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Document 52011SC0938
COMMISSION STAFF WORKING PAPER Executive summary of the Impact Assessment
COMMISSION STAFF WORKING PAPER Executive summary of the Impact Assessment
COMMISSION STAFF WORKING PAPER Executive summary of the Impact Assessment
/*SEC/2011/0938 final - COD 2011/0204 */
COMMISSION STAFF WORKING PAPER Executive summary of the Impact Assessment /*SEC/2011/0938 final - COD 2011/0204 */
1.
Introduction
This initiative aims
to facilitate cross-border debt recovery by improving access to and the
efficiency of the preservation of bank accounts in the European Union. It will
contribute to strengthening of the confidence of businesses – particularly SMEs
(small and medium enterprises), consumers and families to make full use of the
possibilities offered by the Single Market. This is consistent with the
Commission's integrated approach to strengthen the recovery of the European
economy as set out in the Europe 2020 Strategy for
Growth.
1.1.
Political mandate
and existing instruments
The 2009 Stockholm Programme states that
"the European judicial area should serve to support economic activity in
the Single Market". It therefore "invites the Commission to put
forward appropriate proposals for improving the efficiency of enforcement of
judgements in the EU regarding bank accounts and debtors' assets". Accordingly the Commission Action Plan Implementing the Stockholm
Programme refers to an initiative for a "Regulation on the attachment of
bank accounts". Existing instruments in the area of civil justice do not
deal with enforcement.
1.2.
Consultation and expertise
In preparation of this initiative, the
Commission published a comparative study in 2003 and carried out a public
consultation through a Green Paper in October 2006. Empirical data supporting
the elaboration of the impact assessment was collected by a further external
study and a European Business Test Panel Survey. The Commission also organised
a public hearing and several meetings with experts on enforcement. Additional
comments were provided by an inter-service group within the Commission. This
Impact Assessment was reviewed by the Impact Assessment Board (IAB). The
recommendations issued in the IAB's opinion have been accommodated in this
revised version of the report as follows: (i) the analysis of the problem has
been strengthened by explaining better the stages of cross-border debt recovery
and the problems remaining in this area after the revision of Regulation
Brussels I, in particular the assumptions underlying the estimates of the
economic effects of the measure have been clarified, (ii) the assessment of the
baseline scenario has been expanded and the added value of the preferred option
highlighted; (iii) the assessment of the impacts has been improved, in
particular assessing further sub-options reflecting important elements of the
legislative proposal, with specific focus on time-limits as proposed in the new
initiative. (iv) Finally the legal concepts have been clarified and a glossary
was added in Annex.
1.3.
Respect of Fundamental Rights
The impact on
fundamental rights was assessed in order to ensure that the proposed schemes
fully respect the rights and principles set out in the Charter of Fundamental
Rights. The main provisions affected by the Commission initiative are the
following: the right to an effective remedy (Article 47 subparagraph 1), the
right to a fair trial (Article 47 subparagraph 2), the right to human dignity
(Article 1), the right to property (Article 17), the right for family life
(Article 7) and the right to data protection (Article 8).
2.
Problem definition
2.1.
The problem of cross-border debt recovery
At present, a creditor seeking to recover
his debt in another Member State faces significant difficulties. These
difficulties arise both, in the context of a) proceedings on the merits in
which a court issues a final judgment on the basis of a full analysis of all
factual and legal issues involved in the case, and b) proceedings for provisional
measures in which a court issues an interim decision such as an order preserving
a bank account on the basis of a summary analysis of the case. In line with the
political mandate, this initiative focuses on facilitating to obtain
provisional measures for preserving a debtor's assets and on improving the
efficiency of enforcement of decisions in the European Union. Currently, the
internal market enables a debtor to move his funds from one bank account to
another almost instantly, thereby making it easy for him to escape enforcement.
A creditor, on the other hand, has little chance of blocking a debtor's bank
accounts abroad to secure the payment of his claim with the same swiftness. The
creditor may also have difficulties to find out the whereabouts of his debtor's
account, in particular in cross-border situations. As a result, many creditors are
either unable to successfully recover their claims abroad or do not consider it
worthwhile pursuing them and write them off.
2.2.
Different stages of proceedings
Different stages of obtaining and enforcing
a preservation order are illustrated in the figure below. In many Member States, the creditor can
apply for a provisional measure preserving his debtor's assets already
prior to launching proceedings on the merits. If the provisional measure has to
be enforced in another Member State than the one where it was issued, the
creditor needs to have the decision declared enforceable there (in the
so-called exequatur procedure). Under the current Regulation Brussels I,
exequatur can be obtained for provisional measures issued in another
Member State, except if they have been issued without a hearing of the debtor
(so called ex parte orders). With the revision of Regulation Brussels I,
the requirement of exequatur should be abolished, i.e. decisions given in one
Member State, including certain ex parte orders, will be automatically
enforceable in another Member State. However, enforcement of preservation
orders will remain governed exclusively by national law.
2.3.
The causes of the current problem
Problem 1: Conditions for issuing preservation
orders vary throughout the EU: This makes it
more difficult for creditors to obtain a preservation order in some Member
States than in others. Differences relate for example to the level of proof
required by the court to issue the order (e.g. or to the specific condition
that there is a serious risk that the ultimate enforcement of the judgment will
be rendered impossible). Problem 2: Difficulties to obtain
information on debtor's bank account: In many Member States it is difficult for a creditor to obtain
information about the whereabouts of his debtor's bank account. There are also
Member States, where it is not possible to obtain an order obliging the banks
to disclose whether the debtor holds an account with them. In other countries
however, the enforcement authorities have access to the tax registers. In the
area of family maintenance, the Maintenance Regulation establishes a system of
administrative assistance to creditors by central authorities which are granted
access to information held by public authorities. Problem 3: Costs of obtaining a preservation
order are higher in cross-border cases: The revision of Regulation Brussels I will save creditors about
€2,000 as the average cost of exequatur. However, cross-border cases currently
trigger additional costs. This concerns in the first place the need to involve
an additional lawyer licensed to practice in the country where proceedings take
place. There are also costs of the translation of documents into the official
language accepted by the court or the costs for serving documents across
borders. Problem 4: Differences in national
enforcement systems and length of enforcement procedures in Member States: Even in domestic cases it can take
between 1 day and more than 30 days in Europe to serve a court decision on debt
recovery. In cross-border situations, delays will generally be even longer.
Differences in national enforcement systems also result in additional delays
for enforcement or even inexecution of decisions. In some Member States,
enforcement is carried out by bailiffs acting outside the court system, in
others this is done by the court or by a central administrative agency.
2.4.
Scale of the problem
Problems of
cross-border debt recovery affect in the first place businesses which
are trading or providing services in other Member States. The scale of the
cross-border bad debt that can be potentially secured can be estimated between
€1,12 and €2bn on the basis of different sources of data. According to recent
Eurobarometer surveys, consumers are still reluctant to shop
cross-border. 14% of consumers shopping at a distance encountered problems with
the transaction. Over half of them consider that it is difficult to access
civil justice in another EU Member State. The monetary value of 'problematic'
cross-border maintenance claims can be estimated to amount up to €268
million per year. The situation for maintenance creditors will improve to some
extent due to the Maintenance Regulation.
2.5.
Need for action at EU level
Any new European instrument on the preservation
of bank accounts in cross-border situations would be a matter of recognition
and enforcement of a judicial decision and it would also eliminate the
obstacles to the proper functioning of civil proceedings. It would as such be
covered by lit a) and f) of Article 81 TFEU, that also calls for measures
particularly when necessary for the proper functioning of the internal market.
As regards subsidiarity, the problems (namely cost of proceedings, difficulty
to obtain disclosure of debtor's assets and inefficient civil procedural rules)
have a clear cross-border dimension and they cannot be adequately attained by
Member States alone.
3.
Objectives
The general objectives of the initiative
are to facilitate the recovery of cross-border claims for citizens and
businesses, particularly SMEs, to increase confidence of traders, to improve
payment morale of debtors, to reduce the risks involved in cross-border trade
and to improve the efficiency of enforcement of judgements. The specific
objective is to increase effectiveness of the procedure for cross-border
enforcement by enabling creditors to obtain preservation orders or bank
attachments on the basis of the same conditions irrespective of the country
where the competent court is located, allowing creditors to obtain information
on the whereabouts of their debtors’ bank accounts, reducing costs in
cross-border situations, and increasing awareness that a European procedure is
available.
4.
Retained Policy Options
Option A: Status
quo after revision of Regulation Brussels I. Under this option, the
Commission would not take any action in addition to the proposal for a revision
of Regulation Brussels I adopted in December 2010. Option B:
Creation of a European Account Preservation Order. This option would create a
new European procedure with protective effect, which would supplement
existing remedies under national law without requiring EU Member States to
modify their national law on civil procedure or their enforcement systems. The
European procedure would regulate the procedure for issuing the preservation order
for bank accounts as well as rules for its implementation by the bank holding
the account targeted. Option C: Harmonising
national rules for the preservation of bank accounts. This option would harmonise
the national rules of civil procedure for the preservation of bank accounts in
cross-border cases by way of a European directive.
5.
Evaluation of Policy Options and Impact Assessment
5.1.
Option A: Status Quo after revision of Regulation Brussels I (if adopted)
(a) Objectives to achieve: Maintaining the status quo would have no effect on the problems
identified and would not contribute to achieving the specific policy objectives
outlined above. (b) Economic impact: Under the status quo, there are 60% more companies applying for
provisional measures preserving a debtor's bank account in domestic than in
cross-border cases[1]. This means that
companies make less use of the possibility to secure payment of their debts by
way of preservation orders in cross-border transactions than in domestic cases
and, as a result, write off more cross-border than domestic debt. This amount
can be quantified at between €441 Mio and €800 Mio[2].
The difficulties of cross-border debt recovery are putting off companies, in
particular SMEs, and consumers from making full use of the Single Market. As a
result of the revision of Regulation Brussels I, it is expected that the number
of companies taking advantage of preservation orders in a cross border
situation would increase around by 10% compared to the current situation,
leading to the increase of the debt preserved corresponding to estimated
€68-120 Mio. (c) Fundamental rights: The Status quo would not contradict the requirements of the Charter
of Fundamental Rights of the European Union since the Charter only requires
Member States to respect the rights set out therein when they are implementing
Union law and the process of enforcement of civil judgment is currently not
covered by EU instruments. (d) Views of Stakeholders: There have been no requests to keep only the status quo.
5.2.
Option B: European Account Preservation Order
a) Effectiveness to achieve policy objectives: Option B
achieves the general policy objective to facilitate the recovery of
cross-border claims for citizens and businesses by making it easier to obtain a
preservation order securing the recovery of cross-border debt. It achieves the
specific policy objectives to a significant extent. It will allow a
creditor to use an efficient and uniform European procedure under the same
conditions in all Member States of the EU – e.g. without a prior hearing of the
debtor, thereby safeguarding the surprise effect of the measure, to obtain
information about the whereabouts of his debtor's accounts without having to
pay the services of private debt collecting or investigation agencies. It will
reduce lawyer's costs and translation costs. Costs of banks and bailiffs will
be made more transparent by obliging Member States to fix a single fee for
their respective services. It will enable a creditor to obtain and enforce a preservation
order more quickly by introducing time-limits for certain key steps of the
procedure. b) Economic impact: Option B would have a positive economic impact and contribute to
reducing the overall amount of the €55bn bad debt. It would enable companies to
secure the recovery of additional bad debt of between €373Mio and €600Mio
per year, thereby increasing the overall level of bad debt secured by preservation
orders from €679 Mio - €1.2 bn to between €1.12 bn and €2bn per year
over the time. An estimation of cost savings for companies currently
involved in cross-border trade would be in the range of €81,9Mio to
€149Mio annually[3]. Option B will benefit in particular SMEs
and it is likely to encourage more companies and consumers to make full use
of the possibilities offered by the Single Market. The availability of an
effective sanction in case of non-payment (in addition to the increase in the
amount of the claim already provided by the Late Payment Directive) is also
likely to improve the payment behaviour of debtors. The increase in the number
of preservation orders risks having a negative economic impact on banks
where they are currently not allowed to charge a fee for implementing the
measure. c) Social impact: Option B together with the implementation of the Maintenance
Regulation is expected to allow maintenance creditors to recover a notable
proportion of claims from recalcitrant debtors. d) Impact on Member States: Implementation costs are considerably lower than the alternative
option of harmonising national rules. Costs of familiarising the judges and
enforcement officers should be small and would be one-off costs. Member States
whose judicial system is currently comparatively slow might incur higher
implementation costs to comply with the procedural deadlines. Option B will
respect Member States legal traditions. e) Fundamental rights: Option B would improve the right of the creditor to an effective
enforcement of his debts. At the same time, the new procedure would ensure that
the rights of the debtor are safeguarded in full compliance with the
requirements of the Charter of Fundamental Rights, notably by granting prompt
and adequate remedies against the preservation order and by ensuring that
amounts necessary to ensure his livelihood will be exempt from execution. The
instrument should ensure that the debtor's personal data is fairly and lawfully
processed, the purpose of processing this data is restricted to the sole
purpose of preserving the amount of the claim, the debtor's data is not kept
for longer than is necessary and that the debtor has a right to recourse
against the processing of his data. f) Views of stakeholders: A large majority of stakeholders and the European Parliament call
for developing specific European instrument for cross-border debt recovery.
5.3.
Option C: Harmonisation of national rules on the
preservation of bank accounts
(a) Objectives to achieve: This option would also partly achieve the policy objectives set out
above, albeit to a lesser extent than Option B. However, Option C would not
allow national procedures to coexist with the harmonised "European"
procedure. (b) Economic impact: Option C would have a slightly different economic impact than option
B. While it would align the conditions of issue of preservation orders, e.g.
ensuring that throughout the Union, preservation orders could be obtained under
the same conditions, eventually differences between the procedures would
continue to persist if the harmonisation instrument (e.g. by way of a
Directive) did not deal with all detailed aspects of the procedural law of the
Member States. Consequently, option C would not achieve the same degree of
uniformity as a self-standing European procedure established by a Regulation
would. The remaining differences between Member States' national procedural and
enforcement law are likely to continue to require the involvement of a lawyer
licensed to practice in each of the Member States in which the preservation
order is to be obtained and/or enforced. This would not allow for the same cost
reduction under option C than under option B. Option C is therefore likely to
have a less positive economic benefit on SMEs which are less likely to
have in-house legal departments and are generally more sensitive to legal costs
than large companies. (c) Member States: Option C would require Member States to implement the rules
harmonised by the directive into their national law. Option C would therefore
be more costly to implement and be more intrusive into national legal
traditions. (d) Fundamental rights: Option C would have a positive impact on the right of the creditor
to an effective enforcement. Compliance with the requirements of the Charter
concerning the protection of the defendant would equally be required.
6.
Comparing the Options
Key: ++ =
very positive impact; 0=no or neutral impact; - - = very negative impact. Policy options || Effectiveness to reach objectives || Economic impact || Impact on Member States || Fundamental Rights Option A: Status Quo after revision of Regulation Brussels I || 0 || 0 || 0 || 0 Option B: European Account Preservation Order || ++ || ++ || 1)implementing costs – 2) legal traditions 0 || + Option C: Harmonisation of national rules for preservation orders || + || + || 1)implementing costs – – 2) legal traditions – – || + In conclusion, option A fails to
address efficiently the policy objective, since the current obstacle of
divergent criteria for obtaining bank preservation orders and their effects
within national legal systems still remains. Option C does not ensure
the same economic and social benefit as option B and would be unnecessarily
intrusive for national legal systems. Option B offers the most comprehensive
solution, and therefore option B is the preferred option. Sub-options
of option B have been considered as follows: First, the European procedure
would enable the creditor to obtain a preservation order normally without a
prior hearing of the debtor (ex parte), thereby safeguarding the
surprise effect of the measure. Second, the court having jurisdiction on the
merits of the case should be also competent to issue preservation orders. It
will need to be determined whether additional courts are competent to deal with
the objections of the debtor against the order – i.e. the courts of the
debtor’s domicile. Third, provisions would allow the creditor to obtain
information on the whereabouts of his debtor's account: Either a disclosure
order issued by the court would oblige all banks located in a given Member
State to check if the debtor holds an account with them and, or the court or
the enforcement authorities would get direct access to existing public
registers containing the necessary information. Lastly as regards time-limits,
the European procedure would require no slower implementation than for national
measures, or it could introduce specific time limits – e.g. for issuing the
order, for serving it on the bank and the debtor, or for deciding on an application
for review by the debtor. [1] Difference between 11.6% of companies applying for a
bank attachment cross-border and 19.2% applying for it domestically. [2] Estimate on the basis of sample of bank institutions
was €1.12bn – €678 Mio making €440 Mio and the second estimate was €2 bn – €1.2
bn making €800 Mio. [3] This assumes that companies can save an average of
10h in lawyers' fees per cross-border case which amounts on an EU average to
€2.410 per case. This amount is multiplied with the estimated current number of
cross-border freezingpreservation
orders per year of between 34.000 and 61.828.