European payment order: an effective tool for debt collection

The modern market is characterized by a high degree of globalization and internationalization of business. Interaction with partners from other countries has become an integral part of the activities of many companies. However, as the boundaries of business activity expand, new challenges arise, including those related to cross-border debt collection. In such cases, tools developed within the European Union come to the rescue, one of which is the European Payment Order.

What is a European Payment Order?

The European Payment Order is a judicial instrument designed to simplify and speed up the recovery of uncontested monetary claims in cross-border cases within the European Union. It is regulated by Regulation (EC) No 1896/2006 of the European Parliament and of the Council of 12 December 2006. The procedure is additional and optional: a creditor may use it instead of national debt recovery procedures when the claim falls within the Regulation, but the European Payment Order does not replace all domestic remedies available in the Member States.

Advantages of the European Payment Order

1. Simplicity and Accessibility: A payment order allows the creditor to obtain a court order without the need to appear in court. The application is submitted in a strictly approved form, in which only information sufficient to clearly define and substantiate the claim should be provided. Supporting evidence does not need to be attached to the application, so the application must describe in detail the basis of the claim so that the defendant can correctly identify the claims and make an informed choice: either to object to the claim or to leave it uncontested.
2. Speed: Unlike standard court procedures, which can take months or even years, the process of obtaining a payment order usually takes several months.
3. Universality: The payment order is used and executed in all countries of the European Union (with the exception of Denmark), making it a universal tool for international debt collection.
4. Transparency and predictability: The procedure is strictly regulated, which minimizes the possibility of abuse and misunderstanding.

Procedure for receiving a European Payment Order

The process of receiving a European Payment Order consists of several stages:

1. Submitting an application: The creditor must complete a standard application form (Form A), available in all official EU languages, and submit it to the competent court. The jurisdiction of the competent court is determined according to Regulation (EU) No 1215/2012 of 12 December 2012. In accordance with the provisions of the said Regulation, as a rule, the application must be filed with the court at the location of the defendant. In certain cases, the application may be filed with the court at the location of the plaintiff, for example, if such jurisdiction was agreed upon by the parties in their agreement, or the place of fulfillment of contractual obligations is in the country of the creditor.
2. Verification of the application by the court: The court examines whether the case falls within the scope of the European Payment Order procedure, whether the claim is cross-border, whether the court has jurisdiction, whether the claim is for a specific amount that has fallen due and whether the application contains the required information. If the requirements are met and the claim appears well-founded, the court issues the European Payment Order as soon as possible and normally within 30 days of the application, excluding any time used to complete, rectify or modify the application.
3. Delivery of the Payment Order to the Debtor: Once the European Payment Order is issued, it must be served on the debtor in accordance with the law of the Member State where service is carried out and with the minimum standards set by the Regulation. The debtor has 30 days from service of the order to pay the amount indicated or lodge a statement of opposition using Form F. In cross-border service, language is a practical issue: under EU service rules, the addressee may refuse to accept a document if it is not written in, or accompanied by a translation into, a language the addressee understands or the official language of the place of service.
4. Enforcement of a European Payment Order: If the debtor does not lodge a statement of opposition within the prescribed period, the court of origin declares the European Payment Order enforceable. The order is then recognised and enforced in other EU Member States, except Denmark, without a separate declaration of enforceability or exequatur. Enforcement itself is carried out under the national law of the Member State where enforcement is requested, and the creditor may need to provide a copy of the enforceable order and, where required, a translation.

Contesting the European Payment Order

The debtor has the right to contest the European Payment Order within 30 days from service of the order. The opposition is filed with the court or authority that issued the order, using Form F, and the defendant does not have to explain the reasons for the opposition. If an opposition is filed in time, the case may continue before the competent court of the Member State of origin under ordinary civil procedure or, where the claim meets the relevant criteria and the claimant has chosen this route, under the European Small Claims Procedure. If the claimant requested in the initial application that the proceedings be terminated in the event of opposition, the case does not continue as ordinary litigation.

Conclusion

The European Payment Order is an effective and convenient tool for debt collection in cross-border cases within the European Union. Its use allows creditors to avoid complex and lengthy legal proceedings, significantly saving time and resources. For businesses operating internationally, knowledge and use of this tool can be the key to successfully managing accounts receivable and minimizing financial risks.

However, it is important to remember that using the European Payment Order requires careful preparation and knowledge of procedural nuances, so it is recommended to involve legal professionals to accompany this process.

If you have any questions or need legal assistance in obtaining or enforcing a European Payment Order in the defendant’s country, our company is ready to provide our expert services to effectively resolve your financial issue. Contact us to receive additional information and professional support from our specialists.

20.01.2021

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