President Nikos Christodoulides faces a deadline today to sign, refer back to parliament, or challenge before the Supreme Court twelve pieces of legislation covering foreclosures, the insolvency framework, guarantors and the body for out-of-court resolution of financial disputes, as the 15-day period from the date of receipt of the laws expires.
Christodoulides, who returned from abroad yesterday, must today either sign all twelve laws or some of them, refer any of them back to parliament, or take any of them directly to the Supreme Court.
The government is in continuous communication with the Law Office, which has already forwarded its views on some of the legislation to the Presidential Palace and is due to send its recommendations on the remainder today.
Government and Law Office sources told Phileleftheros that final decisions will be taken within the deadline and that the two sides are in ongoing consultation.
Unconstitutionality concerns
According to information received by Phileleftheros, unconstitutional provisions have been identified in some of the legislative measures.
These particular laws, which originated as party legislative proposals, have been the subject of findings communicated by the Law Office to President Christodoulides. Given the seriousness of the matter, a conversation between the President and Attorney General Giorgos Savvides has not been ruled out.
Tight parliamentary timetable
Any referrals back to parliament would need to be sent today or at the latest tomorrow, to allow the parliamentary Finance Committee a matter of hours on Wednesday and possibly Thursday to reach its decisions. Parliament is due to dissolve on April 23 ahead of the May 24 parliamentary elections. The final plenary sitting has 61 laws on its agenda, some of which are expected to be withdrawn.
Should there be further referrals on the foreclosure laws, MPs would need to decide before leaving office whether to accept or reject them. If parliament rejects the referrals and the President maintains his position, he would have the option of taking the matter to the Supreme Court.
Debt confirmation mechanism
The President is expected to sign the laws relating to the debt confirmation mechanism operated by the Financial Commissioner, which also adds the option of debt restructuring.
Under the legislation, the Commissioner’s decisions on complaints against financial companies will be binding up to €20,000, with those companies retaining the right to appeal to the courts on the substance of any decision.
Borrowers will also be able to approach the Financial Commissioner for debt confirmation upon receiving a Type I letter rather than a Type IA letter, giving them earlier access to the Commissioner’s office. The Commissioner has, however, expressed concern about creditors’ right of access to the courts even on the substance of decisions issued.
Broader economic concerns
The majority of the remaining legislative measures are considered problematic, with government sources warning of moral hazard: borrowers who know that a suspension of foreclosures protects their property from auction may not meet their contractual obligations. Loan interest, however, continues to accrue despite the foreclosure suspension.
Despite an improvement in the country’s banking system and a reduction in non-performing loans to €1.5 billion, lending rates and the cost of state financing may rise, government sources said.
Those sources expressed concern that international institutions and credit rating agencies may view unfavourably the changes to the legal framework on foreclosures, guarantors and related matters.