Motion re: Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No. 861/2007

5th February 2014 - Ken Gaughran

Contribution by Mr Alan Shatter T.D., Minister for Justice, Equality and Defence

At the outset I would like to thank the Committee for their willingness to deal with this matter today, at short notice. It is important that Ireland is seen to be in a position to play a full part in the negotiations which have just begun in relation to this instrument, and a positive response to the Motion which has been tabled will facilitate that objective.

The proposal for a new Regulation amending Regulation (EC) No. 861/2007 of the European Parliament and the Council of 11 July 2007 establishing a European Small Claims Procedure and Regulation (EC) No. 1896/2006 of the European Parliament and of the Council of 12 December 2006 creating a European order for payment procedure was presented by the Commission at the end of November. It effectively amends two proposals into which we have already opted. The amending proposal’s legal basis is to be found in Title V of Part Three of the Treaty on the Functioning of the European Union. As a result, the Protocol which we share with the United Kingdom, whereby we have three months to exercise our option to take part in the adoption and application of relevant measures, applies. The exercise of that option is, of course, subject to the prior approval of both Houses of the Oireachtas. We have been informed that the three month period in respect of the proposal will expire on 25 February.

The proposal which is being examined today is the most recent in a long line of proposals to which the Protocol applies and which have come before the Houses of the Oireachtas in recent years. It is not especially controversial and I would hope that the Committee will be willing to give it its support.

The proposal under discussion should be seen against the background of the development at EU level of measures geared towards the enhancement of judicial cooperation in civil matters. The overriding aim of this development is that of making access to justice easier for the individual litigant. It is predicated on the fact that in a genuine European area of justice, individuals or businesses should not be prevented or discouraged from exercising their rights by the incompatibility or complexity of legal and administrative systems in the Member States. The Regulation establishing a European Small Claims Procedure was adopted in 2007 with the aim of enhancing access to justice by simplifying and speeding up cross-border litigation concerning small claims, and reducing the costs of such litigation.

Article 28 of the 2007 Regulation requires the Commission to present a Report by 1 January 2014 reviewing its operation. The proposal now before the Committee follows on from that review. It is also noteworthy that, in the 2013 EU Citizenship Report, the Commission identified the revision of the 2007 Regulation as an action necessary to strengthen the rights of European citizens and the initiative is also included in the European Consumer Agenda as a means of improving enforcement of consumer rights. Moreover, the revision of the Regulation supports the EU’s current political priority of promoting economic recovery and sustainable growth, by creating more efficient, simplified court procedures and by making them more accessible to SMEs.

Committee members will be aware of the Small Claims Procedure which has been operating in the District Court since 1997. That Procedure is an alternative method of commencing and dealing with a civil proceeding in respect of a small claim. The procedure originally applied only to consumer claims but, since January 2010, it has also covered a limited range of business to business claims. It is designed to handle claims speedily, inexpensively and informally without involving a solicitor. It is administered by a Small Claims Registrar, who is an official of the court, whose function it is to process the claim and, if possible, reach a satisfactory settlement without the need for a court hearing. Should this prove unsuccessful the claim will then go before a District Court judge.
Use of this procedure as a means of settling low value consumer and business claims not exceeding €2,000 is consistently high. In 2012, the last year for which statistics are available, over 3000 applications were lodged. Most of those claims concerned household and electrical goods, with others relating to building services, motor vehicles and holidays.

Regrettably the success of our domestic procedure is not matched by an equal success in relation to the EU procedure and use of the EU Small Claims Regulation has been low in Ireland. I have been advised by the Courts Service that 44 such cases came before the Dublin District Court last year, and that a small number of additional cases were taken in other areas. Unfortunately the Courts Service does not compile its statistics in such a way as to extract a breakdown of the type of cases taken under the EU Procedure. This low level of usage accords with the Commission contention that “the procedure is still little known and remains under-used several years after the entry into application of the Regulation.” The low usage of the Regulation was a major factor in the determination of the amendments which the Commission has proposed should be made to the Regulation.

First amongst those is a proposal to increase the monetary scope of the Regulation from claims not exceeding €2,000 to claims not exceeding €10,000. This proposed increase is represented as being of particular assistance to SMEs, as raising the current threshold will allow parties to litigate a substantially bigger number of cases on the basis of the simplified European procedure, thereby benefitting from reduced costs and shorter length of proceedings. It is envisaged that consumers will also benefit from the proposed increase in the financial scope. The European Commission estimates that the reduction in costs related to raising the threshold from the current €2,000 to €10,000 amounts to approximately €233 million euro across the EU. This estimate is based on the assumption that 50% of court cases concerning claims between €2,000 and €10,000 in Member States where there is a simplified procedure would be filed under the European Small Claims Procedure.

My Department has undertaken a process of consultation in respect of the proposal, which is now in its final stages. In the broadest of terms, the outcome of that process to date indicates that there is support from bodies representing businesses for an increase in the threshold to €10,000. However, concern has been expressed by the Courts Service and legal professionals about the desirability of an increase to such a level. The reasons behind this concern include the appropriateness of dealing with legally and factually complex claims at the higher end of the scale in a simplified procedure.

I myself am inclined to the view that an increase in the threshold is both desirable and necessary. However, the negotiation process has only just begun, and in fact the first meeting of the relevant Working Group took place yesterday. In its deliberations that Group will attempt to reach a view as to the level of threshold which is both appropriate and likely to be acceptable to the majority of Member States. Early indications are that a number of Member States seem to be of the view that the proposed increase is pitched at too high a level and does not have regard to what is considered to be a small claim in those Member States in the context of their social and economic circumstances. On the other hand, some Member States are very positively disposed to the proposed threshold, which is actually lower than the value of a small claim under their national systems. The question of the threshold was discussed at the recent JHA Informal meeting, and the views expressed on that occasion were in accordance with those which I have just outlined.

The 2007 Small Claims Regulation applies only to disputes where at least one of the parties is domiciled or habitually resident in a Member State other than the Member State of the court or tribunal which is seized with the case. It is now proposed to enlarge the scope of the Regulation to cover cases which have an important cross-border element notwithstanding the fact that both parties to the case are domiciled in the same Member State. For instance, the case of parties who are domiciled in the same Member State, but who are involved in a car accident in another Member State, would be comprehended by the new Regulation – the cross-border element being the place where the harmful event occurred.

Another element of this proposal concerns the use of electronic communication, including the service of certain documents by electronic means. The 2007 Regulation prescribes postal service with acknowledgement of receipt as the primary method of service. It is now proposed to put postal service and electronic service on the same footing in Member States which desire to do so, and where a party has expressly indicated in advance that documents may be served electronically. This safeguard is appropriate because there will always be a minority of cases where people do not have access to means of electronic communication or do not use such means frequently.

Furthermore, it has been suggested that many types of communications between the parties and the courts could, in principle, be carried out by electronic means, which would save time and reduce costs in a cross-border scenario, and that electronic communication would be the norm where communications of a routine nature are concerned. The Committee may be interested to hear that the Courts Service has recently completed the development of a new on-line Small Claims system. Should the proposal for electronic filing of EU Small Claims be agreed, the Courts Service has indicated that it is likely that the domestic system could be adapted to accommodate an extended European Small Claims Procedure.

Also included is a proposal concerning the use of video conferencing, teleconferencing and other means of distance communication for the conduct of oral hearings and the taking of evidence. A very good case can be made for the use of those means of communication in the European Justice sphere, and I support their use in this context. However, it is important that participation in the electronic elements of the proposal is voluntary, and has regard to the relative technological advancement of each Member State. Indeed, voluntary action is one of the key principles of the Strategy on European e-Justice 2014-2018, which was adopted at the December 2013 JHA Council.

The proposal also envisages that a limitation would be placed on court fees charged for the procedure, to ensure that they are proportionate to the value of the claim, and that Member States should facilitate electronic means of payment of such fees. Furthermore, Member States will be obliged to inform the Commission of the court fees concerned, and of the means of payment which are accepted. These are significant elements of the procedure which facilitate transparency and access to justice. Indeed, enabling the creditor to make an informed decision as to whether the cost of taking the claim is proportionate to the value of that claim was an issue of major concern to Ireland during the negotiations of the 2007 Regulation, and our concern is reflected in the preamble to that Regulation.

The Commission has drawn attention to the high charges levied in some Member States in respect of a European Small Claim. For instance, in one particular Member State the court fee for litigating a claim of €500 is €115, while in another Member State a fee of €180 applies to a claim worth €1,000. I can tell the Committee that the fee payable in Ireland in respect of a European Small Claim is €25, the same fee as is payable for a claim taken under the domestic Small Claims Procedure. This amount is well within the parameters considered desirable by the Commission, which are either a maximum set fee of €35, or a fee of not more than 10% of the value of the claim. I should also say that while I share the Commission’s concerns about high fees being charged in respect of low value claims, I have some doubts about the appropriateness of EU intervention in this area as there is an argument to be made that the settling of court fees falls squarely within the autonomy of Member States and should not be interfered with.

The recently developed on-line Small Claims system to which I referred earlier includes a facility for the payment on-line of fees associated with domestic Small Claims – this facility could also be used in respect of the European Small Claims Procedure.

I will turn now to the proposed amendment of Regulation (EC) No 1896/2006 creating a European Order for Payment Procedure. By way of background, the European Order for Payment Regulation establishes a European-wide procedure for getting a court decision in respect of an uncontested claim. Its key features are that an Order is obtained in the first instance without the debtor taking part in the action; it is then served on the debtor who has the option of abiding by it or contesting it within a short period of time. Failure to act leads to the Order acquiring the status of enforceability. Article 17 of that Regulation provides that where the defendant opposes the claim, the proceedings are automatically continued in accordance with ordinary civil procedures, which do not include the European Small Claims Procedure. It is now proposed that, in those circumstances, it should also be possible to continue an appropriate claim under the European Small Claims Regulation. I support this extension of the choices available, which is to the benefit of the ordinary litigant.

In both the European and domestic sphere I am of the view that it is crucial that parties involved in legal conflict do not incur more legal costs than are necessary in circumstances in which they have to resort to litigation. On the domestic front, Committee members will be aware that I have increased the monetary jurisdiction of both the Circuit and the District Courts with effect from Monday of this week. Those changes should be of benefit to litigants in bringing about reduced legal costs for individuals and companies involved in litigation, and have particular significance for litigants of low value claims which do not come within the scope of either the domestic or EU Small Claims procedures.

I have said in the past to this Committee in relation to other proposals, and I emphasise it again today, that opting into the proposal at this time does not mean that we necessarily agree with every aspect of it. The opt-in process merely ensures that we can be active participants in the negotiation process and this carries with it the undisputed right to make proposals to alter the text should that seem desirable and to participate in any votes that may arise.

Ireland has in the past taken a very positive approach to participation in the various civil law instruments which have been presented and our approach on this occasion is very much in keeping with past practice. It is important that we honour the commitment given in the context of successive Treaties that we will take part in relevant measures in the Justice area to the maximum extent possible. Also, given that we have no fundamental difficulties with the proposal, we do not want to create a perception that such difficulties do in fact exist insofar as Ireland is concerned.

From previous consideration of these issues, the Committee will be aware that it is the case that, under the Protocol, we may accept a proposal any time after it has been adopted. However, it has always been our considered view that, absent any significant policy issues, early opt-in to the discussions on particular proposals will maximise our ability to influence the shape of the final outcome.

Once again, I would thank the Committee for making the time available to deal with these matters today. I look forward to your comments and I will be happy to address any questions which you may have.

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