When the need arises to enforce an obligation or recover a debt, the legal process can seem complicated, so it is essential to understand certain legal tools that expedite the process, such as the executive order, which allows for more efficient action.
Enforcement Proceedings
Instead of debating whether or not a right exists, as occurs in other types of processes, the enforcement proceedings begins with a document that already recognizes that right, allowing the creditor to demand compliance with the obligation contained in this document without having to reprove what has already been established.
The document must be considered an enforceable order, expressly recognized by law, and meet the requirements established by law.
Executive order and importance
A document that must support a clear, express, and enforceable obligation; its importance lies in the fact that it grants the creditor the power to initiate a swift and direct lawsuit to collect a debt or demand compliance with an obligation, without having to go through the evidentiary stages of an ordinary trial:
- Only certain documents have enforceable value: checks, promissory notes, bills of exchange, court judgments, public deeds, and other documents expressly recognized by law can be used to initiate enforcement proceedings. What is not included in the law does not have this value.
- The debt must be liquid, clear, and enforceable; that is, the amount must be determined or determinable, and the deadline for payment or enforcement must have already passed.
- Obligations to do or not to do can also be enforced; as long as they are contained in a valid document, conduct such as delivering a good or refraining from performing an action can also be claimed.
- Alternative or optional obligations are contemplated: the law establishes how to proceed when the obligation allows the debtor to choose between several forms of compliance or to substitute one service for another.
Common mistakes and legal consequences
We present three common errors that compromise the validity of the executive order, which may lead to the rejection of the claim:
- The document does not meet the legal requirements for its type and nature.
For a document to be considered an enforceable instrument, it must have been issued in accordance with the law in force at the time of its creation and contain all the elements required by that law according to its type (check, promissory note, other).
It’s not enough for the document to refer to an obligation; it must be complete, valid, and comply with the applicable legal formalities; otherwise, it will have no enforceable merit.
- Lack of notarial authentication or special certification.
Another common error is that the document has not been properly authenticated before a notary public, thus affecting its formal validity as an enforceable title.
In the case of a court judgment as an enforceable order, without the secretarial certification confirming: (i) that the judgment is final, and (ii) that it has not been enforced in the court that issued it.
- Deficiencies in accounting certifications.
The submission of incomplete accounting certifications, in which the accountant’s professional qualifications are not attested, nor is their signature authenticated before a notary, compromises the validity of the document.
These errors have serious procedural consequences, such as the judge rejecting the claim for lack of a suitable title. But even if the claim is not rejected outright, the debtor can take advantage of these shortcomings to complicate the process, delaying collection and generating costs for the creditor. And that is not the purpose of the foreclosure process, which was designed precisely to facilitate the efficient execution of clear and enforceable obligations.
Recommendations
At EVANS GROUP, we help our clients avoid these pitfalls by ensuring that every document submitted meets legal requirements from the outset, ensuring the process achieves its goal of recovering debts. Therefore, it’s important to:
- Verify that the documentation is complete and legally valid.
Ensure that promissory notes, contracts, checks or other documents that can serve as executive orders are correctly drafted, contain the elements required by current law and have been issued in accordance with their legal nature.
- Authenticate properly.
The lack of notarization or required certifications can render even a legitimate obligation unenforceable. Always check whether your document requires formal authentication, certification of suitability, or validation by a competent authority.
- Seek legal advice before issuing or accepting documents of executive value.
A preventive consultation with a specialized lawyer can prevent an inadequate document from blocking your access to the executive route.
- Keep track of expiration dates and prescription dates.
Record the expiration dates of your securities and the legal deadlines for filing collection actions. Acting late may result in the loss of your rights.
- Act with diligence.
If you have a right to collect, don’t delay it, as swift action is key for enforcement proceedings to fulfill their purpose: achieving effective compliance with an obligation in the shortest possible time.
The enforcement order is a tool for expeditious debt recovery within the Panamanian legal system, but its effectiveness depends on its legal and formal suitability. Understanding its requirements, avoiding common mistakes, and acting strategically is essential for those doing business in Panama.
We are committed to supporting our clients from the outset, ensuring that each document supporting a right to collect is properly structured.
If you need advice on enforcement orders or want to prevent legal contingencies in your collection processes, do not hesitate to contact us. We are here to protect your interests and enforce your rights efficiently.