Is Self-Help Repossession Possible in Central Europe?

Abstract

To create healthy and efficient market economy, a viable legal framework which protects the ownership of individuals is a requirement. A part of this legal framework is formed by a secured transactions law which in the United States represent one of the most important branches of laws which allows the creditor to take a security interest on a debtor's collateral and in case of default the creditor is entitled to take advantage of the collateral directly. Since the beginning of the 1990s in the area of Central Europe there have been several attempts to introduce new secured transactions law. This effort succeeded only partially and therefore the whole system does not work efficiently. Central and Eastern European countries suffer from devotion to traditional legal principles which stem up from Roman legal tradition and therefore are unable to reflect upon new market tendencies appropriately. In this article we introduce and describe the self-help repossession which represents an extrajudicial enforcement tool for secured creditors in the United States. Subsequently, we assess the self-help repossession in our legal systems, in particular Slovakia, Hungary and Romania. It will be shown that despite Supreme Court's or Constitutional Court's decisions prohibiting self-help repossession, this enforcement tool is frequently applied and exercised.