Explanatory Memorandum to COM(2005)87 - European Small Claims Procedure - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2005)87 - European Small Claims Procedure. |
|---|---|
| source | COM(2005)87  |
| date | 15-03-2005 |
Contents
- 1.1. Introduction
- 1.2. The Green Paper on a European Order for payment procedure and on measures to simplify and speed up small claims litigation
- 2. OBJECTIVES AND SCOPE
- 2.1. Overall objective
- 2.1.1. The significance of efficient Small Claims procedures
- 2.1.2. Characteristic features of Small Claims procedures - procedural simplifications
- 2.2. Scope
- 2.2.1. The need for action at Community level
- 2.2.2. Subsidiarity and proportionality
Following the 1975 Preliminary programme for a consumer protection and information policy i and the 1993 Green Paper on Access of consumers to justice and the settlement of consumer disputes in the single market i, the Commission in 1996 adopted a Communication concerning an action plan on consumer access to justice and the settlement of consumer disputes in the internal market i. The action plan focused on the promotion and enhancement of procedures for settling individual consumer disputes, and made provision for the introduction of simplified access to court procedures. With the entry into force of the Treaty of Amsterdam in 1999, the European Union has set itself the objective of progressively establishing an area of freedom, security and justice, amongst others by adopting measures in the field of judicial cooperation in civil matters.
The European Council in Tampere 1999 invited the Council to establish special common procedural rules for simplified and accelerated litigation on small claims, and to abolish the intermediate measures which are still required to enable the recognition and enforcement of a decision or judgment in the requested State for all titles in respect of small claims (i.e. not limited to consumer claims).
The joint programme of the Commission and the Council of measures for implementation of the principle of mutual recognition of decisions in civil and commercial matters, adopted by the Council on 30 November 2000 i, called for simplifying and speeding up the settlement of small claims litigation. Discussions on simplifying and speeding up the settlement of small claims litigation would also facilitate the recognition and enforcement of judgments.
The need for simplified and accelerated small claims litigation has also been expressed by the European Parliament i.
1.2. The Green Paper on a European Order for payment procedure and on measures to simplify and speed up small claims litigation
The adoption of this proposal was preceded by a wide-ranging consultation of both Member States and all interested parties of civil society. The Green Paper on a European order for payment procedure and on measures to simplify and speed up small claims litigation i presented by the Commission on 20 December 2002 gave an overview of the currently existing Small Claims procedures in the Member States. Based on a comparative study of how Member States deal with the relevant procedural issues it formulated a number of questions concerning the desirable scope and features of a European instrument.
The reactions to the Green Paper that were further debated in a public hearing organised by the Commission on 12 December 2003 revealed that an instrument to simplify and speed up small claims litigation is almost unanimously considered a step ahead in the creation of an area of freedom, security and justice.
In its opinion i of 18 June 2003 on the Green Paper, the European Economic and Social Committee welcomed the Commission’s initiative to launch a consultation on this issue and the Commission’s effort to accelerate civil proceedings and to make them cheaper and more efficient. It supported the establishment of a European procedure to simplify and speed up small claims litigation. It considered that suitable measures for speeding up such litigation should be defined without, at the same time, jeopardising the guarantees afforded to the parties in question under the rule of law.
In it opinion i of 12 February 2004 on the Green Paper, the European Parliament welcomed the Commission’s initiative, and stated that the small claims procedure should not only apply to cases relating to payment of a sum of money, on the understanding that a limit must first be determined on the basis of the amount at issue, but also be extended to cover all other disputes concerning economic relationships falling under the heading of obligations. Furthermore, in the small claims procedure alternative dispute resolution (ADR) methods should be applied, the taking of evidence simplified, and the right of appeal limited.
On 16 March 2004 a meeting of experts of the Member States discussed a draft Regulation establishing a European Small Claims Procedure. The approach taken by this text was generally appreciated by the delegations, namely to adopt a regulation which would have as objectives to simplify and speed up litigation concerning small claims by establishing a European Small Claims Procedure available to litigants as an alternative to the procedures existing under the laws of the Member States which will remain unaffected, and to abolish the intermediate measures to enable the recognition and enforcement of a judgment given in a European Small Claims Procedure in another Member State.
Costs, delay and vexation of judicial proceedings do not necessarily decrease proportionally with the amount of the claim. On the contrary, the smaller the claim is, the more the weight of these obstacles increases. This has led to the creation of simplified civil procedures for Small Claims in many Member States. At the same time, the potential number of cross-border disputes is rising as a consequence of the increasing use of the EC Treaty rights of free movement of persons, goods and services. The obstacles to obtaining a fast and inexpensive judgment are clearly intensified in a cross-border context. It will often be necessary to hire two lawyers, there are additional translation and interpretation costs and miscellaneous other factors such as extra travel costs of litigants, witnesses, lawyers etc.
Potential problems are not limited to disputes between individuals. Also the owners of small businesses may face difficulties when they want to pursue their claims in another Member State. But as a consequence of the lack of a procedure which is “proportional” to the value of the litigation, the obstacles that the creditor is likely to encounter might make it questionable whether judicial recourse is economically sensible. The expense of obtaining a judgment, in particular against a defendant in another Member State, is often disproportionate to the amount of the claim involved. Many creditors, faced with the expense of the proceedings, and daunted by the practical difficulties that are likely to ensue, abandon any hope of obtaining what they believe is rightfully theirs.
Within the framework of their procedural systems and traditions, many Member States have introduced specific rules with respect to small claims litigation which provide for procedural simplifications compared with the ordinary procedure. It is not surprising that the solutions that have been devised differ from each other. Whereas in some Member States there are specific Small Claims procedures, others provide for certain procedural simplifications in Small Claims cases. There are also differences with respect to the degree to which specific procedural simplifications apply.
There are specific Small Claims Procedures which provide for various simplifications compared with the ordinary procedure in the United Kingdom (England/Wales, Scotland and Northern Ireland), Ireland, Sweden and Spain. In Germany courts may determine their procedures as they see fit in Small Claims cases. In France there is a simplified way of introducing the procedure for Small Claims (“déclaration au greffe”). The Codes of Civil Procedure of Austria, Finland and the Netherlands and other Member States contain several procedural simplifications compared with the ordinary procedure which are applicable in cases below certain thresholds. While one may not consider these procedural simplifications as amounting to a specific Small Claims Procedure in a strict sense, in practice very similar results are achieved.
The most important features of the existing Small Claims procedures and procedural simplifications can be summarised as follows i:
- All Member States with Small Claims procedures have quantitative thresholds for these procedures which vary, however, considerably i. Some Member States apply the Small Claims procedure additionally also to certain types of litigation, regardless of a threshold. In most Member States with Small Claims procedures, these procedures are available not only for monetary claims. The use of the simplified procedure is in most cases obligatory (for claims below the threshold), but a litigation can be transferred to the ordinary or a more formal procedure by the judge or on application of a party.
- In many existing Small Claims procedures, there are forms for filing the claim. There is no obligation to make legal references in the application in any Member State, i.e. only factual references are required. In most Member States there is support by a court clerk or help desk for the introduction of a procedure. Moreover, the judge gives assistance during the hearing to a party that is not represented by a lawyer (particularly on procedural issues), whilst observing the principle of impartiality. At present, no Member States requires mandatory representation by a lawyer in Small Claims procedures.
- The relaxation of rules concerning the taking of evidence is one of the issues crucial in the small claims procedures in most Member States. In many cases, the judge has a certain amount of discretion in this respect. The possibility of a purely written procedure (instead of oral hearings) exists presently in many cases. In some cases, the rules concerning the content of the judgment are relaxed. There is a time limit for the delivery of the judgment in many Member States. The procedural rules with respect to the reimbursement of costs differ significantly. In most Member States all costs have to be paid by the defendant alone if he loses. The laws of the Member States concerning the possibility to appeal against decisions in Small Claims procedures differ considerably.
Article 65 of the EC Treaty attributes legislative powers to the Community with regard to judicial cooperation in civil matters having cross-border implications in so far as necessary for the proper functioning of the internal market.
With respect to the internal market requirement, there is a margin of appreciation for the Community institutions in determining whether a measure is necessary for the proper functioning of the internal market. With respect to this proposal, the proper functioning of the internal market is facilitated because the establishment of a European Small Claims procedure will help to eliminate obstacles to the free movement of goods, persons, services or capital. As outlined above (2.1.2.), at present small claims procedures are substantially different in the Member States. The access of economic operators to judicial mechanisms of substantially different performance levels entails a distortion of competition in the internal market regardless of whether the actors are domiciled in different Member States or in the same Member State. If some operators have access to efficient and effective procedures while others do not, there is no level playing field for operators competing in the internal market. The existing disparities in the laws of the Member States put obstacles to the proper functioning of the internal market.Consequently, a situation implying a marked disequilibrium with regard to the efficiency of the procedural means afforded to creditors under different national laws amounts to a distortion of competition within the internal market. A European Small Claims procedure would thus facilitate the proper functioning of the internal market.
Concerning the cross-border requirement, most linguistic versions of the Treaty use the term “matter”, and not “measure”. It is therefore necessary and sufficient that the “matter” has cross-border implications. This interpretation is confirmed by letter (c) of Article 65 which provides that measures in the field of judicial cooperation in civil matters shall include eliminating obstacles to the good functioning of civil proceedings, and by Article III-269 of the Treaty establishing a Constitution for Europe.
Procedural law by its nature may have cross-border implications. The judge will always apply the lex fori whether or not the litigation has cross-border elements. Small Claims litigation constitutes a matter having cross-border implications since – taking into account the development of the internal market - most economic operators and consumers will sooner or later be involved in such litigation abroad.
A measure applying also to purely internal cases which is necessary for the proper functioning of the internal market, in particular because it eliminates distortions of competition between economic operators of the different Member States, has necessarily cross-border implications since the putting in place of an efficient Small Claims Procedure in every Member State will facilitate access to justice under equal conditions.
The internal market requirement in Article 65 is thus a restriction of the cross-border requirement. A measure which is necessary for the proper functioning of the internal market has necessarily cross-border implications, whereas a measure having cross-border implications may not always also be necessary for the proper functioning of the internal market. This interpretation is also confirmed by the negotiations leading to the adoption of Article 65 since the internal market requirement was introduced at a late stage of the negotiations in order to limit the scope of the provision. A more restrictive interpretation of Article 65 cannot have been intended by those who drafted it since it would create new obstacles to access to justice in the European Judicial Area. Every legal instrument would have to have its own “cross-border” definition since that definition would almost necessarily have to vary from one issue to another which would cause significant difficulties in the application of those instruments.
It would not only be inappropriate but even counterproductive to constrain the scope of application of the European Small Claims Procedure to cross-border cases.
Firstly, the creation of two different regimes for internal cases and for cases with cross-border aspects should be avoided. Such a duality of regimes would be inconsistent with the objective of a single and coherent area of justice for all.
Furthermore, as outlined above, not in all Member States speedy and inexpensive small claims procedures are available to litigants. The lack of such procedures which are proportional to the value of the litigation make judicial recourse economically questionable in many cases and often creditors abstain from taking legal action. This limitation of effective access to justice causes economic costs which have significant negative macroeconomic impacts on the proper functioning of the internal market.
The objective of this proposal, to simplify and speed up litigation concerning small claims by establishing a European Small Claims Procedure, cannot be sufficiently accomplished by the Member States themselves as they cannot guarantee the equivalence of rules applicable throughout the Community. The objective can therefore be only achieved at Community level.
The present proposal is fully consistent with the principle of proportionality in that it is strictly limited to what is necessary in order to reach this objective. In that context, it is particularly essential to underscore the effects of the combination of the legal instrument chosen (Regulation) with the optional nature of the European Small Claims Procedure in relation to comparable mechanisms under the national procedural law of the Member States. Whilst ensuring the uniformity and direct applicability of the procedure, the Regulation proposed here would only oblige Member States to make the European procedure available as an additional tool. It would force them neither to abandon their pre-existing legislation on small claims nor to modify such legislation to bring it into line with Community law. Hence, this proposal for a Regulation which leaves the right of the Member States unaffected to continue the application of their domestic rules alongside the European Small Claims Procedure encroaches much less on their procedural systems than a Directive that would require an adaptation of national legislation to the standards set in that instrument. This legislative technique, in fact, assures a common minimum level in the efficiency of the recovery of small claims but it permits Member States that have developed an even better-functioning domestic system to retain it. Ultimately, it will be left to the creditors to judge which procedure they consider as being either superior in performance or more convenient in terms of accessibility, the latter criterion being particularly relevant for those operating in several Member States and being spared the need to make themselves familiar with the procedural law of every one of them by the availability of a uniform European Small Claims Procedure. Finally, it should be borne in mind that Article 17 of the proposal provides that “subject to the provisions of this Regulation, the European Small Claims Procedure shall be governed by the procedural law of the Member State in which the procedure is conducted”. Hence, the introduction of a European Small Claims Procedure does not entail the need for further approximation of national procedural legislation and thus keeps interference with domestic law to an absolute minimum.