LAWMAKERS are contemplating putting off the ‘debtors law’ which would take away court powers to order the imprisonment of people who don’t pay debts.
The law banning the jailing of debtors will come into force on June 15 this month, finally bringing Cyprus in line with European practice regarding the human rights of people in debt.
Parliament voted in the law on debtors last year, but implementation was set for a year later. The move was taken based on Council of Europe suggestions to abolish the imprisonment of debtors like in the rest of Europe.
However, lawmakers are now seriously considering whether to postpone implementation or amend the bill to allow the threat of jail to remain in certain circumstances.
The problem appears to lie in the fact that lawyers and commercial parties fear the lack of options available to twist the arms of reluctant debtors once the law is in place.
Chairman of the Cyprus Bar Association Nicos Papaefstathiou argues that experience shows debtors will almost always wait until the last minute to pay their debts. If you take the threat of jail away, they will no longer feel obliged.
He told the Cyprus Mail that the lawyers’ association was against the bill and wanted to keep the penalty of imprisonment for debtors.
“Since the court issues an order for the investigation of the financial background of the debtor, he can comply with the court order or face jail. The law gives full protection to debtors to apply to change or modify the order. For example, if they are unable to pay because they lost their job. It depends on his circumstances,” he said.
“Abolition will create problems with transactions, court decisions and the economy in general. Experience shows that debtors like to wait to the last minute to pay debts. The court order is necessary.”
Asked whether this was contrary to the European Convention of Human Rights (ECHR), he replied, “There is a lot of misinformation on this issue. The ECHR says no one should be jailed for not being able to meet contractual obligations. But in Cyprus, this doesn’t happen. People are only jailed when the court finds that they can meet their obligations, but don’t. No one is jailed for not being able to pay.”
Papaefstathiou maintained that there would be no conflict with European law if the new law were abandoned.
Asked if there were other ways of dealing with bad debts apart from jail, he said: “Yes, but they are not always available. That’s why this is an effective tool, it is only used when others cannot be implemented.”
Regarding the seizure of property for those who refuse to pay, the lawyer asked: “What if they don’t have property to seize but they make enough in wages to pay their debts? Then what can we do?”
Papaefstathiou said the issue was being discussed with deputies and the various parties to see if a last minute deal could be reached.
The main thinking behind the debate is either to postpone implementation of the law or amend it to allow the jailing of debtors who have the means to pay their debts but don’t.
Another Nicosia lawyer who did not wish to be named disagreed with the thought that the law as it stands today does not conflict with European law.
“This is ridiculous, I told lawyers so, but they were up in arms saying, this is our bread and butter. This is not right, are you a European or not? Can you jail someone for debts? Do we believe in human rights and the constitution?”
The lawyer argued that the problem in Cyprus stemmed from the culture of purchasing goods on credit using post-dated cheques and other means.
“We must stop this culture of buying everything on credit in Cyprus,” he said.
He rejected the argument that debtors would no longer feel obliged to meet debts if the threat of jail was not there. “Well let’s introduce the law that when you pass a red light, we cut off someone’s finger. This is the logic.
“You cannot jail people even if they have the means to pay their debts. If people have property and are not paying, issue a writ to seize it, why jail them?”
The lawyer highlighted a conflict of interest between parliament and the legal society.
“The deputies are working as lawyers in parliament and not deputies. Principles are principles. This argument that those who don’t pay must be jailed doesn’t stand. It’s unacceptable, as the former Attorney-general Alecos Markides recognised, which is why he never jailed debtors.”
