Out-Law News 2 min. read

MEPs back proposed improvements to EU small claims debt recovery procedure


Members of the European parliament's legal affairs committee have voted in favour of improvements to the EU's simplified recovery process for cross-border debts.

The changes, first proposed by the European Commission in November 2013, would raise the monetary threshold for claims eligible for use of the simplified process to €10,000, as well as capping court fees and encouraging the use of electronic communications when resolving claims.

Lidia Joanna Geringer de Oedenberg, the Polish MEP who led the debate, said that the higher threshold in particular would allow small businesses, as well as individuals, to take advantage of the simplified procedure.

"With the rise in cross-border trade in the EU, the need to provide effective redress mechanisms to support economic activity has become increasingly vital," she said.

"I am pleased with the European Commission's proposal to make the procedure for the investigation of cross-border claims simple and easy to use for citizens, regardless of where they live or what language they speak, in addition to increasing the threshold to €10,000, allowing both individuals and SMEs to use this method of legal redress," she said.

The parliament will now begin negotiations with justice ministers from the various EU member states.

First established in 2009, the European Small Claims Procedure is a simplified procedure for recovering money owed by a debtor in another EU country, based on standard multi-language forms. For example, it would cover a Swedish shopper who purchases a product online from a German retailer and who receives a faulty product. The shopper could submit the standard form to the Swedish court and, if the court rules in favour, the decision would be enforced in Germany.

According to EU figures, the simplified procedure has reduced the cost of litigation related to the recovery of cross-border small claims by 40%, and cut the average length of litigation from two years and five months to five months. It currently covers claims worth up to €2,000, making the proposed new threshold a considerable increase of particular benefit to small businesses. Only 20% of business claims currently fall within the simplified procedure, according to the Commission.

While the parliament's legal affairs committee backed the majority of the Commission's proposals, it said that the proposed €10,000 threshold should only apply to cases against companies and other 'legal' persons, as opposed to individuals. Claims against individuals using the simplified procedure should be limited to those valued at €5,000 or less, the MEPs said. It also proposed including claims based on employment law, such as those for unpaid salary earned in another member state, within the scope of the simplified procedure.

The committee also amended the Commission's proposal to cap court fees to 5% of the value of the claim, rather than the 10% cap proposed by the Commission. In addition, each member state should introduce a minimum income threshold under which an individual would not have to pay any court fees at all, the committee said.

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