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Are you owed money in Europe?

27th July 2016

Are you owed money in Europe?

Following the United Kingdom’s historic decision to leave the European Union, anyone owed money by an individual or business in Europe is advised to act quickly and take advantage of current European debt recovery procedures. You could be forgiven for thinking that it might be complicated or prohibitively expensive to recover money from a debtor based elsewhere in the EU, especially if the amount outstanding is small.  However, there are several procedures available to allow money claims to be recovered both quickly and easily.

It is unclear for how long these procedures will remain available in the courts of England and Wales.  Tim Newsome, debt recovery solicitor at Myers & Co Solicitors in Burslem, Stoke-on-Trent, outlines the current options.

European small claims procedure

The European small claims procedure enables businesses and consumers to issue small claims in all member states of the European Union (EU).  The process is an alternative to using the national law of the particular member state and is suitable for cases where you consider that the claim may be contested.  In this country, European small claims are treated in the same way as domestic small claims matters.  The procedure uses standard forms that can be used by all parties across the whole of the EU and there are standard time limits to ensure effectiveness.  Once a judgment has been officially recognised, it is automatically enforceable in other member states.  Most European small claims are conducted on paper only, although it is possible to have an oral hearing, which may be conducted via video link if necessary.

This procedure is suitable for monetary and non-monetary claims up to a value of €2,000 (excluding interest and costs).  European small claims are not suitable for claims over marital property, property that is the subject of a will, employment, tenancy, bankruptcy or other claims, so it is always worth seeking advice on whether your claim is likely to be suitable for the European small claims procedure before making an application.

European orders for payment

European orders for payment (EOP) can be used for uncontested high-value commercial debts as well as for small claims.  Disputes are intended to be dealt with on paper only and are suitable for debts and claims that have a cross-border element.  This requires the parties to be in separate jurisdictions.  For example, as England and Wales are one jurisdiction it is not possible for a person in England to use the EOP for a debtor in England or Wales.

A debtor may use a European order for payment procedure in their home country for an uncontested debt.  The court receiving the request will then consider the jurisdiction, the cross-border nature and whether the claim has merit.  If these conditions are not met, the request will be rejected.  If the order is accepted, once it is received it is automatically enforceable in every EU country and no further steps are required.  It is then sent to the defendant, who must either pay the claim amount or contest it within 30 days.  If the European order for payment is contested, the claim will be transferred to the civil court system in the member state of origin (that is, if it was requested in England and Wales, the claim will be transferred back to England and Wales).  However, it is possible to transfer proceedings back to the national system of the other member state.

European orders for payment are treated as though they are a judgment of the court of the member state in which you are seeking to enforce the claim.  Again, the rules vary from state to state so it is worth seeking advice on the relevant jurisdiction before starting this procedure.

European enforcement orders

If, as a creditor, you receive judgment in your favour on a debt, but the debt remains unpaid, you can apply for a European Enforcement Order (EEO) to recover payment.  As long as the debtor does not contest the judgment, you can apply to recover the original debt and your costs of enforcement.

The European enforcement order comprises a two-stage procedure.  First, the claimant makes an application for an EEO in their own country.  Once granted, the order is supplemented to enable it to be registered in a member state, without any need to convert it into a domestic order recognised in the debtor’s country.  This avoids the debt having to be recovered in accordance with the domestic rules of the debtor’s country.  Before an EEO can be imposed, a certificate must be granted by a court and there are several considerations that must be made.

It is therefore wise to seek legal advice before pursuing this course of action, especially since enforcement requires you to contact the relevant court in the member state to ascertain the procedure for using a European enforcement order in that specific country.  Fees and procedures vary, so you are advised to have researched this fully before embarking on this course of action.

Effect of Brexit

At this juncture, it is impossible to predict what effect Brexit will have on the above procedures. It seems likely that at some stage they will become unavailable to UK individuals and companies. There is no indication as yet that they will be replaced by anything similar. Without the above procedures, the cost of recovering European debt is likely to be significantly higher. Therefore, if you are owed money by an individual or business in Europe you should make use of these procedures now before the opportunity is lost.

If you are owed money and need advice on the most efficient and cost-effective method of recouping the debt, contact Tim Newsome in our debt recovery team on 01782 525011 or email tim.newsome@myerssolicitors.co.uk.

The contents of this article are for the purposes of general awareness only.  They do not purport to constitute legal or professional advice, and the law may have changed since this article was published.  Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.