European Union Flag The European Union (EU) has formally recognized that development of three key elements - freedom, security, and justice - is crucial to the successful realization of their strategic mission. To this end members of the European Council and other EU regulatory bodies have been developing an ambitious and comprehensive framework of justice in compliance with one of its primary goals, achieving cross-border cooperation between Member States.

The judicial legislation and mandates being executed are of significant importance to credit and collection professionals doing business within the EU. By understanding the new laws and how to use them to advantage, creditors can save considerable expense and man-power hours when it comes to litigation and other judicial procedures.

Background Strategy

The EU continues to initiate new legislation under the aegis of The Hague Programme which specifically recognizes the need for a supranational, wholly European sphere of justice. According to article 9 of The Hague Programme,

“A European area of justice is more than an area where judgments obtained in one Member State are recognised and enforced in other Member States, but rather an area where effective access to justice is guaranteed in order to obtain and enforce judicial decisions. In the field of civil justice, completion of the Programme on mutual recognition of decisions in civil and commercial matters is of the utmost importance.”

For creditors, this means that not only has the EU recognized the benefits of establishing a system of judicial policies that eliminate the previous difficulties involved with litigation of a foreign debtor, but that it is also taking steps to ensure that all national judicial systems recognize and enforce the EU mandate related to cross-border commercial litigation.

Cross-border Acknowledgment and Enforcement of Judgments

To reinforce judicial cooperation, the EU has been actively implementing new policies and procedures which target specific steps of the civil and commercial litigation process.

In the article “European Order for Payment Procedure” which appeared in the September 2007 issue of the Credit-to-Cash Advisor, we discussed one of these new policies which provides EU members with a simple method for obtaining order for payment without going to the expense of litigation.

Several new laws have been passed which also effect creditors seeking enforcement within the EU. These include:

European Enforcement Order

Any judgment issued on an uncontested claim can be enforced across borders within an EU Member State without any intermediate procedures. This new legislation has eliminated unnecessary steps which previously would have cost creditors additional legal expenses and delay in payout of the enforcement.

Council Regulation on Insolvency Proceedings

In the event a debtor entity is declared insolvent, this regulation institutes universal rules pertaining to: the court that is competent to hear the insolvency proceedings; the applicable law; and, the recognition of the court’s decisions. The intention behind this regulation is to discourage the debtor from transferring his assets or the judicial proceedings from one Member State to another in an attempt to improve his legal position.¹

Means of alternative dispute resolution (ADR): mediation

While this is not a piece of legislation so much as a proposal, the encouragement to use ADR is heavily advocated by the EU. The purpose here is to support and promote the use of mediation in civil and commercial claims dispute resolution as a more favorable alternative to litigation. The proposal also suggests implementing rules on the interaction between mediation and court proceedings. The primary incentive promoted by the proposal to use ADR is its advantage as a more economical method of resolving disputes versus judicial proceedings or arbitration.

Cooperation between European Union Member States

To fully encourage the advancement of the European single market, the varying procedures and standards between judicial systems of Member States are being removed. The goals: (1) that judicial decisions in one Member State be recognized and enforced in other Member States without any intermediate steps, and (2) establishment of better collaboration between the authorities.

Taking of evidence

This regulation makes it easier to take evidence in civil and commercial matters where the court of a Member State requests the competent court of another Member State to take evidence and/or requests that evidence be taken directly in another Member State.² Precise criteria have been established so that evidence taken in one court can be easily requested and transferred to another court. This eliminates protracted dealings and requests from the courts, where cases can be delayed for months and sometimes years waiting on necessary approvals.

Establishment of a European Judicial Network

According to the Council decision, the establishment of an area of justice and the development of a single market logically requires the need to “improve, simplify, and expedite effective judicial cooperation between the Member States in civil and commercial matters.”³ This decision is intended to implement that objective by the establishment of a European judicial network in civil and commercial matters. The EU council has appointed central judicial contact points within each Member State.

Conclusion

Additional legislation and proposals that have been enacted include those relating to cross-border enforcement for the attachment of bank accounts, recognition and form of evidence in commercial litigation, and others dealing with applicable law and jurisdiction.

With so many new directives being initiated, creditors doing business in the EU now have more alternatives to pursue judicial actions against debtors through less costly procedures than in the past. The wise among them will educate themselves in their use, creating bottom-line benefit for their organizations.

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¹Council Regulation (EC) No. 1346/2000 of 29 May 2008 on insolvency proceedings

²Council Regulation (EC) No. 1206/2001 of 28 May 2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters

³2001/470/EC: Council Decision of 28 May 2001 establishing a European judicial network in civil and commercial matters

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Riki-Lee Ritz received a B.A. in French language and literature and is a bilingual account executive in the international department at ABC-Amega. She manages claims in Europe as well as francophone countries in Africa and the Caribbean.

ABC-Amega is a commercial receivable management firm providing 1st and 3rd-party receivable management services in the U.S. and more than 200 other countries worldwide.