Select Committee on European Scrutiny Thirty-Sixth Report

5 European small claims procedure




+ ADDS 1-5




COM(05) 87

+ ADDs 1& 2

Draft Regulation creating the European small claims procedure

Draft Regulation creating the European small claims procedure

Legal baseArticle 61(c) & 65 EC; co-decision; QMV
Deposited in Parliament(a) 14 July 2006
DepartmentConstitutional Affairs
Basis of considerationEM of 14 July 2006
Previous Committee Report(a) None

(b) HC 34-xxx (2005-06), para 1 (24 May 2006); HC 34-i (2005-06), para 9 (4 July 2005)

Committee's assessmentLegally and politically important
Committee's decision(a) Not cleared (further information requested)

(b) Cleared


5.1 Articles 61(c) and 65 EC empower the Community to adopt measures in the field of judicial co-operation in civil matters with cross-border implications, 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 legislation on procedure for 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 payments and time limits.

5.2 In 2000 the Council agreed a programme of work including the abolition of exequatur for uncontested money claims.[18] The Commission has decided to pursue this in three ways. The first was the creation of a European Enforcement Order (EEO) the Regulation for which was adopted on 21 April 2004; the second is the creation of a European Order for Payment, which we cleared on 23 November 2005. The third way is the subject of the current document.

The documents

5.3 The two documents are successive versions of the Commission's proposal for regulation creating a European small claims procedure (ESCP): document (a) supersedes document (b). The Commission proposal pursues two broad objectives.

5.4 First and foremost, it would provide for a simplified and speedy procedure for low-value claims as a uniform alternative to Member States' own schemes. The Commission's proposal follows the general principle of the small claims procedures which currently exist in four Member States (although some other Member States allow their Courts to adapt their procedures as they see fit). The proposal would allow claimants to pursue a simplified procedure for obtaining judgment and would facilitate the introduction of the claim by a specific form. The system would provide for a purely written procedure, unless the Court considered an oral hearing was necessary. The nature and extent of evidence, and the ability to use expert evidence, would be at the Court's discretion. Parties could be legally represented but such representation would not be obligatory, and litigants could have unpaid or non-professional representation. Costs would be payable by the losing party, or at the Court's discretion. However, where the losing party were an unrepresented natural person they would not be liable for the fees of legal professionals of the other party. In certain circumstances, such as the failure to effect service of process, the defendant would have a right to apply for review of a judgment subject to specific conditions set by Member States. Finally the proposal leaves it to individual Member States to decide whether there would be a right of appeal.

5.5 Secondly, Article 18 of the draft regulation would abolish the need for intermediate measures (exequatur) to enable the recognition and enforcement in another Member State of the judgment given under the ESCP. In previous versions of the proposal the Commission proposed that the ESCP should not be confined to cross-border cases and that claimant should be given the opportunity to use the procedure in internal cases as an alternative to the current procedures in each Member State. In her letter of 18 May 2005 the Parliamentary Under-Secretary of State, Department of Constitutional Affairs (Baroness Ashton of Upholland) informed us that the government had succeeded in persuading other Member States to add a cross-border requirement to the proposal. We reported this matter on 4 July 2006.

5.6 The document (a) incorporates this change together with further amendments agreed either before or after we last reported on this proposal. The latest text also shows that the definition of cross-border cases for the European small claims procedure is now the same as that used for the European Order for Payment.

5.7 Agreement has also been reached that the European small claims procedure should only apply to cases with a value of up to €2,000.

5.8 Costs will be borne by the unsuccessful party but the latest text has a proportionality proviso which allows the court to disallow the successful party from recovering excessive costs.

5.9 Finally it has been agreed that the details of the European small claims procedure should be reviewed after a period of five years.

The Government's view

5.10 In her Explanatory Memorandum of 14 July 2006, the Parliamentary Under-Secretary of State, Department for Constitutional Affairs, (Baroness Ashton of Upholland) explains the background to the negotiations which have resulted in the revised text of document (a) together with the Government's view of the changes made to the original proposal:

    "During the UK Presidency in the second half of 2005 negotiations made good progress, completing both the first and second readings of the proposal in the Council. At the Justice and Home Affairs Council in December the UK, as Presidency, sought, and obtained, agreement to six key principles:
  • the ESCP should primarily be a written procedure;
  • there should be time limits for each stage of the procedure;
  • where hearings are necessary, the best possible use should be made of information communications technology;
  • legal representation should not be mandatory;
  • costs should be proportionate to the claim; and
  • the procedure should be reviewed after 5 years

      "In parallel, the UK Presidency obtained agreement that, in principle, measures under Article 65 should concern cross-border cases and not cases that are purely internal to a Member State. This principle has been specifically agreed in relation to the ESCP.

      "Agreement has also been reached that the definition used for the European Order for Payment should be used as the basis of discussions on a definition for the European Small Claims Procedure. There is no apparent reason why the same definition should not be adopted and consistency, where possible and appropriate, is highly desirable.

      "Since then, the Austrian Presidency has been pressing forward seeking to resolve the remaining major issues. There have been some changes to the text which appear to be consistent with the six principles listed above. Discussions at the JHA Council at the beginning of June 2006 culminated in a general agreement to the Austrian Presidency text. The main changes to the text have been in the following areas:

      The 2000 limit

      "Discussions over the limit have been central to reaching an agreement. A limit of €2,000 has been agreed. Notwithstanding that this figure is significantly lower than the £5,000 limit applicable for most cases in England and Wales, the Government could accept this figure as part of an overall package which represents an alternative to, rather than replaces, the domestic small claims procedure and given that a review of the procedure, due to take place 5 years after implementation of the procedure, will enable Member States to revisit the limit.


      "There were concerns under the original text that exposure to costs could be significant due to the lack of clarity as to what costs could be claimed. Agreement to was reached at the JHA Council in December 2005 that costs should be proportionate to the claim. The amendment to the current text will help the court control costs by refusing to award costs unnecessarily incurred.

      "The Government believes that the current text should include the very helpful and already agreed Irish proposal for a recital, which achieves a reasonable balance between those who win and lose an ESC case by ensuring that costs including legal fees are proportionate to the value of the claim. This does not appear in the latest text and the issue will be raised at the next Council Working Group."

    5.11 The Government informs us that negotiations are continuing with a view to reaching agreement on outstanding issues, which will be consistent with the six key principles agreed at the JHA Council in December 2005.


    5.12 We thank the Minister for her detailed comments and update on the outcome of recent negotiations. We especially welcome the inclusion of a cross-border limitation provision into the latest text of the proposal. We also welcome the inclusion of a 'proportionality' requirement for the award of costs.

    5.13 We are happy to clear document (b) which has now been superseded; we continue to hold document (a) under scrutiny until we have had word from the Minister about the progress of continuing negotiations and a new text has been deposited.

    18   Exequatur is the special court procedure for the conversion of a foreign judgment into an order enforceable in the domestic jurisdiction. Back

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