Although largely unknown, the “European small claims procedure” (hereinafter the “Procedure“) has existed in the EU for some time. The Procedure is adjusted by Regulation (EC) No 861/2007 of the European Parliament and of the Council (hereinafter the “Regulation“) and provides an alternative for common dispute procedure in compliance with the Civil Procedure Act. The goal of the Procedure is/was (i) to provide aid to consumers when applying their rights in cross-border disputes and improvement of access to legal protection for small and medium companies when exacting small claims.

The Procedure should provide a simplified, low-cost solution for cross-border disputes in civil-law and business matters.

The Procedure entered into operation in the EU since 2009, and during its existence it was hindered by certain problems, the largest of which were the following:

• Consumers were often discouraged from the Procedure due to excessively large court fees, which often exceeded the claimed amount;
• Small and medium-size entrepreneurs were on the other hand restricted by the 2,000 EUR limit, since only a small percentage of their cross-border claims could fit into this limit.

1.      Current small claims procedure

Within the current Procedure, “small claims” are defined as cases with an amount not exceeding 2,000 EUR excl. accessories, i.e. interests, expenses and other payments (at the moment the charges are delivered to the appropriate court). The ruling is issued in the domestic country of the consumer or in the country of the defendant company if the consumer wishes so. The procedural rights of both parties are maintained and the ruling is directly claimable in the country of domicile of the party which lost the dispute, as well as in any other EU country. It is not required that parties are represented by attorneys during the Procedure.

The regulation then understands a “cross-border case” as any case where at least one of the parties has a domicile or usual residence in another member country than the member country of the court where the action was filed. The Procedure begins by submitting a form and is in writing. The average duration of a European small claims procedure is 5 months, significantly less than the duration of 2 years and 5 months for usual procedures.

The subject of a dispute in the Procedure must be a civil-law or business matter, with the exception of status, family-law, inheritance and work-law matters. The Procedure also excludes claims following from bankruptcy proceedings and arbitration proceedings, claims from the rent of real property (with the exception of charges regarding financial claims) and claims from breach of personal or privacy protection regulations.

2.      Prepared changes regarding the Procedure

The EC carried out the survey targeting the functionality of the Procedure, and consequently processed a proposal for changes within Procedure File: 2013/0403(COD) of 19 November 2013, which should remove most of the current problems with the Procedure (hereinafter the “Proposal“). The proposed changes are the following:

2.1       Increasing the limit for charges within the Procedure

The primary change proposed by the EC is to raise the limit for charges made within the Procedure from today’s 2,000 EUR to 10,000 EUR. This change should allow especially small and medium-size businesses to utilize the Procedure for a larger number of their claims.

2.2       Reduction of court fees

With respect to the unreasonable court fees within the Procedure, and especially with respect to consumers, the Proposal includes a limit to the court fees which would be equal to 10% of the value of the claim, whereas the minimum court fee (if such is imposed by a country) shall not exceed 35 EUR. The Proposal also stipulates that court fees shall be payable via an online credit card transaction.

2.3       Extension of the definition of a “cross-border case”

The Procedure can currently only be used for disputes where at least one of the parties has an address or usual residence in a member state which is different from the member state of the court where the charges were filed.

Newly, charges made within the Procedure are also admissible in cases where the dispute includes a significant cross-border element. This should include the following cases:

• the place of performance of a contract is located in another member state;
• the location a harmful event is in another member state, for instance when the dispute is between participants of an accident in a border region of another member state; or
• the enforcement of the ruling is to be carried out in another member state, for instance if the ruling will be related to the defendant’s salary provided in another member state.

2.4       Reduction of administrative load and travel costs

The Proposal also allows the possibility of initiating the Procedure online. E-mails will thus become a legally valid means of communication between the affected parties.

If the matter requires oral negotiations, members will be allowed to use remote means of participating in the procedure. Teleconferences or videoconferences will thus become the tools used for oral negotiations, if necessary, and courts will be obliged to use these means to maintain the economic efficiency of the Procedure.

These should significantly reduce the overall costs of Procedures, especially travel costs.

3.      Conclusion

With respect to the above, we summarize that the EC Proposal facilitates efficient access to justice for consumers as well as for small and medium-size companies. The Proposal first and foremost reacts to practical problems by removing unreasonable fees for commencements of the Procedure and by increasing the upper limit for small claims to 10,000 EUR, which makes the Procedure better suited to resolve most disputes of small and medium-size businesses.

The implementation of videoconferences and teleconferences for oral negotiations and the possibility of initiating the Procedure by a simple e-mail then makes the Procedure available to everyone. Costly travel to foreign courts will become a thing of the past.

The extension of the Procedure to also include cases between domestic bodies with a foreign element is another welcome change and provides creditors the possibility of choosing the best way of exacting their claim.

All changes are reasonable and react to the practical needs of Proceedings participants. We may thus hope that the Proposal will soon be accepted without significant complications.

For more information, please contact K&A partner, Mgr. Jiří Kučera, e-mail: jkucera@kuceralegal.cz; tel.: +420604242241.