Vice-President of the European Commission responsible for Justice, Fundamental Rights and Citizenship
Making the Single Market work for Europe's citizens and businesses: reforming international litigation
Brussels I Conference: The Reform of International Litigation in Europe
Madrid, 15 March 2010
Justice in the Single Market
Ladies and Gentlemen, I would like to thank the Spanish government for organising today's conference on the reform of international litigation in Europe. The subject is important and timely.
The reform discussed at this conference is not an academic debate. The European Single Market is the EU's greatest creation and crown jewel. While we have much to be proud of, we can not rest on our laurels. We're facing an economic and financial crisis. Europeans expect us to take action.
We're already moving ahead to leverage the strength of our market of 500 million consumers. The Commission recently presented a targeted long-term strategy for smart, sustainable and inclusive growth. The Europe 2020 strategy aims to remove obstacles in the Single Market and to increase the mobility of our citizens, services and investments.
One of my priorities as EU Justice Commissioner is to ensure that citizens feel at ease about living, travelling and working in another Member State. Our citizens should be confident that their rights are protected no matter where they are in the Union. I am convinced that a well-functioning European area of justice has an important role in reinforcing the Single Market. Consumers and businesses may limit their investments and transactions to national markets if they lack confidence in the judicial system. That's why we must overcome barriers to cross-border trade caused by the prospect of civil litigation.
As businesses try to recover from the economic crisis, they need specific EU actions to reduce red tape and to ease cross-border transactions. I fully share the Spanish Presidency's goal of creating a single area of justice to help confront the economic crisis.
Let's not forget that the Single Market is much more than a project for businesses. One of the challenges of promoting European integration is that citizens often don't see the benefits of the Single Market. That needs to change. The new Barroso Commission is fully committed to putting citizens first. The citizen is the focus of both rebuilding our economy and President Barroso's policy-making agenda.
The Brussels I Regulation in the Single Market
The Brussels I Regulation covers rules on court jurisdiction and the recognition and enforcement of judgments. It is at the very heart of the justice area in the Single Market. It tackles concrete questions that affect citizens and businesses.
As Justice Commissioner, I will ensure that people have effective access to justice and that they feel confident to litigate in a cross-border situation just as they would do in their home country. Taking legal action against a person or company can be daunting. But the fact that the defendant lives abroad should not allow him to escape liability.
The reform of litigation in Europe
To be clear, the rules on jurisdiction and recognition and enforcement of judgments in the Brussels I Regulation show a high level of cooperation between Member States and their courts in the area of civil justice. This Regulation has achieved much.
However, we can do more. Civil litigation in Europe still suffers from cross-border barriers. We have to realise that the prospect of cross-border litigation, with all its complexities, is an obstacle to taking advantage of the Single Market. We must be bold and remove these obstacles.
The abolition of exequatur
For me, the priority in the development of a European area of justice is the free circulation of judgments. We could call this the fifth freedom. The reform of the Brussels I Regulation is a key opportunity to finally deliver on what European leaders already defined as the major objective for justice in Europe more than 10 years ago.
I am therefore committed to abolishing the costly and cumbersome exequatur process. This procedural step – which is still needed to get a court judgment enforced in another Member State – may cost up to 2,000 euros in lawyers' fees and other costs. In more than 90% of cases, this procedure is a pure formality. How can we burden our citizens and companies, particularly our small businesses, with such pointless costs? I know that we need some safeguards, but citizens and businesses should not face these extra costs and red tape.
Of course, the Brussels I Regulation is not the only instrument we have at our disposal. We have already abolished exequatur successfully with other instruments that are particularly useful to individuals and businesses.
I am referring to the European Enforcement Order, which is a sort of "passport" that allows a judgment given in one Member State to be recognised and enforced in another, with minimum formalities. Then we have the European Payment Order – a simplified procedure for uncontested cross-border claims.
There's also the European Small Claims Procedure for cross-border claims of less than 2,000 euros. This is a speedy and efficient procedure, based on standard application forms available in all languages, and no lawyer is required. The long-term aim is to make it possible to carry out the whole procedure on-line.
Although primarily aimed at consumers, this procedure can be used by everyone. Right now, there is the practical case of a woman who runs a small business in the UK. She has used the small claims procedure to get judgments in her favour in Greece and Romania, and she's now in touch with the Romanian bailiffs to enforce her claim there. These tools are helping her to do business, and there are many examples like her. She is taking advantage of the Single Market in her daily work. We should make sure that more small businesses cut through red tape and enjoy lower legal bills.
Improvement of enforcement
When a business has to go to court, it is a costly business. Companies cannot afford to go to court 27 times in 27 different courts! The free circulation of judgments must be accompanied by the ability to enforce the judgment in another Member State.
Enforcement rules are not currently covered by the EU rules on cross-border litigation, and therefore remain a matter for national law. Different procedural rules are a big headache for businesses that have won a cross-border case and want to recover their money from the defendant. A massive 60% of cross-border debts are not recovered. Part of the problem is that the procedural tools that exist in purely national proceedings for debt recovery are not similarly available when there is a cross-border claim.
I therefore plan a new Union instrument to allow lenders to block the bank accounts of debtors. This will stop debtors from moving their assets around the EU and allow creditors to recover the money that was awarded to them by a court.
Europe's place in the world
We must ensure that of our citizens and our businesses have access to justice in Europe. We also need to ensure that they are able to enforce their rights, in particular rights guaranteed by EU law before courts in Europe. We also need to offer them appropriate jurisdictional protection against claims and judgments from third countries. European companies will have more confidence to expand to new markets if we address these needs.
The development of a common regime for justice in a globalised world will be an excellent opportunity to set the values that we share in Europe for justice. It will enable us to prepare the ground for future cooperation with third countries.
Arbitration as a method of dispute resolution
When reforming our litigation system in Europe, we should consider all forms of dispute resolution. Our Single Market does not only rely on dispute resolution before state courts. We've also adopted a law on mediation that will improve access to alternative dispute resolution mechanisms. The Directive promotes amicable settlement of disputes and ensures a balanced relationship between mediation and judicial proceedings. The Member States are currently transposing this directive into national law.
These other types of dispute resolution play a very important role in our economies. This is also particularly the case for arbitration.
The leading arbitration centres in the world are in Europe. We have created an arbitration-friendly environment that is favourable to an efficient dispute resolution system. This environment helps companies and boosts trade.
To conclude, ladies and gentlemen, I would like to recall my main priority as Justice Commissioner: the creation of a true European area of justice. In this area, everyone has access to justice across borders and there is a real free circulation of judicial decisions. We have a great opportunity before us. By creating a well-functioning European area of justice we also reinforce the Single Market, cut red tape and boost confidence in cross-border transactions.
I wish you a very successful conference during the next two days. I look forward to hearing about your results.