EU Cross-Border Debt Recovery

12 February, 2012
by: Cripps

Are you utilising all of the options available to your client when pursuing EU cross-border debts and other claims?  EU regulations have started the process of harmonising civil procedure matters across EU member states in order to simplify the methods of: (1) obtaining recognition for; and (2) enforcing judgments.

European harmonisation is the policy of the European Community to achieve consistent laws across EU member states in order to further free trade and protect citizens.  It is a contentious issue and the slow integration of EU law into UK law is, and always has been, a political hot-potato – especially if it involves greengrocers being prevented from measuring fruit and vegetables in ‘pounds’.  Perhaps in the area of civil procedures the battle to prevent the implementation of EU regulation has been less vociferous due to the usefulness of the procedures that have so far been created.

Following on from the Brussels Convention, which simplified the law on recognition and enforcement of foreign judgments, three regulations have provided useful ammunition to potential claimants:

(1) the European Enforcement Order (EEO) Regulation 805/2004;
(2) the European Order for Payment (EOP) Regulation 1896/2006; and
(3) the European Small Claims Procedure (ESCP) Regulation 861/2007.

1 The EEO Regulation

The EEO procedure provides a simple way for an uncontested judgment of one member state to become automatically enforceable in another member-state.  Uncontested judgments include claims that are admitted, agreed, settled or where no defence and/or any objections are filed.

It is often the case that when a debtor has no assets in the UK they will simply not respond to any claims made under the English and Welsh court system.  They will only resist enforcement when the creditor takes action in the debtor’s home country.  In this scenario, if the debtor’s home country is within the EU, you could apply for an EEO after a default judgment was granted.  The end result of obtaining an EEO would be that the debtor will have no further right to object to enforcement in their home country, thus potentially saving months of delay.

2 The EOP Regulation

The EOP procedure simplifies the process of claiming uncontested debts of any amount within the EU. 

In the UK for example a creditor can make an application in the High Court for an EOP if they are owed money by someone from a different EU member state.  If the debtor does not oppose the application then an EOP will be granted which can be enforced in the debtor’s home country following that country’s local enforcement procedures.

If however the debtor does oppose the application then the debt becomes contested and the claim will progress as a regular claim under English and Welsh law.  The debtor will have to serve a defence and in default of this the EEO procedure above can be started.

 
3 The ESCP Regulation

The ESCP offers a standardised method for EU cross-border low value claims (less than EUR€2,000).  It offers a speedy way of obtaining a judgment as once the court dispatches the claim form to the defendant they have 30 days to respond.  Once the court has received the response and any other necessary information it has 30 days to make judgment.

ESCP judgments are recognised and enforceable in other EU member-states without the need for a declaration of enforceability.

4 Practice Point

Obtaining recognition and enforcement of judgments in other EU member-states was, and without the use of these new procedures still is, time-consuming and costly.  Without the use of these procedures, when the debt/value of a claim is relatively modest the cost of enforcing a claim could lead to a party choosing not to pursue even an uncontested debt at the outset. 

By using the new procedures available there are now ways to make EU cross-border debt recovery a more appetising prospect for clients.