Updated European Legislation on small claims to come

At the end of last year a regulation updating both the European Small Claims Procedure and the European Order for Payment Procedure was enacted: see link.

As the key amendment the threshold for small claims will be lifted from 2.000 EUR to 5.000 EUR. This remains below the initially suggested 10.000 EUR, however might still benefit SMEs and obviously an increased number of cross-boarder consumer complaints. In addition, possibilities of oral hearing and taking of evidence were enhanced. 

The changes are to be rendered effective by July 2017.

Small Claims, big relief for consumers and SMEs

Over a year ago we mentioned on this blog the importance of a small claims procedure and European plans to reform it (Making the Small Claims Procedure effective). After many months, the European Commission finally published its proposal on how the existing procedure (in force as of 2009) should be adapted to better suit the internal market needs. Consumer and SMEs protection will increase due to the extension of the application scope of this procedure: today only claims below 2.000 Euro may be submitted, but this limit will be raised to 10.000 Euro. This should be especially relevant for SMEs, who often suffer more damage in cross-border trade than consumers (this should cover ca. 50% of business claims). Moreover, it will be easier to claim this procedure due to new, broader definition of what 'cross-border transaction' is and due to lower court fees (not exceeding 10% of the claim's value, with minimum fee not exceeding 35 Euro). Additionally, it will be possible to start this procedure online and to pay court fees online, as well, while email and tele- or videoconferencing will be part of the procedure. (Shopped online and want your money back? Commission Proposal on Small Claims helps consumers and SMEs)

Making the Small Claims Procedure effective

Since 1 January 2009, the European Small Claims Procedure is in force. Its aim is to improve access to justice by simplifying cross-border small claims litigation in civil and commercial matters and reducing costs and especially to help consumers enforce their rights in cross-border cases.

It concerns claims amounting to maximum €2,000 excluding interest, expenses and disbursements . The consumer can choose whether to bring suit in his country of residence or in the country of the defending company. The decision is directly enforceable in the country of the losing party and in any other EU country. The procedure is conducted mostly in writing using pre-defined forms and it does not require the involvement of a lawyer.

Simple and useful, but... In 2010, a research led by ECC Italy, European Consumer Centres (ECCs) in the 27 EU Member States found that the procedure is relatively unknown – not only among consumers but among judges as well. Although the European Small Claims Procedure itself is in principle straightforward and free of charge, the enforcement of the judgement resulting from this procedure is often protracted by the losing party. As a consequence, only a minority of the positive rulings made by the courts in consumers' home countries, are actually enforced across borders.

Since, even in domestic markets, around 20% of European consumers report having encountered a problem in the past 12 months with a good, service, retailer or provider (with an average estimated loss of €375 per case), the Commission is working to improve the effectiveness of the Small Claim Procedure.

Here are the next steps to be taken:

• work with court authorities to promote awareness of the procedure;
• issue a guide providing practical advice to consumers and legal practitioners;
• raise awareness of the existing standard forms and make information available online in 22 official EU languages, through the European e-Justice Portal, to make it easier to register a claim and see how the procedure works;
• work with ECCs to actively promote the procedure among consumers and judges;
• encourage the ECCs to give concrete assistance to consumers to use the European Small Claims Procedure in individual cases;
• present an evaluation report on the operation of the procedure (including court fees, the speed and the ease of use of the procedure) and if necessary revise the European Small Claims Procedure to make it work more effectively for consumers by, for example, increasing the threshold of €2,000 to cover bigger claims or further simplifying the standard forms used to make a claim.

 Additionally, as of 2013, consumers in around 5-6 pilot countries will be able to complete the small claims forms and carry out the whole court procedure online, via the e-Justice portal.