3 Enforcing payment of uncontested debts
| (25500)
7615/04
COM(04) 173
| Draft Regulation creating a European order for payment procedure
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| Legal base | Articles 61(c) and 65 EC; co-decision; QMV
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| Department | Constitutional Affairs
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| Basis of consideration | Minister's letter of 13 October 2004
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| Previous Committee Report | HC 42-xx (2003-04), para 3 (18 May 2004) ;
HC 42-xxvii (2003-04), para 3 (14 July 2004)
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| To be discussed in Council | No date fixed
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| Committee's assessment | Legally and politically important
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| Committee's decision | Not cleared; further information requested
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Background
3.1 Articles 61(c) and 65 EC empower the Community to adopt measures
in the field of judicial co-operation in civil matters having
cross-border implications and in so far as this is necessary for
the proper functioning of the internal market. The European Council
in Tampere in October 1999 endorsed a programme of work on mutual
recognition of decisions in civil and commercial matters and on
new procedural legislation in cross-border cases, in particular
those elements which are instrumental to smooth judicial co-operation
and to enhanced access to law, such as provisional measures, taking
of evidence, orders for money payment and time limits.
3.2 In 2000 the Council agreed a programme of work
including the abolition of exequatur for uncontested money
claims. (Exequatur is the special court procedure for
the conversion of a foreign judgment into an order enforceable
in the domestic jurisdiction.) The Commission has decided to
pursue this in two ways: first, by the creation of a European
Enforcement Order (EEO), the common position on which was agreed
by the European Parliament on 30 March; and secondly through the
creation of a European order for payment. The Commission believes
there is a clear demarcation between the instruments — the
EEO dealing with the recognition and enforcement of existing national
judgments in another Member State and the uniform European order
for payment procedure with obtaining a judgment.
3.3 The Commission's proposal follows the general
principle of the order for payment procedures which currently
exist in eleven Member States (not including the United Kingdom).
It would allow creditors to pursue a simplified procedure for
enforcing uncontested debts in civil and commercial matters.
The proposed European order for payment procedure would not extend
to revenue, customs or administrative matters, nor would it be
applicable to property and matrimonial law, claims arising out
of bankruptcy proceedings or social security related matters.
The measure is intended to work as an alternative to the existing
internal procedures in each Member State and creditors would remain
free to use either procedure.
3.4 When we last considered the proposal we decided
to hold it under scrutiny while awaiting a revised proposal.
We also asked the Minister to keep us informed of further developments.
The Minister's letter
3.5 The Parliamentary Under-Secretary of State at
the Department for Constitutional Affairs (Baroness Ashton) has
now written to us with further information. Her letter of 13 October
2004 contains a summary of responses to the Government's consultation
on the European order for payment procedure. 15 organisations
were consulted; there were five responses, from the Association
of District Judges, the Small Business Service (forwarding comments
from the CBI and Forum of Private Business (FPB)), the Senior
Master, Queen's Bench Division, and the Trading Standards Institute.
3.6 The summary is as follows:
"The FPB welcomed the proposal as a positive
move to reduce bureaucracy, speed up the settlement of claims,
remove the need for lawyers and their attendance costs and make
the procedures far simpler for both businesses and individual
citizens. They said it was consistent with the work of the Better
Payment Practice group and FPBs long-term campaign to secure the
statutory right to interest for late payment.
"The CBI suggested that the Commission should
proceed with caution on this proposal as it had not been high
on industry's agenda. They thought that further consultation at
European level might be the best way forward.
"The Trading Standards Institute regarded
the proposal as a welcome development.
"The Senior Master thought this procedure
was probably better suited to civil law rather than common law
jurisdictions and wondered how many claims might be made under
this procedure in England and Wales. The Association of District
Judges thought that for internal cases the attraction of the procedure
was uncertain, particularly for those dealing with bulk debt collection
and especially if claims could not be made electronically on-line
or through the County Court Bulk Centre in Northampton. They thought
our existing default judgment system was arguably faster.
"The Association of District Judges believed
the proposal should be limited to liquidated pecuniary claims
only.
"The Senior Master had concerns as to the
meaning of 'the brief description of at least one means of evidence'.
This linked into a question from the Association of District Judges
as to who would examine the application. The more requirements
there were in the application form that required specific reference
to the nature of the cause of action the more likely it was that
the examination would be judicial rather than clerical and there
would be resulting resource implications. Such implications were
also raised by the Senior Master.
"The Senior Master also thought the application
form should make provision for a statement of truth to be signed
by the creditor in line with current court forms in England and
Wales.
"The Senior Master wanted to know how the
court would be able to prevent vexatious or nonsense claims and
what would happen if the claimant made multiple applications.
"Both the Senior Master and the Association
of District Judges had concerns about service. The Senior Master
wanted to know how court staff would know the laws of service
in the receiving State and the Association of District Judges
wondered whether postal service would be allowed. (In fact cross-border
service will be governed by Regulation (EC) No 1348/2000 and postal
service without proof of receipt will be available under the same
terms as in Regulation (EC) No 805/2004 on the European Enforcement
Order.) Both also thought there would be issues about knowing
the defendant's address with certainty.
"On costs the Senior Master wanted to know
what 'claimed costs' were. The Association of District Judges
suggested that the following be added to Annex 2: 'the costs payable
at the date of demand and the contractual or statutory provision
justifying the claim; and what further costs (stating how much)
will be applied if the order is made and the payment is made before
execution commences.'
"In addition the Senior Master thought that
the court having to complete the form in Annex 2 created unnecessary
extra work for the court.
"The Senior Master had concerns about defendants
not submitting their responses on the standard form.
"The Association of District Judges said
they would prefer a provision that in the event of a statement
of defence being filed the proceedings would continue as ordinary
proceedings only when so requested by the creditor. For ordinary
proceedings such a provision would be a trigger for payment of
additional fees and, where applicable, further documents being
filed.
"They also suggested that pending the creditors
request for the case to proceed in ordinary proceedings any further
proceedings should be stayed and struck out if no request to proceed
was received after, say, 6 months. They had doubts about whether
Clause 2 would be a sufficient mandate for a requirement for a
request to continue. They also suggested that if a statement of
defence was delivered to the creditor rather than the court it
should have the same effect as one filed at court and there should
be an obligation on the creditor to file any such statement at
the court unless he was satisfied that a copy had already been
filed there.
"The Senior Master also raised questions
as to how proceedings under this Regulation could best be transferred
to national proceedings in England and Wales.
"The Association of District Judges wondered
how, if a creditor served the documents, the court would know
when to deliver the order for payment of its own motion. They
suggested there should be a provision for a certificate of service
in a prescribed form to be filed to incorporate a certificate
that the debt was still owed (to account for full, or part payment
in the interim) and that no statement of defence had been served
on the creditor.
"The Association of District Judges thought
that if under paragraph 2 the conditions of enforceability and
its stay or limitation would be governed by the law of the Member
State in which the order was issued this would lead to a variety
of provisions as to whether the order was enforceable immediately
upon service or only after a specified delay and if so, of what
duration, and whether the order was only enforceable after the
expiry of the further 3 week period provided for by Article 11.
"The Association of District Judges questioned
why, when there was a prescribed form for a statement of opposition,
Article 12.3 provides that a statement of defence filed late has
the same effect when a statement of defence may be either in the
form sent with Annex 2 or any other form.
"The Senior Master did not see why the defendant
should have two opportunities to object to the claim.
"The Senior Master thought there needed
to be a definition of 'combined court fees'.
"Both the Senior Master and the Association
of District Judges considered which courts in England and Wales
should have jurisdiction for these cases. The former thought the
High Court, the latter suggested the county courts and the Bulk
Issue Centre."
Conclusion
3.7 We thank the Minister for her summary of the
Government's consultation on the European order for payment.
We ask her whether the Government shares the concerns expressed
by the Senior Master and the Association of District Judges.
3.8 We also ask the Minister which, if any, of
the proposed changes and suggestions made by the Senior Master
and the District Judges the government intends to present at negotiations
on the proposals. In particular we ask her whether the Government
will press for inclusion in future proposals of definitions for
the terms "claimed costs" and "combined court fees".
3.9 We shall continue to hold the document under
scrutiny, while awaiting the Minister's answers and a revised
proposal.
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