GREEN PAPER ON A EUROPEAN ORDER FOR PAYMENT PROCEDURE AND ON MEASURES TO SIMPLIFY AND SPEED UP SMALL CLAIMS LITIGATION

(presented by the Commission)

TABLE OF CONTENTS

objective of the green paper

Consultation on the green paper with all interested parties

1. PART I : INTRODUCTION

1.1. The applicability of a European instrument to cross-border cases only or to purely internal litigation as well

1.2. The choice of the appropriate instrument to pursue the approximation of procedural law

2. PART II : A EUROPEAN ORDER FOR PAYMENT PROCEDURE

2.1. INTRODUCTION

2.1.1. Access to efficient justice where debtors do not meet their obligations without any conceivable dispute over the justification, nature and extent of the claim at issue

2.2. Definition of an order for payment procedure

2.3. The need for action at Community level

2.4. BACKGROUND

2.4.1. Initiatives aiming at the creation of a European order for payment procedure prior to the entry into force of the Treaty of Amsterdam

2.5. The Amsterdam Treaty and its ramifications

2.6. The Tampere Conclusions

2.7. The programme of mutual recognition

2.8. The European Enforcement Order for uncontested claims as the first layer of a two-tiered approach

2.9. A Green Paper as the second leg of this approach

3. THE EUROPEAN ORDER FOR PAYMENT

3.1. The general approach

3.1.1. Summary overview of the different models that exist in the MS

3.2. Scope of application of the instrument

3.2.1. Restriction to pecuniary claims?

3.2.2. Should the procedure be available for certain types of claims only or should certain types of claims be excluded from the procedure?

3.2.3. Ceiling for the amount that can be claimed? (or - if non-pecuniary claims are included - for the value of the claim)

3.2.4. Should the use of the instrument be obligatory?

3.3. The rules governing the procedure

3.3.1. International jurisdiction in cross-border cases -Forum of the defendant's domicile?

3.3.2. Rules determining the jurisdiction within the MS whose courts have jurisdiction

3.3.3. Rules determining who exactly is in charge of the procedure

3.3.4. Application for a payment order

3.3.5. The extent of the examination of the claim by the court

3.3.6. The decision of the court on the payment order

3.3.7. Information of the defendant on his procedural rights and obligations along with the decision

3.3.8. Service of the order for payment on the defendant

3.3.9. Opposition by the defendant

3.3.10. Effects of opposition

3.3.11. Effects of the absence of timely opposition

3.3.12. Rules on representation by a lawyer?

3.3.13. Rules on costs (court fees, other expenses) and their compensation

3.3.14. Enforcement

4. PART III: MEASURES TO SIMPLIFY AND SPEED UP SMALL CLAIMS LITIGATION

4.1. EXISTING EC LAW - EARLIER COMMUNITY INITIATIVES

4.2. BACKGROUND

4.3. EXISTING SMALL CLAIMS PROCEDURES IN THE MEMBER STATES

4.3.1. Threshold

4.3.2. Types of litigation

4.3.3. Small Claims Procedure as an option or an obligation

4.3.4. Introduction of the Procedure

4.3.5. Representation and assistance

4.3.6. ADR (Alternative Dispute Settlement)

4.3.7. Relaxation of certain rules concerning the taking of evidence

4.3.8. Introduction of the possibility of a purely written procedure

4.3.9. Relaxation of rules concerning the content of the judgment and time frame

4.3.10. Costs

4.3.11. Exclusion/restriction of the possibility to appeal

4.4. THE NEED FOR ACTION AT COMMUNITY LEVEL

5. SCOPE OF INSTRUMENT ON SMALL CLAIMS

5.1. Threshold

5.2. Types of litigation

5.3. Small Claims Procedure as an option or an obligation

6. SIMPLIFICATION OF PROCEDURAL RULES

6.1. Common minimum standards for forms

6.2. Representation and assistance

6.3. ADR (Alternative Dispute Settlement)

6.4. Relaxation of certain rules concerning the taking of evidence

6.5. Introduction of the possibility of a purely written procedure

6.6. Relaxation of rules concerning the content of the judgment and time frame

6.7. Costs

6.8. Exclusion/restriction of the possibility to appeal

6.9. Further options for simplification

7. SUMMARY OF QUESTIONS

objective of the green paper

This Green Paper launches a consultation with all interested parties on possible measures to be taken at Community level

- to create a European order for payment procedure, that is to say a specific speedy and cost-efficient procedure for claims that are presumed to remain uncontested available throughout all Member States, and

- to simplify and speed up small claims litigation, an area in which it is particularly essential to streamline proceedings and to limit their costs in order to prevent the pursuit of these claims from becoming economically unreasonable.

The paper is based on a comparative study of how Member States currently deal with the pertinent procedural issues. This presentation is intended to facilitate the identification of best practices that could serve as a source of inspiration for European instruments.

Consultation on the green paper with all interested parties

Chapters 1, 2, 3 and 5 of the paper contain a number of questions on what the Commission sees as the most important issues to resolve in the assessment of possible initiatives on a European order for payment procedure on the one hand and on measures to speed up and simplify small claims litigation on the other. A summary of these questions is also listed at the end of the Green Paper. The Commission would appreciate to receive reasoned answers from all interested parties to these questions. Interested parties should of course not feel confined to these questions if other aspects of those subjects, included in the paper or not, give rise to comments they wish to make. Answers to the questions as well as any other comments should be sent before the 31 May 2003 to:

The European Commission Directorate-General for Justice and Home Affairs, Unit A.3 B-1049 Brussels Fax: +32 2 299.64.57

E-mail: jai-coop-jud-civil@cec.eu.int

To facilitate the handling of incoming answers and comments, interested parties who communicate them by several different means (e.g. by e-mail and in the paper form) are kindly requested to indicate, where appropriate, that the same document has already been sent to the Commission earlier on. Answers and comments may be made public on the Commission's website, unless the sender explicitly requests otherwise. In the spring of 2003 the Commission will assess the need for organising a public hearing to further debate the issues raised in the paper.

1. PART I : INTRODUCTION

The programme of measures for implementation of the principle of mutual recognition of decisions in civil and commercial matters [1] as the Commission's current working programme is, true to its name, primarily focused on facilitating the recognition and enforcement of judgments that were delivered in another Member State and not on the approximation or harmonization of procedural law. Nevertheless, the program recognizes that in some areas the abolition of intermediate measures that are still necessary to enable recognition and enforcement might coincide with the creation of a specific procedure laid down within the Community, either a uniform procedure laid down in a regulation or a harmonized procedure set up by each Member State pursuant to a directive.

[1] OJ 12, 15.01.2001, p.1.

In line with the conclusions of the Tampere European Council, the program of mutual recognition explicitly calls for the establishment of such common rules

- for a specific procedure for the speedy and efficient recovery of uncontested claims (European order for payment procedure) and

- for the simplification and acceleration of litigation on small claims.

Although small claims procedures and an order for payment procedure are two distinct areas of procedural law the questions raised by harmonization or the creation of a uniform European procedure are partly identical or overlapping. After all, these will be the first initiatives in the field of civil judicial co-operation directly concerning the rules that govern the procedure to obtain an enforceable decision.

The two major issues concerning the general approach to European legislation that both areas in question have in common (although the solutions need not necessarily be the same) are the following:

1.1. The applicability of a European instrument to cross-border cases only or to purely internal litigation as well

It is conceivable to devise rules that are exclusively applicable to litigation on small claims or to order for payment proceedings involving two parties who are domiciled in two different Member States and thus to envisage a European order for payment or small claims procedure for cross-border litigation only. On the other hand, the cross-border dimension of a case may become apparent only once the creditor proceeds to the stage of enforcement and realizes that enforcement has to be sought in another Member State because the debtor has moved to that State or only has assets worth seizing there. It could also be considered unsatisfactory to make a specific efficient European procedure available only for claims with an international dimension whilst plaintiffs in purely internal cases are possibly left with a burdensome ordinary civil procedural system that does not meet their justified needs. Beyond questions of practicability and equity, a marked disequilibrium with regard to the efficiency of the procedural means afforded to creditors from different Member States for the recovery of their claims, be they small or uncontested, could have a direct bearing on the proper functioning of the internal market. Such an impact would be arguable if litigants in the European Union did not have access to instruments of equal performance levels whereas equality of citizens and business partners in an integrated area presupposes equal access to the weapons of law. It is plausible that a company operating in a Member State where the judicial system provides for a fast and effective enforcement of claims has a significant competitive advantage over a firm which does its business in a judicial environment where such effective judicial remedies are not available. Such differences may even have as a consequence that companies are deterred from exercising their rights of freedom of establishment in other Member States under the EC Treaty. Therefore the application of possible instruments on order for payment proceedings and on small claims could be deemed useful also in cases of purely internal litigation.

Question 1:

Should European instruments on order for payment proceedings and on small claims be applicable to cross-border cases only or to purely internal litigation as well ? Please comment on the benefits and disadvantages of a reduced or extended scope of application for both of these possible instruments

1.2. The choice of the appropriate instrument to pursue the approximation of procedural law

The repercussions of the choice of the legal instrument deemed suitable in order to pursue the approximation of procedural law are of considerable significance. A directive could be limited to the core principles and leave the Member States with some leeway to shape the procedure according to their individual needs. Yet, the obligation to adapt their legislation to the requirements of the directive would inevitably entail the replacement of the preceding national system. On the other hand, a regulation in its direct applicability allows the Member States no room for manoeuvre. But the introduction of a uniform European procedure does not necessarily supersede national legislation. Such a new European procedure could also be considered an additional option happily coexisting with the national method of dealing with small or uncontested claims.

How much uniformity is necessary, in line with the principle of subsidiarity, to achieve the desired gain in efficiency and user-friendliness? How much freedom and flexibility can the Member States be awarded without undermining the original purpose of facilitating equal and equally efficient access to justice?

It should also be recalled in that respect that the dividing line between uniform and harmonized procedures is not as clear-cut as it might appear. Even in the case of the adoption of a regulation all issues consciously not addressed by such instrument would remain open to and actually call for complementary national rules. It may well be imaginable, for example, to prefer a regulation as the appropriate instrument to guarantee full uniformity concerning the core principles of a European order for payment procedure whilst leaving less central matters open for possibly divergent rules devised by the Member States according to their individual needs. At the same time, a directive may appear to be the more suitable legislative device with regard to the fundamental elements of a small claims procedure. Either way, it is necessary to determine those crucial procedural aspects that warrant harmonization and have to be covered by a legislative instrument, be it a regulation or a directive. The remainder of this paper will be dedicated to the identification of these fundamental issues separately for a European order for payment procedure and for small claims.

Question 2: What is the appropriate legislative instrument for order for payment proceedings and small claims, a regulation or a directive?

2. PART II : A EUROPEAN ORDER FOR PAYMENT PROCEDURE

2.1. INTRODUCTION

2.1.1. Access to efficient justice where debtors do not meet their obligations without any conceivable dispute over the justification, nature and extent of the claim at issue

It is an established fact of life that the main purpose of a substantial percentage of court proceedings in the Member States is not to obtain an authoritative impartial decision on contentious questions of fact or law. Rather, it is increasingly not the exception but the rule that in the verifiable absence of any dispute the creditor has to turn to the judiciary to attain an enforceable title allowing him to collect a claim by means of forced execution that the debtor is simply unwilling or unable to honour [2].

[2] In 2000 the Commission launched a study on specific procedures on small claims as available in the Member States. The questionnaire distributed to the Member States in that context also contained some question on uncontested claims. The answers of the Member States as summed up in a table in the final report by Evelyne Serverin, Directeur de recherche au CNRS IDHE-ENS CACHAN (Des Procedures de traitement judiciares des demandes de faible importance ou non contestées dans les droits des Etats-Membres de l'Union Européenne, Cachan 2001, p. 30) reveal that where comprehensive statistical data is available the percentage of uncontested claims ranges between around 50 % (Ireland) and more than 80 % (Germany, Austria, Sweden) out of all cases dealt with by ordinary lower civil courts.

This situation implies a multi-faceted challenge for the Member States' judicial systems. It has become essential to distinguish the truly contentious cases at the earliest possible stage of the proceedings from those where no real legal dispute exists. Such a differentiation is a necessary, albeit not sufficient condition to make efficient use of the limited resources allocated to the courts. It enables them to concentrate on the controversial litigation and to adjudicate it within a reasonable period of time. This desired result can be achieved, however, only if a speedy and effective procedure for uncontested claims is available and produces the relief of the judiciary that is indispensable for the prevention of considerable backlogs. Thus, given the mere number of non-contentious cases referred to above, the existence of a procedural legislation that ensures their efficient adjudication is a determining factor for the performance of a judicial system as a whole.

The swift recovery of outstanding debts whose justification is not called into question is of paramount importance for the economic operators in the European Union. A legal framework that does not guarantee a creditor access to the rapid settlement of uncontested claims may afford bad debtors a certain degree of impunity and thus provide an incentive to withhold payments intentionally to their own advantage [3]. Late payments are a major reason for insolvency threatening the survival of businesses, particularly small and medium-sized ones, and resulting in numerous job losses. The necessity to engage in lengthy, cumbersome and costly court proceedings even for the collection of uncontested debts inevitably exacerbates those detrimental economic effects.

[3] Based on the results of a study conducted at the Commission's request in 1994 ('European Late Payment Survey' - Intrum Justitia), the Commission estimated the proportion of intentional payment delays throughout the European Union at 35 % in its Communication to the Council and the European parliament 'towards greater efficiency in obtaining and enforcing judgments in the European Union', OJ C 33, 31.1.1998, p. 3, para. 38.

2.2. Definition of an order for payment procedure

All the Member States try to tackle the issue of mass recovery of uncontested claims through their courts from their national perspectives within the framework of their procedural systems and traditions. Not surprisingly, the solutions that have been devised differ widely, both in their technical nature and in their success. In some Member States, judgments by default, special summary proceedings within the structure of ordinary civil procedure or even provisional measures that are quasi-definitive as in practice main proceedings hardly ever ensue [4] are the principal procedural instruments to cope with uncontested claims.

[4] In the Netherlands, the unavailability of a speedy, simple and inexpensive debt collection procedure has stimulated an extesive use of provisional measures (kort geding) by the courts.

In several Member States, however, a specific payment order procedure has proven to be a particularly valuable tool to ensure the rapid and cost-effective collection of claims that are not the subject of a legal controversy. As of today, eleven Member States (Austria, Belgium, Finland, France, Germany, Greece, Italy, Luxembourg, Portugal, Spain, Sweden) know such a procedure as an integral part of their civil procedural legislation [5], the French injonction de payer and the German Mahnverfahren being the most famous examples. In fact, the recent years have seen the new introduction of payment orders in two Member States (Spain, Portugal) that had not offered an enforceable title of that nature to their creditors before [6]. This development testifies to the growing appreciation of this type of procedure throughout the European Union.

[5] With the exception of Belgium where due to some structural defects (e.g. the payment order has to be preceded by a formal notice) the procédure sommaire d'injonction de payer procedure has turned out to be more cumbersome than ordinary civil proceedings and has, therefore, not met broad acceptance among legal practitioners

[6] In Portugal the legislation on a payment order procedure adopted in 1993 has undergone a reform significantly improving its performance in 1998. In Spain, the proceso monitorio has been introduced in 1999.

The payment order procedures available in the Member States vary considerably with regard to such crucial aspects as the scope of application, the attribution of competence to issue an order or the formal and substantive requirements for obtaining a favourable decision. In spite of these discrepancies between the existing models of legislation that will be dealt with in more detail in this Green paper, all of them share the following distinctive features that can serve as elements of a definition of a payment order procedure:

Upon application by the plaintiff, the court or other competent authority takes a decision on the claim at issue ex parte, i.e. without any prior possibility for the defendant to participate. This decision is served on the defendant with an instruction to abide by the order or to contest the claim within a certain time limit. If the defendant fails to act either way, the payment order acquires enforceability. Only if he lodges opposition the case can be transferred to ordinary proceedings. Hence, as opposed to normal procedural rules the burden to initiate adversarial proceedings rests with the addressee of the payment order. This shift of responsibility, referred to in particularly lucid terms in French as 'inversion du contentieux', combined with the protection of the rights of the defence as embodied in the opportunity to prevent an enforceable title from coming into being constitutes the core characteristic of the payment order procedure.

2.3. The need for action at Community level

It appears to be rather self-evident that the duration and cost of ordinary civil proceedings that are inappropriate for claims where no legal dispute exists tend to grow even more disproportionate in cases with cross-border implications. The lack of knowledge of the legal systems of other Member States and the consequential need to consult a lawyer, the time-consuming service of court documents on parties in a Member State other than the one where the proceedings take place and the expenses related to translation are only the most conspicuous factors that complicate the lives of creditors of cross-border claims. These problems are inherent in every cross-border litigation irrespective of the contested or uncontested nature of a claim. Nevertheless, the contrast between a rapid recovery procedure available for purely internal lawsuits and the delays and expenses that ensue where parties are domiciled in different Member States reaches an intolerable extent if the justification of the claim at stake is not even challenged by the defendant. This situation privileges bad debtors in cross-border relations and may provide a disincentive for economic operators to extend their activities beyond their Member State of origin, thus limiting commercial transaction between Member States. Even the availability of an effective national procedure for the recovery of uncontested debts in every Member State, a far cry from the current situation [7], would not necessarily be a decisive improvement since the profound differences between such procedures and the lack of familiarity with them present significant obstacles to the settlement of cross-border cases in themselves. A harmonized European order for payment could go a long way towards improving easier access to efficient justice.

[7] Even in those Member States where payment order procedures exist, these are often (in Austria, Belgium, Italy and Luxembourg) not applicable if the defendant is domiciled abroad.

It also needs to be taken into consideration that cases with cross-border implications are by no means only those where the main proceedings involve parties from different Member States. A previously purely domestic case can acquire an international dimension because a judgment delivered in one Member State has to be enforced in another Member State, for example because the debtor has moved to that State or only has assets worth seizing there. The declaration of enforceability (exequatur) that is necessary to enable enforcement on the territory of another Member State than the one in which a judgment was delivered [8] is a source of delays and expenses, so much so that the Council and the Commission have established the abolition of such intermediate measures as one of their ultimate priorities in the programme of measures for implementation of the principle of mutual recognition of decisions in civil and commercial matters [9]. Providing the opportunity, subject to the rules of international jurisdiction, to obtain an enforceable title in the Member State where enforcement is sought through a harmonized payment order procedure would remove the need to cross a border for the purposes of enforcement altogether in a number of cases. Where enforcement in another Member State than the one where the decision was taken is inevitable the general introduction of a European order for payment could greatly facilitate the recognition and enforcement procedures or even render them obsolete [10]. The reservation of the right to refuse the enforcement of a foreign judgment is to a large extent the consequence of the diversity of national legislation and the lack of knowledge of foreign rules, especially as regards their compatibility with the requirements that are implied in the list of grounds for refusal or revocation of exequatur [11]. As far as judgments by default are concerned - and an order for payment is a judgment by default in that it acquires enforceability only if the defendant remains passive and fails to contest [12] - this reasoning applies in particular to the sensitive issue of the proper observance of the rights of the defence that are enshrined in Article 34 (2) of Council Regulation (EC) No 44/2001. If a European payment order procedure contained uniform common rules including those safeguarding the rights of the defence the complete disappearance of intermediate measures for the purposes of recognition and enforcement would appear to be within reach [13].

[8] The exequatur procedure, originally laid down in Articles 31 et seq. of the 1968 Brussels Convention on jurisdiction and enforcement of judgments in civil and commercial matters (consolidated version OJ C 27, 26.1.1998, p. 1), has been modified and is now governed by Articles 38 et seq. of Council Regulation (EC) No 44/2001 of 22 December 2000, OJ L 12, p. 1, which has entered into force on 1 March 2002.

[9] OJ C 12, 15.1.2001, p.1

[10] This position, has already been set out in the Commission communication to the Council and the European Parliament 'towards greater efficiency in obtaining and enforcing judgments in the European Union', OJ C 33, 31.1.1998, p.3

[11] Article 45 (1) read together with Articles 34 and 35 of Council Regulation (EC) No 44/2001

[12] The European Court of Justice has scrutinized the compliance of orders for payment with Article 27 (2) of the 1968 Brussels Convention which applies to judgments given in default of appearance in Hengst Import BV v. Campese (C-474/93), 13.7.1995, ECR 1995 I-2113 (Italian procedimento d'ingiunzione) and in Klomps v. Michel (C-166/80), 16.6.1981, ECR 1981, 1593 (German Mahnverfahren).

[13] The inevitable risk of the misconstruction or misapplication of those rules in individual cases does not constitute an obstacle in that respect since mistakes of that nature do not bar the enforceability of a judgment in a purely domestic setting unless the judgment itself is challenged by the losing party.

It is open to discussion if a European order for payment procedure should be exclusively applicable to cross-border litigation. In addition to the general reflections on this issue for the purposes of the different subject matters of this Green Paper [14] the following thoughts could be taken into consideration. In the light of the fact that an order for payment procedure is, in the essence, a method for the mass collection of debts that are undisputed and that is operated through the courts because they have a monopoly on the delivery of enforceable titles it could be considered reasonable to regard a situation implying a marked disequilibrium with regard to the efficiency of the procedural means afforded to creditors in different Member States as amounting to a distortion of competition within the internal market [15]. The creation of a European order for payment could represent an endeavour of harmonization in compliance with the principle of subsidiarity as this type of procedure is not inextricably interrelated with the other rules governing civil procedure but rather a chapter apart. It is the end of the payment order procedure caused by the defendant's opposition that triggers the possible transfer to ordinary civil proceedings. Hence, the introduction of a European order for payment would not entail the need for further approximation of national procedural legislation.

[14] Supra 1.1

[15] According to the Commission communication to the Council and the European Parliament 'towards greater efficiency in obtaining and enforcing judgments in the European Union', OJ C 33, 31.1.1998, p. 3, para. 38 the study 'European Payment Habits Survey'- Intrum Justitia (see supra, footnote 3) has demonstrated that the proportion of intentional payment delays is substantially below the Union-wide average of 35% in Member States where judgments can be obtained and enforced more quickly, more cheaply and more efficiently.

In the light of the foregoing remarks and in order to enable the Commission to better assess the extent of the need for action at Community level as well as the nature of the action needed, it is one of the purposes of this Green paper to gather more information on the functioning of the procedural rules for the recovery of uncontested claims, be it an order for payment procedure or another procedure, in the Member States. Analyzing the statutory framework in place does not in itself allow drawing the right conclusions as to the performance of a specific procedure in its day-to-day use. The greater the divergence of acceptance and success of methods intended to simplify and accelerate the attainment of an enforceable decision on a claim that turns out to be uncontested, the bigger the disequilibrium outlined above and the more urgent the need for approximation throughout the Community.

Question 3:

Which problems, if any, have arisen in the application of the order for payment procedure or another procedure for the recovery of uncontested claims available in your Member State? Please indicate the level of acceptance and success of these procedures in practice. Are these procedures also available in cross-border cases where either the plaintiff or the defendant is domiciled in another Member State? If yes, which problems, if any, have occurred in the application? If no, how are uncontested claims in a cross-border situation to be adjudicated?

2.4. BACKGROUND

2.4.1. Initiatives aiming at the creation of a European order for payment procedure prior to the entry into force of the Treaty of Amsterdam

2.4.1.1.Storme Proposal

In 1993, a working group of experts on procedural law, presided by Professor Marcel Storme, presented to the Commission a draft proposal for a Directive on the approximation of laws and rules of the Member States concerning certain aspects of the procedure for civil litigation (the so-called Storme Proposal) [16]. This first comprehensive attempt at addressing the most fundamental features of civil procedure [17], clearly based on an internal market rationale [18], comprises a section setting up detailed rules of an order for payment procedure, thus recognizing the particular importance of harmonization in that area [19]. Although this proposal was never converted into a legislative initiative of the Commission, it is a valuable point of reference and source of inspiration.

[16] The text was published in 1995, Storme (ed.), Rapprochement du droit judiciaire de l'Union Européenne - Approximation of judiciary law in the European Union, Dordrecht/Boston/London.

[17] It is worth mentioning that prior to this proposal the Council of Europe had suggested in its Recommendation No R (81) 7 On Measures Facilitating Access to Justice of 14.5.1981 that "provisions should be made for undisputed or established liquidated claims to ensure that in these matters a final decision is obtained quickly without unnecessary formality, appearances before the court or costs".

[18] The introductory report by Prof. Marcel Storme deals extensively with the necessity of harmonizing civil procedural law following from the creation of an internal market both from an economic point of view and with regard to the legal basis of Community legislation in this field.

[19] The working group originally intended to draft a complete European model code of civil procedure. The final proposal is, however, characterized by a marked difference between some areas (such as the order for payment) that are dealt with in detail and where a harmonized common procedure is suggested and others limited to the setting up of general principles or minimum standards.

2.4.1.2.Late payment Directive

In 1998, the Commission presented the Proposal for a European Parliament and Council Directive combating late payment in commercial transactions [20]. Based on the reasoning that the consequences of late payment, such as a deterring interest to be collected by the creditor after expiry of the due date, can be dissuasive only if they are accompanied by redress procedures which are rapid, effective and inexpensive [21] the draft, in its Article 5, contained a provision obliging Member States to ensure the availability of an accelerated debt recovery procedure for undisputed debts and outlining some essential minimum characteristics of that procedure. Although the term 'order for payment' was not mentioned in the text it is probably safe to assume that a procedure along these lines was what the drafters of the proposal primarily had in mind [22]. The Directive that was finally adopted on 29 June 2000 [23] based on Article 95 of the Treaty establishing the European Community took a more cautious approach. Instead of the introduction of a (potentially new) specific procedure Article 5 requires the Member States to ensure the possibility of obtaining an enforceable tile within a period of 90 days in conformity with their respective national legislation [24]. It remains to be seen if the transposition of Article 5 will entail noticeable changes in the Member States' procedural systems [25]. At any rate, this provision has to be considered a careful first stage, not the final step of the process towards the establishment of an efficient European recovery procedure for uncontested claims.

[20] COM (98) 126 final, OJ C 168, 3.6.1998, p. 13.

[21] Recital 14 of the proposal which became recital 20 of the Directive.

[22] The explanatory memorandum of the proposal explicitly referred to the French injonction de payer and to the German Mahnverfahren.

[23] Directive 2000/35/EC, OJ L 200, 8.8.2000, p. 35. The time limit for transposition expired on 8 August 2002.

[24] Article 5 ('Recovery procedure for unchallenged claims') reads:

[25] It appears to be not improbable that most if not all Member States will claim that their procedural legislation already meets these conditions. In that respect, much hinges on the interpretation of the term "normally". Does it take into account only the legal framework or also the empirical facts of the courts' factual efficiency in practice?

2.5. The Amsterdam Treaty and its ramifications

The entry into force of the Treaty of Amsterdam entailed the transfer of judicial co-operation in civil matters from the third pillar (Article K.1 (6) TEU) to the first pillar. According to Articles 61 (c) and 65 of the Treaty establishing the European Community, the Community adopts measures in the field of judicial co-operation in civil matters having cross-border implications and insofar as necessary for the proper functioning of the internal market. Pursuant to Article 65 (c) these measures include the elimination of obstacles to the good functioning of civil proceedings, if necessary by promoting the compatibility of the rules on civil procedure applicable in the Member States.

This new Community competence gave a fresh impetus to the discussion of farther-reaching approximation of procedural legislation including the field of uncontested claims [26].

[26] This is not to say, however, that Articles 61 (c) and 65 are the only possible legal basis for a European order for payment procedure.

2.6. The Tampere Conclusions

The European Council meeting in Tampere on 15 and 16 October 1999 endorsed the principle of mutual recognition of judgments and other decisions of judicial authorities as the cornerstone of judicial co-operation to be established within the Union. Under the heading "Greater convergence in civil law" it invited the Council and Commission to prepare new procedural legislation in cross-border cases, in particular on those elements that are instrumental to smooth judicial co-operation and to enhanced access to law. Orders for payment were explicitly mentioned as featuring among those crucial issues [27].

[27] Presidency Conclusions point 38.

The European Council asked the Council and the Commission to adopt, by December 2000, a programme of measures to implement the principle of mutual recognition including the commencement of work on a European Enforcement Order and on those aspects of procedural law on which common minimum standards are considered necessary to facilitate the application of the principle of mutual recognition.

2.7. The programme of mutual recognition

The joint programme of the Commission and the Council of measures for the implementation of the principle of mutual recognition of decisions in civil and commercial matters adopted by the Council on 30 November 2000 singled out the abolition of exequatur for uncontested claims as one of the Community's priorities. Pointing to a contradiction in terms in the delay of enforcement of judgments concerning claims that have not been challenged by the debtor caused by an exequatur procedure, the programme designated this area as the first one in which exequatur should be abolished as rapid recovery of outstanding debts is an absolute necessity for business and a constant concern for the economic sectors whose interest lies in the proper operation of the internal market [28].

[28] OJ C 12, 15.1.2001, p. 1, section I B 3.

As already pointed out earlier, the programme of mutual recognition is clearly focused on facilitating the recognition and enforcement of judgments that were delivered in another Member State. It is not a program of harmonization of national procedural law. Approximation of procedural legislation taking the form of setting minimum standards or harmonization is envisaged not as an objective in itself but as an accompanying measure that may, in some areas, be a precondition for the desired progress in attempting to gradually dispense with any exequatur procedure [29]. In the same document, it is underscored that in some areas abolition of exequatur might take the form of establishing a true European enforcement order, obtained following a specific, uniform or harmonised procedure laid down within the Community [30]. It has to be emphasized that the abolition of exequatur and the harmonization of procedural law are two distinct issues. The former presupposes the delivery of a decision and concerns the access to enforcement where a border has to be crossed for the purposes of enforcement whereas the latter relates to the efficient access to justice in order to obtain a decision regardless of whether or not this decision has to be enforced abroad. In spite of the interrelation between these matters as just outlined above it is important to bear in mind their separate nature and the fact that both of them can be addressed independently and on their own merits. Suffice it to recall here that the abolition of exequatur is of no relevance to a creditor who, in a cross-border case, has to sue a defendant in another Member State where an efficient procedure for the collection of uncontested debts is not available. Vice versa, the use of such a procedure leading to a decision issued in the State in which the defendant is domiciled will, in the vast majority of cases, remove the need to enforce this decision in a third Member State. On the other hand, there will always be judgments or other enforceable titles on uncontested claims (court settlements, authentic instruments) including those obtained through non-harmonized procedures that have to be enforced in a Member State other than that of their origin.

[29] It is illustrative in that respect that the programme deals with issues suitable for harmonization or the setting of minimum standards under the heading of 'measures ancillary to mutual recognition'.

[30] Section II A 2 b of the Programme. Although no mention of an order for payment procedure (nor any other specific procedure) is made in this section the later proposal of a European enforcement order for uncontested claims at the first stage of the implementation in section III A proves that harmonization along these lines has been envisaged particularly for the recovery of uncontested claims.

2.8. The European Enforcement Order for uncontested claims as the first layer of a two-tiered approach

Taking into consideration the above-mentioned circumstances, the Commission has chosen a two-tiered strategy aiming both at

* the abolition of exequatur on the condition of the observance of certain minimum standards for all enforceable titles on uncontested claims regardless of the nature of the proceedings that have led to the decision or enforceable document

and

* the creation of a specific harmonized procedure for the recovery of debts that are presumed to remain uncontested, namely the European order for payment,

albeit not simultaneously in the same legislative instrument. This approach allows swift progress in dispensing with exequatur for all situations that are characterized by the verifiable absence of any dispute over nature and extent of a debt (not only orders for payment) while carefully preparing the establishment of a harmonized order for payment procedure.

In April 2002, the Commission has adopted the proposal for a Council Regulation creating a European Enforcement Order for uncontested claims [31]. This legislative initiative constitutes the first stage of the two-step strategy and provides for the abolition of exequatur for all enforceable titles on uncontested claims, its scope of application not being limited to decisions resulting from a specific procedure. The elimination of intermediate measures is conditional upon the compliance with a number of minimum procedural standards regarding the service of documents covering the methods of service, the time period between service and the judgment enabling the preparation of a defence and the proper information of the defendant. Only the conformity with these requirements which is certified by the court of origin justifies the elimination of a control of the observance of the rights of the defence in the Member State in which the judgment is to be enforced. This system of certification by means of completing multilingual standard forms is intended to provide a tangible benefit for creditors who gain access to speedy and efficient enforcement abroad without the involvement of the judiciary of the Member State where enforcement is sought and the ensuing delays and expenses.

[31] COM (2002) 159 final.

2.9. A Green Paper as the second leg of this approach

The present Green Paper represents the second leg of this strategy and has to be seen in the context of the Commission's policy of tackling the issues raised by the programme of mutual recognition with regard to uncontested claims as a whole.

It should follow quite logically from the above considerations relating to the implementation of the programme of mutual recognition and from the general reflections concerning the rationale for a European order for payment [32] that the purposes of procedural harmonization pursued in this Green Paper and of facilitated recognition and enforcement are neither mutually exclusive nor contradictory or even overlapping. Rather, the two Commission initiatives are complementary to one another. The existence of a European order for payment procedure would not only create a level playing field for creditors and debtors throughout the Member States in terms of affording them equal access to justice. It could also bring about further progress in the field of recognition and enforcement by rendering superfluous even the requirement of certification envisaged under the proposal for a European Enforcement Order.

[32] Supra 2.3.

3. THE EUROPEAN ORDER FOR PAYMENT

3.1. The general approach

It is the purpose of this paper to launch a broad consultation on possible ways towards the creation of a specific uniform or harmonized European order for payment procedure. To that end, the rules that could govern such a procedure will be addressed individually, as far as possible in their chronological order in the course of the proceedings. Each issue will be presented based on an initial concise summary of the pertinent legislation in the Member States. This survey should serve as an inspiration for discussion in order to identify the best practices existing in the European Union - or new innovative solutions wherever appropriate - and translate the result of this analysis into a new Union-wide order for payment that offers a value added for the European citizens.

The isolated examination of the detailed characteristics of an order for payment procedure, one by one, would, however, be incomplete and insufficient if it stood alone as it would necessarily lose sight of the big picture, that is to say of the goal to construct a procedure the individual parts of which fit together in a harmonious way and form a well-balanced whole. Therefore, before turning to the particulars a brief overview will be given of the different "families" of order for payment procedures in Europe, thus offering an insight into the procedural features that are typically combine by the various national systems. When dealing with the single aspects of the procedure the possible interrelationship between them has to be taken into consideration. It will be a crucial choice to either follow one of the leading models or create something new matching up elements of divergent existing patterns and possibly innovative features.

3.1.1. Summary overview of the different models that exist in the MS

Roughly speaking, one can distinguish between two types of order for payment procedures in Europe. In spite of deviations in minor details the legislation of all Member States that do know an order for payment can be grouped into one of those two categories.

The key defining feature of what could be called the "evidence" model (Belgium, France, Greece, Luxembourg, Italy, Spain) is the requirement for the plaintiff to produce a piece of written evidence which proves the justification of the claim at stake. Without such documentary proof an application for an order for payment is considered inadmissible. This condition provides a safeguard against frivolous demands. It has to be seen in the context of a system that allows the delivery of an order for payment only after a summary examination of the merits of the case by a judge. It is at the stage of this test that the documentary proof plays its pivotal role. Does such written evidence exist and does it support the claim sufficiently to justify the judge's decision to issue an order for payment? The necessary assessment of these questions by the judge constitutes a means of protection of the defendant even at the ex parte stage of the proceedings when he has no opportunity to pronounce on the justification of the demand himself. Claims that are unfounded even based exclusively on the information supplied by the plaintiff or that cannot be supported by any written proof are to be filtered out very early in the proceedings by the judge himself. If an order for payment is issued, however, it bears the stamp of having passed a certain test of reasonableness. In most Member States that belong to the "evidence" family (France, Greece, Italy, Spain) the defendant only has one shot to object to the claim. Once the deadline for opposition has passed the order for payment immediately acquires the force of res iudicata and no further appeal lies against it.

The "no-evidence" order for payment procedure, however, that Austria, Finland, Germany, Sweden and Portugal adhere to is characterized by the complete absence of any examination by the court relating to the merits of the claim at issue. Whenever an application is admissible and satisfies the basic formal requirements the court issues an order for payment without any further assessment of the well-founded nature of the demand [33]. Where the "evidence" school apparently considers some minimum protection of the defendant by the court indispensable the "no-evidence" model puts its main emphasis on the responsibility of the defendant himself. In a certain sense, this is the pure implementation of the principle of the "inversion du contentieux" as the fate of the case fully depends on the reaction (or non-reaction) of the defendant without further interference by the court. If the defendant has the possibility of preventing an enforceable decision by simply saying "no", by opposing to the claim, no further safeguard is deemed necessary. The other main differences are the logical consequence of that different philosophical approach. If no examination takes places, there is obviously no need for documentary proof of the claim valid only as a tool to enable such control. Furthermore, if the claim is not assessed by the court and the whole procedure thus approaches a rather administrative nature [34] it does not appear to be necessary to involve a judge; consequently, in all Member States belonging to this group the power to deliver an order for payment is delegated either to clerks of the court or, as in Sweden, to the enforcement authorities, administrative bodies outside the sphere of the judiciary. Interestingly enough, in most Member States falling within that category the lack of protection through a court assessment of the merits of the claim is somewhat counterbalanced by awarding the defendant two opportunities to object instead of one. In Finland, Germany and Sweden, in the absence of opposition within the time limit a second (and enforceable) decision is rendered which is not final but can be challenged by the defendant within yet another time limit. Only if the defendant lets this second chance pass by the order for payment becomes res iudicata.

[33] Note has to be taken of the fact, though, that in Austria recently adopted new legislation prescribes a summary assessment of the merits of the claim by the court; for further detail infra 3.3.5.

[34] The use of the term "administrative" refers to the lack of the evaluation of the well-founded nature of the claim. It should not be misunderstood as calling into question the judicial nature of the procedure as such. Only Sweden has gone so far as to entrust an administrative body with the conduct of order for payment proceedings.

Having said that, however, it is important to point out that two Member States have departed from this pattern in their legislation. Both Austria and Portugal have subscribed to the "no-evidence" model but for even greater efficiency they have chosen a one-step procedure. Once the defendant has missed his one and only option to object, no further decision subject to opposition or appeal has to be taken; rather, the order for payment becomes final right away.

The Austrian and Portuguese examples illustrate the possibility of picking and matching the most performing elements from both existing classic models of order for payment procedures. The Austrian Mahnverfahren combines the simplicity of the "no-evidence" model (no documentary proof, no examination of the claim, no involvement of a judge) with the severe restriction of possibilities to appeal inspired by the "evidence" system and enables a creditor to obtain a decision that is not only enforceable but carries the full effect of res iudicata in just a little more than two weeks [35]. Is this hybrid an inspiration for a solution at the European level? [36] Or should one stick to one of the standard systems as described above? Can the cultural gap between the "evidence" and the "no-evidence" traditions be bridged and if so how? How much responsibility can be left to the defendant? Is there a minimum standard of protection of the defendant by the courts against the pursuit of unfounded demands through orders for payment?

[35] It has to be added, however, that the time limit for opposition of currently 14 days will be doubled to 4 weeks as from 1 January 2003; infra 3.3.9.1.

[36] It should be noted in that respect that both Austria and Portugal limit the scope of application of their order for payment scheme by a ceiling amount. This could be understood as a precautionary measure to avoid intolerable results of a new ultra-efficient procedure.

The following discussion of possible strategies to deal with every single detail of an order for payment procedure has to be seen in the light of these all-encompassing questions. The solutions found by different Member States cannot and should not be analyzed out of the context of the general approach they have chosen. And every possible proposal for a European order for payment needs to establish its own balance given the complicated interplay between different procedural aspects. In the following, special mention will be made of the implications of certain options for the character of the procedure as a whole wherever deemed appropriate.

3.2. Scope of application of the instrument

3.2.1. Restriction to pecuniary claims?

Whilst in most Member States (Austria, Belgium, Germany, Greece, Luxembourg, Portugal, Spain) the scope of application of a specific procedure for the acquisition of an enforceable decision that is based on the presumption that the claim will remain uncontested and implies the "inversion du contentieux" is limited to pecuniary claims for a specific amount. France, Finland, Italy and Sweden make it available for other obligations as well. In these Member States, the sphere of an order for payment or "injonction de payer" is transcended and an "injonction de faire" can be obtained. The range of demands that are eligible varies but typically includes the delivery or restitution of movable property and eviction [37].

[37] In Italy, according to Article 639 c.p.c. claims referring to a specified quantity of fungible goods or to the restitution of a specific movable object are admissible. The Swedish procedure for "ordinary assistance" (handräckning) is available for eviction, the surrender of movable property, the performance of a duty to deliver, the removal of property, the performance of an employment contract and the implementation of prohibition or provision of access to land or premises. In France, pursuant to Article 1425-1 N.C.P.C. an injonction de faire is available for every non-monetary obligation based on a contract if not all the parties to the contract are merchants.

When considering the question whether or not non-pecuniary claims should be covered by a harmonized European procedure it needs to be borne in mind that, given the overwhelming predominance of claims for payment in civil litigation, compared to an order for payment an order for performance will be of relatively little practical relevance [38]. Besides, by definition such obligations are less amenable to standardization such as the use of forms and of data processing since the claim itself (and the wording of an enforceable decision) always requires a precise description that is much harder to come by than the mere expression of a pecuniary demand in Euros and Cents (or other currencies).

[38] In that respect it is important to take note of the fact that in France the injonction de faire procedure has enjoyed very little success and its abolition has been recommended in a reform proposal by the President of the Tribunal de Grande Instance de Paris.

Question 4:

Should a European order for payment procedure be limited to pecuniary claims? If not, which types of non-pecuniary claims should be included?

3.2.2. Should the procedure be available for certain types of claims only or should certain types of claims be excluded from the procedure?

Within the field of pecuniary claims, several Member States (Austria, Belgium, Greece, Italy, Spain, Sweden [39]) do not limit the order of payment procedure with respect to the nature or legal basis of the claim at issue. Among the other Member States, two different approaches of reducing the scope of application of this procedure can be observed. France and Portugal allow an order for payment only for claims resulting from contractual obligations and thus exclude matters relating to delict [40]. Instead of defining the claims that are eligible for an order for payment Germany, Finland and Luxembourg prohibit the delivery of such a decision in certain well-defined cases [41].

[39] The requirement of an obligation that is unconditional and has fallen due is considered self-evident and not a limitation as covered by this section of the Green Paper.

[40] In France, in addition to contractual obligations Article 1405 N.C.P.C. permits an injonction de payer for certain statutory obligations such as contributions to the pension scheme.

[41] In Luxembourg, an order for payment is not admissible for claims resulting from real estate tenancy, labour and apprenticeship contracts. In Germany, the restriction is much more limited and covers only consumer credits if the interest rate goes beyond the threshold established in 688 (II) (1) ZPO. In Finland, the procedure is not available in matters where an out-of-court settlement between the parties is not permitted.

It has to be underscored, however, that the differences outlined above are not as manifest as they might appear at first sight. It is of particular relevance in that context to bear in mind that many Member States make an order for payment conditional on the production of a documentary proof of the claim. This requirement will hardly ever be met for claims that are based on tortious liability. In practice, therefore, the discrepancy between an order for payment available for contractual claims only on the one hand or for all types of claims but only upon presentation of written proof (as in Belgium, Greece, Italy and Spain) will be rather marginal.

It will have to be carefully analyzed if and to what extent the scope of application of a European injonction de payer needs to be confined to certain types of claims and if so by which method such restriction should be achieved. It goes without saying that the admission of all (pecuniary) claims would be the clearest solution as every restriction would inevitably give rise to interpretative difficulties concerning the distinction between eligible and ineligible claims [42] and necessitate an examination by the court or competent authority before issuing the order. Any such limitation would appear to be justified only in case of a compelling need to exclude certain subject matters from the scope of application of the procedure. For example, a typical structural weakness of defendants in specific areas may be assessed as jeopardizing the adequate protection of the rights of the defence in spite of the possibility to contest the claim and thus prevent an enforceable decision from coming into being.

[42] For example, claims for damages that have arisen from a precontractual relationship (culpa in contrahendo) are considered as being of a contractual nature in some Member States (e.g. Germany) and as a matter relating to delict in others (e.g. France).

Question 5:

Should a European order for payment procedure be available for claims relating to certain areas of civil and commercial law only or should certain types of claims be excluded? In either case please indicate the categories of claims that should be included or excluded

3.2.3. Ceiling for the amount that can be claimed? (or - if non-pecuniary claims are included - for the value of the claim)

The availability of an order for payment procedure can be restricted not only by the definition of the nature of admissible claims but also by introducing a ceiling as to the amount that can be claimed (or if non-pecuniary claims are to be included to the value of such claims). Some Member States (Austria, Belgium, Portugal, Spain) only offer an order for payment up to a maximum amount [43] whereas the others (Finland, France, Germany, Greece, Italy, Luxembourg and Sweden) refrain from any such limitation [44].

[43] The sums that constitute the ceiling vary considerably between these Member States. They are approximately EUR 1850 in Belgium, EUR 3750 in Portugal and EUR 30.000 in Spain. In Austria new legislation has recently been adopted pursuant to which the ceiling amount will be raised from EUR 10.000 to EUR 30.000 as from 1 January 2003.

[44] In Luxembourg, two different procedures (ordonnance conditionelle de paiement and provision sur requête) are available depending on the amount that is claimed. The provision sur requête that is applicable for claims of more than EUR 10.000 has only been introduced in 1997 and is largely inspired by the rules governing the ordonnance conditionelle de paiement but differs from it in that it is essentially a provisional measure and cannot acquire the status of res iudicata.

As the order for payment procedure is designed to enable the efficient and inexpensive settlement not of small claims but of uncontested claims and as the uncontested nature of a claim is by no means linked to the magnitude of the amount involved the justification of any such constraint of access can only conceivably be found in the protection of the defendant against the peril of irreparable harm in the case of the enforcement of a decision that is later overruled [45]. This reasoning appears to hold up, however, only if the ordinary proceedings that the plaintiff has to resort to actually offer a higher degree of protection to the passive defendant than the order for payment procedure. That is doubtful since almost all Member States allow the delivery of a judgment by default if the defendant does not enter an appearance at a court hearing irrespective of the value of the claim at stake and without intensified scrutiny of the justification of the claim as compared to the order for payment procedure [46]. Interestingly enough, the comparative analysis of the Member States' order for payment legislation reveals no clear correlation between unrestricted access to such procedure and an increased protection of the defendant's rights. In fact, most of the Member States with the exception of Austria that do not require documentary proof or an examination of the well-founded nature of the claim and empower officials other than judges to issue the decision (Germany, Sweden, Finland) do not provide a ceiling for the access to an order for payment. Possibly, in Portugal and Spain the limitation of the amount that can be claimed can partly be explained by the novelty of an order for payment to the procedural systems of those Member States and a resulting caution [47].

[45] The Austrian ceiling is based on the intention to prevent the danger of annihilation of the defendant's existence. In the recent debate on the increase of the ceiling amount the relationship between the value of a claim and the probability of its contested nature also played a considerable role. This criterion has to be seen in the light of the fact that the use of the order for payment procedure is obligatory in Austria (infra 3.2.4). In all other Member States it is the plaintiff's decision to opt for this procedure if he deems it sufficiently likely that the defendant will not oppose the claim.

[46] It has to be taken into consideration, nonetheless, that generally speaking a judgment by default can be ordinarily appealed against whereas in several Member States an order for payment cannot (infra 3.3.11.2).

[47] It is also worthy of note that in Austria and Portugal the ceiling has been raised considerably in the recent past and that a further move upward has just been adopted (Austria) or is currently being discussed.

As a result of the above reflections, the question arises if and for which reasons a limitation of the amount that can be claimed in an order for payment procedure is considered necessary (and what that limit should be) or if the procedure should be available regardless of the value of the claim.

Question 6:

Should a European order for payment procedure be available only for claims up to a certain value? If so what should be that ceiling value?

3.2.4. Should the use of the instrument be obligatory?

With the sole exception of Austria, all the Member States that know an order for payment provide this procedure as an optional method for the recovery of the claim that will generally be chosen by the creditor only if he has reason to believe that the justification of his demand will not be disputed. In Austria, the Mahnverfahren is obligatory and does not depend on an application by the plaintiff. Whilst this nature of the order for payment procedure as a mandatory first step of all proceedings dealing with pecuniary claims below the ceiling established by Austrian law can be explained by the specific circumstances in that Member State [48], it remains to be seen if this reasoning is considered appropriate at the European level. Contrary to its original purpose, an obligatory order for payment procedure may well cause additional delays if the parties have to go through the motions although it is clear from the very outset that the defendant will contest [49].

[48] Prior to the reform of the Mahnverfahren in 1983 the opposition by the defendant simply invalidated the order for payment. To further pursue the claim, the creditor was obliged to file a new lawsuit following the rules on ordinary proceedings which was considered as being overly cumbersome and sharply limited the general acceptance of this procedure. The introduction of an obligatory order for payment procedure which is automatically continued as an ordinary procedure if the claim is contested is apparently perceived as a satisfying solution to this problem. Nevertheless, the obligatory initiation of proceedings by means of application for a payment order does not appear to be a necessary prerequisite for a smooth transfer to ordinary proceedings if the defendant contests the claim.

[49] Austrian authorities claim, however, that the obligatory nature of the order for payment procedure does not entail any delays because the time-limit for contesting the claim simultaneously serves the purpose of preparing the defence and therefore contributes to a speedier handling of the case in the ordinary procedure.

Question 7:

Should the use of a European order for payment procedure be obligatory or optional only if the creditor believes that the claim will remain uncontested?

3.3. The rules governing the procedure

3.3.1. International jurisdiction in cross-border cases -Forum of the defendant's domicile?

If the plaintiff and the defendant are domiciled in two different Member States, international jurisdiction is governed by the rules of Council Regulation (EC) No 44/2001. Under those provisions, as a general rule defendants are to be sued in the courts of the Member State in which they are domiciled (Article 2 (1)). The Regulation contains a considerable number of exceptions, however, either affording the plaintiff the option of an additional forum other than that of the defendant's domicile or even providing for exclusive jurisdiction irrespective of the defendant's domicile.

It appears to be worthwhile to consider if a legislative instrument on a European order for payment should contain special provisions on international jurisdiction taking precedence over Council Regulation (EC) No 44/2001. It could be discussed for this type of procedure to attribute exclusive competence to the courts of the Member State in which the defendant is domiciled. This would deprive the plaintiff of the convenience of being able to sue the defendant in his own Member State of domicile or at least in the Member State that is (exclusively) competent for the main ordinary proceedings in the case of opposition in some instances. As a consequence, if the defendant objects to the claim litigation may have to be transferred to another Member State for the contentious proceedings since any special rule for the injonction de payer procedure should be without prejudice to the rules on jurisdiction as far as the ordinary procedure is concerned. This transfer could present considerable procedural difficulties. Nevertheless, these possible disadvantages in a limited number of cases could be offset by the legal certainty resulting from a simple and clear rule on international jurisdiction. Such a provision could also contribute to the guarantee of the rights of the defence. In particular, by enabling an order for payment procedure only in the Member State in which the defendant is domiciled it would ensure that no border has to be crossed for the purpose of serving the order for payment on the defendant. Given the crucial importance of the service of that document for the rights of the defence [50] potential complications and delays of cross-border service could be avoided and thus the speed and efficiency of the procedure be enhanced. At any rate, it needs to be carefully analyzed if the potential advantages of a jurisdictional rule to that effect really warrant a deviation from the well-balanced system of international jurisdiction established by Council Regulation (EC) No 44/2001.

[50] On this aspect in more detail infra 3.3.8.

Question 8:

Should the courts of the Member State in which the defendant is domiciled have exclusive international jurisdiction for a European order for payment procedure in cross-border cases?

3.3.2. Rules determining the jurisdiction within the MS whose courts have jurisdiction

As regards the distribution of competence for order for payment proceedings within a Member State, the legislation of those Member States that know such a procedure varies considerably. In some Member States (Austria, Italy, Luxembourg) the general rules of jurisdiction in ordinary proceedings apply. Others have special rules. In almost all Member States the courts of the domicile of the defendant have jurisdiction for order for payment proceedings. Often the plaintiff has the additional possibility of turning to the court of the place where the obligation in question (in most cases the payment) has to be performed and/or the place where the enforcement of the order will be sought. Germany is the notable exception in that respect as in principle the courts of the domicile of the plaintiff are always competent for the purposes of the Mahnverfahren there [51].

[51] 689 (2) ZPO. This specificity is probably intended to increase the user-friendliness of the system for mass creditors who are granted the advantage of having to turn to one court only for all their claims regardless of where the defendant lives. It has to be seen in the light of the fact that the order for payment procedure is a purely written procedure and that it does not make a considerable difference for the defendant where he gets the order from or where he has to return the opposition to. It is worth noting, however, that this rule is modified by 703 d if the defendant is not domiciled in Germany. In these cases jurisdiction is attributed to the court that would be competent for the main proceedings (if the defendant objected to the claim) according to the ordinary rules on jurisdiction. The same rule applies to the order for payment procedure before the labour courts. In general, the existence of separate jurisdictional rules for the Mahnverfahren on the one hand and for ordinary proceedings on the other entails the necessity of transferring the case to another court if the defendant has lodged an opposition and triggered ordinary proceedings.

Identical rules throughout the European Union would, of course, be easier to use for plaintiffs from other Member States who would not have to deal with the particularity of the legal system of the Member State where the proceedings take place. Nevertheless, it appears to be somewhat questionable if a European instrument should contain provisions on the internal distribution of jurisdiction within the Member States. Rather, it would be in line with Council Regulation (EC) No 44/2001 to limit the jurisdictional rules to the determination of the competent Member State in cross-border cases. At any rate, different rules governing jurisdiction would entail the need to make information on these rules readily available, for example via the European Judicial Network.

Question 9:

Should a European instrument on an order for payment proceeding contain rules determining the competent courts within the Member States? If so what should these rules be?

3.3.3. Rules determining who exactly is in charge of the procedure

One of the crucial dividing lines between what has been referred to as the "evidence" and "no-evidence" schools lies in the fact that the former (Belgium, France, Greece, Italy, Luxembourg, Spain) attributes the authority to issue the order for payment to the competent judge whereas the latter (Austria, Finland, Germany, Portugal, Sweden [52]) delegates that power to clerks of the court (greffier, Rechtspfleger) or, in the Swedish case, to the civil servants at the enforcement authorities.

[52] This delegation to court clerks in the case of an uncontested claim can also be found in Member States where an order for payment procedure does not exist, e.g. in the UK in default proceedings.

As indicated above, this difference can be at least partly explained by the structural discrepancy between decisions that are the result of a summary assessment of the merits of the case at issue based on written proof and those that are based on the mere circumstance that the defendant did not contest the claim.

In choosing between those models, combining elements of them or leaving this particular issue to the Member States, it is an important aspect that the creation of an order for payment procedure that is handled by court clerks can contribute significantly to relieving the judges' workload and to enabling them to concentrate on the truly "hard cases". Nevertheless, it should be taken into account that even if the claim itself is not contested by the defendant the person actually in charge of the order for payment proceedings might be confronted with intricate legal problems such as the following: Has the document which instituted the proceedings been properly served on the defendant? Has the plaintiff given a justification of the claim that is contradictory in itself or could even hint at fraudulent conduct? Has the plaintiff sufficiently explained why he is entitled to a higher interest rate than the legal one? Has the defendant who has missed the deadline for his opposition and applies for relief from the effects of the expiration of time not been able to object on time without any fault on his part [53]? Needless to say that the capacity of clerks to face this challenge depends on the extent and quality of their legal training that appears to differ substantially between Member States [54].

[53] At least in Austria the decisions on an application for relief (Wiedereinsetzung in den vorigen Stand) and the rejection of opposition where appropriate (e.g. if belated) fall within the competence of the Rechtspfleger (subject to the limitations explained in the previous footnote) whilst in Germany these matters are dealt with by a judge.

[54] In Austria and Germany the court clerks (Rechtspfleger) have several years of legal education.

Therefore, if a delegation of powers was the favoured option it would have to be carefully considered what should be the limits of the clerks' powers in dealing with a European injonction de payer. Some Member States appear to have attempted to solve this problem by either giving the clerks the opportunity or obliging them to refer "hard cases" to the competent judge [55]. In the latter case, the criteria for a mandatory involvement of a judge may have to be clearly defined.

[55] In Portugal issues on which the clerk has doubts have to be decided by a judge. In Finnish order for payment proceedings the clerks who do not necessarily have any legal training have to refer "hard cases" to legally trained staff, i.e. notaries or judges.

Question 10:

Should an instrument on a European order for payment contain provisions determining who exactly at a court (judges, court clerks) is in charge of the procedure and has the authority to deliver an order for payment? If yes what should those rules be?

3.3.4. Application for a payment order

3.3.4.1. The content of the application, in particular on the description of the claim and its legal foundation

The basic information that needs to be included in an application for an order for payment such as the names and addresses of the parties, the amount claimed including interest and costs where appropriate and the description of the circumstances invoked as the basis of the claim, appears to be fairly straightforward and not overly prone to controversy. One issue that could conceivably stir some debate is the content of the requirements for a sufficient description of the origin of the claim. Current legislation of the Member States on orders for payment ranges from conditions identical with those of an ordinary writ (Italy) to a mere reference of telegraphic brevity to the basis of the claim (Sweden, Austria, Germany, Finland) [56]. The approach to be selected in that regard is inextricably linked to the decisions on some other fundamental matters raised in this Green paper. Obviously, the necessary quality and detailed nature of the justification of the claim depends largely on the degree of examination of the claim by the court. If the order for payment is the result of a (summary) legal assessment by the court the account of the underlying facts that supposedly support the claim has to be sufficiently comprehensive to enable the court's examination. If, by contrast, the defendant carries the responsibility for triggering an examination of the merits by objecting to the claim and in the absence of such opposition the payment order is delivered without even a superficial test of its justification, it is satisfactory to provide enough information to put the defendant in a position of being able to identify the claim and then decide whether or not he wants to challenge it.

[56] The Swedish information leaflet attached to the standard application form illustrates the requirements of a clear statement of what the claim refers to by giving the following example: purchase of a car, reg. No. BMG 689 on 19 January 1996.

Question 11:

What should be the requirements relating to the content of the application for a European order for payment? In particular, which conditions should apply to the description of the circumstances invoked as the basis of the claim?

3.3.4.2. The requirement of documentary proof of the claim

The requirement to provide some documentary evidence of the claim has already been characterized as the key defining element of the "evidence" model of an order for payment procedure. The clear advantage for the protection of the defendant against unfounded demands is predicated on a legal examination of the merits of the case by the court based on the account of the plaintiff and the written proof supplied by him. This effect has to be weighed against the losses in efficiency resulting from the need for such an examination and from the difficulties to reconcile the necessary submission of written evidence with the use of electronic data processing. In simple terms, it boils down to the question if a check conducted by the court on whether or not the claim appears to be well-founded is considered indispensable or if it can be left entirely to the responsibility of the defendant to challenge the claim and the lack of an objection in itself is sufficient to justify a decision in the plaintiff's favour.

In order to thoroughly assess the meaning and impact of a requirement of documentary evidence it is of utmost importance to know how generously or restrictively it is to be understood, in other words which types of documents are admitted as satisfactory proof of the claim. Overly strict conditions effectively demanding an express recognition of the claim by the defendant would deprive the order for payment procedure of most of its practical relevance. By contrast, rules that are too lax could dilute the control that can be effected by the court to the point of calling into question the value of the requirement of documentary proof itself. The Member States that belong to the "evidence" school (Belgium, France, Greece, Luxembourg, Italy, Spain) do not apply the same criteria in that respect, to say the least. The degree of precision and detail of the provisions dealing with this issue differs widely. In France, Article 1407 NCPC limits itself to spelling out the condition that the application must be accompanied by documents justifying it [57] without any further indication as to what could be considered necessary to meet this requirement, thus leaving it to the courts to develop more concrete guidelines in their case law. The Belgian legislation goes one step further and demands a document emanating from the defendant while clarifying that it does not have to amount to an acknowledgement of the claim [58]. The Spanish and particularly the Italian law contain long and detailed lists and definitions on what constitutes documentary proof for the purposes of the order for payment procedure [59]. It goes beyond the scope of this Green Paper to deal in depth with all the documents covered by those provisions. Suffice it to say here that in both Member States the claim can be supported by documents that do not carry the defendant's signature but have been drawn up by the plaintiff unilaterally [60].

[57] Art. 1407 alinéa 3: "La requête doit être accompagnée des documents justificatifs ". Article 11.2 (4) of the "Storme proposal" which reads "The application... shall be accompanied by all documentary evidence in support of the claim" appears to be equally imprecise in qualitative but more demanding in quantitative terms.

[58] Article 1338 of the Belgian Judicial Code (French version: "... un écrit émanant du débiteur". The preparatory works regarding this provision give an ordering slip, a receipt of delivery signed by the defendant and an accepted invoice as examples of valid documents.

[59] In Spain Article 812 NLEC, in Italy Articles 633 - 636 c.p.c.. In both cases the lists are not exhaustive.

[60] The Spanish provision admits documents emanating from the plaintiff unilaterally that bear witness either to circumstances of the concrete claim at issue or, as a complementary document to another one mentioning the amount claimed, to a long-standing relationship between the parties.

In the light of these discrepancies it appears as though the complexity of an attempt to develop a definition of the documents admissible as evidence in order for payment proceedings should not be underestimated. Possibly, this is also an aspect to be taken into account when considering the general question whether the passing of a European order for payment should depend on the production of a written proof of the claim.

Question 12:

Should the submission of documentary proof of the claim at issue be a requirement for the application for a European order for payment? If so what types of documents should be considered sufficient as a proof of the claim?

3.3.4.3. Formal requirements - the use of standard forms

While several Member States with an order for payment procedure make official standard forms available (Austria, Germany, Luxembourg, Portugal, Sweden, Spain) [61], their use is mandatory only in some of them [62] and an optional alternative to a writ in others [63]. In those Member States where a writ can or must be submitted, requirements vary between those of a writ just like in ordinary civil proceedings [64] and a simplified version specifying but the parties and their domiciles, the amount and the origin of the claim [65].

[61] In France, standard forms that are not official are circulated by private publishing houses.

[62] In Austria, Germany (except where service has to be effected abroad) and Portugal (unless the form is unsuitable for the case in question).

[63] This is the case in Luxembourg where a simplified commencement of proceedings is also possible by means of an oral or written déclaration au greffe (application submitted to the court's branch).

[64] Italy.

[65] Spain (Article 814 NLEC).

The use of standard forms is a particular fashion of structuring the information that is necessary for the initiation of order for payment proceedings. It can serve a number of different purposes. Firstly, it assists the plaintiff, especially if he is not represented by a lawyer, by providing him with the comprehensive list of issues that have to be addressed in order to submit an admissible application, ideally accompanied by some explanatory remarks for each of the items. Secondly, it is an important tool to facilitate the use of electronic data processing particularly if it is combined with the possibility of an electronic transmission of the application to the court. Furthermore, in cross-border cases the existence of multilingual standard forms can contribute significantly to the simplification and acceleration of the proceedings by reducing the need for translation and the resulting cost and delay to a minimum. Lastly, a standardized application would seem to be the necessary prerequisite of a standardized decision that could then circulate freely throughout the Community for the purpose of enforcement.

The creation of a European standard form if deemed essential in the light of the foregoing considerations would present a number of technical problems. On a range of issues such as, for example, the categories of costs whose reimbursement can be demanded, the national rules differ significantly and this would probably have to be reflected in the standard form itself as well as in the explanatory remarks. Maybe a uniformity of the standard form limited to the core issues with some flexibility for the Member States to tailor other questions to their individual needs or to include additional items could constitute a viable strategy to deal with these complexities.

Question 13:

Should it be obligatory to use a standard form in order to present an application for a European order for payment? If so what should be the content of the standard form?

3.3.4.4. The submission of the application to the court by electronic means, and the use of electronic data processing in general

Communication between the court and the parties

Communication between the court and the parties through electronic means, especially via e-mail, offers the potential for a further streamlining of proceedings and for substantial savings both in terms of money and time. This appears to be particularly convincing in cross-border cases in the light of the considerable delays often occurring in the course of ordinary postal service or the formal service of documents from one Member State to another. Moreover, the increasing use of electronic data processing by the courts of the Member States in handling order for payment procedures could be further facilitated by the electronic submission of (standardized) applications as the courts would be spared duplicating the work already done by the plaintiff by feeding the application into its computer system. The electronic transmission of a document by the plaintiff to the court appears to represent a technical rather than a legal challenge as it does not entail the same intricacies as the formal service of judicial documents by electronic means of communication.

Accordingly, several Member States allow or are at least experimenting with the filing of an application by the means of an electronic medium [66]. Not surprisingly, the most advanced Member States in that respect are the ones that also make wide use of electronic data processing in handling the order for payment procedure in general.

[66] In Germany, an application can be submitted online only in some of those court districts where the competence for order for payment proceedings has been centralized (see supra 3.3.2, footnote 50) and is dealt with in a computerized manner as a whole.

A legislative instrument on a European injonction de payer should not impede but rather encourage further openness to technological progress in order to promote more efficient case-handling where this does not present any threat to the right of the parties to a fair trial. Yet, it appears to be highly doubtful if a proposal should prescribe the availability of particular methods of communication to the courts as this could stretch the resources of Member States that still have to develop the computer infrastructure of their court systems.

It is a question of further technical developments, particularly with regard to the safety and reliability of electronic communication, if or to what extent such means can be extended to the service of documents on the parties [67].

[67] On the service of documents in more detail infra 3.3.8.

Management of the case by the court

The potential use of information technology is not limited to the issue of communication between the court and the parties. It can also be a powerful tool in the management of the case by the court. Every relief from tasks that can be performed in a computerized fashion enables courts to dedicate more time to truly complicated matters. As the cases to be dealt with in an order for payment procedure are "easy" cases if they remain uncontested and as they should be submitted to the court in a standardized way they appear to be the natural-born candidates for an increased use of electronic data processing.

As of now, a number of Member States (Austria, Finland, France, Sweden) apply data processing in their respective injonction de payer proceedings in a purely supportive way, for enrolling cases, keeping track of time limits, calculating the costs et cetera. The decision on the application for an order for payment itself, is left to the person in charge of the proceedings be it a judge or a clerk of the court. Germany, on the other hand, has carried the use of electronic data processing one significant step further in fully computerizing the procedure in several court districts. The software used in conjunction with special standard forms allows an automatic check of missing information, obvious inadmissibility or unfoundedness or other extraordinary circumstances (a defendant domiciled abroad, unusually high interest rate etc.) [68]. If and only if problems are detected during that check the case is brought to the attention of the court clerk. Otherwise, the system itself sends out the payment order and, in the absence of objections by the defendant, also the second decision, the enforcement order and a cost invoice without the involvement of a human being. If the defendant lodges an opposition on time the file is automatically transferred to the court for ordinary proceedings.

[68] A similar check is automatically conducted also in Austria.

The preceding paragraphs should have illustrated how significant and how multi-faceted the possibilities of the application of computer technology and electronic communication are. In view of the fact that such issues are closely interrelated with other strategic decisions on the core tenets of a European order for payment procedure [69] this Green paper should serve as a platform for a broad discussion on the role of electronic communication and data processing in a European instrument.

[69] It is obvious, for example, that a computerized procedure resembling the German model as described in the main text is only conceivable if the court does not engage in an examination of the merits of the case which can only be performed by a human being.

Question 14:

What should be the role of computer technology and electronic data processing

a) in the communication between the court and the parties and

b) in the management of the European order for payment procedure by the court?

3.3.5. The extent of the examination of the claim by the court

It appears to be self-evident that the court that has received an application for an order for payment has to check the admissibility of the application (does the claim at issue fall within the scope of application of the order for payment procedure, i.e. is it a civil law claim, is it a pecuniary claim, has an obligatory standard form been correctly completed, is the application signed etc.) and its own international jurisdiction ex officio [70].

[70] Pursuant to Article 26 (1) of Council Regulation (EC) No 44/2001, the court has to declare of its own motion that it has no jurisdiction unless jurisdiction is derived from the provisions of that Regulation where a defendant domiciled in one Member State is sued in another Member State and does not enter an appearance there.

As regards the merits of the case the cleavage between what have been referred to as the "evidence" and "no-evidence" types of injonction de payer procedures is clearly exposed once again. As a general rule, in the Member States adhering to the "evidence" model an order for payment can be delivered only if the assessment of the information given and the documentary evidence produced by the applicant yields the result that the claim is well-founded. By contrast, according to the "no-evidence" school a decision in favour of the plaintiff does not depend on any prior examination of the justification of the claim in question [71]. The choice of one of those options is inextricably linked to the predilection for one of the two systems and their determining features at large. As already pointed out with regard to the requirement of a proof of the claim or the necessity of the involvement of a proper judge the philosophy of full responsibility of the defendant for avoiding a decision against him and triggering adversary proceedings competes with the principle of a minimum protection of the defendant.

[71] In Austria, under 448 (2) ZPO an order for payment must not be issued if the claim is obviously not actionable (e.g. gambling debts) or not yet due. Apart from that, in the absence of express provisions dealing with this matter it was disputed in legal literature if and to what extent the well-founded nature of the claim at issue is to be examined. The court practice used to be very generous in that respect. By new legislation effective as from 1 January 2003 it has been explicitly clarified, though, that the court has to conduct a summary examination of the justification of the claim along the same lines as before delivering a judgment by default, i.e. based on the factual information by the plaintiff that has not been contested.

In order to prepare the choice it may be instructive to take into consideration the following aspects concerning the practical implementation of either of those principles.

It is important to bear in mind that even those Member States that refrain from an institutionalized examination of the merits of the case know a certain "safety valve" in that following either explicit provisions to that effect or an established practice applications that are obviously unfounded are rejected [72]. In other words, the need for a certain protection of defendants who remain passive against frivolous claims is recognized even within the "no-evidence" model. A European instrument inspired by this model should possibly contain an express rule defining the duties of the courts in that respect as clearly as possible.

[72] According to section 23 of the Swedish Act on Summary Proceedings, "if it can be assumed that the claim by the applicant ... is unfounded or unjustified, the application should be treated as if it had been contested by the defendant". The following examples are given in legal literature:

In fact, the practical differences between the minimum protection offered by the elimination of obviously unfounded claims and the examination of the claim as necessary according to the "evidence" order for payment procedure could be properly assessed only if sufficient information was available on the extent of that examination. It appears to be an inevitable consequence of the unilateral nature of the proceedings preceding the decision that the test applied by the courts is a test of plausibility or credibility rather than an in-depth assessment of the justification of the claim. It depends largely on the requirements regarding the documentary proof and the nature of the plaintiff's account if the court is enabled to conduct more than a very superficial control concerning the merits of the case [73]. The mere fact that in all the Member States that have opted for the "evidence" model the judges issue an injonction de payer only if they consider the claim to be well-founded does not exclude significant variations in the practical implementation of that principle or guarantee a high level of protection of the defendant in itself. To ensure equal standards throughout Europe, some general guidelines on the thoroughness of the examination of the merits of the case may turn out to be necessary.

[73] The fact that in Italy and Greece the court can invite the applicant to submit additional documents or elaborate further on some aspects or details if it considers the original application to be insufficient could be taken as being indicative of a somewhat stricter scrutiny of the justification of the claim. Ultimately, additional information of the usual application of these rules in all the Member States adhering to the "evidence" school would be necessary to thoroughly deal with these questions.

Question 15:

Should an examination of the justification of the claim be carried out before the delivery of a European order for payment? If so what should be the criteria of that examination?

3.3.6. The decision of the court on the payment order

3.3.6.1. Should a partial payment order be possible?

If the application fulfils the formal or substantive conditions only for a portion of the claim at issue but not for all of it the question arises if an order for payment should be issued for the part that meets the requirements [74]. Several Member States (Germany, Luxembourg) answer that question in the negative for their national systems and take a straightforward "all or nothing" approach. If the order for payment cannot be granted in full including the claimed interest rate and costs it has to be refused altogether [75].

[74] This situation has to be distinguished from that of an order for payment on a claim that is then only partially contested by the defendant.

[75] 691 (1) of the German ZPO. In Austria, the same rule applies only if the claim is partially unfounded. If, however, the application is partially inadmissible an order for payment can be delivered for the remainder of the claim.

The French and Belgian systems take a different approach. If the competent judge considers the claim at stake to be only partially justified he gives an injonction de payer for the valid fraction of the demand. No appeal lies against that decision but the plaintif