Strasbourg, 14 December 2010
European Commission to cut red tape in cross-border court cases for businesses and consumers
A France-based company has a construction contract with a Poland-based entrepreneur to build a factory near Paris. The two firms agree that a Warsaw court will deal with any contract disputes. The Polish firm sues the French company because it is behind in payments. The Warsaw court rules that the French company must pay the outstanding amount. The Polish company then wants this judgement to apply to the French company’s assets in France. This currently requires the Polish company to first go through a time-consuming procedure in a French court called “exequatur” – which may cost up to €3,000. The “exequatur” procedure, which is carried out more than 10,000 times a year in the EU, is outdated given the development of Europe’s Single Market and the level of trust between the Member States’ legal systems in civil and commercial matters. This is why the European Commission today proposed abolishing the “exequatur” procedure, a move that could save up to €48 million a year and facilitate cross-border business, particularly for small and medium-sized firms (SMEs). The cost saving is part of the Commission’s proposal for a sweeping reform of the so-called “Brussels I” Regulation of 2001, a set of EU rules that determine which court has jurisdiction in cross-border cases and how court judgements issued in one EU Member State are recognised and enforced in another EU country. The reform is meant to strengthen the Single Market and cut red tape. It will also reinforce the protection of European consumers when they deal with businesses in third countries, enhance legal certainty for choice of law agreements among businesses, and improve the competitiveness of Europe’s arbitration industry.
"Today the Commission is proposing to eliminate a complicated and costly procedure for recognition and enforcement of judgements in civil and commercial matters between Member States. This is good news for Europe's citizens and SMEs. Our proposals will deliver faster and cheaper settlement of cross-border disputes, with savings between 2,000 and 12,000 € in individual cases," said José Manuel Barroso, President of the European Commission.
"In a true Single Market, judgements in civil and commercial matters issued in one Member State should be given full faith and credit in all other Member States of our European Union. This is why we act today to abolish the old-fashioned and overly bureaucratic exequatur procedure, thereby removing an important deterrent for cross-border transactions in Europe,” said Viviane Reding, Vice-President of the European Commission and the EU’s Justice Commissioner. “My goal is that by 2013 judgements in civil and commercial matters can be executed effectively, speedily and inexpensively across the EU, whether they are made by a domestic court or a court in another EU Member State.”
Even though the EU's Single Market gives businesses access to a market of 500 million consumers, only a quarter of Europe’s 20 million SMEs are involved in cross-border trade. A recent survey found that almost 40 percent of businesses would be more inclined to trade outside their home market if the procedures for settling court disputes abroad were simplified. Removing bureaucratic obstacles that impose extra costs and legal uncertainty on businesses is therefore a key part of the Commission’s drive to make life easier for companies and citizens (see IP/10/1390 and MEMO/10/525).
The Commission agreed today on a reform of the “Brussels I” Regulation of 2001. This Regulation is fundamental to cross-border litigation because it determines which court has jurisdiction in cross-border cases. It also allows for court judgements in one Member State to be recognised in another.
The reform proposed by the Commission today includes four key changes:
The Brussels I Regulation facilitates civil judicial cooperation in the EU by identifying the most appropriate jurisdiction for solving a cross-border dispute and ensuring the smooth recognition and enforcement of judgements issued in another Member State. This helps the Single Market function properly.
Eight years after the original Regulation came into force, the Commission’s reform proposals are now seeking to make it more efficient.
The proposal to abolish the “exequatur” procedure follows earlier moves such as the European Payment Order (a simplified procedure for uncontested cross-border claims), the European Small Claims Procedure for cross-border claims of less than €2,000 and the EU’s Maintenance Obligations Regulation.
The Commission also published a Green Paper today with several options on facilitating the free circulation of civil status documents (See IP/10/1704).
It is now for the European Parliament and the Council of Ministers to agree on the Commission’s proposal for a reform of the “Brussels I” Regulation.
For more information
Homepage of Viviane Reding, Vice-President of the European Commission and EU Commissioner for Justice:
Chart 1: Relevance of rules on jurisdiction and enforcement for cross-border commercial activity
"To what extent would you be inclined to engage in (more) cross-border commercial activity if, in the event of a dispute, a judgement obtained in one Member State would be enforceable in another without additional procedures?"
Figures and graphics available in PDF and WORD PROCESSED
Source: CSES study, Text box 3.3, p. 61
Chart 2: Number of exequatur applications and success rates (2009)
Chart 3: Cost and length of exequatur proceedings in the EU Member States
Source: CSES study, p. 42.