements show that this provision has little chance of being implemented unless the court devises speedy systems to answer such urgent requests. For a creditor to take this action, he must fulfill certain conditions, which are set out by the law. These conditions are: 1) interest of the creditor: the oblique action is accorded to creditors only when the debtor is insolvent and neglects to act himself. This condition which is laid down under Article 1993(1) of the Civil Code provides that the oblique action is allowed to prevent impoverishment of the debtor which otherwise jeopardizes the creditor's right to payment. 2) In action of the debtor- it is also necessary that the debtor neglects to act himself. 3) The creditor must secure court authorization to take the oblique action. Thus, the court shall not grant application (Article 1993(3) of the Civil Code) where the rights are not endangered by the debtor's inaction, nor if insolvency is not in view ("is not to be feared" in the French text). The condition seriously restricts the scope of Article 1993, because by the time insolvency is proved to be near, the chances are the debtor will be bankrupt before the court decides to grant the creditor the permission he seeks. Speedy judicial decisions are here again essential. Article 1993 of the Civil Code sets out negative conditions. The court shall refuse the creditor's applications where the right he intends to exercise is too personal to the debtor, by law or by nature. To put it differently, all actions are not equally susceptible of being exercised by the creditor. Thus, there are exceptions provided by law. Actions denied to creditors include extra- patrimonial actions and certain actions included in the patrimony of the debtor. As a consequence, all extra-patrimonial actions, that is, those that safeguard personal status, are not subject to seizure by creditors. Such actions are excluded by their very nature, as the actions included in the oblique action are intended to apply only to actions having pecuniary object. Among the extra-patrimonial actions you may consider, for instance, the actions in reclamation or in contestation of filiations, demand for divorce and separation, marrying a rich woman, accepting of donation with charges etc. This situation is clearly provided under Article 1993(2) of the Civil Code. The second exception may relate to certain patrimonial actions. There are certain actions which, although patrimonial in nature because of their pecuniary object, are nevertheless beyond the reach of creditors and remain reserved to the debtor. For instance, you may consider Art 404 of the Civil Procedure Code, which was mentioned in relation to Article 1988 of the Civil Code. Those mentioned under Art. 404 of the Code of Procedure are not subject to attachment. Although such property is included in the patrimony of the debtor, it is not subject to the pledge of creditors. The latter, therefore, have no interest in exercising any action over such rights. Question: Should the debtor be made a party to the proceeding? It is possible for the creditor to exercise the action of his debtor alone, and without the latter figuring in the case. But it seems more advisable to make the debtor a party. The issue that may also be raised in connection with this is whether or not the judgment rendered by the court will have the effect of res judicata, regarding the debtor, the real owner of the right. There is no doubt that it will have a res judicata effect where the debtor has been made a party. When such precautions have not been taken, i.e. where the debtor has not been made a party to the proceeding, it would be difficult to know what answer to give. Some jurists think that the judgment is never res judicata as regards the debtor because his creditor is not his representative and he is only taking preservatory measure, not judgement. Others argue that the judgment can always be used for or against the debtor. Still others make a distinction according to whether the judgment was or was not favorable to the creditor. It seems that the first position seems to be sound. The question is: Can the creditor sue for the whole claim of his debtor even where his claim is smaller? Certain jurists believe that the creditor is not pursuing his own action. The amount of his credit is a matter of indifference. It is the right of the debtor, which he is exercising, right which is indivisible in the relations of the third party with the debtor. The creditor has, therefore, the right to demand a judgment for the total amount, regardless of the amount of his own credit. Question: Who benefits from the effects of the action? When the creditor wins his suit against the third party, who profits from the judgment obtained? You should note that the object of the judgment is property which forms part of the patrimony of the debtor and does not at all belong to the creditor pursuing the action. Whatever the subject matter of the suit which has been recovered, they form part of the estate of the debtor. Thus, it necessarily follows that the value obtained by a diligent creditor is not attributed to him to the exclusion of others; it falls into the common pledge of all his creditors. The pursuing creditor is, therefore, required to share the profits with the others. He is subject to their rights to share according to their share and even is subordinated to them if they are privileged, unless he himself has a right of preference. As to the types of creditors that are entitled to take the oblique action, the oblique action is available to any creditor, without distinction between secured or unsecured, privileged or unprivileged. The very fact that a person is a creditor, entitles him to such action, subject, of course, to the conditions laid down by the law. Finally, you must note that the Civil Code provisions regarding oblique actions will not be operative in cases where there are special provisions in relation to specific matters (Article 2000 of the Civil Code). Download 53.56 Kb. Share with your friends:
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