11 European Small Claims Procedure
| (35576)
16749/13
+ ADDs 1-2
COM(13) 794
| Draft Regulation amending Regulation (EC) No. 861/2007 of 11 July 2007 establishing a European Small Claims Procedure and Regulation (EC) No. 1896/2006 of 12 December 2006 creating a European Order for Payment Procedure
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| Legal base
| Article 81 TFEU; QMV; co-decision
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| Document originated
| 19 November 2013
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| Deposited in Parliament
| 27 November 2013
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| Department
| Ministry of Justice
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| Basis of consideration
| EM of 4 December 2013
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| Previous Committee Report
| None |
| Discussion in Council
| No date set
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| Committee's assessment
| Legally important
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| Committee's decision
| Not cleared; further information requested
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The document
11.1 This is a proposal to revise the
European Small Claims Regulation.
11.2 In evaluating the working of the
current Regulation the Commission says that the procedure has
reduced the costs of litigating cross-border small claims by up
to 40% and reduced from two years and five months to five months
the average duration of litigation. Two-thirds of those that had
used the procedure were satisfied with it. However use of the
procedure is quite limited. The reasons given for that include
the low ceiling of €2,000 which is said to limit the availability
for SMEs in particular; the inability of parties to be able to
choose the jurisdiction of their common domicile under the Brussels
I Regulation[47] to determine
their dispute; disproportionate court fees in relation to the
value of the claim or high costs if parties are expected to attend
a court hearing in another Member State; obstacles in the method
of paying court fees; difficulties in completing the standard
forms or the costs incurred in having unnecessary parts translated;
barriers to the use of electronic or online procedures; and uncertainty
about the way a judgment can be reviewed. The Commission has also
suggested that improvements could be made to the way the Regulation
is implemented and publicised.
11.3 Addressing these issues the Commission
has proposed the following changes to the Regulation. First an
increase in the threshold from €2,000 (approximately £1,670)
to €10,000 (approximately £8,300). It believes this
will be of particular benefit to SMEs. The Commission says that
while 71% of consumer claims are within the current threshold,
for SMEs only 20% of their claims are below €2,000. It is
also stated that approximately 30% of all cross-border business
claims are between €2,000 and €10,000. Where the value
of the claim exceeds €2,000 the Commission has suggested
that an oral hearing should be held if requested by one of the
parties.
11.4 Many changes are aimed at reducing
the costs and burdens on parties wishing to use the procedure.
These include allowing for the use of electronic service of documents
where this is available in Member States; making electronic communication
between the parties and courts the rule for documents not subject
to formal service where the parties agree and where such methods
are allowed under national law; obliging courts to use videoconferencing,
teleconferencing and other means of distance communication for
the conduct of oral hearings and taking of evidence unless a party
expressly requests to be present in court; limiting court fees
to 10% of the value of the claim; obliging Member States to allow
distance payment of court fees; and obliging Member States to
make available information on the amount of the fees and payment
methods available. There is a suggestion that the translation
requirements in standard form D, the certificate of enforcement,
should be limited to the substance of the judgment to avoid unnecessary
costs.
11.5 The Commission has also suggested
amending the cross-border restriction in scope to include situations
where the parties and the court are in the same Member State but
the place of performance of the contract, the place where the
facts on which the claim was based or the enforcement of the judgment
are in a different Member State.
11.6 Other amendments include increasing
the level of assistance that parties can receive from courts;
making clearer the procedure allowing a defendant to apply for
a review of the judgment in Article 18 by aligning it with a similar
provision in the Maintenance Regulation.[48]
In addition Articles 26 and 27 have been amended to take into
account the post-Lisbon Treaty comitology requirements. The proposal
is to amend the Annexes by using the delegated acts procedure.
11.7 There is also a proposed change
that will affect the European Order for Payment Regulation.[49]
Currently if a defendant lodges a statement of opposition in response
to a European Order for Payment the claim is transferred to the
ordinary civil procedure of the Member State concerned unless
the claimant has requested that the proceedings be terminated
in that event. The Commission proposes that where a statement
of opposition has been lodged in such a case and the claim falls
within the scope of a simplified procedure, including the Small
Claims Regulation, it should be possible to transfer the claim
to that procedure.
The Government's view
11.8 In his Explanatory Memorandum of
4 December 2013, the Secretary of State for Justice (Chris Grayling)
says that the Government acknowledges the value of an effective
cross-border small claims procedure and welcomes the opportunity
this revision of the Regulation brings to improve it. It recognises
that an increase in the threshold is likely to be of benefit to
potential users of the procedure and could allow more businesses
to use it. Given that the threshold for the domestic small claims
procedure in England and Wales was raised for most cases to £10,000
in April 2013 the Government can support the Commission's suggested
threshold of €10,000.
11.9 Although the domestic small claims
threshold for personal injury and housing disrepair cases remains
£1,000, the Government does not see this as a reason to oppose
the increase for cases within the remit of the European procedure.
Domestically the vast majority of personal injury cases arise
out of road traffic accidents or employers' or public liability
claims where there is a fixed costs out of court scheme for liability-admitted
claims of up to £25,000. There is also a fixed costs regime
for use where cases exit the out of court scheme, including where
liability is not admitted and the case proceeds to court. Therefore
the Government can see merit in the higher limit for the relatively
few personal injury cases which might arise under the Regulation.
11.10 In Scotland the current limit
for a small claim is £3,000 and for summary cause (another
simplified procedure designed to allow litigants to bring a claim
without the need for a lawyer) is £5,000. There is a proposal
to combine both into a new "simple procedure" which
will have a limit of £5,000, to be kept under review. In
Northern Ireland the current small claims threshold is £3,000.
The devolved administrations are considering the implications
of the Commission's suggestion.
11.11 While the Government agrees that
the level of court fees should not be a disincentive to potential
users of the procedure it believes that such matters are better
left to Member States to decide in a way which best meets the
needs of their legal systems. If the cap as suggested by the Commission
is agreed, currently in England and Wales the court application
fees for all claims except for those below £700 are well
within the proposed 10%.
11.12 Of the other suggested changes,
the Government can support use of more methods of electronic communication
where they are available and appreciates the advantages of using
videoconferencing or teleconferencing where hearings are thought
necessary. While not all courts have videoconferencing facilities
all can undertake telephone hearings. It can also support the
use of distance payment of court fees and improved provision of
information on the level of fees and the payment methods. While
there is no online system currently available in our courts to
accept fee payment, credit card payments can be accepted over
the telephone.
11.13 The Government will want to ensure
that any improvement in the assistance that courts can offer parties
does not stray into the area of legal advice. It can support the
mainly technical changes to the provision allowing a defendant
a right to review of the judgment. The suggestion that it is only
necessary to require the translation of the substance of the judgment
in form D is sensible given that the form itself is standard in
all official EU languages and that is the only section where free
text is necessary.
11.14 The Government notes that the
Commission proposes the delegated acts procedure for amending
the standard forms. During the negotiations the Government will
call for the implementing acts procedure to be used instead as
it believes this will provide more oversight by Member States.
The Government believes that the proposed changes to the European
Order for Payment Regulation to allow a transfer of proceedings
to the European Small Claims Procedure in appropriate cases are
sensible and will benefit creditors.
LEGAL BASE AND OPT-IN
11.15 Article 81(1) TFEU requires that
measures adopted under that provision must have cross-border implications.
The Government believes that this restriction must be reflected properly
in this proposed Regulation. While it will give further consideration
to the Commission's changes to Article 2, it currently remains concerned
that those changes will not properly respect the Treaty's cross-border
restriction and would unduly extend the instrument's scope
of application to cover cases which should remain subject
to national law only.
11.16 As this proposal has been brought
under Article 81 TFEU the UK's Title V opt in applies. The text
was presented to the Council in English on 25 November. Therefore
the eight week period before which the Government will not make
a decision on the opt in expires on 20 January. When deciding
whether to opt in, the Government will consider the effect on
UK citizens and businesses if the UK no longer participates in
the Regulation; how effective the Commission's suggested changes
will be in improving the quality and use of the procedure; and
the negotiability of resisting the proposed changes to the cross-border
restriction.
REGULATORY IMPACT ASSESSMENT
11.17 The Government's initial assessment
is that the changes to this Regulation are unlikely to give rise
to any significant regulatory impact. Parties with claims that
fall within the Regulation's scope will be able to choose whether
to use the procedure. The purpose of the majority of amendments
proposed seek to reduce the costs and burdens on parties who wish
to use it. An EU checklist assessment is being prepared.
FINANCIAL IMPLICATIONS
11.18 The Government does not at this
stage expect the adoption of this proposal will have any significant
financial implications for the United Kingdom.
CONSULTATION
11.19 The Government will consult interested
parties such as consumer organisations, the legal profession and
the judiciary about this proposal to amend the Regulation.
Conclusion
11.20 We thank the Minister for his
Explanatory Memorandum.
11.21 We take note of the Government's
concerns about the revised scope of the draft Regulation in Article
2, and ask the Minister to keep us informed of how negotiations
on this Article in particular develop.
11.22 The Government acknowledges
the value of an effective cross-border small claims procedure
and welcomes the opportunity this revision of the Regulation brings
to improve it. It recognises that an increase in the threshold
is likely to be of benefit to potential users of the procedure
and could allow more businesses to use it. Given that the threshold
for the domestic small claims procedure in England and Wales was
raised for most cases to £10,000 in April 2013 the Minister
supports the Commission's suggested threshold of €10,000.
We do not have reason to disagree with the Government's assessment;
accordingly, we do not recommend that the opt-in decision on this
amending Regulation be debated. We ask the Government to inform
us of its decision in due course.
11.23 In the meantime the proposal
remains under scrutiny.
47 44/2001. Back
48
4/2009. Back
49
1896/2006. Back
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