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 process of recovering uncontested monetary claims in cross-border cases. It is regulated by Regulation (EC) No 1896/2006 of the European Parliament and of the Council of 12 December 2006. The main purpose of this regulation is to ensure that creditors can quickly and efficiently obtain a debt collection order throughout the European Area.

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 44/2001 of 22 December 2000. 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 verifies the application for compliance with formal requirements. If the application is compliant, the court issues a European Payment Order within 30 days.
3. Delivery of the Payment Order to the Debtor: Once the Payment Order is issued, it is sent to the debtor, who, after receiving it, has 30 days to either pay the debt or challenge the Payment Order.
4. Enforcement of a European Payment Order: If the debtor does not contest the Payment Order within the prescribed time limits, it becomes an enforcement document which can be enforced in any EU country (except Denmark) without the need for an application for enforcement and without any possibility to object to its recognition.

Contesting the European Payment Order

The debtor has the right to challenge the Payment order within 30 days from the date of its receipt. To do this, you must file an objection (Form F) with the same court that issued the Payment Order. If an objection is filed, the process moves into a standard trial, and the creditor will have to prove the validity of its claims in court, unless the plaintiff requested in the initial application that the proceedings be terminated in such a case.

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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