5 European small claims procedure
| (a)
(27688)
10160/06
—
+ ADDS 1-5
(b)
(26443)
7388/1/05
COM(05) 87
+ ADDs 1& 2
|
Draft Regulation creating the European small claims procedure
Draft Regulation creating the European small claims procedure
|
| Legal base | Article 61(c) & 65 EC; co-decision; QMV
|
| Deposited in Parliament | (a) 14 July 2006
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| Department | Constitutional Affairs
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| Basis of consideration | EM of 14 July 2006
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| 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)
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| Committee's assessment | Legally and politically important
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| Committee's decision | (a) Not cleared (further information requested)
(b) Cleared
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Background
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:
"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.
Conclusion
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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