The European Parliament and Council have recently approved a new regulation (Regulation (EC) 1896/2006) to institute a European order for payment (EOP) procedure which will go into effect on December 12, 2008. The essential purpose of the new regulation is to make it easier to recover uncontested debts between cross-border parties in all European Union Member States by standardizing and accelerating the process.

Under existing procedures a judgment obtained in a Member State is not automatically enforceable in another Member State. This often leaves creditors in a difficult situation; not only do they have to navigate the judgment and enforcement processes governed by unfamiliar foreign legislation, the costs of pursuing such actions are often prohibitive. Once the new procedure is in effect it will, for example, be possible for a creditor in France to follow a standard procedure to recover a past-due amount owed by a debtor in any other Member State outside of France.

As the regulations and administration of the EOP are standardized, any order will be easily transferred and recognized in any Member State without being subject to intermediate proceedings and without the need for declarations of enforcement. The EOP procedure applies both to commercial and civil cases. It is important to note that the EOP procedure can not be applied or used in the case of bankruptcy or insolvency.

Application for European Order for Payment (EOP)

The application for an EOP is standard across all Member States and available in all official languages of the European Union. A limited amount of information is required to file the application, and must include the following:

the names and addresses of the parties and their representatives
the name and address of the court to which the application is made
the amount of the claim, including the principal and, where applicable, interest, contractual penalties, and other costs
the cause of action, including a description of the circumstances invoked as the basis of the claim and of the interest demanded
the cross-border nature of the case

The court does not verify the validity of the claim, but merely confirms that the requirements have been met. The EOP is only ordered on the basis of the information provided to the court by the claimant.

Acceptance or Rejection of an EOP

An EOP is issued only after the appointed court determines all requirements have been met by reviewing the application. There may be circumstances in which a creditor, or claimant, is able to satisfy the requirements for only a partial amount of a claim. In this instance the court will propose that the EOP be revised or amended according to the information the claimant is able to provide. For example, if a creditor attempts to claim a balance of €12,000.00 but is only able to substantiate half of that amount, the court will amend the EOP for €6,000.00. The claimant will have the opportunity to examine the amendment and will have to notify the court if the new EOP is acceptable.

Remember that if any deadlines are given by the court it is important to abide by them as a missed deadline will certainly result in the dismissal of an application.

An application will be subject to rejection if:

it fails to meet the necessary conditions
it is not founded
the applicant fails to return a completed or modified application in time
applicants fail to reply within the time limit, or refuse the courts proposed amendments

If the court rejects the application the claimant is duly informed, and there is no appeals process available. However, a new application can be filed and a creditor still has legal recourse under procedures available under national Member State laws.

Issuance of an EOP

Once the application has been accepted by the court, an EOP is issued within 30 days. The EOP notifies the defendant of the claim and requires the defendant to provide an answer of acceptance or opposition.

If the defendant opposes the claim then the opposition must be filed within 30 days of original service of the order on the defendant. In the event that no opposition is lodged then the order automatically becomes enforceable. At this point the national law of the Member State where the order must be enforced takes over, and the enforcement actions are governed by the law of that State.

Service of an EOP

An EOP is served on a defendant under the normal procedures of the national law of the Member State where service must be performed. These procedures vary slightly from each Member State but as a rule are generally very similar. For service to be effected on the defendant or the defendant’s representative, the address must be known and established.

Opposition to an EOP

In the event that a defendant lodges an opposition to the EOP, the courts of the Member State in which the EOP was originated will manage the remainder of the proceedings under usual civil law specific to that country. At this point it is always possible for the claimant to make a request to the court to terminate the proceedings.

It is possible for the defendant to have the courts review the EOP after failing to lodge an opposition and still challenge the enforceability after the 30-day time limit has passed in instances where:

the EOP was served without acknowledgement of receipt by the defendant and service was not effected in time to enable the preparation of a defense
the defendant was prevented from objecting to the claim by reason of force majeure or due to extraordinary circumstances
the EOP was wrongly issued

The court will decide if the defendant has a legitimate right to protest, but if even one of the criteria listed above are not met, the EOP will remain as a standing order. If the defendant can prove one of the above conditions occurred, then the EOP will be dismissed.

Outcomes of New EOP Process

The hope of the EU Parliament and Council is that this regulation will save costs for both corporations and citizens trying to recover past-due sums, and will also relieve some of the cost burden from national civil service bodies. The European Parliament has requested that this regulation be reviewed in five years to determine the cost-effectiveness of the new procedure. The results of the review will be provided to the public.

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Disclaimer: This information is provided by ABC-Amega Inc. and is not intended to be legal advice and is not a substitute for competent legal advice on the referenced subject.

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.