The European order for payment procedure: an overview

di Sergio Quarta

Categories: Business Law
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The European order for payment procedure: an overview

 di Sergio Quarta

The first impulse that led to the creation of the European order for payment procedure was in the first decade of the 90s, precisely by means of the International Congress held in Bordeaux in 1992, on the initiative of the Union International des Huissiers de Justice, where the real possibility of creating a European enforcement order in conjunction with the European monitory procedure emerged.

After three years, the Commission showed, for the first time, concern about the terms related to commercial transactions, encouraging Member States to strengthen the instruments at their disposal related to cross-border debt collection, with a view to obtain more easily an enforcement order. Subsequently, the Commission set aside the European order for payment procedure project, turning to another objective, that is, the so-called abolition of the exequatur. Nevertheless, the project was never completely abandoned, and between 15 and 16 October 1999, it was resumed by the Council of Tampere: on that occasion, the Community legislature issued a preventive measure, to combat late payment in commercial transactions, obliging Member States to guarantee citizens the right to obtain an enforcement order for the recovery of unchallenged claims.

With the introduction of Regulation (EC) No 1896/2006 of the European Parliament and of the Council of 12 December 2006, creating a European order of payment procedure, the EU institutions wanted to provide a regulatory instrument uniformly applicable in all Member States, limiting its scope to civil and commercial matters, with the sole purpose of the collection of uncontested pecuniary claims for a specific amount, that have fallen due at the time when the order for payment is submitted: with this, the new legislation concerning cross-border cases on uncontested pecuniary claims was introduced, allowing the free circulation of orders for payment in any EU country, eliminating the intermediate proceedings necessary to enable recognition and enforcement of judgments in other Member States, but simplifying, speeding up and reducing the costs of  litigation in cross-border cases.

a) Scope

With respect to its scope, for Biavati, art. 2 defines a "tripartite" boundary, which is objective, subjective and territorial. The first of the three criteria is quoted in the first paragraph of the mentioned article where it states that "This Regulation shall apply, in cross-border cases, to civil and commercial matters, whatever the nature of the court" remaining, therefore, excluded " revenue, customs or administrative matters, and the liability of the State for acts or omissions in the exercise of State authority ("acta jure imperii").

With regard to the second criterion, that is the subjective scope, a set of hypotheses are established where this regulation  shall not apply , that is: "a) rights in property arising out of a matrimonial relationship, maintenance obligations, wills and successions; b) bankruptcy, compositions and analogous proceedings; c) social security, d) claims arising from non-contractual obligations, unless they have been subject of an agreement by the parties or there has been an admission of debt, or they relate to liquidated debts arising from joint ownership of  property."

The third and last of the criteria defining the scope of its application is the territorial criterion, in accordance with paragraph 3 of art. 2 of this Regulation, according to which "the term 'Member State' shall mean Member States with the exception of Denmark." A statement that, in any case, fits in well with the concept of territoriality as stated in art. 5 where, for the purposes of this Regulation, the following definitions shall apply:

1. "Member State of origin" means the Member State in which a European order for payment is issued;

2. "Member State of enforcement" means the Member State in which enforcement of a European order for payment is sought;

3. "court" means any authority in a Member State with competence regarding European orders for payment or any other related matters;

4. "court of origin" means the court which issues a European order for payment.

Tripartition which, in any case, emerges in other regulations, such as Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction, and the recognition and enforcement of judgments in civil and commercial matters, or Regulation (EC) 805/2004 of the European Parliament and of the Council of 21 April 2004, creating a European Enforcement Order for uncontested claims, for which, moreover, responsibility of the State for acts and omissions in the exercise of State authority is also excluded, as expressly required by the Court of Justice of the European Communities. All this to support the harmonization of law of the court that, in civil and commercial matters, provides an application by analogy of the above-mentioned Regulations to correct all the possible disparities, contributing to the homogeneity of the discipline.

b) Complementary and alternative nature

It is important to specify that Regulation (EC) 1896/2006 was not meant to rule on the procedural measures of each Member State, but its adoption is optional or alternative to the existing regulation because, according to art. 1, par. 2, a claimant might, in any case, pursue his claim under the law of the Member State concerned in the dispute.

Certainly, what we want to promote, with this Regulation, is nothing but the principle set out in the first paragraph of the mentioned article, that is "to permit the free circulation of European orders for payment throughout the Member States by laying down minimum standards, compliance with which renders unnecessary any intermediate proceedings in the Member State of enforcement prior to recognition and enforcement.”

In other words, this provision represents the faithful expression of European philosophy, aimed at the harmonization of procedural law of the EU Member States, which seeks to:

"remove obstacles to the smooth running of civil proceedings at Member State level”; this statement is in line with the principle of respect for the legal traditions of the Member States. It is a complementary measure of mutual recognition, as the full achievement of this principle, which implies the abolition of the so-called "intermediate measures", is conditioned to the fact that the Community Member States harmonize the minimum standards that are applicable to certain aspects of civil proceedings: the aim of this harmonization is to ensure the needs of a due process."

In support to what has been stated so far, we cannot overlook the provision set in art. 65 of the Treaty of Lisbon on cross-border judicial cooperation, which is rooted on the principle of mutual recognition of judicial and extrajudicial decisions, in so far as it provides that it "may include the adoption of measures for the approximation of the laws and regulations of the Member States" (para 1, art. 81, of the consolidated TFEU version). In addition, the Treaty of Lisbon recognizes broad freedom as regards the adoption of international-procedural measures to facilitate the principle of mutual recognition within the EU where "all procedural issues not specifically dealt with in this Regulation shall be governed by national law."

c)  No evidence and evidence models of payment order procedure

In the historic procedural context, two forms of "payment order procedure" can be recalled, classified as “no evidence” models and “evidence” models. This difference is not merely terminological, but mainly based on their structural diversity and respective development: the first model, for example, implies that the claim is based on the mere statement of the claimant, which is subject to suspension until the debtor has not demonstrated the contrary: this suggests an implicit "alleged" judicial protection, as a certain degree of trust is granted to the claimant, who wants to be protected from a possible economic prejudice. On the other hand, with the evidence model the claimant is required to produce documentary evidence to the judge when requested by the plaintiff. In the latter case, the intention is to protect the legal-procedural position of the debtor: this model was that mainly used in the EU Member States before the approval of Regulation (EC) 1896/2006, which certainly aimed to replace the domestic law of each State, towards a subsequent procedure of recognition and, therefore, enforcement.

The difference between the two models is easily understood: in fact, in the first case proof to the contrary, of the non-existence of the claim, must be supplied by the debtor if he wants to demonstrate that he is not responsible; in the second case, instead, the claimant will provide all the necessary documents with the aim to prove the contrary, that is that he really has a claim against the debtor.

Between the two types, the first represents the so-called “no evidence” model of payment order procedure providing no documentary evidence, where the judge will only proceed on the basis of statements made by the claimant, while the second is an “evidence” model. Marco Angelone questions the first model claiming that, in any case, the statements of the claimant, with the relative sources of evidence, are always and in any case a documentary means, so as to identify it as a “partial evidence” model of payment order procedure.

Finally, the no evidence models of payment order procedure, exactly as it was described, could lead to a multitude of unjust claims, and the alleged debtor would be obliged to remove all doubts using any form of evidence. Furthermore, the fact that documentary evidence is not necessary to facilitate payment requests is implicitly related with the aspect regarding the use of electronic means, as a basis for the procedure, with the purpose of accelerating the result.

d) Application for a European order for payment

The no evidence models of payment order procedure, releasing the claimant from any obligation regarding the contribution of evidence, allows to speed up the procedure for obtaining the judgment. This however might affect not only the position of the debtor, entirely disadvantageous, who in theory would be the recipient of payment requests actually not due (nonexistent), but in this case, also the possibility of an alteration of the principle of "due process" could occur, according to which the two parties to the conflict must be in the same legal defensive position, and not one already ahead of the other, thus prejudicing one of the procedural guarantees regarding  the gathering of evidence in favor of the claimant, because for him it is sufficient a brief description of the evidence used to justify his claim.

The adoption of form A, for the application for a European order for payment, is used to facilitate the compilation and is regulated by art. 7, which also allows the judge to save time in the implementation of the bureaucratic procedures in the event of an application to set aside a payment order and, therefore, the filing of ordinary proceedings. The request, in fact, must be completed with some important details such as:

a) "the names and addresses of the parties, and, where applicable, their representatives, and of the court to which the application is made;

b) the amount of the claim, including the principle and, where applicable, interest, contractual penalties and costs;

c) if interest on the claim is demanded, the interest rate and the period of time for which that interest is demanded, unless statutory interest is automatically added to the principle under the law of  the Member State of origin;

d) the cause of the action, including a description of the circumstances invoked as the basis of the claim and, where applicable, of the interest demanded;

e) a description of evidence supporting the claim;

f) the grounds for jurisdiction and finally the cross-border nature of the case which, according to the provisions of art. 3, for the purposes of this Regulation, a cross-border case is one in which at least one of the parties is domiciled or habitually resident in a Member State other than that of the court".

The application shall be signed by the claimant, that is the person concerned or by his legal representative, pursuant to art. 7, para. 6, in electronic form or on paper which, in any case, will be scrutinized by the competent court, as regards to the drafting of the standard model and the cross-border nature of the transaction, excluding unfounded claims and requesting the appropriate sanctions in accordance with the provisions of form “C”, annex III, art. 8.

The information provided by the claimant, pursuant to art. 7, para. 3, of the Regulation (EC) 1896/2006, deriving from the payment request, gives rise to liability on the content and any deliberate false statement could lead to appropriate penalties under the law of the Member State of origin.

The European order for payment contains a copy of the application form and the defendant will be required to choose one of the following alternatives: pay the claimant the amount indicated in the order or oppose the order by lodging with the court of origin a statement of opposition, within 30 days from the notification of the act. However, it will become enforceable if no statement of opposition is lodged or it is presented after the term of 30 days has expired, pursuant to art. 18, para. 1: in this case the order will assume the effectiveness of an enforceable judgment in all respects.

Finally, when there is a regular statement of opposition, the proceedings shall continue before the court of origin in accordance with the procedural rules of that State, becoming ordinary civil proceedings, unless the claimant has explicitly requested to terminate the proceedings, art. 17, para. 1, if the statement of opposition has been lodged.

On the other hand, if the claimant’s application is rejected, there will be no right of appeal: however, this does not prevent the claimant from pursuing the claim by means of a new application or any other procedure available under the law of a Member State, former art. 11, para. 2 and art. 11, para. 3.

e) Opposition of the debtor

Effective judicial protection, from the perspective of the debtor, is expressed through a statement of opposition, pursuant to art. 16: it takes the form of a written complaint to be sent within 30 days of service of the order on him, by filling the "F" form set out in Annex VI, which is supplied to him together with European order for payment. This will have to be sent back to the court of origin, producing the relevant evidence in support of his defense (57). However, Regulation (EC) 1896/2006 provides that the application shall be submitted in paper form or by any other means of communication, including electronic, accepted by the Member State of origin and available to the court of origin, and signed by the defendant or, where applicable, by his representative. However, an electronic signature is not required if and to the extent that an alternative electronic communications system exists in the courts of the Member State of origin, which is available to a certain group of pre-registered authenticated users and which permits the identification of those users in a secure manner.

This is a fact that, no doubt, reveals one of the aims pursued by the European legislator, that is,  to speed up procedural decisions on both sides (claimant and debtor), not to mention the organizational and structural aspect of jurisdiction and competence, which also has this aim, as we shall see later.

f) Effects and jurisdiction

According to the procedural legislation, the effect resulting from the opposition is that of transforming the cross-border case to ordinary civil proceedings. The debtor, as we have seen, can defend himself by lodging a statement of opposition and indicating, in the act of defense, that he contests the claim. However, his statement of opposition may terminate the proceedings if the claimant explicitly requested so, therefore preventing an eventual fraudulent attempt. The claimant will still be informed of the lodging of a statement of opposition (which will give rise to ordinary civil proceedings) if it is also the claimant’s intention to carry on with the proceedings.

The jurisdiction is defined in Regulation (EC) 44/2001 of the Council of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, in accordance with the rules of European Union law applicable to the matter. Where requests are made ​​by consumers, within the limits provided for by an international contract, the State where the consumer is domiciled will have jurisdiction. For EU citizens, domiciled in a Member State other than that in which they are resident, the State where they declare their domicile will have jurisdiction. In the event of an employer sued by employees, this may be agreed in the State where they have their domicile or before the Court of the State in which the employee habitually carries out his work or in the courts for the last place where he did so. Finally, if the employee does not or did not habitually carry out his work in any one country, even though being an employee, he can sue the employer in the State where the employment contract was agreed.

Another quite delicate problem lies in the interpretation of the rule contained in art. 5, para. 3, where, when referring to the court, it does not expressly indicate the figure of the judge, therefore being able in this case to include any other authority of a Member State, with adequate jurisdiction that allows it to issue a European injunction or any other related activity.

According to Valitutti, there is no doubt that this legislative lacuna could be overcome with an ad hoc state law that recognizes this right to bodies other than the judges and courts. In this case, there would be a form of fragmentation of jurisdictional power towards alternative bodies that would be invested with the authority to issue, as in this case, an enforcement. However, this would affect, to some extent, the judicial hierarchy which, being intended to promote the growth of effective judicial protection, would risk not being under the control of the traditional jurisdiction.

g) Conclusions

In light of the above, it can be said that the European order for payment procedure represents a solid contribution to the harmonization of private international law for having had considerable impact not only on the legal aspects of the Member States, given their different legal and procedural traditions, but also on the economic and social aspects of those Member States.

The reasons that led to the development of this Regulation, as well as of the rest of the legislation on credit protection, are due without doubt to the developments of globalization that have forced the European institutions to intervene through appropriate regulatory measures to cope with needs.

Amongst the most significant needs we can mention the international cooperation in judicial proceedings: more precisely, the need to minimize the discrepancies between the different Member States, for a homogeneous judicial area and simplifying above all international procedural activity. In this case, the concern shown by the European institutions had the purpose both to facilitate the recovery of undisputed claims and to ensure freedom, security and justice in the European judicial area.

In relation to the functioning of Regulation (EC) 1896/2006, its success can be observed in the fulfillment of the objectives in view of its adoption, that is in the increase of speed and effectiveness of judicial decisions within the European judicial area, although at first glance the most immediate and visible result is that regarding the abolition of intermediate proceedings for the recognition of judgments, the so-called exequatur, with the aim to facilitate the free circulation of judicial decisions in the European judicial area. To the same extent, the result achieved on the reduction of the costs of justice and on the simplification of bureaucratic procedures is significant, achieved thanks to the standard forms that facilitate the preparation of the order for payment procedure before the competent court.

As regards to the relation with the principle of effective judicial protection, there is no doubt that this instrument, as any other procedural regulation, has been the result of intense comparative work between the different order for payment procedures in the EU Member States, opting in favor of the no evidence model, despite the fact that the evidence model prevailed in several Member States. This choice, as is known, works to the detriment of the debtor, who is obliged to provide evidence to the contrary in the case of a payment order from the claimant. In any case, this choice can be justified, in our humble opinion, by the desire to speed up and reduce the costs of litigation provided that the constitutional principles of the various Member States, which have functioned as filters in the reception and application of European legislation, are respected.

Of course, the regulatory framework introduced with the aim to simplify, speed up and reduce the costs of litigation in favor of the harmonization of private international law does not require EU citizens to take the path marked out by the new regulations, instead they remain free to resort to a procedure provided for by national regulations to resolve a dispute. For this reason, international private law represents an alternative to national law in the case of cross-border conflict, resulting thus in a further resource with the aim of ensuring equal benefits to European citizens.

Finally, if for some this suggests a consolidation of judicial protection, for others we are talking of a weakening of the judicial power if bodies other than a court were invested with this authority because, as mentioned earlier, this Regulation does not expressly identify the figure of the judge, being able, in this case to refer to any other authority with adequate jurisdiction. In our view, this uncertainty fades if we consider the real purpose, that is the harmonization of private international law, which undoubtedly favors the diffusion of the principle of effective judicial protection. Specifically, it is not important which bodies are authorized to administrate justice, but what matters is the respect for the constitutional principles that allow to transpose European legislation.

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(Altalex, 4 March 2013. Article by Sergio Quarta)

 

 

 

 

 

 

 

 

 

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