Lost in translation?
The European order for payment, intended to provide straightforward cross-border debt recovery, is undermined in Scotland by doubts and inconsistent practice at key stages
It is clear that for solicitors, and their clients, cross-border litigation adds a further layer of complexity and inconvenience in comparison to domestic Scottish claims. The introduction of the European order for payment (“EOP”) procedure, by way of Regulation (EC) No 1896/2006 (“EOP Regulation”), was an acknowledgment of this and an attempt to minimise the costs, time and resources required to recover uncontested cross-jurisdictional debts within the European Union (excluding Denmark).
Recovery of such debts can be of crucial importance in the current climate to clients of Scottish law firms; however, the attractiveness and “financial viability” to a claimant (the term used within the EOP Regulation) of using the EOP procedure may be dependent on clarity and efficiency in its implementation. The present uncertainty within Scotland regarding the service of EOPs in other jurisdictions somewhat undermines the standardised and uniform approach which the EOP Regulation seeks to implement.
European Order for Payment Regulation
One of the express purposes of the EOP Regulation is to “simplify, speed up and reduce the costs of litigation in cross-border cases concerning uncontested pecuniary claims by creating a European order for payment procedure” (article 1(1)(a)).
The substantive parts of the EOP Regulation entered into force on 12 December 2008 and it was widely welcomed as a step forward for cross-border recoveries, litigation and judicial co-operation within the EU.
EOP procedure is optional and can be used in place of existing procedures under the relevant national law. There are no financial limits in relation to amounts claimed; however, the Regulation does not apply to particular types of claim, including property rights arising from a matrimonial relationship, wills and succession, bankruptcy and, generally, claims stemming from non-contractual obligations.
The procedure uses standard forms to increase efficiency and consistency in application. A claim is made using standard form A and is required to contain various specified details. These details include a “description of evidence supporting the claim” (article 7(2)(e)). There is no express requirement to include the particular evidence being founded on rather than a mere description, but certain sheriff courts may request the production of such evidence to support the application (including, in many cases, a copy of the document on which the claim is founded and copies of any follow-up correspondence). Greater clarity and consistency from the courts in relation to this would be welcomed.
On receipt of the application the court will review it and either reject the application, ask the claimant to rectify it or proceed to issue an EOP, dependent on the extent to which the EOP Regulation requirements have been met.
Service of EOPs
Article 12(1) states that a court “shall issue, as soon as possible and normally within 30 days of the lodging of the application” an EOP. This is supplemented by article 12(5), which provides that the “court shall ensure that the EOP is served on the defendant in accordance with national law by a method that shall meet the minimum standards laid down in articles 13,14 and 15”.
Article 13 of the EOP Regulation outlines various methods of service with proof of receipt by the defendant. These methods include forms of personal, postal and electronic service where there is acknowledgment or confirmation of receipt. Article 14 provides specified methods of postal, personal and electronic service without proof of receipt. Service pursuant to articles 13 and 14 may also be effected on a representative of the defendant by virtue of article 15.
Effecting service in practice
The provisions of article 12 mentioned above are ambiguous and there consequently seems to be widespread disparity between and amongst practitioners and sheriff courts in Scotland regarding how the service of EOPs requires to be implemented.
Perhaps the most obvious interpretation of the relevant provisions, which certain courts have applied, is that the court produces (issues) the EOP and ensures service by serving the EOP upon the defendant itself. An alternative approach, adopted by certain sheriff courts, is to issue the EOP to the claimant for service by the claimant or their representative. Under this approach, the court simply has a supervisory involvement in ensuring that the EOP is served. In practical terms, it is not entirely clear whether an execution of service submitted on behalf of the claimant is the desired – or only – means by which the courts can “ensure” service.
In addition, there is some dubiety as to whether a translation of the EOP from English into the language of the member state of service should be included; we are of the view that this could not be intended given that the EOP proceeds on the basis of a standardised form.
In the absence of express provision regarding responsibility for service within the EOP Regulation, it would appear that article 26 is of relevance. It states that “all procedural issues not specifically dealt with in this Regulation shall be governed by national law”. Member states therefore do have some discretion in relation to how they would like to deal with service. Within this context, a requirement for service by the claimant would be the usual approach under Scots procedural law, with service by the court only occurring in a handful of existing situations.
The Act of Sederunt (Sheriff Court European Order for Payment Procedure Rules) 2008 does not contain any specific provisions with respect to which party should serve EOPs. The terms of rule 3 regarding the sending of documents by the court (within and outside the UK), and rule 4, which requires the claimant to lodge a document with details about the effecting of service on a representative of the defendant, are potentially conflicting and are certainly open to various interpretations.
Despite the degree of latitude given to member states regarding the service of EOPs, certain issued guidance suggests that the recommended course is for courts to execute service.
The European Commission’s European Judicial Network has published A Citizens’ Guide to Cross-border Civil Litigation in the European Union, which states that, following issuing, the EOP “will now be served on the defendant by the court” (see http://ec.europa.eu/civiljustice/publications/docs/guide_litiges_civils_transfrontaliers_en.pdf).
In addition, the European Commission’s Judicial Atlas website specifies that the EOP procedure only requires the claimant to submit their application and, thereafter, the procedure does not require “any further formalities or intervention on the part of the claimant” (see http://ec.europa.eu/justice_home/judicialatlascivil/html/epo_information_en.htm?countrySession=4&).
Guidance entitled Making a cross border claim in the EU EX725 has been published for England & Wales by Her Majesty’s Court Service. Included within the document is the following statement:
“If the conditions for applying for a European order for payment are met, the court issues and serves the order as soon as possible and normally within 30 days of the lodging of the application.”
The guidance from the European Commission and in England & Wales clearly suggests an expectation that the relevant court (rather than the claimant) will serve the EOP on the defendant. This is certainly the approach which is most in line with the intention of the EOP Regulation to minimise expense for parties seeking recovery of sums due.
If claimants are responsible for identifying appropriate forms of service and validly serving EOPs in different states, the cost of litigation and the resources required to be devoted to recovery can increase significantly.
Procedure following service
Within 30 days of service of an EOP, a “defendant” may lodge a statement of opposition contesting the claim. This will usually move the case into domestic civil procedural rules of the country in which proceedings were issued, albeit we anticipate that it would be open to the claimant to drop the claim at this stage, given that the onus would be upon the claimant to draft the relevant court papers to progress the claim.
Where no statement of opposition has been lodged, the court of origin is required to declare the EOP as enforceable and issue the enforceable EOP to the claimant. An enforceable EOP will be deemed as equivalent to a judgment by a court of the member state where the claim is to be enforced.
The enforcement procedures of the member state where the EOP is to be executed will apply, and the claimant is explicitly required to provide the enforcement authorities of that member state with a copy of the EOP and, where necessary, an appropriate language translation (article 21). This is a clear statement of responsibility for enforcement, unlike the terms of article 12 relating to service.
A consistent approach
There is currently a lack of uniformity as to how sheriff courts in Scotland are interpreting and implementing the provisions regarding issuing and service of EOPs. The resulting uncertainty is problematic for parties who wish to use the EOP procedure, as well as for those who are advising them.
It is important for a party to be aware of the steps which they require to take and the consequent cost involved in recovering uncontested claims in other jurisdictions, as this may impact upon whether they wish to use the EOP procedure.
The issuing and service of EOPs by courts, rather than claimants, appears to be more in line with the principles of the EOP Regulation as regards making the procedure straightforward and minimising costs. More important than this, however, is the adoption of an approach which is consistent, transparent and certain.
Definitive guidance from the Scottish Court Service would be gratefully received in order to bring clarity and to promote the use of an underutilised procedure which should be of great significance to practitioners and clients alike.
Furthermore, article 32 of the EOP Regulation states that the European Commission is required to present a detailed report reviewing the operation of the EOP procedure by 12 December 2013 and member states are obliged to provide information to assist with this. In this context, we would ask the Scottish Court Service to pass details of the current issues regarding service, and any other matters raised by other practitioners concerning the EOP procedure, to the relevant authorities in order to help create a more effective and coherent procedure.
James McGachie is a senior associate in the Litigation and Regulatory Team at DLA Piper Scotland LLP; Alisdair MacPherson was formerly a trainee solicitor at DLA Piper Scotland LLP.