European payment order procedure and measures to simplify and speed up small claims litigation: Green Paper

The European Commission has launched a consultation with all interested parties on a European payment order procedure and on measures to simplify and speed up small claims litigation. Following the Green Paper, the Commission has adopted two Proposals for Regulations on the subject.

ACT

Green Paper on a European order for payment procedure and on measures to simplify and speed up small claims litigation [COM (2002) 746 final - not published in the Official Journal].

SUMMARY

1. On 20 December 2002 the Commission adopted a Green Paper on a European order for payment procedure and on measures to simplify and speed up small claims litigation with a view to initiating consultations on the possibility of a EU legislative initiative in the field. The deadline indicated in the Green Paper for sending in comments was 31 May 2003.

EUROPEAN PAYMENT ORDER PROCEDURE

2. All the Member States are aware of the problem of recovering uncontested debts. Several Member States have made provision for a specific rapid recovery procedure. However, especially in cases where the parties are domiciled in different Member States, the costs and delays inherent in ordinary civil proceedings (often the only form of recourse applicable) create insurmountable obstacles to access to justice, thus placing bad debtors at an advantage.

3. A European payment order procedure, i.e. a specific, fast-track, inexpensive procedure for setting claims which, it is assumed, will not be contested, would ensure rapid debt recovery and would be of fundamental importance to economic operators in the European Union.

4. Payment order procedures are used in many EU countries. There are two types of procedure: what is known as the "evidence" model, whereby the claimant is required to produce written evidence to substantiate the claim, which is examined by a judge; and the "no evidence" model, in which the courts do not assess the claim's validity. In the second model, whenever a claim is admissible and satisfies the basic formal requirements, the court issues an order for payment without it being necessary to submit supporting documents.

5. Depending on the model, defendants can contest claims in one or two ways: one in most countries applying the "evidence" model, and two in most countries applying the "no evidence" model.

Scope of application of the instrument

6. As regards financial orders or orders to take a certain course of action, the Commission suggests the possibility of limiting orders to a payment obligation in view of the clear predominance of financial orders in civil cases. It has also asked whether the procedure should apply only to claims below a certain amount.

Form and content of payment order claims and supporting documents

7. The Commission has drawn up a preliminary list of data which should be included in European payment order claims. Whether there is an obligation to provide supporting documents which prove the existence of the debt depends wholly on the chosen approach, i.e. the "evidence" or "no evidence" model.

8. A standard claims form will have to be used if claims are to be processed automatically. At the same time, the payment order procedure should also be automated where possible. Ideally it should be possible for communication between the court and the parties to take place by email.

Examination of claims and standardisation of decisions

9. The person responsible for examining the content of claims also depends on the model chosen (a judge in the "evidence" model but not necessarily so in the "no evidence" model).

10. As regards formal requirements, a standard claims form would facilitate access to justice and a standardised decision would make it easier to have a payment order enforced in a Member State other than the one in which it was issued.

Notifying defendants of their rights and obligations

11. As a minimum, defendants must be provided with the following information so that they can decide whether to contest a claim:

the possibility of lodging a statement of objection and the associated time-limit and formal requirements;
whether the payment order is enforceable if the claim is not contested within the time-limit.

Contestation and status of res judicata

12. To enable the following ordinary procedure to be properly prepared and simplified, the Green Paper moots the possibility of a uniform deadline for lodging statements of objection. If the defendant contests the claim within the time-limit the payment order is not enforceable. Where no statement of objection is issued, a fundamental difference between the different types of payment order may arise in that they can consist of one or two stages, or one or two ways in which claims can be contested.

13. Payment orders may acquire res judicata status where the defendant allows the deadline for lodging a statement of objection to elapse, as provided for in most of the Member States which apply this procedure.

SETTLEMENT OF SMALL CLAIMS

14. Streamlined procedures for small claims do not exist in all the Member States. Where no procedure exists which is appropriate for the disputed amount, the expense involved in obtaining a court decision on these claims is often disproportionate to the amounts at stake. This is a particularly serious problem in the case of cross-border disputes, which entail the services of two lawyers, translation/interpreting costs and travel expenses. It is therefore necessary to rationalise mechanisms and to limit their cost so that ordinary people and businesses can have their rights enforced.

Scope

15. We need to establish a quantitative threshold based on the amount of the claim, below which it must be regarded as a "small claim".

16. With regard to whether the procedure should be mandatory or optional, the Green Paper stresses that a mandatory procedure would provide greater scope, especially if it was not restricted to cases with a cross-border dimension. At the same time, it suggests leaving judges the option of transferring the case to ordinary proceedings.

Simplification of procedural rules

17. With a view to simplifying the small claims procedure as much as possible, the Green Paper envisages:

using multilingual standard forms containing essential data (such as the parties' names and addresses and the competent court, the claim, including a short description of the facts, the date and signature);
the possibility of instituting proceedings by means of an oral declaration;
the right to be represented by a person other than a lawyer, or not to be represented;
introducing more flexible rules on the taking of evidence, or limiting the forms of evidence which are accepted;
introducing the possibility of a purely written procedure;
adopting less strict rules on the contents of decisions;
excluding/restricting the right of appeal.

Responses to the Green Paper

18. The Commission has received many responses to the Green Paper. Contributions have been received from almost all Member States and from various interested parties and associations (particularly associations representing legal professions). A discussion paper [PDF] reflects the general trends of the contributions received on the most relevant issues concerning the main aspects of the future Community instrument for small claims.

Background

19. According to Articles 61(c) and 65 of the Treaty establishing the European Community, the Community adopts measures in the field of judicial cooperation in civil matters with cross-border implications.

20. Point 38 of the conclusions of the 1999 Tampere European Council refers to orders for payment as an element that is instrumental to smooth judicial cooperation and to enhanced access to law. Points 30 and 31 of the conclusions call for a simplification and acceleration of cross-border litigation on small consumer and commercial claims.

RELATED ACTS

Proposal of 15 March 2005 for a Regulation of the European Parliament and of the Council establishing a European Small Claims Procedure [COM (2005) 87 final - not published in the Official Journal].

Following the consultation procedure for the Green Paper, the European Commission adopted on 15 March 2005 a Proposal for a Regulation establishing a European Small Claims Procedure. This Regulation will apply in civil and commercial matters, whatever the nature of the court or tribunal, where the total value of a monetary or non-monetary claim excluding interest, expenses and outlays does not exceed EUR 2 000 at the time the procedure is commenced.

Adoption: codecision procedure (COD/2005/0020)

On 13 June 2007, the Council adopted a Common Position regarding this proposal for a regulation.

Amended proposal of 7 February 2006 for a Regulation of the European Parliament and of the Council creating a European order for payment procedure [COM (2006) 57 final - not published in the Official Journal].

On 19 March 2004 the Commission adopted a proposal for a Regulation creating a European order for payment procedure [COM (2004) 173 final]. This proposal amends the initial proposal in response to amendments voted by the European Parliament. The proposal for a Regulation is designed to:

simplify, speed up and reduce the costs of litigation in cross-border cases concerning uncontested pecuniary claims;
permit the free circulation of European orders for payment throughout all Member States by laying down minimum standards whose observance renders unnecessary any intermediate proceedings to be brought in the Member State of enforcement prior to recognition and enforcement.

Adoption: codecision procedure (COD/2004/0055)

On 11 December 2006, the Council approved at second reading the proposal for a Regulation creating a European order for payment procedure. Regulation (EC) No 1896/2006 creating a European order for payment procedure [Official Journal L 399 of 30.12.2006] is applicable from 12 December 2008, except certain Articles which are applicable from 12 June 2008.

See also