Report on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EC) No 861/2007 of the European Parliament and the Council of 11 July 2007 establishing a European Small Claims Procedure and Regulation (EC) No 1896/2006 of the European Parliament and of the Council of 12 December 2006 creating a European order for payment procedure

Stock having been taken following five years of application, the European Small Claims Procedure has proven to be a useful tool. However, there is still much room to broaden and enhance its take-up, something which was highlighted in the Commission’s application report of November 2013. The European Small Claims Procedure has reduced the costs of litigating cross-border small claims by up to 40 % and has cut the duration of litigation from up to two years and five months to an average of five months. On the other hand, the number of applications differs greatly between the Member States, ranging from just 3 applications in Bulgaria to 1047 applications in Spain for 2012.

Parliament noted in its resolution of 25 October 2011 that ‘the usage of small claims tribunals in some Member States remains significantly low and that more needs to be done in terms of legal certainty, language barriers and transparency of proceedings’. There is reason to be concerned about each small claim which is not pursued due to reluctance or a lack of awareness of the options available on the part of the potential claimant. This could seriously damage trust in the internal market, in particular with respect to its cross border scope and opportunities for online trading.

II. The Commission’s proposal

II A. The scope

The Commission proposes to raise the threshold for small claims which fall under the European Small Claims Procedure from the current amount of EUR 2 000 to EUR 10 000. It considers this new threshold to be less important for consumers, given that most of their claims do not exceed EUR 2 000, but deems it to be a considerable improvement for SMEs. According to the Commission’s findings, only 20 % of business claims are valued at less than EUR 2 000, whereas about 30 % of such claims are valued between EUR 2 000 and EUR 10 000. This means that, while the current threshold only covers 20 % of all business claims, a new threshold of EUR 10 000 would increase this share to about 50 %.

The Commission further proposes to extend the definition of what constitutes a cross border case, and thus falls under the scope of the regulation. The current regulation applies only if ‘at least one of the parties is domiciled or habitually resident in a Member State other than the Member State of the court or tribunal seized’. The Commission proposes, henceforth, to include also cases in which both parties are domiciled in the same Member State, but which contain another cross-border element, such as place of performance of the contract, place of occurrence of the harmful event, or enforcement of the judgment in another Member State.

II B. The procedure

A Commission survey has shown that 45 % of companies involved in a cross-border dispute do not go to court, owing to the disproportionate costs of court proceedings in relation to the value of the claim, while 27 % do not go to court because the court procedure would take too long. In order to make the European Small Claims Procedure more successful, the Commission proposes to reduce further the costs and duration of the procedure.

The current regulation allows for the initial application to be sent by email if the Member State in which the procedure is initiated deems this acceptable (Article 4(1)). Throughout the procedure, service by post with acknowledgment of receipt is provided for first of all under Article 13, while service by other means, including electronic service, is allowed only if such postal service is not possible. In practice, this means that in many Member States all communications between the parties and the court are currently carried out by post.

The Commission now proposes to put postal and electronic service for documents on an equal footing, provided that a party has expressly accepted in advance that documents may be served electronically.

Given that the European Small Claims Procedure is, in principle, a written procedure, oral hearings are only held in exceptional circumstances. According to the current regulation the court ‘may hold an oral hearing through video conference […] if the technical means are available’. This is to say that, should the technical means not be available, persons summoned for an oral hearing would be required to travel to the court, possibly in another Member State. The current regulation contains no incentive or obligation for Member States to provide these technical means.

The Commission proposes, as a rule, that oral hearings be held in future by distance communication, unless a party requests to appear before the court and be heard in person.

II C. The costs

At present, the court fees charged in Member States for cases brought under European Small Claims Procedures vary considerably, from no court fees to a share of up to 57 %. As a rule, the court fees are levied upfront when an application is lodged, and the claimant may hope to recover them eventually only if the claim is successful (the ‘loser pays’ principle). The Commission proposes to set a maximum cap on court fees of 10 % of the value of the claim, as it would further open up access to justice. The Commission also proposes to provide for a maximum amount of EUR 35 in minimum court fees.

Lastly, given that in a number of Member States the payment of court fees is required in the form of cash or stamps, parties must either travel to pay the fees or hire a lawyer in the Member State of the court, with both alternatives generating costs and potentially discouraging parties from pursuing their claim. The Commission therefore aims to oblige Member States to provide a means of distance payment for court fees.

Under the current regulation, the party seeking enforcement must produce an original copy of the judgment and of form D, which is the certificate relating to the judgment. The Commission has observed that the whole form is usually translated, at a cost, into the language of the Member State seeking enforcement.

The Commission now proposes that a translation of only section 4.3 of the form (relating to the substance of the judgment) be required.

III. The rapporteur’s assessment

III A. The scope

Your rapporteur welcomes the raising of the threshold for use of the European Small Claims Procedure. By making the simplified procedure available also for cross-border claims valued between EUR 2 000 and EUR 10 000, the share of cases eligible for a considerable reduction in costs and length of litigation is increased.

Your rapporteur feels that this change will further increase the number of cases in which businesses and consumers could make welcome savings. The threshold for a small claim needs to remain at a level that is lower than the amount of an average claim, so that the necessary procedural guarantees for larger claims are ensured. It should also not be forgotten that increasing the use of the procedure by raising the threshold will make the procedure part of day-to-day court business. This will make it easier for potential users, in particular consumers, to access the necessary information. However, raising the threshold beyond EUR 10 000 does not seem feasible at this stage, so your rapporteur supports the figure proposed by the Commission.

III B. The procedure

The holding of oral hearings by videoconference is a timely proposal for modernisation. The need to travel to an oral hearing and pay travel costs can constitute a significant burden in cross-border cases. In a Commission survey on the European Small Claims Procedure , one in three respondents indicated that they would be more inclined to file a claim if the procedures could be completed at a distance, i.e. that there was no need to go to court in person.

It is to be noted that the relevant rooms and equipment would have to be provided and maintained by the courts. Such infrastructure is frequently inexistent and the funds to create it are scarce in these times of economic crisis. Your rapporteur therefore feels that the Member States should be given a further two years in order to ensure that such infrastructure is available where required across Europe.

On the subject of oral hearings, your rapporteur also feels that the court needs to have greater discretion to refuse a request for an oral hearing where it is not required by the facts of the case.

Your rapporteur supports the proposal where it seeks to encourage the use of information technology. Evidence shows that insufficient use of information technology discourages citizens from using the European Small Claims Procedure. One fifth of respondents indicated in a Commission survey that they would be more inclined to use the procedure if all proceedings could be carried out online. However, the electronic communication system in place must work impeccably and provide the same procedural security as postal service, e.g. as regards the acknowledgement of receipt.

The provisions on the use of information technology should therefore be strengthened, but without unduly affecting national procedures.

III C. The costs

Your rapporteur considers that costs of EUR 1 000 which could be levied for a EUR 10 000 claim under the new rule are still rather high. However, this still largely remains a matter for the Member States.

The Commission’s proposal to provide for a maximum amount of EUR 35 in minimum court fees seems reasonable, given that it has identified the average minimum court fee for a claim of EUR 200 as EUR 34, and that for a claim of EUR 500 as EUR 44. Furthermore, your rapporteur believes that parties on low incomes should be benefit from a waiver. Reference might be had to the national minimum wage in order to set a threshold for such a fee waiver in each Member States.

Your rapporteur welcomes the Commission’s proposal to oblige Member States to put in place means of distance payment, including bank transfers and online credit or debit card payment systems. This would allow claimants to save on payment costs, which have been identified by the Commission as ranging between EUR 400 and EUR 800 where travel is required. Where a claim has been satisfactorily dealt with at a distance, it would be ridiculous to make the parties travel in order to pay fees. In order to allow citizens to benefit from these savings, the enforcement of this requirement will warrant specific attention. At the same time, your rapporteur feels that the Member States’ court administrations should not have to provide several means of distance payment; one is sufficient.

The change to the translation requirement is a good thing, as it will deliver savings in money and time. According to the figures published by the Commission, the average translation costs for form D are EUR 60, but these could be reduced to EUR 40 if section 4.3 only was translated. This does not create any comprehension problem as all fields of the form other than section 4.3 are already available in all official languages in the text of the regulation. The option of providing the forms in electronic format should also be explored in order to further facilitate the procedure.

IV. Awareness and guidance

The European Small Claims Procedure can be successful only if consumers and businesses, courts, and associations providing advice are aware of it. Evidence quoted by the Commission shows that 86 % of citizens and almost half of the courts have never heard of the procedure. It is therefore crucial that the Commission continue its efforts to provide information on the European Small Claims Procedure, in particular via the e-Justice Portal. It is equally important that the Member States complement the Commission’s efforts through national awareness-raising campaigns.

Furthermore, consumers and businesses need very concrete information on how to use the procedure in practice and what it would cost. It therefore makes sense for the Member States to provide information on court fees and methods of payment for the European Small Claims Procedure. The Commission will publish this information on the internet, which will allow consumers and businesses to make an informed decision.

Consumers and SMEs may need practical assistance in filling out the forms for the procedure. In this connection, the Commission’s proposal for practical assistance is most useful. However, such assistance can help only if it is targeted, practical and specific. It might be useful to explore the possibilities of online guidance, while bearing in mind that individual, personal advice will also be necessary. Assistance may also be of benefit at the enforcement stage.

V. Conclusion

All in all, your rapporteur is very favourably disposed towards the changes proposed by the Commission. She believes that the changes proposed in this draft report would further improve the functioning of the Small Claims Procedure, and looks forward to the ideas of other Members to be tabled in the form of amendments.

The proposal as it stands would enter into force on the twentieth day following that of its publication. It would apply from six months after that. Your rapporteur proposes that the legislative delegation to the Commission for the required forms, and the obligation for Member States to provide certain information should apply from the day of entry into force, as this would ensure that the framework is in place on the date the substantive changes apply.

Furthermore, your rapporteur would allow for an additional period of three years from the date of entry into force for Member States to ensure that the relevant equipment is available in courtrooms before it becomes mandatory to hold oral hearings by videoconference.