Italy: June 12 2008: EU Member States Will Start Creating The New European Payment Order Procedure - A Step Towards Simpler And Quicker Credit Collection Within The European Union

Last Updated: 3 June 2008
Article by Micael Montinari

Introduction

From June 12 2008 member states will begin their collaboration on the preparation of domestic procedure, forms and rules on competence and language in order to implement the new European payment order procedure, which will finally be available to creditors from December 12 2008.

Once the new procedure comes into force, claimants will not be required to bring intermediate proceedings in the member state of enforcement before securing recognition and enforcement, provided that certain minimum requirements are met. An applicant for a payment order will merely fill in a form detailing, among other things:

  • certain basic information about the parties;

  • the cross-border nature of the claim;

  • the value of the claim; and

  • a description of the evidence supporting the claim.

Although the procedure established by the regulation should serve as an additional and optional measure for the claimant, which remains free to commence proceedings under its domestic law, the new procedure will likely be used mostly in cross-border credit collection cases.

All kinds of creditor, including companies, stand to benefit from the new procedure. The length and cost of domestic procedures often frustrate pursuit of the debt. Companies mostly enter into an engagement with local counsel based on hourly rates, which means that the costs they bear are often higher than the level of compensation in the payment order.

The creditor may choose to be represented by a lawyer, although this is not mandatory under EU regulations. The new procedure is expected to require much less working time on the lawyer's part than is usually required by domestic procedures.

Scope Of Application

The new procedure provided for by EU Regulation 1896/2006 applies to civil and commercial matters in cross-border cases, irrespective of the court in question. However, it does not apply to:

  • tax, customs or administrative matters;

  • questions of a state's liability for acts and omissions in the exercise of its authority;

  • rights in property arising out of matrimonial relationships, wills and succession;

  • bankruptcy proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings;

  • social security matters; or

  • claims arising from non-contractual relations, unless (i) the claims have been the subject of an agreement between the parties or there has been an admission of debt, or (ii) the claims relate to liquidated debts arising from joint ownership of property obligations.

However, the scope of application is relatively broad and covers all the most usual credit claims arising from a breach of contract.

Jurisdiction will be determined in accordance with the relevant rules of EU law, in particular Regulation 44/2001.

Proceedings

1. Application

An application for a European payment order must be made using the standard form accompanying Regulation 1896/2006.

The application must include:

  • the names and addresses of the parties and their representatives (where applicable), as well as an indication of the court before which the application is being made;

  • the amount of the claim, including the principal and, where applicable, the interest, contractual penalties and costs;

  • the grounds for the claim and a description of the circumstances surrounding it;

  • a description of the evidence supporting the claim;

  • the grounds for the choice of jurisdiction; and

  • an explanation of the cross-border nature of the case.

The application may be submitted in hard copy or by any other means of communication (including electronic communication) that is accepted by the member state of origin and available to the court of origin.

2. Examination

The competent court examines whether the above requirements are met and whether the claim appears to be grounded.

The claimant has no right of appeal if the application is rejected, but such rejection does not prevent the claimant from pursuing the claim by means of a new application for a European payment order or any other procedure available under the law of a member state.

3. Content

If the requirements are met, the court issues a payment order, normally within 30 days of the application being filed.

The order must inform the defendant of its right to choose to (i) pay the claimant the amount indicated in the order, or (ii) challenge the order by lodging a statement of opposition with the court of origin within 30 days of service.

In addition, the defendant must be informed that:

  • the order was issued solely on the basis of information provided by the claimant, which has not been verified by the court;

  • the order will become enforceable unless a statement of opposition is lodged with the court within 30 days; and

  • if such a statement is lodged, proceedings will continue before the competent court of the state of origin in accordance with the ordinary rules of civil procedure, unless the claimant explicitly requests that the proceedings be terminated.

4. Opposition

The defendant's statement must indicate that it contests the claim, although it need not specify its grounds for doing so. It must use the standard form which is supplied with the payment order a sample form accompanies the regulation.

If the defendant files a statement of opposition within the 30-day term, proceedings will continue before the competent courts of the state of origin in accordance with the ordinary rules of civil procedure, unless the claimant explicitly requests that the proceedings be terminated.

5. Enforceability

If no statement of opposition is lodged within 30 days, the court, having verified the date of service, declares the order to be enforceable using a standard form accompanying the regulation.

The formal requirements for enforcement are governed by the law of the member state of origin.

6. Legal representation

A claimant applying for a European payment order or a defendant lodging its opposition to such an order need not be represented by a lawyer or other legal professional.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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