Cross-Border Debt Recovery Procedures in EU Commercial Relations

Introduction

The growth of intra-Community trade and the intensification of cross-border economic relationships have inevitably generated an increasing number of disputes concerning debt recovery between commercial partners domiciled in different EU Member States. When a debtor in another Member State refuses or delays payment of a contractual obligation, the creditor faces a range of additional challenges compared to a domestic dispute: differences in procedural law, language barriers, the increased cost of legal representation abroad, and the difficulty of enforcing a judicial decision outside the borders of the state in which it was rendered.

The European legislator has responded to these challenges by establishing a unified legal framework designed to simplify and accelerate cross-border debt recovery. The principal legal instruments available to creditors are the European order for payment (Regulation (EC) No 1896/2006), the European small claims procedure (Regulation (EC) No 861/2007), and the mechanism for recognition and enforcement of judgments provided by Regulation (EU) No 1215/2012 (commonly known as the Brussels I bis Regulation). Additionally, Regulation (EU) No 655/2014 concerning the European Account Preservation Order provides a valuable complementary tool for securing assets pending enforcement.

This article examines each of these mechanisms, with a focus on the practical aspects relevant to creditors seeking to recover debts in cross-border commercial relationships, from the perspective of both Romanian law and European Union law.

Regulation (EC) No 1896/2006 - The European Order for Payment

Scope and conditions

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 designed as a rapid and efficient instrument for the recovery of uncontested pecuniary claims in cross-border civil and commercial matters. The procedure applies when at least one of the parties is domiciled or habitually resident in a Member State other than the Member State of the court seised.

Pursuant to Article 2 of the Regulation, the procedure applies in civil and commercial matters, regardless of the nature of the court or tribunal. Excluded from its scope are revenue, customs and administrative matters, liability of the State for acts or omissions in the exercise of State authority, matrimonial property regimes, insolvency proceedings, social security, and claims arising out of non-contractual obligations (unless they have been the subject of an agreement between the parties or there has been an admission of debt).

Issuance procedure

The application for a European order for payment is submitted using Standard Form A set out in Annex I to the Regulation. The creditor must indicate the amount of the claim, including the principal and, where applicable, interest, contractual penalties and costs, as well as the basis of the claim and a description of the evidence supporting it. It is essential to note that at this stage, actual submission of evidence is not required -- only a description thereof.

Under Romanian law, jurisdiction to hear applications for a European order for payment lies with the district court (judecatorie) or the tribunal, depending on the value of the claim, in accordance with Article 1028 of the Romanian Code of Civil Procedure, read in conjunction with the provisions of the Regulation. The court examines the application, as a rule, within 30 days of its submission, without summoning the defendant.

If the application meets the formal and substantive requirements, the court issues the European order for payment using Standard Form E. The defendant (debtor) has 30 days from service to lodge a statement of opposition. If the opposition is lodged within the prescribed time limit, the proceedings are converted into ordinary civil proceedings, unless the claimant has expressly requested that the proceedings be terminated in such a case. If, on the contrary, the debtor fails to lodge an opposition within the statutory time limit, the European order for payment becomes enforceable.

Enforcement

A major advantage of the procedure is that a European order for payment declared enforceable in one Member State is recognised and enforced in the other Member States without the need for a declaration of enforceability (exequatur) and without any possibility of opposing its recognition (Article 19 of the Regulation). This provision significantly simplifies the cross-border enforcement process, eliminating the formalities that previously caused considerable delays.

The actual enforcement is carried out in accordance with the legislation of the Member State of enforcement. Thus, if the order is to be enforced in Romania, the provisions of Book V of the Code of Civil Procedure concerning enforcement will apply, with the specific provisions of Articles 1103-1109 of the Code of Civil Procedure concerning the enforcement of judgments rendered in other Member States.

The European Small Claims Procedure

Regulatory framework and value threshold

Regulation (EC) No 861/2007 of the European Parliament and of the Council of 11 July 2007 establishing a European small claims procedure was significantly amended by Regulation (EU) 2015/2421, which raised the value threshold from EUR 2,000 to EUR 5,000, thereby substantially extending the scope of the procedure. The amendments entered into force on 14 July 2017.

The procedure applies, like the European order for payment, in cross-border civil and commercial matters, with the same exclusions. The fundamental difference lies in the fact that this procedure allows for the determination of disputes on their merits, including where the claim is contested by the debtor, whereas the European order for payment targets only uncontested claims.

Conduct of the procedure

The procedure is initiated by completing Standard Form A from Annex I to the Regulation, which is filed with the competent court. In Romania, jurisdiction lies with the district court (judecatorie), pursuant to Article 1029 of the Code of Civil Procedure. The claimant must attach to the application all relevant supporting documents.

The procedure is designed predominantly as a written procedure. The court may hold an oral hearing only if it considers that it cannot give judgment on the basis of the written evidence or if a party so requests, although the court is not obliged to grant such a request. Hearings may be conducted by means of distance communication technology (videoconference), which significantly reduces costs for the parties.

The court renders its judgment within 30 days of receiving the defendant's response or of the oral hearing, as the case may be. The judgment is enforceable, without the need for the provision of security, and is recognised and enforced in the other Member States without exequatur, similarly to the European order for payment.

Practical advantages

The principal advantages of this procedure are reduced costs (legal representation is not mandatory), speed, and the simplicity of standardised forms. The procedure is particularly useful for small and medium-sized enterprises that have relatively low-value claims against commercial partners in other Member States and for which initiating ordinary contentious proceedings would be disproportionately expensive.

The Brussels I bis Regulation - Recognition and Enforcement of Judgments

General principles

Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels I bis Regulation) constitutes the cornerstone of judicial cooperation in civil matters within the European Union. This Regulation replaced Regulation (EC) No 44/2001 (Brussels I), introducing substantial improvements, the most significant being the abolition of the exequatur procedure.

Pursuant to Article 36 of the Regulation, a judgment given in a Member State shall be recognised in the other Member States without any special procedure being required. Furthermore, under Article 39, a judgment given in a Member State which is enforceable in the Member State of origin shall be enforceable in the other Member States without any declaration of enforceability being required.

Jurisdiction rules

The Regulation establishes uniform rules on jurisdiction, the general rule being that set out in Article 4, whereby persons domiciled in a Member State shall, regardless of their nationality, be sued in the courts of that Member State. In addition to this general rule, the Regulation provides for special jurisdiction (Article 7) and exclusive jurisdiction (Article 24).

In matters relating to a contract, pursuant to Article 7(1), a person domiciled in a Member State may be sued in another Member State in the courts for the place of performance of the obligation in question. For the sale of goods, this is the place in a Member State where, under the contract, the goods were delivered or should have been delivered. For the provision of services, this is the place in a Member State where, under the contract, the services were provided or should have been provided.

Grounds for refusal of recognition

Although the exequatur procedure has been abolished, the Regulation maintains the possibility of refusing enforcement under strictly limited conditions, set out in Article 45. Enforcement may be refused if recognition is manifestly contrary to the public policy of the Member State addressed, if the judgment was given in default of appearance and the document instituting the proceedings was not served on the defendant in sufficient time, if the judgment is irreconcilable with a judgment given between the same parties in the Member State addressed, or if the judgment is irreconcilable with an earlier judgment given in another Member State or in a third state between the same parties in proceedings involving the same cause of action.

Practical Aspects

Choosing the appropriate procedure

The choice of the optimal legal instrument depends on several factors: the nature of the claim (contested or uncontested), its value, the urgency of recovery, and the creditor's procedural strategy.

The European order for payment is advisable when the creditor has solid supporting documents (invoices, contracts, confirmations of receipt of goods) and anticipates that the debtor will not contest the claim. The principal advantage lies in the speed of the procedure and the absence of the need to take evidence.

The European small claims procedure is recommended for claims of up to EUR 5,000, even where the debtor might contest the claim, since the procedure allows for the determination of the dispute on the merits.

For higher-value claims or complex disputes, the creditor will resort to ordinary contentious proceedings before the court having jurisdiction under the Brussels I bis Regulation, subsequently benefiting from the simplified recognition and enforcement mechanism.

Protective measures - The European Account Preservation Order

A particularly valuable complementary instrument is Regulation (EU) No 655/2014 establishing a European Account Preservation Order procedure. This allows the creditor to obtain, on an ex parte basis (i.e., without prior notice to the debtor), the preservation of funds held in the debtor's bank accounts in another Member State, thereby preventing the transfer or withdrawal of funds before a judgment on the merits is obtained and enforced.

The application may be filed before the initiation of proceedings on the merits, during such proceedings, or after a judgment has been obtained. The creditor must demonstrate the existence of fumus boni iuris (a good arguable case on the merits) and periculum in mora (a real risk that, without the measure, subsequent enforcement will be impeded or made substantially more difficult).

Private international law aspects

In cross-border disputes, the determination of the law applicable to the substance of the legal relationship is governed by Regulation (EC) No 593/2008 (Rome I) for contractual obligations and Regulation (EC) No 864/2007 (Rome II) for non-contractual obligations. While these regulations do not directly concern the debt recovery procedure, they are essential for establishing the rights and obligations of the parties.

Moreover, in the case of commercial contracts between professionals, it is advisable to include choice of court clauses (Article 25 of the Brussels I bis Regulation) and choice of law clauses (Article 3 of the Rome I Regulation) in order to ensure legal predictability and reduce the risk of disputes concerning jurisdiction or applicable law.

Limitation periods

A frequently overlooked aspect in cross-border debt recovery practice concerns limitation periods. Under Romanian law, the general limitation period in commercial matters is 3 years (Article 2517 of the Civil Code), calculated from the date on which the payment obligation becomes due. Filing an application for a European order for payment or an application under the small claims procedure interrupts the running of the limitation period pursuant to Article 2537(1) of the Civil Code.

It is essential that creditors act promptly, as limitation periods may vary from one Member State to another, and the determination of the law applicable to limitation (which, under EU law, is a matter of substantive law rather than procedural law) may result in the application of a shorter period than that provided for under Romanian legislation.

Costs of proceedings

Court fees for the European order for payment in Romania are established pursuant to Government Emergency Ordinance (OUG) No 80/2013 on court fees. Under Article 3(1), the fee is calculated based on the value of the claim, and pursuant to Article 33, in the case of applications filed under European regulations, the fees provided for by Romanian legislation apply.

An important aspect is the possibility of applying for cross-border legal aid under Directive 2003/8/EC, transposed into Romanian law by OUG No 51/2008, for natural persons who lack the financial resources to cover the costs of proceedings.

Conclusion

The European legal framework provides creditors with efficient and relatively accessible instruments for debt recovery in cross-border commercial relations. The European order for payment, the European small claims procedure, and the simplified recognition and enforcement mechanism under the Brussels I bis Regulation constitute a coherent legal arsenal capable of ensuring the effective protection of creditors' rights within the European judicial area.

Nevertheless, the effective use of these instruments depends critically on a thorough understanding of the particularities of each procedure, the selection of an appropriate procedural strategy, and rigorous compliance with the formal and substantive requirements imposed by the European regulations and national legislation.

If you are facing difficulties in recovering debts from commercial partners in other EU Member States, the law office of Tudor Grigorean, Cluj Bar Association, is at your disposal for specialised legal advice and representation in European cross-border debt recovery procedures. Contact us for an assessment of your specific situation and to identify the most efficient recovery strategy.