Lawyers share an opinion that Actio Pauliana (challenging of a transaction carried out to the creditor's detriment) is a little-studied and legally regulated legal instrument. Therefore, the Supreme Court’s case-law compilation on the understanding and application of this means of creditor protection in the practice of the Latvian Senate will be useful for lawyers, especially in the context of commercial law and insolvency.

The prerequisite for application of the Actio Pauliana is a debt that is overdue and the creditor's ability to prove that the insolvent debtor has deliberately acted to the detriment of the creditor in order to avoid payment of the debt. It is the proving of abusive nature of the action that makes it difficult or even impossible to apply this remedy. Therefore, initially in case-law, but later also in the legislation, the presumption of fraud (praesumptio fraudis) was introduced, meaning that the said malicious activity was carried out with the participation of a third party, i.e., in the case of compensation transactions, the third party knew about the debtor's intention to avoid payment of the debt. The purpose of Actio Pauliana is to protect creditors from fraudulent legal transactions, in particular transactions aimed at reducing the debtor's property by transferring it to third parties in bad faith.

The case-law compilation of the Supreme Court consists of two parts: an overview of Latvian Senate’s rulings and comments by legal scholars.

The first part (the case-law compilation) includes 37 chronologically arranged excerpts of Latvian Senate’s rulings in civil cases regarding Actio Pauliana and its scope (rulings adopted between 1919 and November 1940). The compilation contains Senate’s findings regarding the application of this remedy during the relevant trial and the senators' reasoning for the application thereof.

The second part (the doctrine) is designed as an overview of legal scholars' comments on the Actio Pauliana and the understanding thereof. The comments are complemented by an insight into the findings of court rulings.

Full texts of various materials are available in electronic format in the Latvian National Digital Library, on the Supreme Court website and other websites.

The compilation was prepared by Zinaida Indrūna, a consultant to the Division of Case-law and Research on the application of laws, at the suggestion of the Senate’s Department of Civil Cases.

The compilation "Disputing the transactions concluded to the detriment of creditors (Actio Pauliana). Case-law and legal doctrine of the Latvian Senate until 1940" is available on the website of the Supreme Court in the section Case-law/ Compilations of case-law/ Civil law

 

Information prepared by

Rasma Zvejniece, the Head of the Division of Communication of the Supreme Court

E-mail: rasma.zvejniece@at.gov.lv, telephone: +371 67020396, +371 28652211