Debt Recovery Across EU Borders
Is a company that owes you money based in another country in the European Union? Perhaps an individual debtor has dissipated his assets in England and moved abroad within the EU to frustrate your attempts to enforce locally.
Unfortunately, these are not uncommon scenarios that can complicate enforcement to the point that the commercial viability of continuing is extinguished. While you may be successful in obtaining judgment in England this is often only the beginning of an arduous and protracted journey which can see legal costs increase significantly.
There are, however, procedures in place for uncontested claims that can facilitate cross border litigation within the EU as well as simplifying the enforcement process.
European Payment Order
The European Payment Order (“EPO”) aims to provide a quick, standard and cheap method for pursuing an uncontested debt throughout the EU, for both small and high value claims.
This procedure applies when you are claiming money from someone who does not dispute that they owe you the money you are claiming. To obtain an EPO you must complete a standard form providing details of the parties, the amount you are seeking and evidence relating to the debt. Unlike the European Enforcement Order procedure below, there is no requirement to obtain judgment before submitting your application for an EPO.
Once you have obtained the EPO it becomes automatically enforceable in every EU country, with the exception of Denmark, and will be capable of being enforced in accordance with debt recovery systems in the jurisdiction in which you seek to enforce. However, please note that an EPO is capable of being challenged by the debtor, in which case the debt may move outside the scope of the EPO procedure and into the usual litigation process of the applicable jurisdiction, which may be determined for example by contract or the debtor’s domicile.
European Enforcement Order
An alternative to the EPO is the European Enforcement Order (“EEO”). This enables you to enforce an existing judgment in another EU member state (except Denmark). So, once you have obtained judgment here in England you can apply for an EEO certificate that will accompany your judgment rendering it readily enforceable. There is no need to register or convert the judgment. The balance due under the EEO will be recovered in accordance with the rules of enforcement of the particular member state in which you seek to enforce.
The EEO procedure only applies to civil and commercial claims which are uncontested. For the purposes of this procedure a claim shall be regarded as uncontested if:
- the debtor has expressly agreed to it by admission or by means of a settlement which has been approved by a court or concluded before a court in the course of proceedings; or
- the debtor has never objected to it in the course of the court proceedings; or
- the debtor has not appeared or been represented at a court hearing regarding that claim after having initially objected to the claim in the course of the court proceedings; or
- the debtor has expressly agreed to it in an authentic instrument.
For your application for an EEO to be successful, however, there are strict requirements that you must ensure are complied with during the initial claim leading up to judgment and thereafter. These relate to, for example, the service of the claim form and judgment. Furthermore, if the matter is subsequently contested it may be brought back before the original national court and proceed as a defended action. In this respect, it is essential that you are able to evidence that the claim has been served in accordance with the EEO procedure to reduce the risk of any problems arising.
European Small Claim Procedure
The European Small Claim Procedure (“ESCP”) is designed to reduce costs and speed up the process for making low value claims against defendants based in other EU member states. It is not available for bankruptcy and winding up, employment matters or social security claims and is only available where the value of the claim does not exceed 2000E excluding interest, disbursements and costs.
Unless the Court orders otherwise, it is usually a written procedure and unlike the determination of small claim disputes in England, under the ESCP legal costs can be recovered from the paying party, subject to reasonableness and proportionality.
Within 30 days of receiving the defendant's reply to your claim (if any) the court must either issue a judgment, request further details in writing from either party, or summon the parties to an oral hearing.
Once you obtain judgment, you can request the Court to fill out a form to make your judgment enforceable in other Member States of the EU, without any further formalities. As above, you will then need to carry out enforcement in accordance with the rules of the Member State in which you seek to enforce.
Further considerations on enforcement
Once you have an EPO, and EEO or an ESPC judgment, enforcement in another Member State can still be refused but only if it is irreconcilable with another judgment in that Member State between the same parties.
On a more practical side, before deciding whether to pursue a defendant, by whatever means, it is important to know its status. For example, is it a company or an individual? There can be a tendency to assume the answer without research and if you commence proceedings against the wrong entity you will most likely have to start again no matter how far you get. Furthermore, it is paramount to first establish whether the defendant is solvent or has assets against which you could potentially enforce a judgment. Remember, a judgment ordering A to pay B a sum of money is effectively meaningless if A has no means to pay.
A City Law Firm Limited’s litigation team have a good track record of resolving these disputes or, where settlement is not possible, recovering the undisputed debts
For more information contact us…
0207 426 0382