Debt Recovery in the European Union
Article 81 of the Treaty on the Functioning of the European Union establishes a legal basis for the development of judicial cooperation in cross border civil matters within the European Union. A first step in this process can be seen in the introduction of two specific procedures, the European Order for Payment Procedure and the European Small Claims Procedure. These procedures have been introduced in order to bring about a uniform procedure common to all Member States and to remove any barriers that exist in cross border debt collection.
European Order for Payment Procedure (EOPP)
Regulation EU 1896/2006
In response to the perceived need for a uniform or harmonized procedure to obtain a judicial decision for the recovery of uncontested claims within the EU, Regulation 1896/2006 was enacted in December 2006 to create a first “uniform European procedure for civil disputes”.
The Procedure applies to all European Union Member States, with the exception of Denmark and deals specifically with “cross-border cases”. Article 3 of the Regulation defines a cross-border case as one, in which at least one of the parties is domiciled or habitually resident in a Member State, other than the Member State of the court seized.
Significantly, this procedure does not require the claimant to be a European resident (Article 7.5), and makes it possible to obtain a quick decision enforceable through the whole of Europe.
Article 7(e) of the Regulation does not require documentary evidence to accompany the application, only a “description of evidence”, this is to avoid high translation costs and to make the process more efficient as the debts that the EOPP generally deals with are not disputed.
However, a claim does not have to be uncontested to be made through this Procedure. A claim will only be determined as being uncontested during the procedure by the silence of the defendant who does not contest the claim after receiving a payment order. Finally, of note is the fact that there is no ceiling for the amount that can be claimed.
Procedure
• The regulation includes a form, Standard Form A set out in Annex I, to be used to apply for a European order for payment. A pecuniary claim must be for a specific amount that has fallen due at the time when the application for a European Order for Payment is submitted. This form can be submitted by post or even electronically.
• The procedure is based on the use of standard forms for communication between the court and the parties, in order to facilitate its administration and enable the use of automatic data processing. According to Article 1(a) of the Regulation the purpose of the EOPP is to simplify, speed up and reduce the costs of litigation in cross-border cases concerning uncontested pecuniary claims. Another purpose is to permit the free circulation of European orders, throughout the Member States, by laying down minimum standards.
• Once the order is issued in accordance with article 12, which is usually within 30 days of the lodging of the application, it is served on the defendant in accordance with national law by a method that has to meet the minimum standards laid down in articles 13, 14 and 15.
• The defendant may then, within 30 days, lodge a statement of opposition to the EOPP with the court of origin, using standard form F, which is be supplied to him together with the order for payment (Article 16). As opposed to normal procedural rules, the burden to initiate adversarial proceedings rests with the defendant.
• If he does lodge a statement of opposition, the proceedings continue before the competent courts of the Member State of origin in accordance with the rules of ordinary civil procedure of that state. If he does not do so, the court of origin will declare the European Order for Payment enforceable using standard form G (Article 18).
• After that, the order must be recognized and enforced in the other Member States, without the need for a declaration of enforceability, and without any possibility of opposing its recognition.
European Small Claims Procedure (ESCP)
The European Small Claims Procedure (ESCP) was introduced by means of Regulation (EC) No 861/2007 of The European Parliament and of The Council of 11 July 2007. According to the Regulation, the objective of such a procedure is to facilitate access to justice, and to simplify and speed up litigation concerning small claims in cross-border cases whilst reducing costs.
It created for the first time in Europe a uniform, speedy and affordable means of debt recovery for low value claims in cross border cases for consumers and businesses. The European Small Claims procedure came into effect in all Member States, with the exception of Denmark, from 1 January 2009. Petitioners in any of the EU’s member states can use the procedure to take action against a business they have dealt with in any of the other EU countries.
As with the EOPP detailed above, the European Small Claims Procedure (ESCP) operates on the basis of standard forms. It is set up as a written procedure unless an oral hearing is considered necessary by the court. The Regulation provides for four standard forms and establishes time limits for the parties and for the court in order to speed up litigation.
Also, as with the EOPP, the European Small Claims Procedure (ESCP) applies only to cross-border cases, that is, cases in which at least one of the parties is domiciled or habitually resident in a Member State other than the Member State of the court where the action is brought. Domicile is determined in accordance with Articles 59 and 60 of EC Regulation No 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters.
In practice what the EU has introduced is a standardised procedure to be used by all participating court systems. It was created in response the need for Community legislation that guarantees a level playing-field for creditors and debtors throughout the European Union . For claims under €2,000, (excluding all interest, expenses and outlays) a petitioner can fill in a claim form and send it to the court system of their Member State of residence. This saves the applicant from having to take action in foreign courts in foreign languages.
Procedure
• The claim is commenced by filling in standard claim Form A, as set out in Annex I, and lodging it with the court or tribunal with jurisdiction directly, by post or by any other means of communication .
• The claim form should include a description of the evidence supporting the claim and be accompanied, where appropriate, by any relevant supporting documents. The claim form, the response, any counterclaim, any response to a counterclaim and any description of relevant supporting documents must be submitted in the language of the court or tribunal.
• Where the court or tribunal considers the information provided by the claimant is inadequate or insufficiently clear or if the claim form is not filled in properly, it will give the claimant the opportunity to complete or rectify the claim form or to supply supplementary information or documents or ultimately to withdraw the claim.
• A copy of the claim form, and, where applicable, of the supporting documents, together with the answer form is then served on the defendant in within 14 days.
• Any counterclaim is submitted using standard Form A, and any relevant supporting documents should accompany the counter claim on the claimant within, again, 14 days of receipt. The claimant then has 30 days to respond to any counterclaim.
• If the court agrees that it is appropriate to use the small claims procedure it will give the defendant 30 days in which to respond. It will then make its ruling within 30 days. The court can also:
(a) demand further details concerning the claim from the parties within a specified period of time, not exceeding 30 days;
(b) take evidence in accordance with Article 9; or
(c) summon the parties to an oral hearing to be held within 30 days of the summons.
Enforcement
This Regulation was introduced with the objective of making it simpler to obtain the recognition and enforcement of a judgment given in the European Small Claims Procedure in another Member State. It provides for the enforcement of decisions in any of the member states without the need to go through the formal process of seeking mutual recognition of judgments (exequatur).
The enforcement procedures are governed by the law of the Member State of enforcement. A judgment delivered in a European Small Claims Procedure is enforced under the same conditions as a judgment handed down in the Member State in which it is to be enforced. Under no circumstances may the judgment be reviewed as to its substance in the Member State of enforcement.
Costs
The costs of the proceedings are borne by the unsuccessful party. As stated, purpose of this regulation was to better facilitate access to justice, because of this the regulation provides that the principles of simplicity, speed and proportionality should be kept in mind by the court when making any decisions in relation to costs. The regulation also provides that the details of the costs to be charged must be made public and the means of setting any such costs be transparent.
Conclusion
As can be seen from the above the EOPP and ESCP were introduced to create a simplified system for uncontested claims without having to make application to a foreign court. For both procedures representation by a lawyer or any legal professional is not mandatory. It is also important to emphasise that these procedures are in addition to and not in place of the existing national procedures for debt recovery.
Although there has been some reported use of the EOPP the potential and utility of these new procedures remains to be seen. The procedures do not appear to be used that frequently or appear to be widely known. Time will tell whether they will become a cornerstone of European Union civil debt recovery.
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