Strasbourg, 14 December 2010
Civil Justice: The Reform of the "Brussels I" Regulation and the European Commission's Green Paper on the Free Circulation of Public Documents: Frequently Asked Questions
Why is there a need to improve judicial cooperation in the EU in civil and commercial matters?
Judicial cooperation between EU Member States in civil and commercial matters is the legal support to the EU's Single Market and the free movement of people. When companies do business across Europe or when citizens travel, purchase goods, or work in a Member State other than their own, they need a coherent legal framework to resolve any disputes that may arise. Judgements in Europe need to circulate freely – just like people, goods, services, and capital.
With the Lisbon Treaty and its new emphasis on judicial cooperation and the rights of citizens, the time has now come to do away with the remaining obstacles in this area, such as the intermediary court proceedings that are still needed before a judgement from one Member State is recognised in another.
In addition, efficient solutions to cross-border disputes and the smooth recognition and enforcement of judgments issued in another Member State help the Single Market function properly.
The reform of the "Brussels I" Regulation
What is the "Brussels I" Regulation? Can you give some practical examples showing why it is relevant in practice?
The "Brussels I" Regulation of 22 December 2001 establishes common EU rules on jurisdiction in civil and commercial matters and thus clarifies which court is competent in a cross-border dispute. The Regulation also includes EU rules that facilitate the enforcement of a judgement issued by the courts in one EU Member State in another country.
Some practical illustrations:
A company based in France concludes a construction contract with a company based in Poland in which they designate the courts of Warsaw to deal with any dispute arising under their contract. The "Brussels I" Regulation ensures that the choice for the Warsaw courts will be respected, even if, for instance, the building is to be constructed in Paris; and that the judgement given by the Polish courts will be recognised and enforced everywhere in the EU, including in France.
A German company discharges waste into the Danube, causing damages to farmers using the Danube water to irrigate their land in Austria and Slovakia. The "Brussels I" Regulation determines which courts may have the jurisdiction to rule on the claims for compensation against the German company brought by Austrian and Slovakian parties. It ensures that any judgement given by those courts will be recognised and enforced everywhere in the EU, including in Germany.
An Italian seller and a Romanian buyer have concluded a sales contract. The parties have not determined which court would deal with any disputes. The Italian seller files a lawsuit in Italy for breach of contract. The Romanian buyer subsequently brings proceedings in Romania for annulment of the contract. The "Brussels I" Regulation provides that the Romanian court should await the decision by the Italian court on which court has jurisdiction to hear the dispute. If the Italian court exercises jurisdiction, the Romanian court shall decline to hear the case, even if it considers that it would have jurisdiction itself. The Italian decision will be recognised and enforced everywhere in the EU, including in Romania.
What is “exequatur” and why does the Commission propose abolishing it?
Under the current rules of the "Brussels I" Regulation, a judgement given in one Member State does not automatically take effect in another Member State. In order to be enforced in another country, a court in that country first has to validate the decision and declare it enforceable. This is done in a special intermediate judicial procedure that takes place after the judgment has been obtained and before concrete measures of enforcement can be taken. This is called the "exequatur" procedure. "Exequatur" means "let it be executed" in Latin.
The "exequatur" procedure makes cross-border litigation more cumbersome, time-consuming and costly than national litigation. It may take several months to obtain, thereby delaying cross-border enforcement. The procedure is also expensive. The average cost for straightforward cases in the EU is €2,200, ranging from €1,100 in Bulgaria to €3,800 in Italy. For more complex cases, the costs can reach €12,700.
Amongst the 27 EU Member States – which share a Single Market with largely harmonised "rules of the game" in civil and commercial matters – "exequatur" is in most cases a pure formality. Almost 95% of applications for getting judgements declared enforceable in other EU countries are successful today.
This is why the Commission proposes to abolish the "exequatur" procedure with the reform of the "Brussels I" Regulation. There will no longer be a need in the future to go through a special procedure for judgements in civil and commercial matters issued by a court in another EU Member States. At the same time, the reform will maintain procedures to protect defendants: They will have the possibility to contest the judgment if they were not given proper notice of the proceedings or, if in exceptional cases, the procedure in the other Member State infringed their right to a fair trial.
In legal terms, the abolition of the "exequatur" procedure can be described as a small revolution. It will lead to a situation where judgements issued in another EU Member States in civil and commercial matters will be treated like domestic judgements. In the Commission's view, this is a situation that can be compared to the progress made in recent years in the Single Market. It also attests to the mutual trust that has developed among Member States in civil and commercial matters. There are only a few fields in which exceptions or transitional provisions are foreseen to take account of the need for further harmonisation of substantive or procedural law.
In the Single Market of the United States of America, there is no "exequatur" procedure for judgements issued in one US state that need to be enforced in another US state. Instead, the US Constitution itself ensures that all judgements issued in one state of the US have "full faith and credit" across all other US states.
How will the reform of the "Brussels I" Regulation help businesses?
When a business has to go to court, it can be a costly affair. Getting a court judgement recognised in other EU Member States without unnecessary legal fees will save businesses – notably small and medium-sized enterprises – time and money.
First, the reform will do away with the existing obstacles to the free circulation of judgements: with the abolition of the "exequatur" procedure, any judgement obtained in one Member State will be recognised automatically in any other Member State as if it were delivered in the latter Member State itself. Businesses will save the costs, time and hassle of going through intermediary proceedings to have a judgement recognised and enforced abroad;
Second, businesses will benefit from a complete, transparent, and uniform set of rules on jurisdiction of the courts in Europe, covering disputes with trading partners from Europe and abroad;
Third, there will be improved legal certainty concerning the choice of a court to resolve a dispute. The revised rules will ensure that any such choice will be respected throughout Europe and avoid abusive litigation to circumvent the choice;
Finally, there will be improved legal certainty concerning arbitration agreements. The revised rules will ensure that a choice to submit a dispute to arbitration will be respected throughout Europe and avoid abusive litigation.
Will consumers benefit from the reform of the "Brussels I" Regulation?
Yes, consumers will be among the main beneficiaries. At the moment, consumers benefit from the principle of the protection of the weaker party that is firmly enshrined in the "Brussels I" Regulation. As a result, in a legal dispute between consumers and businesses, the consumer may always choose to go to a court in the EU Member State in which the consumer is domiciled, whether the consumer brings and action or defends himself. This principle currently applies only to legal relationships inside the EU and not to situations where there is a connection with a third country.
With the reform of the "Brussels I" Regulation, the Commission proposes to extend these jurisdiction rules to legal relations between consumers and businesses in third countries. Here is a practical example of the reform:
A UK consumer signs a contract for a time-share apartment on the Turkish Riviera while on holiday. He then returns home and decides that he cannot afford the apartment and decides to end the contract. Under the EU’s Time Share Directive, consumers can end contracts within 14 days. However, the Turkish seller refuses to reimburse the consumer. Under English law, no court in England has jurisdiction to hear the case. The consumer’s rights to be protected under the Time Share Directive are denied because of the lack of jurisdiction of English courts. The reformed "Brussels I" Regulation would give citizens and companies the same possibilities to sue in national courts when a defendant is located outside the EU.
What is the timetable now for the reform of the "Brussels I" Regulation?
The Commission's proposal will now be sent to the European Parliament and the Council to be adopted under the ordinary legislative procedure (co-decision), which puts Parliament and Council on equal footing. The final approval is expected within the next two to three years.
The Commission's Green Paper on free circulation of documents
What is a Green Paper?
In a Green Paper, the Commission elaborates on an issue that may warrant a response by means of EU legislation; and outlines possible policy options, which are then submitted to a public consultation.
What are public documents?
Public documents cover all the official records drawn up by the authorities of Member States. Examples include administrative documents such as diplomas or patents; notarial acts such as sales deeds for property and marriage contracts; civil status records such as birth, marriage or death certificates; and judicial documents such as court rulings or documents issued by a court.
Civil status documents are a subgroup of public documents. A citizen's civil status is their legal situation. It is important to be able to prove this status in everyday life using documents. Citizens are often obliged to produce public documents in their host Member State to obtain a right, such as proving eligibility for social security benefits. A birth certificate is needed for admission to school, eligibility for retirement, social security benefits, allowances for dependent children and for many other purposes.
Why is there a need for free circulation of documents in the EU?
Europeans are increasingly using their rights as EU citizens: about 12 million people currently live in a Member State other than their own. When Europeans move to another Member State, they are often asked to prove their legal status to fully enjoy their rights as citizens. However, people frequently have problems getting these documents recognised by their host Member State. This leads to obstacles both in terms of time and money. Language can also be a barrier. In some Member States, citizens have to pay a fee so that their documents, which were already officially issued by one Member State, are recognised as authentic in another Member State. In some Member States the so called apostille authentication certificate is provided free of charge or for less than €5, while in others it can cost up to €50. Similarly, citizens also may need to pay to have documents translated. This can cost between €20 and €50 per document.
The Court of Justice of the EU ruled in the Grunkin-Paul case on 14 October 2008 that a refusal by a national authority to recognise the surname of a child born in another Member State, which was legally registered in that Member State (in this case, a double name), represents a violation of the EU's free movement rules. In the case, every time the child crossed the border between Denmark and Germany, he would bear another name. The Court of Justice considered this situation, and the inconvenience it caused in the daily life of the citizen concerned, as incompatible with the right to free movement, and required the German authorities to recognise the surname legally given to the child in Denmark.
The free circulation of public documents is one of the actions listed in the first EU Citizenship Report (IP/10/1390 and MEMO/10/525). The Commission proposed measures to make peoples’ lives easier when they exercise their EU rights to get married, buy a house or register a car in another EU country, among others. These initiatives are described in 10 factsheets.
What is the added value of EU action in this field?
According to a Eurobarometer survey from October 2010, 73% of European citizens are in favour of measures to ease the circulation of public documents between Member States (IP/10/1372). As most of the challenges in this area are about cross-border situations, the Commission must act as no Member State can solve those problems on its own.
How will the new approach help individuals?
The new approach on free circulation of documents will help citizens use their rights when travelling, studying or working, possibly getting married or divorced, buying or inheriting property, no matter where they are in the EU. It will make life easier for citizens, thus reducing bureaucracy and saving time and money.
What are the implications for national authorities? Will there be an EU model document?
The free circulation of documents would make the right to free movement a tangible reality for each citizen. In the Green Paper adopted today, the Commission outlines several policy options to ease the free circulation of public documents and the recognition of the effects of civil status documents. One possibility would be to develop Europe-wide forms for the most common civil status documents. This would avoid the costs of administrative formalities and translations. It would also alleviate the burden for national, regional and local authorities as they would not have to re-check documents that were officially issued in another Member State.
Will there be new legislation?
Depending on the outcome of the public consultation, two separate legislative initiatives are planned by the Commission for 2013: first, on the free circulation of documents; and second, on the recognition of civil status situations.
What is the timetable for the consultation?
The Commission launched the public consultation on 14 December 2010 and the public has until 30 April 2011 to respond. The Commission will take these responses into account when it proposes legislation in 2013.
The public consultation is available under the following link: